Financing (PCP) Vs Leasing A Car - Which Is Cheaper? 

Makes me glad I bought my e-Niro First Edition out right on pick up. Cost me £33,000 (after the grant, £3500 at the time). Sold it back to the dealer for £31,800 (in exchange for a MY22 4+). 20 months of use for £60 a month. That's a win in my book.

Thank you Andy. You've helped me to demystify the options.

Thanks Andy for a great overview. I recently chose financing - in Germany the rates are so low still, it's almost 0pc. One huge factor against leasing for me was the mileage restriction. 10k km yearly is crazy - it defeats the purpose of having the freedoms of a new car when you have to watch how much you drive it.

I got a PCP ( 3 years) on my Nissan Leaf 40kw Tekna 2019 last year and it cost £19.990. With £5000 deposit it cost me £226 per month. I am very happy with a car, specially when I see the petrol priced at this time.

Excellent video, well presented!! Love the whiteboard. Cheers!!

Dry wit combined with an entertaining learning experience makes EVM a great watch.

Very clear way of figuring out which is the cheapest option. I was also worried about the mileage - thanks for clarifying that.

It's worth pointing out that for many people like myself, we're leasing a car via salary sacrifice. In your example, my costs to down whilst leasing to £11,880. The lease also covers all maintenance and insurance which is another factor. It suddenly makes leasing the best option. There is a slight issue with impact to pension arrangements for some people, but that isn't the case for me.

Thank you so much for the explanation at the end regarding "Always put the minimum mileage on the PCP"

Great explanation!, Im always saying that when someone ask me about the pcp and picking the right car with the right options extras etc sometimes make a good difference 😎

Thanks so much for this. Very helpful indeed!

I've just gone through this and I have moved from leasing after 10 years and gone to PCP. The lease deals are pretty poor at that range and are very close to PCP. Over a 3 or 4 year lease the saving on the lease was less than £1K. Throw in a bunch of manufacturers specials and benefits such as free servicing etc and you may as well take the risk of getting some residual value in the car at the end of the term. In the end the PCP was £500 lower deposit and came in £15 a month cheaper. So there you go, I took a PCP on a Polestar 2 which I believe will have a good amount of money left in it at the end of term. The Whiteboard speaks!

The best detailed explanation I saw, thanks mate

Fantastic video, informative and precise.

Well done for doing these sums (and pointing out that 'not finance' is always the best deal if you have the money). I've never bought a car I have to get finance on and don't intend to start now, even though I am looking at a very expensive ID Buzz Cargo or Arrival van next.

Love the "Whiteboard of Truth"...! And, your added 'clothing explanation' note on the Intro... just hilarious...! Anyhow, I was actually quite 'pleasantly' surprised that there was only about £1,500 total cost difference between HP and PCP. I think, on that basis, I'd be tempted to take the PCP option simply for the added protection in case the bottom dropped out of the used-car market during the time period...? Plus, then the extra £483 difference per month could be put aside in a 'high-interest' account / ISA to offset that difference a little, too...

You can make leasing work in some circumstances. Last year you could get a MG5 Long Range at £300 month on a 36 month, no deposit. Came with free insurance, £250 cashback, tethered EVSE home charger and install, plus other freebies like breakdown, dashcam. About £2000 worth. So (300x36)-2000 = £8,800 total cost. I figured the £30k value would be around the £20k region after 3yrs being an old-fashioned shape. £21,200+ then PCP wins. Without all the goodies then PCP wins. Unfortunately these days they have removed most incentives and monthlies have gone up ~£75 on just last year.

Good summary and lot to consider. And as pointed out, this does not even go into issues with company owning versus leasing cars and being able to play with operation versus capital expenses tax treatments, etc. But, no matter what one does, with a Tesla you come out great. Here in the US, for many Tesla models it takes over a year between order and delivery. And during that time, the order price of the car will be 20% or more than your order price which Tesla honors.

