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Newbie seriously considering leasing UK - sense check

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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.
If you sell your PCP car pre the end of term then you’re lucky if you get any equity at all too. I only had equity on my previous one due to the chip shortage. With a lease car you essentially have that “equity” in lower payment for the duration of the lease as long as you save the difference. I have been told by an aquaitance in the trade once you get past the 1/2 way mark in a lease most lease companies are happy to get the car back (in good condition) & not pursue the outstanding contract as it costs more in legal fees & time than they’d gain back (not sure about that lol). Essentially though your “equity” is just elsewhere ie in your bank not a finance companies.
It all depends how you play it, if you’re think lease as a cheaper option no it’s not really, if you put the difference aside. PCP & lease are essentially the same thing in costs (if you save the difference), just that financially on a lease you have less outgoings as far as lenders like mortgage companies etc are concerned.
 
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.

It has been factored in - the car needs to have £9k of equity just for the OP to breakeven. At the moment second hand values are crazy, but that will change and normality will return. In normal times you are highly unlikely to see a car over achieve it's anticipated residual value by the margin required to put the OP in profit. In addition there's the £9K being saved over the period the OP can use for other purposes (not all at once obviously).

Perhaps my logic is slightly perverse, but my past experience with PCPs have shown only end equity of around the £2k level.
I don't think it's perverse, you're using your experience of PCP over many years to make a judgement call. I have read so many posts over the years, and have friends who've talked about how they will fund the deposit on the new car from the equity of the old - just like the dealer said, only to find the car is under water or can barely clear the balloon.
 
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I am sure that lease companies are not that daft and they calculate residual values in the way they would not lose any money.
Ask them how they felt a few years ago when Tesla overnight dropped the price of the Model s & X Performance models by £30k. 😭

Leasing companies are businesses like any other and are there to make a profit. It's all about managing risk and where your tolerance and capacity for loss levels are. No right or wrong answer, just options and hopefully having researched properly the right personal decsion is made.
 
I am sure that lease companies are not that daft and they calculate residual values in the way they would not lose any money.

Yes but it is possible there is a disconnect between lease and pcp providers with their calculations. Clearly in the third party space looking at leaseloco,lease prices for model 3 seems way lower than the equivalent PCP and both are effectively you financing the calculated depreciation. So that suggests either the lease companies pushing hard for business and gambling on lower depreciation, or PCP calculations being overly cautious on GFV (or a bit of both)

It is tempting me to lease tbh (I’m considering selling my 2020 SR+ as I can get more than what I paid for it) and starting over with a 2021 with slightly bigger battery. That’d be on a loan like for like, but if I lease the same outgoings will get me a LR which is tempting
 
It is tempting me to lease tbh (I’m considering selling my 2020 SR+ as I can get more than what I paid for it) and starting over with a 2021 with slightly bigger battery. That’d be on a loan like for like, but if I lease the same outgoings will get me a LR which is tempting
That is tempting! If you can capitalise on the crazy used market then why not, and a 2021 car will be better than a 2020 car anyway, purely by dint of Tesla's continual improvements - or rectiifcation fo design faults, depending on how you look at it :D. Probably a mixture of both to be fair.

Don't forget to factor into the decision what you will do about replacing the car when the lease finishes.
 
Demand is much higher than supply and will likely remain that way for another decade. They have to raise prices to keep the waiting list in check, that should tell you something.

Also people will keep EVs for longer than ICE, especially ones made now. Much more reliable batteries than 5 years ago. Second hand market will continue to be short on (good) EVs for a long time yet.

Lease companies will continue to cash in for years. You are basically paying a lot of money to not have the perceived hassle of selling, people don't realise how fast and simple it is now. You can sell a Tesla in 3 days and get an Uber to pick up your new one.
 
That is tempting! If you can capitalise on the crazy used market then why not, and a 2021 car will be better than a 2020 car anyway, purely by dint of Tesla's continual improvements - or rectiifcation fo design faults, depending on how you look at it :D. Probably a mixture of both to be fair.

Don't forget to factor into the decision what you will do about replacing the car when the lease finishes.
That was the final driver for me changing now tbh. My BMW in Feb of last year was quoted @ £19.5k when the wife changed to her Kona E. I sold it in November last year using the same website……for £27k with more mileage on the clock. As I said before if you save the difference between lease cost and pcp cost …that then becomes your down payment for the next car ….. or just a rainy day fund but it’s your money in your bank unlike a PCP where it’s already spent🤷🏼‍♂️.
 
