Leasing a Car Is Cheaper Than Buying

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Billionaire oil tycoon, John Paul Getty who is said to be the richest man in history once made the comment,

“If it appreciates then buy it but if it depreciates then lease it”

In reality what he was trying to say was that if you were purchasing assets which will increase in value over time then you should buy them whereas if you were thinking about purchasing something such as a car which degrade in value over time then you should hire the vehicle.

When buying a new car everyone knows and has that common thought that the moment those tyres drive off that forecourt you have already waved goodbye to a substantial amount of money. Over time it has become apparent that although depreciation of a vehicle differs according to the makes and models typically the following will apply:

In the 1st year approximately two-fifths of the vehicle value is lost so around 40%

After 3 years + approximately three-fifths of the overall value from the list price is lost so 60%.

It is for this reason alone that people choose to buy used cars over new cars. However, you can avoid losing out through depreciation costs by simply renting your road. Why not just hire a car and take out what is known as personal leasing.

This would mean that you take out a long term hire contract where you agree a fixed period to drive the vehicle and this will be for a fixed monthly cost. Although you will never end up owning the vehicle at the end of the contract as when your contract ends you have to return the car in good condition, however the benefits of budgetry control and no unsuspected garage costs are a big plus for many people.

If you cover a lot of miles then vehicle hire could be for you. The vehicle hire company will agree with you a set amount of miles per year and if you go over this then you will be charged. Your fixed monthly amount can be made so it includes items such as servicing, MoT’s and even repairs.

When you hire a car you use it and then hand over the depreciation cost back to the vehicle hire company as well as handing over the responsibility of having to sell the vehicle onto the next person thus it rids you of any hassle.

Which? Magazine reviewed twelve well known cars to find out whether it would be cheaper to buy them or too lease them and the following was found:

Make and model

Buy or lease?

Audi A4 Avant 2.0 TDI 143 SE

Buy

Audi TT 2.0 TDI Quattro

Buy

Citroen C4 Grand Picasso 1.6 HDi SX

Buy

Honda Jazz 1.2 i-VTEC S

Buy

Jaguar XF 3.0D V6

Buy

Mazda 2 1.3 TS2 5-dr

Buy

Renault Modus 1.5 dCi 86 Dynamique

Buy

VW Golf 2.0 TDI 110 SE 5-dr

Buy

VW Scirocco 2.0 TSI GT (DSG)

Buy

Honda CR-V 2.2 i-CTDi SE

Either

Nissan Qashqai 1.5 dCi Acenta 2WD

Either

Ford Mondeo 2.0 TDCi Zetec

Lease

When the cars were tested they were so based on three years and 36,000 miles. When purchasing the loan interest charge was 8.9% APR and all costs excluded fuel, servicing, vehicle road tax and car insurance.

Car hire works for people who do not have a big deposit to put down on a car. It also works for those who would like to have fixed monthly payments and want to be behind the wheel of maybe a nicer car which they couldn’t afford to buy outright.

Intack Self Drive is a high quality provider of:

  • Vehicle Hire Blackburn
  • Vehicle Hire Burnley
  • Vehicle Hire Accrington
  • Vehicle Hire Darwen
  • Vehicle Hire Preston

Come to us for tailored contract hire today! Speak to a member of our friendly team about what we can do for you.

For more information call us on 01254 970027 or email reservations@intack.co.uk.

10th January 2012, 10:41