I liked this but I don’t understand why. I felt worse afterwards. What you said, especially about the mileage on a PCP is so bloody obvious, I cannot believe I did not think about it before. I feel like a bit of an idiot now. Thank you for making that so understandable!

Very well explained and interesting video.

Great video. Really helped me. Was about to sign a lease. Rethinking now

Excellent video. 6 months on, I think the market has adjusted a bit. I have just compared a number of lease and PCP deals on a Kia Niro EV. Based on expected depreciation of the Niro (39% reduction in value in 3 years according to Autocar and other sources) and leasing is now somewhat cheaper than PCP. This delta is magnified a bit for company car buyers (50% VAT reclaim and tax relief). I still learned a lot from this video - perhaps an update would be worth doing?

great video - thanks

Great Video! Thanks Add it to my playlist Ev Review! 👍🏽⭐

Very interesting, as a fellow Yorkshireman. 👍

Nothing beats waking up to watch Man Maths that make more sense than what I learned at school.

Very interesting, thanks

Gonna buy a New Kia Niro Estate EV, I'm doing PX (but may sell privatly), savings and the cheapest loan I can find, had a pretty solid offer of 3% Apr from AA (dealers usually quote 4.x%) . As you say though there is zero incentive for discounts. Best advice I can give anyone is to save loads and then overpay on any loans as the quicker you reduce the balance the less you pay.

Thanks Andy, the one thing you forgot to add in was the mileage, the agreed mileage can have a big impact on a lease, and usually the reason I have avoided them.

2019 M3LR. Got the £35k, 0% Energy Saving Trust loan (Scotland only) and paid balance in cash. Payments under £500 a month over 6 years. Depreciation way less than could ever have been anticipated. Reliability better than anticipated too. With the fuel savings easily covering the depreciation, it's probably one of the best car financial decisions I ever made and I used to be a proponent of bangernomics.

Yes only buy 2nd hand, and we buy with credit cards and then transfer balance, interest costs are less than a grand over 5 years. Great video will share!

Thanks for the video. That's how it should be (buying is cheapest but more upfront is needed) however whilst it might be easy for a Tesla, it's often not so easy to work out for many others. The discounts that were available with PCP, the fact that some lease companies but not others allow you to buy at the end (but without a guaranteed price) and the mileage constraints (who knew lockdown was coming) make it all a bit of a lottery sometimes. I ended up with a 3 year PCP because: 1) I didn't quite have £100k to buy it outright 2) I didn't want to put down the 50% deposit needed for manufacturer HP 3) The bank wanted an insane interest rate if I borrowed more than £30k 4) I got about 10% off for financing PCP 5) I just didn't fancy a lease where I might not be able to buy later 6) BiK (non-EV) was stupid if I went through the company 2 years on I thought I was going to hand it back at the end because values weren't great. Then pandemic. The value shot up and I paid the GMV. In retrospect, PCP turned out to be the best value by far. I thought it was going to be slightly more expensive than buying outright. I guess I got lucky. I still have the car now and plan to keep it.

Thanks. In the states we have the option to buy our leased car at the end of the lease or give it back to the dealer. I lease so if it's to my advantage to buy it at the end of the lease I will, if not I'll get another lease. Leases cost more but you always drive a new car, never need repairs and don't have a hassle trying to sell your car, especially if you get a dent, so if you can afford it leasing is the best option.

It mostly depends on if it's a personal or business vehicle and on how long you intend of keeping your vehicle. With leasing you will be be paying every year for the rest of your life. If you keep your car a long time leasing is daft if you like to change your car every year or so finance is daft . With ICE cars I used to pay finance over a few years then get a few years no payment before selling it and starting again.

First of all thanks for this video. It's very relevant to me right now as I'm trying to figure out if I can afford to get an electric. Not sure we have the PCP option in Sweden but I'm very interested in finding out now. Going to some dealerships on monday. And I think that after 3 years, that £46k Tesla is probably worth at least £30k. Impossible to say what will happen in the next 3 years of course but so far they have held their value incredibly well.

