Newbie seriously considering leasing UK - sense check

[dog299]

**disclaimer I have searched and read lots online and on this amazing forum about leasing, yet still I had some questions. My friends and family all seemingly use PCP so no one to test my understanding. Mods feel free to merge this**

Background:
Currently have a BMW M135i due to various circumstances looking for something bigger/higher up.
Our mileage is SUPER low, even with an expected slight increase of usage we will comfortably be below 5k miles a year. The BMW is 2yrs old and has <5k (yes Covid played some part but not much).
We have never kept a car longer than 3yrs
We are careful car owners (few alloy chips but nothing too heavy - touching wood).
Always used PCP method of funding in the past.
My company does not offer any leasing scheme

Where I am:
Model Y on order with Tesla - Current plan was to go down my old faithful route of PCP.

PCP numbers are not up yet, but using the M3 Calculator (spec one to the level VERY close to the MY price) I get:

Deposit £6k across 48months roughly £771 a month - £9.2k a year.

Assumption being that I might only actually keep the car for 3yrs yet have some money even at the 36month stage to move on.

Thinking differently:
Reading on here a lot of people seem to go down the lease route.

Using Nationwide leasing numbers for demo purposes

Deposit £1,908.96 Across 36months (5k miles) £636.32 a month £7.6k a year.

Across the 3yr period (on my rough figures):

PCP: £33.8k vs Lease £24.8k - close to £9k difference - even more if add the difference in the deposit

Assumptions/considerations on the back of this:

1. Aware on the PCP you potentially will have some equity. Currently in the BMW we have about £5k, mixture of PCP payments yet mostly due to the crazy 2nd hand market. With the Lease option you do not have this (next car funding is solely up to me). Yet given the £9k difference, even if the bubble continues (unlikely in my mind especially out to the 36months stage) the equity at 36months for PCP will not be £9k? is my maths/understanding wrong here?
2. Linked somewhat to the point above; EV tech is changing fast. The 4000 series battery tech could really change things and impact 2nd hand value. On leasing this is not my concern.
3. If you wish to end early on a lease you are extremely limited; you are effectively signed up to the £24.8k come what may (best be the right car etc)

Questions on leasing:

1. When you lease a Tesla what happens if you want to have more than one driver? I read somewhere there are limitations in the app to add users. We would want two profiles or the ability to use two different phones to open etc.
2. If you curb the wheels or get paint marks do you have to let the lease company know and get permission before fixing?
3. If I wanted to get paint protection would I need permission; is it even worth it when leasing?
4. I have heard horror stories when it comes to return the leased car, and that the company makes their money by finding fault to charge. Is this still true? I appreciate hard to say yet are talking £100s or £1000s; could be logical to factor that into the £9k difference.
5. When insuring a lease car is this limited to only certain companies and is it vastly more expensive?

Massive thank you for just reading to the end let alone responding. Hopefully at least it took your mind off the wait for your new Tesla.

 

[Dasher]

I am not qualified to help you directly (I have always bought cars outright), but I would just nudge you to query why you might change a Tesla after only 3 years. They have very little maintenance costs, don't wear even the brakes, are not going to be replaced by a “new model“ anytime soon, and keep getting updated. The depreciation on EVs will settle at a lower annual level then ICE cars. I too used to change my cars after around three years, but I have had my Tesla for two and a half years, and changing it could not be further from my mind.

If you do keep it longer, perhaps the debate you are having might be different. Hope this helps!

 

[GeorgeSymonds]

I am not qualified to help you directly (I have always bought cars outright), but I would just nudge you to query why you might change a Tesla after only 3 years. They have very little maintenance costs, don't wear even the brakes, are not going to be replaced by a “new model“ anytime soon, and keep getting updated. The depreciation on EVs will settle at a lower annual level then ICE cars. I too used to change my cars after around three years, but I have had my Tesla for two and a half years, and changing it could not be further from my mind.

