Leasing a car

‘If it appreciates, buy it. If it depreciates, lease it’. Wise words by Paul Getty, a billionaire oil tycoon. And that’s why I’m now driving this beauty:

Photo from Tilsun Group. 

Let’s rewind a couple of months. One Sunday, my BFF and I go to the cinema and grab some lunch, and of course, the topic of the rising cost of fuel came up. I was absolutely astonished to find that friend gets 600 miles per tank (£55 at most) of diesel, whereas I was getting 330 miles if I was lucky on £60-£65 a tank full. I’m no mathematician, but I figured out that I needed a new car. I could not go on spending £300 a month on petrol a month and drive the car I was driving – not quite an old banger, but knocking on 10 years old and a car that I didn’t feel unsafe in, but I didn’t feel particularly safe in. I bought it in a rush when my old car was broken – which is never the right thing to do.

Decision to get a new car made, where do I go from here? I’ve been working really hard to pay off my debts so I didn’t want to take out a loan for a new car. My boss is a big fan of car leasing, then my colleague’s wife got a lease car and the seed was planted. I did a lot of research, a lot of decision making and a lot of talking things through with my Dad, who Knows About Things. I worked out that the MPG on the particular car I was looking at would reduce my petrol bill to £150, freeing up £150 that I already paid for petrol month in, month out; plus the pleasure of driving a brand new car. Decision made: I was getting a lease car.

I did encounter some bad service when trying to get some quotes. I wanted to go with The Tilsun Group – they are definitely the cheapest company out there. My colleague’s wife took out a lease with them, so I got in touch with her personal sales manager. After two eager phone calls, I then heard nothing back from him, and never received my quote via email. I chased him up – nothing. A week later, I tweeted  about it and received a response from them within 3 minutes. I decided not to respond, and a few hours later they got back in touch to say they had no record of my quote request. Hm, strange that, having spoken to a sales manager twice. To give them their due, they did get a quote to me by the end of that day, but my name was mis-spelt and they omitted the first half of my double barreled surname from the quote.

Select Contracts, however, got in touch with me within a few hours and offered me a competitive quote. It was more expensive than Tilsun over the course of the 2 year lease, but they would need circa £750 up front, whereas Tilsun wanted £1,700 – meaning I’d have to rush to sell my car to free up the cash to make my first payment. Paul from Select Contracts has kept me up to date all the way and has dealt with me quickly, meaning I got my car just over two weeks after ordering it.

How a lease works:
Leasing is really simple but there are a lot of options and fees that aren’t exactly clear when you see a price on a website.

Firstly, you’ll see leases listed as 3+, 6+, 9+ or 12+. This is the number of months payments you need to pay up front/as your first payment. The number following that is then how long you will lease the car for. It’s important to work out the total lease cost – so 3+23 would be 26 payments of whatever you’re quoted, 6+23 would be 29 payments, etc. In my instance, I’ve opted for a 3+23 lease, meaning I’ll have the car for 2 years. I did find that I’d save a massive £20 over the 2 year period if I put down 6 months upfront, which I decided wasn’t worth it for me.

Secondly, unless explicitly stated, there’s a documentation fee. The name of it might changing slightly between companies, but this is their commission payment for arranging the finance, delivering the car to you and taking care of everything else. I was quoted anything from £199+VAT – £225 including VAT, so between £200-£250 seems right. Best Car Leasing Deals do not charge this fee, they’re competitively priced, but they got back to me with a quote too late and I’d already ordered the car from another company.

Thirdly, you will need to set an annual mileage. These are usually set between 8,000 and 10,000 miles per annum and I opted for 20,000 as my commute is 12,000 per annum. If you go over your annual mileage allowance then you will have to pay a fee per mile when the car is collected at the end of your lease. I was quoted 3.2p per mile (including VAT) from one company, so for every 1,000 miles you go over, you’ll be charged £32.

Fourthly, your fixed monthly fee includes certain things. Car tax is covered by the leasing company. This automatically saved me £260 a year. Major repairs (not wear and tear such as tyres) are again, paid for by the leasing company. You will have to pay for an annual service, as a main dealer. You will also cover insurance and fuel payments.

Can you haggle:
The price quoted is pretty much the price – there may be a little leeway, but I wouldn’t count on it. You could of course get the cheapest price online, then visit your nearest dealer and ask them to price match the online price.

What documentation do I need:
This varies between providers. Typically you may need:
2 x proof of address
3 month’s bank statements
3 month’s payslips
Driving license – photocard and paper counterpart

What happens at the end of the lease:
You’ll have a few choices. If you do nothing, the lease company will come and collect the car and then take the car to auction and sell it. However, they will offer you the option of extending the lease, taking out a new lease or buying the car from them. Me? I’m putting some money away so that if at the end of the lease they offer me an amazing deal to purchase the car, I’m in a position to do so.

Other stuff to consider:
Driving a brand new, £20k car, instead of my £2k car actually lowered my insurance premium by £50 for the year. It is important to get quotes before you commit to the lease – be sure to check Go Compare, Moneysupermarket and Confused.com as well as ringing your own insurance provider. My provider said they’d change the policy and charge me £180 for 5 months, whereas a whole new policy was £292 for 12 months. No brainer.

Delivery can be anything from 7 working days if the main dealer have anything in stock, and longer if your car needs to be ordered in.

You may need to pay a refundable deposit – Select Contracts asked me for £300, refunded upon delivery of the car, to cover any cancellations.

So a lease really worked out well for me. I know that some people have the opinion of it being a waste of money, but I get to drive a brand new car, I don’t pay for road tax and if anything does wrong, I’m not facing a hefty repair bill.

Ps. driving a new car is lovely <3