Very useful education. Thanks. I'll be a bit different as I'm on a 7 year interest free loan and 3 years in. I intend to sell at about 4 years so I thought I'd put my name down for something fairly soon and sell when the new car is ready in 12 to 18 months. Does that seem practical? I'm hoping the car (2019 eNV200 40kWh Evalia) will be worth most of its original £35k but that is obviously an important point.

Great explanation of the options. I disagree that if you go with PCP you should select the lowest mileage. If you intend to pay the balloon payment at the end, the lowest overall cost option is often to put the highest mileage possible. The monthly payments will be high and the balloon payment much lower but add it all together and the total amount is normally slightly less than going with very low mileage. It all depends on whether you want to pay more per month and less at the end, or the other way round.

We're currently leasing a Model 3 SR+ but it's a 4 year lease, 8k miles per year, £425/m through a third party leasing company. Telsa were about £100/month more for the same lease period so it's worth shopping around for a better price. To be fair we needed to keep the monthly price down and the purchase options from Tesla were just too expensive.

Just had an interesting meeting at a dealership, where they tried to sell me a PCP deal, not a car. What happened to the salesman that asked what you used a car for, who travelled in it, how often you changed it, what annual mileage you did and what your typical journeys look like? Interest charge over 5 years was >£5k and no discount against list price because they could sell every car allocated to them. The interest cost on a PCP is calculated on the OTR price less your deposit, so on a £40k car with 10%, you will pay interest on £36k over 3 or 4 years but because you do not amortise the loan to zero, that will add up to a lot of interest unless you can find 0%. Yes, the capital repayments in isolation are low, allowing for the GMFV, but it is still your hard-earned cash going into the finance Co.’s coffers when you also have to pay the interest. The APR is critical and consider HP or an unsecured personal loan over a longer period. Look at the total cost in the quote. I found a dealer further afield willing to offer a discount and I will buy for cash so saving the interest (but losing credit interest on my savings, which remains a joke).

Great video thank you. I did all these maths when getting my Kona EV mid pandemic. I went for lease, I appreciate we are in uncertain depreciation times that favour PCP but this hasn't always been the case. I used to hate watching my cars depreciate and losing my asset. I like that it's not my car if it goes wrong (accepting all cars have warranty) and depreciation isn't my worry. That said it was £300/m with 3m deposit over 2yrs. Those deals are non existent now but at a 34k car quite a bit cheaper to lease than Tesla. Also no interest is added onto a PCH, the dealer PCP interest added several grand . In 18 months time with the market the way it is I will either extend lease or PCP/HP. No way I'd pay £450-500 a month for a small EV.

Here in the Netherlands a private lease is classed (and registered) as a personal loan, though the lease companies prefer to keep that quite. This can have an adverse (massive) effect on the size of mortgage you can get if you intend to buy a house and for some people that comes as a shock. And as one German viewer mentioned, the lease price only 'looks' attractive if you drive 10,000km per year, or less.

Right now, the salary sacrifice thing makes a huge difference for EVs because the BIK rate on an EV is 2%. So you pay the lease with money from salary before income tax and NI is taken, and then pay 2% instead. While that remains the case, it changes the result - especially for people in the 40% tax bracket where it almost halves the lease cost. The other thing with a lease is I believe they usually come with servicing etc all included - which makes it a bit like renting a car but for a long term. Not that you'd pay £8k for that over three years! Of course - the BIK rate is set now until end of March 2025 (I think), but who knows what the government will do after that...

