Lease My Car or Buy My Car – Which is Better?
Do customer perspectives change during a pandemic/COVID? Will the political and economic uncertainty lead to a change in customer behaviors on vehicle procurement?
As the stagnant situation continues we are seeing some very different perspectives online and in newspapers, as the automotive industry tries to understand what the future looks like and where each business should be allocating resources.
Part of the issue is that there are competing opinions in the mass-media suggesting how cars should be procured and what engine/fuel type should be used. We have suggestions the industry is on the brink of collapse partnered with other news highlighting recording trading periods. Who really knows what the truth is!
The Ownership versus Usership Question
For a customer looking to a get new car, they are faced with two clear choices – ownership or usership. The UK has very much been a purchase-style market, where cash sales and hire purchase were the foremost ways to procure a vehicle.
Our mentality was one of “owning a good” and having control of its destiny. Out of this, the personal contact purchase (PCP) was innovated as part of this purchase-style approach.
There is no right or wrong answer when you are looking into a new car – this is about understanding what it is you want to achieve. Do not focus on the cheapest monthly rental or payment, as this isn’t the only relevant consideration.
With cash and hire purchase you are pushing towards long-term options plus, if you are thinking of having a car for 5 years or more, this is really the route you want to take moving forwards. When you own a vehicle you retain the V5 so there are no admin fees to change the registration plate or for when you incur fines.
There is no need to have a car inspected; any damage to the vehicle is for you to deal with alone. Particularly with a cash purchase, you are not answering to a finance company on how to deal with that vehicle.
It is yours to do with what you please. Above all, this about freedom and autonomy; if you do not want to have to consider a finance company within the process, you need to move this route.
For some customers, they also like the control of selling or part-exchanging the vehicle; if you purchase a popular car which you think will retain some value, this could be an ideal solution. You never know, there may be a profit opportunity.
PCP Car Contract Option – Some Important Considerations
The PCP is perhaps the hybrid between ownership and usership. With a PCP, the contract will operate in a fairly similar fashion to a contract hire arrangement in that you pay an initial payment and monthly payments to a finance company.
To be clear, the finance company have a direct interest in the vehicle and you are not entitled to do anything with the vehicle without their permission. However, at the end of the contract you will have a guaranteed future value (GFV), or balloon, which allows you to either purchase the vehicle or sell the vehicle.
For any customers who MAY want to purchase a vehicle, this could be a solution. There is nothing wrong with owning a vehicle; you may only be covering small mileages and therefore keeping a car 10 years seems realistic or you may want to buy the car at the end of the contract as you want a 2nd family car.
In some cases, a customer will early terminate the PCP and effecting “part-exchange” within the negotiation. However, let us be clear – there is no right to upgrade the vehicle and there is no guarantee there will be any value, or equity, in the vehicle.
This is not something which anyone can confirm to you, as market conditions will dictate this. When you have paid over half of the total amount payable on the contact you can exercise voluntary termination. This is not when you are half-way through the contact; this is a financial calculation. This is another slight misnomer.
Lease Car Option – Saving Time and Hassle
Finally you have leasing, or contact hire as it is strictly known, which is this rapidly evolving way of procuring a new vehicle. This very much a usership and fixed term contract which allows a customer to operate a vehicle for 2-5 years and effectively return it to the finance company at contract cessation.
Often marketed as the hassle-free way of motoring, leasing is aimed at customers wanting a new car every few years and avoiding the administration involved in buying and selling a car.
For some customers, they simply don’t want the uncertainty of car and market valuations; human-beings are increasingly devoid of time or effort! Leasing lends to the online procurement culture in the UK and we have very much been early adopters to this process.
Car dealerships, because of their model, have perhaps been a little bit behind on this. While leasing can present an affordable way to run a new vehicle, and include all the maintenance/servicing aspects, you are again beholden to a finance company for all elements of administration. Ultimately if you love the car, you may be disappointed at the end of the contract. There is no right to own or purchase it.
With COVID well embedded into our current climate, it is going to be interesting on what customers will do – should I keep a vehicle for 5 years or more and accept now is the time to “bed down”? should I lease it with market uncertainty making it difficult to plan a car’s value?
Both are acceptable arguments and will ultimately depend on your attitude to risk. As we stress, do not jump into a contract or decision based on a monthly value. Make sure you consider the whole perspective.
One of Our Latest Audi A3 Lease Deliveries
In terms of the car shown, the Audi A3 SPORTBACK 35 TFSI S line 5dr [Comfort+Sound] (Petrol & Manual), this is based on the following configuration:
- Metallic Paint – Mythos Black
- Twin leather – Steel grey with anthracite stitching + front sports seats with S embossed logo
- Dark spectrum aluminium inlays
- 18″ 5 spoke V style diamond cut alloy wheels
- ISOFIX Child seat anchors in front and i-size top tether for outer rear seats
As standard the car includes LED headlights, 18” alloys, 3-spoke leather steering wheel, LED interior lighting, acoustic glass, light and rain sensors, privacy glass.
Audi connect, Audi smartphone interface, cruise control, Audi virtual cockpit with 10.25” cockpit, MMI navigation plus, electrically adjustable/heated/folding/dimming door mirrors with kerb view. 
Reversing camera, parking assist with system plus, collision avoidance system, Bluetooth, DAB radio, climate control, leather upholstery, S Line styling pack, 40/20 split folding seats, heated front seats.
Immobiliser and anti-theft alarm. In terms of additional options consider – wireless charging, flat-bottomed steering wheel and the upgraded 18” alloys.
On the technical-side company car and business users can note the P11d at £29,705.00 and CO2 at 141g/km. The 1498CC 6 speed manual petrol engine delivers 150ps, 84 second 0-62 times and combined MPG of 45.
