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no, no balloon payment after 72 months. you just paid it off completely with your 72nd payment and loan balance is 0. car is completely yours with no finance attached to it. Hence, after 4 years your balance on the loan is quite similar to PCP Balloon payment.
at the same time you have much better flexibility to trade it earlier.
win win IMHO
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Right... so the total cost if you keep the car for at least 72 months is at least 59,800 if that figure includes all the interest charges.
Whereas the total cost of the lease quote you posted is 35,200, so a 24,600 difference in the total cost for those quotes if you see them to the end of the term.
My point is - if you don't keep the car until the end of the 72 month term and don't do that much mileage, leasing over that same period is probably cheaper (but as you've pointed out - you lose the flexibility of being able to sell a car whenever you want), but if you need or want to do something else with the difference in commitment be it cash or debt, you can with a lease. The inflexibility of lease isn't for everyone, but there are ways you can mitigate the 'opportunity cost' of having access to the extra capital you're not committing to the car if you need it.
All I can say from my experience with cars over the years, unless you're financing Zondas or a rare Porsche, is you should expect to lose money not make it, excluding all running costs. They're an expense, so the cheapest way to have access to the car for the period of time you want it often makes sense. Averaging out all the equity I've had in PCP / HP cars over the years wouldn't even compete with the annual returns on a very modest index or bond purchase in an ISA. Nor a lump sum mortgage payment. Tesla's have been an absolute freak of nature for a few years in this regard but who knows if that will continue.
I'm not saying HP or PCP is wrong, just offering another viewpoint on why Lease might actually be better depending on OP's circumstances, and something they may not have considered (size of overall commitment). If the car is a present to yourself or you're going to keep it for ages, it doesn't matter though!
try 2x36 month leases so you can do a more direct comparison with a 72 month loan TCO. Assuming you'll need a car for 6 years you'll need another lease/PCP for that second half.
What does that do to TCO? for lease the math is easy. for PCP you may need to make some assumptions on depreciation which will factor into GFV and equity for the second period
What does that do to TCO? for lease the math is easy. for PCP you may need to make some assumptions on depreciation which will factor into GFV and equity for the second period
but with lease you do not keep your car at all. you get let's take that 650 a month payment for 48 months. 31200 + 4 k down payment - 35200. but after 4 years you return the lease vehicle and that's it. You just paid 35k for a car rent :/ You might have a difference between the estimated value and your payments which might cover the next down payment for lease, but imho you get more value with "ownership" after pcp/loan than Lease.
In my books that is not the best deal, really.
But if you know you want the same car for 6 years, lease probably isn't the right solution... unless you really need access to the difference in commitment.
*Unless...... manufacturers really get on board with treating the body and running gear of the car as a separate product to the battery when ICE is gone. Which is an interesting one. That might have some big effects on equity / whole of life cost.
tesla don't have lease figures, only PCP/loan. Taking tesla defaults for a YLR with basic everything - so 57990
loan - 72 months, £9k deposit - £806pm
72x806=£58k + deposit = £67k over 6 years - £11k per year, £931 per month. And you own the asset at the end.
total interest charged, £9,263
PCP1 - 36 months, 5k deposit, £998 per month
first 36 months - 998x36 = £36k+5k=£41k. GFV of £23,776. Interest charged - £6,923
assuming(!) same rates in 3 years time, and assuming depreciation gives a 50% valuation of the car after 3 years? - so 28995 - 23,776= 5219 giving you a deposit for the next PCP
PCP2 - 36 months, 5k deposit, £998 per month
first 36 months - 998x36 = £36k (deposit covered by the previous car). GFV of £23,776. Interest charged - £6,923.
Newer car so this is now worth £28995 again. Woudl cost you £24k to buy it.
over the 6 years - purely on outgoings
- PCP = 41k + 36k = £77k and you don't own anything. You can potentially walk away by selling the car and pocket £5k, or pay £24k to own the car.
- Loan = 67k and you own the car (albeit a 6 year old car now).
PCP is 10k more than a loan without owning anything at the end. If you choose to buy the car at the end it'd be 35k more than the loan but the car you own would be 3 years newer.