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I have the lease vs PCP dilemma each time i’m buying a car, no different with my M3 this year. I again went with PCP, although more expensive per month, because of the commitment that a lease requires for the term. I like to believe I am in a stable job, but nothing in life is certain and I rather have the freedom to end the agreement if the need arises.

Also I had over £6k of equity in previous PCP car as a result of the crazy car market, so that’s something to keep in mind. Also selling process with Tesla was super easy, just a few photos and none of the potential nervousness when handing a lease car back.

Lastly keep in mind that there is NO car tax payable for a Tesla, it’s fully electric….
 
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That is tempting! If you can capitalise on the crazy used market then why not, and a 2021 car will be better than a 2020 car anyway, purely by dint of Tesla's continual improvements - or rectiifcation fo design faults, depending on how you look at it :D. Probably a mixture of both to be fair.

Don't forget to factor into the decision what you will do about replacing the car when the lease finishes.

my 2020 does still have most of the new stuff - power boot, heat pump, wireless chargers etc. So its mainly just the range increase if I stay SR+. And while the LR hasn't yet brought the bigger battery over, that makes the (temporary) range gap fairly small for what would be quite a bit more outlay.

Yeah the replacement after lease is the thing. I tend to PCP and jump ship often before the term (VT). I went loan this time in case I kept it for longer. If I lease a LR the monthly would be about the same as the loan so not a lot of leeway to save up over 3-4 years for the next lease deposit. And with the loan I liked the idea of not having a permanent outlay which is what I've had for countless years now with PCPs etc.

a £0 cost to change for about 25 more miles (should give me safely 200 miles round trip range and sometimes I've been just the wrong side of that) would be handy, plus simply a year newer car will help with depreciation (although the loan would start over..)
 
Demand is much higher than supply and will likely remain that way for another decade
I agree that demand is crazy high currently but not sure it will be the same level for another decade.

Tesla Berlin will be up and running shortly and there is even talk about a Giga Factory opening in UK (I heard Doncaster might in the possible location). The supply of these great cars will increase, we are already hitting 12k+ vehicles a quarter to the UK.

Other manufacturers will sort out their supply issues many are signing new contracts to ensure more supply and I read Sony is partnering with TSMC investing and convert existing and new factories into chip production.
 
I have the lease vs PCP dilemma each time i’m buying a car, no different with my M3 this year. I again went with PCP, although more expensive per month, because of the commitment that a lease requires for the term. I like to believe I am in a stable job, but nothing in life is certain and I rather have the freedom to end the agreement if the need arises.

Also I had over £6k of equity in previous PCP car as a result of the crazy car market, so that’s something to keep in mind. Also selling process with Tesla was super easy, just a few photos and none of the potential nervousness when handing a lease car back.

Lastly keep in mind that there is NO car tax payable for a Tesla, it’s fully electric….
Different scenario for me as I previously mentioned my BMW was my own car …. the M3 is leased through my business. In February I was negative equity, by November I was £4k up. The difference for me is no personal payments, no VAT on the lease, minimal BIK tax to pay, business pays the insurance & I claim some of my electric bill back for charging. Whereas with a personal car (PCP) I paid the PCP (out of my already taxed pay), I paid the insurance, tax, fuel, maintenance etc and got to claim back 45ppm which barely covered the tyre wear.
It was a no brainer for me. My wife’s car is a personal lease, her reasons were she’s started studying nursing for 3yrs, so her income has dropped. She has 3yrs on a lease cheaper than a PCP, no worries about maintenance etc for the time she’s on reduced income …. again a no brainer for her.
 
What i don’t understand is if I had taken a personal lease directly with Tesla, it would have been funded by ALD however the cost of the lease was around £150 dearer per month versus the ALD lease that I agreed via a broker. Which tells me, lease companies like ALD and Lex must get some discount or are pricing a lower depreciation. Oh and they need to pay the broker a fee for introducing me.