If you do keep it longer, perhaps the debate you are having might be different. Hope this helps!

On the flip side, out of warranty and a lot of Model S and Model X are getting big bills, if you get one of the MCU2 cars it will be out of date soon and Tesla seem to have happily taken £2k from a lot of owners to upgrade their MCU only to have not rolled out many of the new features to them in the Dec release (hasn’t been a problem for M3 owners but could be going forward). I’m playing devils advocate but it’s worth noting the other side.

I think the more relevant question is why lease when you’re guaranteed to spend £6k+ a year on the car when current depreciation is about half that.

 

[nunp]

**disclaimer I have searched and read lots online and on this amazing forum about leasing, yet still I had some questions. My friends and family all seemingly use PCP so no one to test my understanding. Mods feel free to merge this**

Background:
Currently have a BMW M135i due to various circumstances looking for something bigger/higher up.
Our mileage is SUPER low, even with an expected slight increase of usage we will comfortably be below 5k miles a year. The BMW is 2yrs old and has <5k (yes Covid played some part but not much).
We have never kept a car longer than 3yrs
We are careful car owners (few alloy chips but nothing too heavy - touching wood).
Always used PCP method of funding in the past.
My company does not offer any leasing scheme

Where I am:
Model Y on order with Tesla - Current plan was to go down my old faithful route of PCP.

PCP numbers are not up yet, but using the M3 Calculator (spec one to the level VERY close to the MY price) I get:

Deposit £6k across 48months roughly £771 a month - £9.2k a year.

Assumption being that I might only actually keep the car for 3yrs yet have some money even at the 36month stage to move on.

Thinking differently:
Reading on here a lot of people seem to go down the lease route.

Using Nationwide leasing numbers for demo purposes

Deposit £1,908.96 Across 36months (5k miles) £636.32 a month £7.6k a year.

Across the 3yr period (on my rough figures):

PCP: £33.8k vs Lease £24.8k - close to £9k difference - even more if add the difference in the deposit

Assumptions/considerations on the back of this:

1. Aware on the PCP you potentially will have some equity. Currently in the BMW we have about £5k, mixture of PCP payments yet mostly due to the crazy 2nd hand market. With the Lease option you do not have this (next car funding is solely up to me). Yet given the £9k difference, even if the bubble continues (unlikely in my mind especially out to the 36months stage) the equity at 36months for PCP will not be £9k? is my maths/understanding wrong here?
2. Linked somewhat to the point above; EV tech is changing fast. The 4000 series battery tech could really change things and impact 2nd hand value. On leasing this is not my concern.
3. If you wish to end early on a lease you are extremely limited; you are effectively signed up to the £24.8k come what may (best be the right car etc)

Questions on leasing:

1. When you lease a Tesla what happens if you want to have more than one driver? I read somewhere there are limitations in the app to add users. We would want two profiles or the ability to use two different phones to open etc.
2. If you curb the wheels or get paint marks do you have to let the lease company know and get permission before fixing?
3. If I wanted to get paint protection would I need permission; is it even worth it when leasing?
4. I have heard horror stories when it comes to return the leased car, and that the company makes their money by finding fault to charge. Is this still true? I appreciate hard to say yet are talking £100s or £1000s; could be logical to factor that into the £9k difference.
5. When insuring a lease car is this limited to only certain companies and is it vastly more expensive?

Massive thank you for just reading to the end let alone responding. Hopefully at least it took your mind off the wait for your new Tesla.

Just to share my thoughts. For some reason the PCP route is not that competitive with Teslas - we all know the M3 retains a decent amount of its value say after 3 years but that does not seem to be reflected in the GFV on the calculators - less than 50% it seems. Whilst on a lease it is - in my case I’m paying 40% of the M3 LR value over 3 years (Via Vanarama) and I get 1 years insurance and free Charing point. So a lease will work out cheaper I would say versus PCP on any Tesla. If you never keep your cars beyond 3 years then the lease option is worth considering.

