It’s common knowledge that buying a new car and driving it off the forecourt is essentially the equivalent of thousands of pounds disappearing immediately. It will be of little consequence when we’ve got our hands on the steering wheel of a brand new model with minimal miles on the clock, but let’s say you have to sell the car six months later – you’ll soon be aware of the fall in price then. Whatcar.com estimates that most cars lose between 50-60% of their value in the first three years.
Different cars depreciate at different levels, as do bikes, lorries and vans. For that reason, people often choose to lease a car rather than buying one. The value of your lease equates to the level of depreciation of the car – in other words, if you take out a three-year lease term on a vehicle, your rate will be directly linked to the fall in value of the vehicle in that time.
Example: you lease out vans from new from a company, you use your vans for 30,000 miles a year, and your company has ten of them. Therefore, you have no need for MOT tests in the first three years. A company might even give you a reduced lease rate per month for your loyalty, since you’re leasing out multiple vehicles. You stay within the agreed maximum level for the vehicles, being aware of excess mileage charges. When it’s time to replace a vehicle your lease company may allow you to swap to a new or newer model, at somewhere near the rate you were paying.
The Telegraph has given a breakdown of potential savings for a Mercedes Sports Class C-Saloon. Counting initial arrangement fees and factoring in a two-year stint, the site calculates that leasing would cost £8,383.60, compared to costs of £11,480 if you had purchased it. Assuming a similar level of depreciation across ten or more vehicles, this equates to a saving of £31,000 across two years.
Most lease companies allow a wide range of vehicles and plans, from a small city mover to custom Ford vans through to a tipper/Luton. Experts will help you decide on the correct plan, and even deliver the vehicle to your door. Some will even take over a lease from another company, perhaps at a better rate than you are currently paying.
Essentially then, leasing allows you to take delivery of a vehicle, or multiple vehicles, without directly suffering the burden of depreciation. For the car owner it’s a way of consistently driving the best vehicles, while for the small business owner who needs vans for retail, commerce or working as a sales rep, it can be a way of saving thousands of pounds a year.