Monthly Archives: January 2014

Private Car Leasing Deals

John D. Rockefeller once said, “If it appreciates, buy it, if it depreciates, lease it” Wise words.
Many people don’t realize the true cost of owning a car. They think its just a simple calculation, add the monthly payments to the fuel and insurance and you’re done.

New Private Car Leasing

The real cost of buying goes something like this:
We’ll assume you’re keeping the car for a 3 year period. We’re ignoring insurance and fuel as whatever way you buy your car, these will cost the same.

Option 1 Cash

If you have the cash in the bank, great, head on down to your local BMW showroom and splash the cash.

BMW X9 (New made up model!) £50,000.
The interest you would have earned per year on the money £3000 per year
The depreciation £6500 per year
Road tax 3 years @ £400 = £1200
At the end of three years you sell the car for £30,500.

The car has cost you £29,700

Option 2, HP

Same car, deposit £10,000
Depreciation £6500 per year
Monthly cost, £550 per month, £6600 per year,
Balloon payment at the end £28,000.
Road tax 3 years @ £400 = £1200

You sell the car for £30,500 and pay back the £28,000 balloon.

The car has cost you £28,500 (You made £2,500 from selling the car!)

Option 3 Lease the car

Deposit £3000
Monthly payments £500
No road tax cost

At the end of 3 years hand the car back and walk away.

Total cost £21,000.

There’s no doubt that the depreciation takes its toll, generally you’re better off leasing rather than buying.

Business users can reclaim the VAT whereas in private car leasing, they cant.