Thanks for this it is very useful. There are always exceptions and some golden deals can be had. I always bought my cars and owned them afterwards. I had a deposit down on a Tesla model 3 and pulled it in 2018 as I had an unbelievable deal for a car worth around £38K on a 30 month lease. In my case a manufacturer offered a very limited number of Volvo S90 D4 Model R for £220 a month (+ £2K down) and I wanted to bite the hand off the person who offered it to me. This was cheaper than when I bought a 3 year old Jaguar Model S 3.0 Diesel. I was very very lucky and got to drive a car that was brand new and I enjoyed the new car feeling when I got it. As I was never able to buy a brand new car this was my first new car and a very up market one to have that, to have the experience with. I thank my lucky stars that Volvo chose to clear it's 2018 diesel stocks of S90 early so it could offer it's 2019 spec cars earlier. The 2019 models had ad-blue so were much greener. I wish everyone luck in finding a very advantageous deal when they look for a car. Good luck everyone.

Thanks for the great content, could you do a leasing comparison for leasing an EV through a small Ltd company for a lower rate tax payer? thanks

One of the key differences is flexibility. I am in the last year of my 3 year lease. Not complaining about what I am paying as it was a good pre-pandemic deal. To get the same car now would cost about 80% more 😱 So I got a quote for extending the lease a year without extending the miles. The lease company would increase the payments by 15% for the 18 months that would then remain. Once you commit to a lease, you are very much in their hands.

What a fantastic video! thanks for that, I had no idea that changing the miles driven would make such an impact. But I've just tried out an experiment on a Kia EV6 PCP, and seem to get the opposite result! If I declare 6k miles/year, with a £25k deposit, I pay £186/month, but the balloon payment is £25k, with £5359 interest to pay. If I declare 30k miles per year, my monthly payment shoots up to £393 but the balloon payment shrinks to just £17k with interest payments of £4540 -- over £800 saving! Now, the monthly payments may end up eye-watering, but overall, this comes with a substantial saving. I wonder why this is different to your Tesla example? May be worth warning people that not all PCPs are the same.

I still went for PCH for my car as I know exactly how much it’s going to cost me (£5k/ year) and I’ve never sold a high price car privately, makes me nervous being scammed.

The TCO is not sexy for the folks. Sticker shock scares the crap outta them and then they don't want to deal with the up front cost. My SR plus has gone up in value over the 2 years I've had it and my friends who succumbed to my free test drives who then bought one are now delighted with the value of their cars being a lot higher than what they paid. As of yet I have not received any commission from them. You add in the fuel cost savings and it starts to get embarrassing. I talk about TCO and it looks like I'm showing off... Good videos man

It’s worth pointing out that the PCP balloon payments in a normal market are calculated to essentially be slightly under the value of the car at end of deal assuming mileage limits. If you put a deposit in, in normal times you don’t get that back. If you think about these finance companies they aren’t planning to let you buy a car for £19K worth £30K. So when doing these comparisons safest is to add on 5-10% of residual as asset value. And that is how pcps are designed to work. Sure the inflated market is crazy now but dangerous to assume it will be that way in a few years. Second hand prices already coming down month on month. Leasing in a normal market is usually cheapest in total cost.

If you can get something new reasonably quickly if you have a personal lease it’s worth talking to your lease provider. At the moment Kia are happy to take our Soul back after 14 months and not charge me 50% of the remaining payments (as is the usual common practice and in the terms for the lease) because they can make more on flipping it that the relatively good terms I leased the car on (1+35, 8,000 miles per annum £310 per month) over the remaining 21 months. I’m currently considering getting a new Niro to replace it on a loan / pcp as I have a get out of jail free card

Looked at these options and went for hp over 4 years. Wanting to keep the car it worked out more a month to put money aside for the money owed in a pcp. Lease too much money Great video btw

One of the few benefits of disability: Motability - they are such a large fleet that their lease costs are insanely good value.

Playing the game has now enabled me to buy a much more premium car now. Bought a leaf in 2018 for around £30k on pcp with a very low balloon payment. It was the same monthly cost as my Corsa diesel at the time when adding car payment plus fuel cost. Charging for free at work made it a no brainer. 4 years later i have just sold it for £16,400 giving me a nice big deposit for an almost £50k polestar 2, again on PCP. Didn't get a tesla as insurance is too expensive to include my mrs with her provisional licence (£3k). Also the pcp isn't as competitive as offered by polestar (balloon payment is low). I will be paying £50 less a month than I currently do on my leaf.

