Explain how car leasing works

[theplayingmantis]

Now this may appear a stupid topic but I cannot get my head round this.

I'm looking to replace or supplement my quadrofoglio with something else a bit fun, considered selling mine getting new one and then potentially a grenadier (not for fun) or keeping it getting an Emira (or similar) which I love, and saving the rest of thr cash.

Out of interest I looked at lease costs of an Emira and its ball park 1.2k over 48 months plus another 12 k or so deposit. So that's 60 k for a 85k ish car with nothing to show at the end...that seems utterly crazy and pointless to me...is that a uniquely bad deal because of the car type or is that normal value for leasing??

[Mammasaid]

Read for yourself;

https://www.pistonheads.com/gassing/topic.asp?h=0&...

[soxboy]

Yes, that’s how leasing/ contract hire works. Without getting into the usual ‘leasing is a mugs game/ finance is the work of the devil’ the figures only really work well for mainstream stuff or cars that manufacturers are trying to shift.

I don’t think I’ve ever seen a Lotus in any of the leasing sites, I imagine that price is along the lines of ‘we’ll quote this and if anyone’s daft enough to pay it, happy days!’

I couldn’t load a finance quote on the Lotus website, however from looking at the advert below from a dealer they have very low expectations of final payments in 48 months. As a result, leasing funders will run away from this type of car.

https://www.autotrader.co.uk/car-details/202309152...

Edited by soxboy on Tuesday 10th October 09:20

[5lab]

It is only ever a great deal on cars that don't cost a lot to make. Eg.. golf r - probably costs vw £2k more than a base model golf to make as it's mostly the same bits, so their margin is massive. They don't want to offer deals on the list price as people will stop buying at full price and the resale will be shot but they can let one out the door for £300/month knowing that it will still make money at 3 years old. Same for a fast 1 series, etc

Cars on a custom platform (gt86, mx5, your emira) don't have that massive margin in them already, so the lease cost is much closer to the cost of getting a £90k loan over 4 years, wlat 10% interest rate, plus massive depreciation

[paulrockliffe]

How it works is basically, not enough people can afford a new car without paying monthly, so the manufacturers work out the depreciation curve and let you pay the depreciation monthly. That way the cars hit the market at lower prices that people can afford and the increased volume of sales mean the amortisation of development and fixed costs is over more vehicles, which brings the costs down overall.

Of course the depreciation on an Emira will be horrific over 4 years and in that case the cost may be inflated to the point that they can't quite sell them all, because if the market will pay more, you might as well charge more.

[anonymous-user]

Leasing can work well and make financial sense but usually only if you chase the deal and not the car. I've leased my last 5 daily drivers and I'm confident I've beaten or matched the equivalent depreciation cost on all of them, but I've not been overly fussy and chosen the best deal from a range of cars which fit my criteria.

If you're after a particular car, especially a sports car or something a bit niche it's usually the worst / most expensive form of finance to use.

[Giantt]

[theplayingmantis]

Thanks folks.

So low volume, more desirable niche cars its not a thing on basically.

Makes sense. But was curious given people bang on about it to see what was quoted

[wyson]

https://www.pistonheads.com/gassing/topic.asp?h=0&...

Depends on the car it seems, although the above is talking about PCP.