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Lease/PCP/Purchase UK

Good morning,

I'm awaiting delivery of my M3 LR - expected mid Nov- early Dec.

I was originally set on a lease, due to low monthly payments making it much more affordable. Including my trade in (7k), lower running cost savings for my twice monthly 600 mile journeys and a travel contribution from my employer, I calculated it'd cost me about £200/pm over 4 years to lease the car.

PCP, on the other hand, is slightly more expensive. I struggle to see any sense in this if I'm not 100% certain I want to make the balloon payment at the end and own the car. But perhaps financing the balloon payment could be an option?

Tesla Loan / Third party personal loan seems to stretch my budget more than I'd like for a longer period of time (5-6 years), but I suppose a couple of years down the line I could sell the car and make the majority of the money back if I'm not happy?

My current thought process and why I'm leaning more towards the lease is:
  1. Lower monthly payments will free up a lot of income and allow me to save / not worry as much about being able to afford nice things such as holidaying and socialising more post COVID.
  2. Although the M3 is great and already ahead of its time, I believe in 4 years, with the expected improvements in battery technology to say the least, I won't want to be in the position of financing a balloon payment / loan for several more years.
The reasons I'm slightly against the lease is:
  1. The potential resale value of the vehicle at the end of the lease. I know in a personal lease I will hand the car back, but if I've already paid £30k for a lease on a £46k car (with gov grant), would it not make more sense to pay a little more and have some equity in it? I know it's almost impossible to get a used Model 3 right now and the resale value of nearly new is still 90% of original RRP, but in 4 years time will the car actually devalue that much?
  2. My job means that I may go away for months at a time. I don't know how I'd feel about paying a lease knowing that I won't be able to make use of the car. However, I'm sure that my family / close friends wouldn't mind making use of it whilst I'm away. I could also reduce the mileage on the lease and reduce the monthly cost.

My current car which I now own was purchased using a combination of PCP and personal loan in order get the most competitive interest rates. I've been driving it for the past 2 years and not having to worry about any costs outside of the usual mot/tax/service. It does feel good to own the car, but at times it was hard work affording it on lower income!

I know my job is secure for the next 3 years at least (very blessed in these uncertain times!), having just accepted a promotion tied in with a contract to extend within the organisation. Because of this, a 4 year more affordable lease seems to be the most sensible option as opposed to a 4 year PCP with balloon payment or a 5+ years Tesla/personal loan.

I appreciate the long read and I'd welcome any opinions / insight from other owners/potential owners - what would you do in my situation? What's your opinions on different types of purchasing/leasing?

Many thanks!
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Also consider Salary Sacrifice if you are heading to a lease option as you get roughly 1/3 off the car which might make the cost more palpable.

As for the rest, I was in the same boat but deciding to go down Salary Sacrifice route. -which because of my annual mileage is about the only way I can afford one.
Thank for the information.

Unfortunately that is not something that my employer offers!
Have you asked? I spoke to Octopus EV the other day and they basically just send in an Invoice to business each month where they have calculated all the savings in so its really straight forward for a business. There is about an hours worth of paperwork for business to do therefore no hassle at all.

I'm in the military, unfortunately I don't see them being this flexible as they don't even seem to support cycle to work schemes.


Active Member
Aug 30, 2015
How much more over the 48 months does the PCP cost compared to the lease? This is the premium you would be paying for the flexibility of:

1. Part exchanging during or at the end of the term if the car has equity
2. Paying the finance off and selling privately
3. Keeping it at the end of the term - with refinance/savings

I’ve always PCP’d as I’ve found the premium to pay for the flexibility was worth it. However this time the PCP was £10k over the term more expensive than a straight lease, and I felt that premium was too high for the possible benefits.

As for HP/3rd party loan, aside from the higher monthly cost it leaves you with the full liability for the cars value/depreciation. At least with a lease or PCP you have a walk away point and the finance company carries the financial risk. I’d consider that risk to be fairly high given the new tech, battery improvements and future competition - all of which put pressure on residual values.

There’s not necessarily a right or a wrong answer, just options and you need to weigh their relative value to you.
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Looking at the residuals I really would consider buying outright (avoiding PCP and leasing), if you can afford it; perhaps look at a “classic finance” type deal.

With a PCP or lease, you’re effectively paying for depreciation. As these cars don’t seem to be depreciating much, finance providers offering leases for example are going to absolutely creaming it.


Active Member
Aug 30, 2015
With a PCP or lease, you’re effectively paying for depreciation. As these cars don’t seem to be depreciating much, finance providers offering leases for example are going to absolutely creaming it.

That may be the case now but there’s no certainty that will continue. With competition on the way (even from within Tesla with the Model Y), and continual improvements in computer and battery tech, residuals will be under pressure.

If you feel residuals will remain strong then PCP is your friend as the balloon payment will, if you are right, be lower than than the market value of the car.
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