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+--- Thread: Cash .vs. Finance .v.s Lease (/Thread-Cash-vs-Finance-v-s-Lease)
Cash .vs. Finance .v.s Lease - jiggyjaggy - 10-10-2011 05:51pm
SO what is everyones thoughts on this? I am mulling the figures over and have come to the following conclusions based on a Dynamic £40k ish and ownership over 2 years
Cash - £40k down, no interest obviously (minimal lost in banks-urrrhh bloody goverment) residual value after 2 years being £25K ?? Is that fair to say? Depreciation loss being circa £15k.
Finance - £10 deposit, 2 years at circa £1200 pcm based on 9ish %, total interest over 2 years being circa £30k, depreciation = £40k - £25k residual - finace paid (£30k) + deposit £10k = £10k
Leasing - £3500 deposit, £600pcm x 23 months = total £17,200 plus you get your deposit back plus the fact that you can use your cash on other investments.
So surely Leasing is a no-brainer here isn't it???
RE: Cash .vs. Finance .v.s Lease - DynamicRRV - 10-10-2011 06:43pm
Cash.
RE: Cash .vs. Finance .v.s Lease - ytshome - 10-10-2011 06:49pm
Well Glasses guide say 94% after one year and 70% after three. So your estimation of £25K may seem a little stingy. If you took 80% at end of year two thats £32K and makes a big difference to your calculations. Cheers YT
Cash .vs. Finance .v.s Lease - gomark - 10-10-2011 07:39pm
Personally, I take the view that as cars are depreciable assets, I PCP new cars as I am then only financing the depreciation over 3 years. I have a rate of under 7%. My view is that I can use the cash I have to reinvest to make more money than that rather than being tied up. If I buy a car over 3 years old, then as the majority of the depreciation has already happened, I'll buy outright.
Not saying it's right, but works for me
RE: Cash .vs. Finance .v.s Lease - Daigriff - 10-10-2011 07:42pm
It's got to be cash...provided you have it. I reckon residuals will still be excellent in 2 years especially as I expect prices to increase during that period.
I did look at lease costs but found them expensive. M&S Finance will do up to £15k personal loan at 6.3% APR which seems good.
RE: Cash .vs. Finance .v.s Lease - jiggyjaggy - 10-10-2011 07:46pm
You think the residuals can really stay that high?
But if you could take the £40k cash and invest it to give an approx 30% RoE (which gives you an additional £12k) then surely it is better to take the leasing option, as the leasing costs £17k, and you feel none of the depreciation.
RE: Cash .vs. Finance .v.s Lease - caroline11000 - 10-10-2011 08:07pm
Be interesting to add a poll to the thread to see what percentage of people are choosing which option........ cash, lease or finance ?
RE: Cash .vs. Finance .v.s Lease - jiggyjaggy - 10-10-2011 08:11pm
Well a poll I shall add then. I agree with goMark. I would rather use the money to make further money. Don't see the point in putting the cash down if you can make more than the 6% or minimum interest rate's people are quoting.
RE: Cash .vs. Finance .v.s Lease - The Valeter - 10-10-2011 08:29pm
I am only (hopefully) able to buy the Evoque due to an inherritance that my wife is getting (hopefully) soon. As I run my own mobile valeting sole trader business I propose she puts around 50% down but as a loan to me (my business) & the rest on either PCP or straight finance, all of which then can go on my accounts.
RE: Cash .vs. Finance .v.s Lease - jiggyjaggy - 10-10-2011 08:43pm
I guess thats the other factor, work usage. As a company car you would get various tax breaks wouldn't you?