I know you stated it as a big unknown but the last three months car sales are down on used market so there is pressure already to lower prices, so not sure I would be confident in saying prices will remain high for 3-4 years. Also as already mentioned by a few others if your going to buy the PCP put mileage as high as you can that way you will save on interest if you go full term so with Tesla you will pay £300 less that way. Same mindset on savings you didn't cover potential to haggle with PCP and HP - whilst there are less deals out there, if you can find it cheaper than OTR price you should be able to get a PCP on the deal price as such - so for example £2500 off a Mokka e currently is an option. With a lease Im not sure of the benefit of front loading as such cost I would always load it other way smallest deposit so 1x or 3x as that way if you want out mid term you only pay half the monthly payment which would of been paid upfront if loaded and that's then not returnable. Overall payment over term doing this is normally a few quid difference. Finally leases are not as good as they used to be so for sure you need to check don't assume like you said - Ioniq old model is the only car I could find that had 4 year old models for sale and still available and that was a lot closer call with PCP v Lease 2k saving again with the risk prices fall.

Just to add many Lease options let you ‘buy ‘the car at the end of term, agree its down to them how they value it but there is at least a possibility the figure could be comparable to PCP.I got my model 3 via Lex Auto lease on a PCH, i cannot buy the car myself as there are tax regulations but they will gladly sell it to a partner/family member so effectively i keep the car.

I went down the rabbit hole when it came to leasing my Kia E Niro. I will look at ending my lease at 50%, only problem is the long lead time for a new EV. Hopefully by 2024 the delivery times will have improved.

This is a great intro for car finance. I bought my car HP - one advantage you don't mention is that you can pay extra, end it early, and save some interest. Has the Driving Ohm podcast address changed or something - none have popped up in my podcast app for a while.

Good comparison, thanks… when I got my E-Niro in 2019 I went with lease to make it affordable and wash its face against previous 130000 mile Mondeo and make it affordable; did the math but didn’t see the future 2nd hand market or the effect of the Pandemic and so on. So you live and learn, I will definitely consider the other options when the lease runs out but we have to consider monthly affordability as well. TBH the market is bonkers and that’s the real problem! Can you have a word EVM? 😁

I use to do PCP, but when got my e-Niro went with a 3 year lease, worked out same price as my PCP. Why I like lease on EVs is tech is changing so quickly, I do not need to worry about being left with a paperweight at the end of it.

There's another very important factor though: Opportunity cost. How great that is depends on where you live, but for example here in Sweden, you're only allowed to borrow 80% of the purchase price, so you must pay a 20% down payment. Combine that with the higher monthly costs and compare to not paying anything at all upfront for the lease and you have *a lot* of money that's not generating income for you trough investing. At 10% per year, that downpayment would have grown by 33%. PCP seems like a pretty great middle ground, but I've never seen that offered here.

Bought my 3 month 71 plate and 700 mile old leaf tekna 40kwh in January for £25k paid in full WBAC are offering £24865 with 5500 miles on it today. Cheap motoring especially as I charge at work for free.

Another insightful vid. I've done the same calculations but with my works Salary Sacrifice (SalSac) scheme which is difficult to depicte as you have in the comments but essentially for a Model Y LR on a 3 year term: Total Asset cost: Tesla Loan = £22,273 Tesla PCP = £24,274 SalSac = £19,318 I used 30% depreciation which was close to your 31% (asset £40,663 after 3 Yr) as you said obviously this could be more unlikely less. The tax saving you get through SalSac makes it very attractive, though worth noting the amount of saving differs depending on your Tax banding (above calc done as Higher Tax payer)

Finally somebody who sings my tune. Bank loan for 20k at 250 a month, 8k part ex of old car - Tesla model s facelift 50k miles facelift. And the 250 a month saved on oil funds the loan. Thoughts?