In terms of PCP I have always lost money other than a bmw I sold in the summer in particular when coming out of the agreement early due to a change in circumstance. When I have ended lease agreements early, they have always been less than the negative equity if ending a PCP. Swings and roundabouts I guess. Lease market is no way as good as it was previously and more in line with PCP nowadays.
 
I was weighing up all of these options when I decided I wanted the M3LR. My situation was a little different though, I owned my M135i outright (albeit owing £14k on a 2.9% personal loan). I borrowed a little bit more on top of the loan and used some savings, and bought the M3LR via part-ex of the M135i plus cash. It means I have the flexibility of selling, etc. should my job fall through or circumstances change, and I'm hoping the strong residuals mean the depreciation of the car is better than what I'd have had to deal with on the BMW. That and not many deals out there are going to beat the 2.9% fixed interest rate I'm paying on my loan.

Strictly in terms of lease VS PCP - for me it really comes down to whether you're happy to be locked to the full term or not, or if you really want the option of buying the car at some point. If you know that you're going to want to upgrade/change at some point and you're essentially happy to rent a car that you'll never own, lease is a good option and will keep the monthly payments down.
 
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I agree that demand is crazy high currently but not sure it will be the same level for another decade.

Tesla Berlin will be up and running shortly and there is even talk about a Giga Factory opening in UK (I heard Doncaster might in the possible location). The supply of these great cars will increase, we are already hitting 12k+ vehicles a quarter to the UK.

Other manufacturers will sort out their supply issues many are signing new contracts to ensure more supply and I read Sony is partnering with TSMC investing and convert existing and new factories into chip production.
It's simple math.

Demand = 100% of car sales

Current EV sales is 16% (in UK)

Second hand market lags this

Even if supply doubles every year you are looking at 2026-7 until new market is 100% EV.


Berlin top end capacity will be around 2 million units by then - for the whole of Europe. UK car market alone is 1.6 million per year.

In addition to this, the bottleneck is battery supply. Other car manufacturers will struggle because Tesla is gobbling up most of the global supply. Even if they are swimming in chips... Assuming they don't go bankrupt by then.
 
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Demand = 100% of car sales

Current EV sales is 6% (in UK)

Second hand market lags this

Even if supply doubles every year you are looking at 2028 until new market is 100% EV.


Berlin top end capacity will be around 2 million units by then - for the whole of Europe. UK car market alone is 1.6 million per year.
True.

Though the assumption being that everyone will be buying Tesla ;) (why would they not hehe)
 
  1. Not a problem. Driver profiles/phones is an internal thing. You're confusing this with 2 or more people each with their own Tesla ID for the app, which you can add, or log in to the app with 1/the same Tesla ID, either way, nothing to do with driver profiles, and multiple phones.
  2. No
  3. More than likely, check/ask. As to whether it's worth it, I'd say no, but may reduce scratches come the end of the term, but I wouldn't bother.
  4. Not in my experience. Fair wear and tear is expected, they don't expect the car to be pristine / as new.
  5. No, no different to PCP/Owning in my experience, they're still insuring the same car, just different registered owner.
If you have 0 desire to buy the car at the end of the term, no point in PCP in my opinion. You pay more during the term and you have equity at the end as a result (in theory). You pay to build that equity! Save your money, and if you really want to, put £200/month in a bank account, after 3 years £7,200 saved, assuming 0 interest!

Also, remember, unlike PCP, leasing will be the same cost over the term regardless of deposit, so 3+35 or 1+35 will cost the same in total.
 
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My take on this - I was in a pcp with my focus st costing me 302 a month with 5.5k down deposit I was 2 yrs in - Took option to buy it from ford early for 19.2k then sold it to cazoo for 25k so essentially just about got my deposit back. Anyway that aside I wanted to get a M3LR and vanarama's deal at the time in early November was 445 a month 5355 down 3yrs and 8k miles - free 1yr insurance, free bp pulse membership 12months and £360 credit on bp pulse. ( I couldn't have the home charger this was their compensation). Anyway with regards to buying or pcp and buying in say 3yrs time no way I was doing that.

Tesla have just released the Standard model with LFP i.e charge your battery 100% now and way less winter degradation in 3 yrs time battery tech will have improved again. Lease is the way to go right now, even though the M3LR now is a great car and I love it, Tesla and others could well be doing real world 400 miles + machines in 3yrs time and that will be time to definitely not be stuck with the current models.