Also your credit file benefits from this - on a pcp you owe the full amount including the GFV on a lease the payments that you need to make over say 36 months. I used to always go down the PCP route but kept on losing money when part ex ing after 2 years so the lease route ensures no depreciation. Though this has changed recently with the overinflated used car market - first of a kind. Also the lease company pays the road tax, on PCP you do, so you need to factor in £40 per month on road tax if the car is above the £40 threshold.

In terms of the Model Y, gateway2lease - decent broker and used them in the past - are offering the LR for £487 on a 35 month term, 9 months up front and 5k miles so seems cheaper than Nationwide.

In respect to handing the car back, i‘m pleased to say I have never been charged any damage costs - mostly recently the A6 I returned had a few scratches down to the primer and these were not picked up. I think the industry has improved its reputation and the BVLA guidelines are clear what is and what is nit wear and tear. In terms of paint protection - you don’t need to ask for permission but of course I would say why bother if the car is not yours. I was able to buy the BMW protect x kit off eBay for £15 and applied it myself. Cant say I did a worse job than the valoters. So just do that - not full protection but something on a car that is not yours.

Finally, all lease companies let you end the agreement early if you pay 50% of the remaining payment - this is something less, depending on the car and rentals, that getting new tyres and a service.

 

[Durzel]

On the flip side, out of warranty and a lot of Model S and Model X are getting big bills, if you get one of the MCU2 cars it will be out of date soon and Tesla seem to have happily taken £2k from a lot of owners to upgrade their MCU only to have not rolled out many of the new features to them in the Dec release (hasn’t been a problem for M3 owners but could be going forward). I’m playing devils advocate but it’s worth noting the other side.

I think the more relevant question is why lease when you’re guaranteed to spend £6k+ a year on the car when current depreciation is about half that.

Yeah not gonna lie but the recent treatment of "legacy" S/X owners that have MCU2 (which we all have) has rocked my confidence in my 2020 M3P being maintained beyond its natural lifespan.

It is also totally possible that Tesla might just decide that this is how they want to do business now, with discrete model/years and facelifts with stuff that is unavailable on older cars, like traditional manufacturers do. At the end of the day all any of us can rely on is what we bought when we hit the "Place Order" button.

Would also agree about the lease costs vs depreciation at the moment, but the key word is "at the moment". Leasing is always a calculated bet against the lease company.. if you win you get a car cheaper than it would have cost in depreciation (assuming you realise that loss, if you keep the car you don't), if you lose then they get back a significantly more valuable car than you've made payments for.

 

[yessuz]

to be fair - due to my mileage, PCP/Personal hire make no sense to me. (I do 20k a year)
I opted for the tesla loan - I find the monthly payments to be lower than PCP/PH and at the end of the day I am the owner....

Tesla Loan rates are great - maybe worth consider?

 

[yessuz]

Jso you need to factor in £40 per month on road tax if the car is above the £40 threshold.

40k+ road tax is not applicable for Zero emission vehicles...

 

[dog299]

I am not qualified to help you directly (I have always bought cars outright), but I would just nudge you to query why you might change a Tesla after only 3 years. They have very little maintenance costs, don't wear even the brakes, are not going to be replaced by a “new model“ anytime soon, and keep getting updated. The depreciation on EVs will settle at a lower annual level then ICE cars. I too used to change my cars after around three years, but I have had my Tesla for two and a half years, and changing it could not be further from my mind.

If you do keep it longer, perhaps the debate you are having might be different. Hope this helps!

I have thought about the possibility of keeping longer yet I am aware I am impatient/childish around gadgets and cars. Get the new iPhone each year kinda guy/drone and I realistically know I will want to change after 3 years.

Plus as some others mentioned I think there might be winds of change in Tesla world; changing the processor from Intel to AMD; removing radar to pure visual was interesting. Makes me wonder will the firmware upgrade path live forever in its current form? or will it increasingly be dependent on hardware?