Never understood the leasing! I have looked at it a few times, but even without something like this, it always seemed pretty obvious to be that it was a dumb option! Mostly you have to pay around the same pr. month, but you don't have any asset in the end of the lease! It is like renting a house vs buying it! You pay a lot, and have nothing to show for it after! Only upside of leasing to me is that you can easier upgrade and change to newer cars. since, as you said, you are probably no going to run a loan for only 3 years!

As I shook your hand at the weekend I almost feel like we're mates now, so I have a question about what you said about PCP (as I've never gone donw the PCP route up to now). You say take the lowest mileage option they offer and don't go back to the finance company at the end of term? But that would presumably mean that you would need to pay the balloon payment at the end (and keep or sell) which may not be a viable option (for most people going down the PCP route)?

As a high mileage user I get pcp's for the 1st 2 years then buy it out with an unsecured loan that falls in the sweet spot which is what I have just done with my zs ev, I now have the freedom to make a choice now

Hi another good video. With lease what about savings on insurance etc

I have just taken delivery of a BMW iX40 on a lease. I crunched all the numbers and could not get a PCP or HP deal to anything like the same value. A PCP would have cost £280 pm more and would have required a £12,000 deposit on the same 10,000 mile a year, 4 year deal. My previous car (an X5) was a 4 year pcp and the lease deals were a lot more costly than a pcp when I got this car. A bonus was the £8,000 profit in buying the car on the final payment and selling myself! However, previous pcp deals have only ever broken even, so I think the profit this time is just circumstantial and I think the value of your Tesla is inflated substantially in the current (temporary 🤔) market, so I think the notion of any profit in 4 years time is likely to be flawed. Of course, I may be wrong, but £12,000 up front and 48 x £280 a month is what a pcp would cost me above the lease… what are the chances any value above the £25,000 of additional outlay the pcp would take? I also think my impressively high tech car might seem more dated than the past experience with electric car and battery tech moving so quickly. Will my 260 mile range suddenly seem ho-hum with potentially sub £40k 4680 teslas doing 400 miles? All in all, I love your content, so this is not a criticism, it is more reaffirming your own contention that everyone needs to crunch their own numbers and make the choice that suits them! Keep up the good work! I love your solar and home battery content too! 👍

Couldn't agree more. Why do people not research finance options. That is why banks are so rich.

Am I missing something - these monthly payments are as high as my mortgage payment where I live. I am all for paying a monthly amount but to afford these kinds of prices would put me in the top 2% of earners and with all the other things in life going up astronmically at this time would mean I am looking for something around the 150 a month mark. Is there any option to be able to get a car at this price as I have been looking for months now with no luck.

Another key thing with PCP is that you can settle the finance early, more flexible than a lease in that respect.

After the total cost, you can go to the total cost of ownership. With the lease the insurance, road taxes, 'side road help' or however you call it. All that is included. For the other ones you have to add these. Then the cost of ownership can be very different in some situations. Because you're $703 per month, becomes $850 very quick. And that is without maintainence.

good video, in this scenario, i'd go with the loan rather than buying with cash, invest the 46k you have lying around , a return as low as 2% pa would make it cheaper than cash, (I'm not a financial advisor)

Interestingly, 3 year old model 3's are selling for around £45-50k depending on mileage 😱 The only problem being when you come to sell you have to wait 6-12 months for a new car or buy an inflated used car which I guess all becomes relative to some extent. Great video 👍🏻

Good one

Just considering buying either a Honda e, 2 years old, 10.000km run, €36.500 at Honda, or a Model 3 SR+, 4.000km run, 4 months old (made in china, LFP battery, basic autopilot, black color), €55.000. I can afford a down payment of €30.000 and would HP the rest. Although i love the Honda e to bits, in terms of looks, size, and design inside and outside (which is kinda redundant), it looks like the Tesla is the better choice, although it is actually a bit more expensive than new. But new Teslas can be delivered in 12 months, so that is not an option as i need a car now. I do not like the outside looks of the Tesla, do not particularly like the centralized iPad (but like the general user interface). And of course there is the tiny but very annoying issue that my spot in the parking garage is on the lowest level (-4) and it is extremely tight to drive down and up, basically requiring a 3 point turn at each ramp. Which the Honda can probably do without the 3 point turn as its turning circle is tiny. But of course the charging network, long range possibility (living in both Porto and Berlin might make it necessary to drive at times) and a lot more space in the cabin are the plus side of the Tesla. Decisions, decisions.

