So I'm raking up the mileage on my car, rapidly approaching 65K miles, and while I am many, many miles off purchasing a new one I like to be ahead of the game and consider my options.
TBH I am hoping to make my current car last another 80K miles or so, which would mean it lasting around another 8 years and then I could just spunk a good chunk of my pension pot on another, but if I needed to get another sooner, or if I wanted to, then leasing would be an option, for maybe just a few yars...
To this end I thought I'd explore the relative costs of car leasing, which is something I may have to do short term.
I've selected a Hyundai electric vehicle to do this comparison, mainly because it's a car I know, not that I'd end up buying one, but I could have picked pretty much any reasonable mid-range car and I'd probably get similar relative costs for leasing and buying!
Leasing costs of for a Hyundai IONIQ 5...
So that's around £388 a month, which is not that astronomical. NB that's on a 3 year lease with an allowance of 8K miles a year.
These stats are for the same car, but the options have been auto selected, probably slightly lower mileage, but similar cost......
And the buying cost...
You can note from the above that the Ioniq 5 has a purchase cost of £27K, while below i looked at the next model, the 6, with VERY low mileage, you can get one for £33K which is the average of what's below.....
The relative costs....
So on a lease I'd be looking at the following:
- One year = £4500
- Three years = £13500
- Five years = £20820.
- Six years = £27000.
So after 6 years I would have paid as much for the car as buying it, and if I bought it I'd still have a car to sell.
Now I'm not sure of the resale value of 6 year old electric vehicles, but let's be conservative and say I'd get £5K out of it.
Also factor in another couple of grand for financing the purchase over 5 years, I don't have £27K lying around I'd want to spunk on a new car, and I'm around £3K better off at least over 6 years, that's £500 a year or £40 a month.
And that's being conservative with the resale value.
Then there's also the fact that being a tightwad, I am likely to make a car last 10 years, in which case that's £27K/ 10 which is £2700 a year for the total cost of the car rather than £4500 which is a significant difference, and TBH that would probably still have a resale value of a few grand even then!
Of course the other benefit of owning the car is that I can do as many miles as I like!
Car leasing final thoughts...
If I'm being purely rational, then buying is obviously more economically viable. If I'm gonna go tightwad on the car then buying is just obviously the winner.
HOWEVER, I wouldn't actually rule out leasing as an option, depending on the terms and conditions, which I'd have to read carefully before buying.
If they were reasonable then leasing is a viable financial option which would allow me to have a new car for a few years, at not too much more cost than buying one nearly new. The big advantage of leasing is the exchanging for a new car every three years, and the extra cost isn't actually that much to pay for that kind of luxury, I mean a car is central to life, after all!
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