Also there are some areas to improve the MY - Heads up (unlikely but still); suspension; range; charge speed etc.

Granted not an issue if you main focus is purely the drive but I know my eyes will wonder to shiny things

 

[dog299]

Just to share my thoughts. For some reason the PCP route is not that competitive with Teslas - we all know the M3 retains a decent amount of its value say after 3 years but that does not seem to be reflected in the GFV on the calculators - less than 50% it seems. Whilst on a lease it is - in my case I’m paying 40% of the M3 LR value over 3 years (Via Vanarama) and I get 1 years insurance and free Charing point. So a lease will work out cheaper I would say versus PCP on any Tesla. If you never keep your cars beyond 3 years then the lease option is worth considering.

Also your credit file benefits from this - on a pcp you owe the full amount including the GFV on a lease the payments that you need to make over say 36 months. I used to always go down the PCP route but kept on losing money when part ex ing after 2 years so the lease route ensures no depreciation. Though this has changed recently with the overinflated used car market - first of a kind. Also the lease company pays the road tax, on PCP you do, so you need to factor in £40 per month on road tax if the car is above the £40 threshold.

In terms of the Model Y, gateway2lease - decent broker and used them in the past - are offering the LR for £487 on a 35 month term, 9 months up front and 5k miles so seems cheaper than Nationwide.

In respect to handing the car back, i‘m pleased to say I have never been charged any damage costs - mostly recently the A6 I returned had a few scratches down to the primer and these were not picked up. I think the industry has improved its reputation and the BVLA guidelines are clear what is and what is nit wear and tear. In terms of paint protection - you don’t need to ask for permission but of course I would say why bother if the car is not yours. I was able to buy the BMW protect x kit off eBay for £15 and applied it myself. Cant say I did a worse job than the valoters. So just do that - not full protection but something on a car that is not yours.

Finally, all lease companies let you end the agreement early if you pay 50% of the remaining payment - this is something less, depending on the car and rentals, that getting new tyres and a service.

All amazingly helpful points and great food for thought.

re:Gateway2lease i will have look - i should have mention spec the Black 20' wheels so that add slightly to the monthly cost (around £50ish).

As a current Tesla leaser any thoughts on my other questions at the end of the post (sorry being cheeky) - re: setting up additional phone/keys and insurance?

cheers

 

[DJP31]

@dog299 like you I have always PCP'd and never leased. Until this time when getting my second MS. When I crunched my numbers the total cost over the term was £10k more expensive on PCP. I did not think I would achieve £10k over the ballon payment and hence leased. The market is crazy at the moment but that won't last and EV developments/impovements are happening all the time (although I did expect to have more to choose from than in '17 when I bought the first one).

I treat it like I own it and had it ceramic coated, and any kerbing or minor dings can be sorted out by you. Returning the car is the same as if you returned it on PCP - they will inspect it and if it has more than fair wear and tear they will charge you.

The biggest potential downside is the loss of flexibility during the lease term, it certainy isn't as flexible as PCP. You will have to weigh up what price you put on that flexibility, but for me my circumstances are such that being forced to change is very unlikey, and certainly not worth the premium I'd be paying. Only you will know to what extent, if any, you believe your circumstances could change and "price" that flexibility accordingly.

As far as the app/phone access etc is concerned I don't believe you will have any problems in that respect. I think there are some limitations on what you can see within your Tesla account online, any maybe that varies depending on the lease company. In my case I leased directly from Tesla and have exactly the same accesss to everything as I did when I had the last one on PCP.

One thing I did find when getting third party lease quotes, was the cost of options e.g. paint/FSD bumped the monthly cost significantly as they seem to be paid for over the term of the lease, whereas with the Telsa in house lease the monthly cost didn't rise by anything like as much over the same term.

 

[DJP31]

As a current Tesla leaser any thoughts on my other questions at the end of the post (sorry being cheeky) - re: setting up additional phone/keys and insurance?