On higher value cars, the drop is a lot bigger. So Lease vs PCP almost the same and you may as well buy a house if you are going to get a 100k+ loan. Plus, what if you get a lemon that will not sell? Double whammy. The higher lease cost is the ‘insurance’ that says I do not have to worry if indeed it is a lemon.

I need advice. I have a 2015 Mazda 6 estate with 40,000 miles I only do 4,000 per year. It's worth around £12k and I own it out right. I know my next car will have to be PCP so my question is when so I do it say a £28k Audi A1. If i do it now and use a £12k deposit and thus have really cheap payments around £120pm what will happen in when I part ex in 4 years will my payments then go up to £300 for the same car. Cause I'll only have a few grand in equity or will I have £12k plus a few Grand? So should I just wait tilly car is worth say £6k them do PCP?

It's interesting watching this 9 months later because prices have sort of gone off a cliff mostly thanks to Tesla doing their big price cuts in January. It's great news for people trying to get into EVs or trying to get into a better EV that was previously way out of reach. Unfortunately intrest rates over the past 9 months have gone the other way, crazyily high compared to what we've been used to. Perhaps this video needs an update. I'm sure the final answer will probably be the same but the figures will be vastly different.

Thanks for the video! But you are omitting the fact that the monthly lease price often includes (or here in the Netherlands, rather always includes) road tax, insurance and maintenance.

Is it time to do an update on these figures as there are now Tesla model 3 standard range plus three years old for 19 to 25k?

I would say that there is some risk in severely (>5k miles/year) under stating your annual mileage on a PCP. The balloon payment at the end of term is a guaranteed future value which is based on the mileage you stated. That’s not going to stop a dealer wanting to get you into a new car but does give them a tool to use in negotiation. Having said that the contract should clearly state a cost per mile over the limit and they are usually quite reasonable ~7p mile I think mine is which is only £1,050 for 15,000 miles over. As you say - do the maths yourself it’s equivalent to you paying yourself to do the maths by the amount you save!

So this just popped up in my feed , its a year old in 2024,and one year later, models 3's at3 years old are about £10k cheaper than guesstimated here. Looks like the cliff occurred.

Is it fair to say that, if you can afford it, trading in and buying cash (outright) will always be the cheapest in the long run?

Interesting. My understanding is the final PCP balloon payment is what the manufacturer considers to be the final depreciated value of the car. Before second hand car prices went up if a car was worth 40% of its new cost at 3 years old then you were doing well. I’m one year into a 3 year lease of an ICE vehicle. It cost 20,000 and was forecast to be worth £8,000 after 3 years. So the depreciation is £12,000. My total lease cost is £8,000 so I think at the time I made the right decision. Not sure I’ll do the same in 2 years though. With regards EVs. If there is a revolution in battery composition resulting in lower cost and/or better range then current EV’s will plummet in value. That’s why many people are leasing EVs and not buying outright at the moment. You’re insuring yourself against progress making your car worth considerably less after 3 years

Cheapest 3yr old Tesla Model 3 standard on Autotrader as I type 10/06/2022 17:35 - £34,950. So £32k is a low estimate. These figures are valid.

Thanks, really useful. For the first time ever we're looking at buying new given the crazy second hand market. The point about excess mileage on PCP had completely passed me by so that you for that (have previously bought second hand for cash). Also re your point about sallery sacrifice not stacking up, our other car (Soul EV) is a company car through my work and is for now ahead of having gone another route, no idea if that will be true for another one in 30 months time when it needs replacing though. Keep up the excellent content, it's largely due to your videos we got our first EV 18 months ago and now we're heading towards having two!