You're clearly paying more for a PCP or a lease but you're paying for the convenience of a newer car more often and paying the hedging the finance company is doing on the depreciation. Loan you're taking on that depreciation risk yourself along with accepting an older car for longer.
loan - 72 months, £9k deposit - £806pm
72x806=£58k + deposit = £67k over 6 years - £11k per year, £931 per month. And you own the asset at the end.
total interest charged, £9,263
PCP1 - 36 months, 5k deposit, £998 per month
first 36 months - 998x36 = £36k+5k=£41k. GFV of £23,776. Interest charged - £6,923
assuming(!) same rates in 3 years time, and assuming depreciation gives a 50% valuation of the car after 3 years? - so 28995 - 23,776= 5219 giving you a deposit for the next PCP
PCP2 - 36 months, 5k deposit, £998 per month
first 36 months - 998x36 = £36k (deposit covered by the previous car). GFV of £23,776. Interest charged - £6,923.
Newer car so this is now worth £28995 again. Woudl cost you £24k to buy it.
over the 6 years - purely on outgoings
- PCP = 41k + 36k = £77k and you don't own anything. You can potentially walk away by selling the car and pocket £5k, or pay £24k to own the car.
- Loan = 67k and you own the car (albeit a 6 year old car now).
PCP is 10k more than a loan without owning anything at the end. If you choose to buy the car at the end it'd be 35k more than the loan but the car you own would be 3 years newer.
You're clearly paying more for a PCP or a lease but you're paying for the convenience of a newer car more often and paying the hedging the finance company is doing on the depreciation. Loan you're taking on that depreciation risk yourself along with accepting an older car for longer.
Just checked my loan - put a big (for me) deposit down and lower interest rate at the start of the year, so 'only' £5k in interest. Total to be paid including deposit and interest would be around £56k - the recent multiple price hikes have effectively given me 0% finance which is helpful
Doing two back to back PCP loans over six years on the same car would be an…. Interesting?! financial decision
Also you’re right Tesla don’t offer a lease on the Y, but you can set up a lease deal with a lease broker and transfer an existing order for the broker to finance it. Nearly did this myself but didn’t need to in the end. My lease was before the price hike too coincidentally.
Doing two back to back PCP loans over six years on the same car would be an…. Interesting?! financial decision
Also you’re right Tesla don’t offer a lease on the Y, but you can set up a lease deal with a lease broker and transfer an existing order for the broker to finance it. Nearly did this myself but didn’t need to in the end. My lease was before the price hike too coincidentally.
Just using it for an illustration- even if you change cars you may be paying more but assumption is you will need a car during that period so makes sense to me to consider TCO across 6 years for both options?
Another option would be the pcp then settle after 3 years for 24k (likely will need a loan for that) so you end up with the same age car as the loan. If you can get a personal loan for £24k over 3 years with less than £3k interest the tco would be on par or possibly slightly cheaper, but gives you a pause moment to give you a choice
Edit : Tesco bank 24k over 3 years £699 per month, total cost £25,184 so only £1200 interest. Saving around £1800 over the term?
So if you’re willing to own the car for a long time a PCP transitioning to finance for the GFV could be cost effective. Or at least kicks the cam down the road in terms of making a decision
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Oh yes the monthly is very high with the interest and the majority will see the car will be less describable after such a long term and the car will eventually loose value as supply increases and new models come online.
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assuming its in one piece and the battery is still in good condition (will it still be under warranty)? then the floor for a used EV with good long range should be pretty high. I’d think the GFV for the PCP is almost comically low so you’re paying heavily up front for that. I could see it holding that GFV or around there after 6 years.
Just had a look at the Tesla loan and entered my upfront cost over 72 months. £715 a month with interest of £8129 so if we add it all up your paying more than twice as much compared to my lease before price increases over a longer period. I'm also fortunate to have a car to drive which we keep going to fill in gaps while waiting for new cars and helps to keep cost as low as possible and to make additional profit for next car. Its all individual circumstances and what fits for you so lets get back to the shipping.
how much is the equivalent car on lease?
Even if less per month (I saw an example of £650pm earlier in the thread) TCO over the term isn’t much different once you include the deposit and assuming you’d have to do another lease to cover the 6 years of the loan. If its £50 a month less once you factor in the deposit, then thats a £3600 saving vs a loan over 6 years. So will the loan car (which you’d own) be worth more than £3600? Pretty safe bet
of course lower monthly outgoing may be the priority for you which is totally fine - we’ve kind of gone off into a philosophical discussion a little bit!
Close my lease cost is £400 pm for a M3. I don't see anyone is a winner with new cars as we always loose our payments with interest and risk the resale value. Running a new car is just about how much your prepared to loose and a comfortable monthly.