I forgot the insurance bit. Didn't make any difference to my premium in the slightest.

Plus as some others mentioned I think there might be winds of change in Tesla world; changing the processor from Intel to AMD; removing radar to pure visual was interesting. Makes me wonder will the firmware upgrade path live forever in its current form? or will it increasingly be dependent on hardware?

Your car will be out of date within month's of getting it, if not sooner. Tesla continually improve/change things and if you want to keep at the cutting edge you will defo want to change it every few years. You've already said you don't keep a car more than 3 years and that's going to be even truer with a Tesla.

To be blunt and potentially unpopular with the fanbois, Tesla have zero regard for you as a customer. They will promise upgrade paths but they rarely appear or when they do they are expensive. They are bad enough as it is recognising and accepting design faults, and worse still have form for cappiny both battery capacity and charging speeds on oldfer models.

I'm not sure I could claim copyright but I do remember coinign the phrase "Love the car, hate the company" pretty early in my Tesla relationship!

 

[Xdama]

**disclaimer I have searched and read lots online and on this amazing forum about leasing, yet still I had some questions. My friends and family all seemingly use PCP so no one to test my understanding. Mods feel free to merge this**

Background:
Currently have a BMW M135i due to various circumstances looking for something bigger/higher up.
Our mileage is SUPER low, even with an expected slight increase of usage we will comfortably be below 5k miles a year. The BMW is 2yrs old and has <5k (yes Covid played some part but not much).
We have never kept a car longer than 3yrs
We are careful car owners (few alloy chips but nothing too heavy - touching wood).
Always used PCP method of funding in the past.
My company does not offer any leasing scheme

Where I am:
Model Y on order with Tesla - Current plan was to go down my old faithful route of PCP.

PCP numbers are not up yet, but using the M3 Calculator (spec one to the level VERY close to the MY price) I get:

Deposit £6k across 48months roughly £771 a month - £9.2k a year.

Assumption being that I might only actually keep the car for 3yrs yet have some money even at the 36month stage to move on.

Thinking differently:
Reading on here a lot of people seem to go down the lease route.

Using Nationwide leasing numbers for demo purposes

Deposit £1,908.96 Across 36months (5k miles) £636.32 a month £7.6k a year.

Across the 3yr period (on my rough figures):

PCP: £33.8k vs Lease £24.8k - close to £9k difference - even more if add the difference in the deposit

Assumptions/considerations on the back of this:

1. Aware on the PCP you potentially will have some equity. Currently in the BMW we have about £5k, mixture of PCP payments yet mostly due to the crazy 2nd hand market. With the Lease option you do not have this (next car funding is solely up to me). Yet given the £9k difference, even if the bubble continues (unlikely in my mind especially out to the 36months stage) the equity at 36months for PCP will not be £9k? is my maths/understanding wrong here?
2. Linked somewhat to the point above; EV tech is changing fast. The 4000 series battery tech could really change things and impact 2nd hand value. On leasing this is not my concern.
3. If you wish to end early on a lease you are extremely limited; you are effectively signed up to the £24.8k come what may (best be the right car etc)

Questions on leasing:

1. When you lease a Tesla what happens if you want to have more than one driver? I read somewhere there are limitations in the app to add users. We would want two profiles or the ability to use two different phones to open etc.
2. If you curb the wheels or get paint marks do you have to let the lease company know and get permission before fixing?
3. If I wanted to get paint protection would I need permission; is it even worth it when leasing?
4. I have heard horror stories when it comes to return the leased car, and that the company makes their money by finding fault to charge. Is this still true? I appreciate hard to say yet are talking £100s or £1000s; could be logical to factor that into the £9k difference.
5. When insuring a lease car is this limited to only certain companies and is it vastly more expensive?

Massive thank you for just reading to the end let alone responding. Hopefully at least it took your mind off the wait for your new Tesla.