Even happier I got my 6y 0% EST loan for my Model 3 😁

This has convinced me to keep my old petrol car as it only costs me £85 a month in petrol even at these high prices , I’m just going to run it til it dies , no way I can afford those monthly repayments for an EV

Interesting but you have to consider that to make the greatest savings you have to tie up more of your capital. Therefore you'd save the most money if you bought the car outright 😁

Who are these people that can afford (Lease pch) £6,708 a year + £6k deposit and have nothing to show for it after 3 years? When for an extra £1,728 a year you get a £32,000 car after 3 years. Its not like these people are skint paying £6,708 a year to rent a car, my mind is blown.

In all the lease deals I have ever seen, the monthly payment is only less than the PCP payment if you pay a much larger deposit. All the arguments in favour of lease assume the car will be worth less than the balloon payment, the car is going back to the finance company and this is the last car they will ever need so they don't need any future asset. Doesn't matter what it is, leasing is always more expensive as you'll never have anything to show for the money paid at the end of the deal.

My LEAF is £127 per month! 2 year lease with 3K deposit. I know that was good but it has proved the the LEAF is the right car and I have ordered a new one for delivery next year. It was an expensive test but proved the viability of an EV for me...

Is paying any deposit pcp? Dead money ? Part ex only if you can?

what was the interest rate for the loan. if you take it that pcp should be cheaper as you are not paying interest on the full value of the car. you are paying it on only the amount eg 46k - 6k - Final payment you set at 19k so really the payment is on 21k but £703 a month equals £25,308 after 3 years or £6,308 for interest over 3 years, that does seem a high interest rate for the pcp were as the loan 46k - 6k = 40k 1,191 being £42,876 which is only £2.876 of interest for 3 years That would mean the interest rate for the loan is half that of the pcp.

Well this is very intereting to watch NOW, with used EV prices absolutely plummeting... I am actually looking at a used Model 3 Long Range about 2-3 years old, for $25k or less, and the mileage isnt terrible; I've seen anywhere from high 20k's to low 40k's. With that said, you would still be on top if you bought and financed $46k and the car is now worth $25k vs leasing, which is crazy 🤣 For reference Im in USA, but the prices are quite similar in this comparison, just for a Long Range MP3 instead of Standard.

For a higher or top rate tax payer, salary sacrifice lease still does make sense (is it right that high earners are getting subsidised to buy their Taycan's... probabably not!). Are the lease companies overcharging for depreciation and pocketing some of the tax savings for themselves? Absolutely. Do I wish that I could get the tax savings whilst actually being charged a fair headline lease price with realistic depreciation? Yes. But when I did the calculations the car (in my case Model Y) would have to retain 80% of it's value after 3 years / 36000 miles to make it cheaper to buy on finance. That's I think budgeting on the low side for insurance/tyres/breakdown cover etc that are included in the lease. I think it's not impossible that the Model Y is worth 80% after 3 years, but it's far from certain. My own personal expectation is more like 65%. I'm hoping the market normalises a bit and the lease company will let me buy the car from them at a reasonable cost (but not holding my breath) There are also some secondary benefits like having the weight of the lease company to sort out any problems if there are any

Usually cars are worth approx 50% over 3 years. Yes it's very diff now but I doubt the chip shortage will continue much longer, as crypto has crashed. Eg I've been able to get 2 good lease deals recently, so in a normal market lease wins, provided you buy the deal and not a specific car.

I bought my used Nissan Leaf gen2 2018 Tekna in November for 17K for cash. But apparently those days are gone.

Had a cheap ish on pcp. Final payment £3500. Sold privately 2 years later for 4800. Before you say blar blar prices have gone up . That was in 2017. Never hand car over!! Incidentally VW offered me 2800. How I laughed.