Try using Leaseloco website, it’s a comparison site (you can only get instant quotes on stock cars though not with extras). It’ll give you a decent baseline at least and maybe find you a cheaper deal than the one you have found already.
I leased mine after many years of PCP deals but mainly because I can lease an EV through my business without impact on my personal financial record.
Just did a search on leaseloco btw, see attached for 5k miles per year.

 

[dog299]

Thanks for the responses.

Think I will be pushing forward with the lease option…big change (oh considering using Rivervale)

 

[nunp]

Thanks for the responses.

Think I will be pushing forward with the lease option…big change (oh considering using Rivervale)

Riverside are decent and don’t charge a fee. Leaseloco and leasing.com are well worth a look before committing to a lease. Also choose a broker that allows you to cancel FOC. I did that, had a M3 LR on order and came across a better deal for one during Black Friday so cancelled and re ordered. Lease prices and deals fluctuate. It does seems the MY leases have come down in price, probably to chase Q1 March push.

Our M3 is my wife’s car, she is logged in the app under my account but I also got her a key fob - like that when she opens the car her settings are automatically I.e seat position set.

 

[pgkevet]

Depending where you live- rural V city - and adding in charger installation and fuel costs on top of monthly payments for 5K miles per yr and you're better off with a bike, taxis and occasional hire cars unless personal circs come into it.

 

[Xdama]

Depending where you live- rural V city - and adding in charger installation and fuel costs on top of monthly payments for 5K miles per yr and you're better off with a bike, taxis and occasional hire cars unless personal circs come into it.

No fuel costs if you don’t use it, charger is a bonus when you come to sell your house & quite honestly I’d rather pull my toenails out witha set of pliers than get in most of the taxis where I am lol. Bike …. no thanks, too cold wet & downright uncomfortable . Each to their own though

 

[dog299]

Depending where you live- rural V city - and adding in charger installation and fuel costs on top of monthly payments for 5K miles per yr and you're better off with a bike, taxis and occasional hire cars unless personal circs come into it.

We certainly have had the ‘do we need a car‘ conversation and if so ‘why not just get a run around’.

The conclusion we keep coming to is when we do drive, we like a nice experience; and fortunately are currently able to afford it.

 

[yessuz]

No fuel costs if you don’t use it, charger is a bonus when you come to sell your house & quite honestly I’d rather pull my toenails out witha set of pliers than get in most of the taxis where I am lol. Bike …. no thanks, too cold wet & downright uncomfortable . Each to their own though

Middlesbrough!?

 

[SpareHeadOne]

You seem to have only factored in what you will shell out, but not what the residual value of the vehicle will be at the end or how much equity you might have.

For the lease car it will be £0, but for your PCP car it could be £5/10/15k more than you owe.

Don't forget the lease company will be factoring in the worst depreciation they think will take place and pocketing the difference when they sell on your car after you've paid for it.

 

[dog299]

You seem to have only factored in what you will shell out, but not what the residual value of the vehicle will be at the end or how much equity you might have.

For the lease car it will be £0, but for your PCP car it could be £5/10/15k more than you owe.

Don't forget the lease company will be factoring in the worst depreciation they think will take place and pocketing the difference when they sell on your car after you've paid for it.

Very true.

My prediction is the current second hand bubble will burst at some point.

My thinking:

9k+ Teslas we’re delivered in December 2021 alone; in 3 years time (my expected holding period) there will be a lot of stock kicking about and most probably the chip shortage will also be improved.

The impending (ie next 6-12months) 4000 series battery improvements may represent a watershed moment for the 2nd stock and prices.

Also I weight up the opportunity cost of missing out on possible future equity vs the comfort of known lower contracted figures.

Plus if the current lease market stays the same, i ‘only‘ need to find the 3month upfront for the next lease.

Perhaps my logic is slightly perverse, but my past experience with PCPs have shown only end equity of around the £2k level.