dovboy

my sister in law is thinking about leasing a brand new car through her buisness.

the car is worth about 18k and the payments are 230 a month for 2 years then the car goes back as far as i know,no more than 15k miles per year.

its a renault of some sort,the depreciate like a falling brick so whare do the leasing company make there cash?

and anyone leased before?

Danster76

iTrader: (2)

When the users exceeds the mileage allowance and they charge per mile....better off getting a cab if she hits the 15k

Mr S1

iTrader: (2)

They make their money on the interest charged on the rentals (which if a true 'lease' will attract VAT so she'll need to be VAT registered to claim it back) but there will also be a residual at the back end. That's why they restrict the mileage as they estimate the car will be worth 'x' in 2 years with 30k miles, sell the car and pay off the residual. If there's a shortfall, then that's down to the leasing company to swallow. If the car has more than 30k miles then there is a mileage penalty to pay by the lessee as more mileage will affect the residual.

Mr S1

iTrader: (2)

Not necessarily - depends on what the penalty is. My mate has a 320d BMW on lease and for an extra 10k miles the penalty is Ł600. To do 10k miles in a cab would be a darn sight more than Ł600 wouldn't you say ?

dovboy

thanks for that,i also hear that there are quite large charges if there are even tiny bits of damage/marks etc.true?
(22 year old hairdresser so it will be a wreck in 2 years imo)

she is not vat registered but believes that the payments each month can be put in as expenses and a large percentage redeemed.

Mr S1

iTrader: (2)

If there is damage then yeah, the charges can be quite high as repairs on modern cars can be pricey.

She needs to have a word with her Accountant and see what he recommends from a VAT and tax perspective.

Ollie.

Mr S1 is wrong. He's talking about a PCP which is totally different. Lease has no final fee etc.

Mr S1

iTrader: (2)

Errr, don't think I am. PCP (similar to HP) usually has a final payment which the end user can pay, or hand the car back and walk away, bar damage penalties etc. Lease with a balloon has a residual and leases don't allow the end user to take title to the asset.

focusv8

The lease company won't pay anything like Ł18k for it.
And they are getting Ł5520 in payments over 2 years.

Unless she's a mobile hairdresser using the car daily, she won't get much of the money back out of the business.

.

dovboy

she is mobile.

Rick Astley

Ready for this?

Debrecen in Eastern Hungary back to sunny Blackpool is approximately 1500 Miles. In the taxi I drove back from Debrecen we left the meter running.

Debrecen, Hungary to Vienna, Austria =



Meter reset back to Ł0.00, Vienna, Austria to Calais, France =



Calais, France to Blackpool, UK =



Total Cost of journey in a Taxi =Ł2743.20

Which roughly means if I had had a paying customer in the cab they would hand over cash totalling Ł2743.20.

That is ROUGHLY Ł1.80 per mile.

Hopes that helps rather elaborately to back up your point you were making...

Mr S1

iTrader: (2)

Quality !!!

Danster76

iTrader: (2)

If the said 22 yr old hairdressers situation changes or she gets bored and returns the car mid term she will face penatlies which can sometimes add up to near enough the total payment term.

Iain Mac

Writing Down Allowances are changing from 1 April and that could have a big impact on lease rates as lessors will be affected by this. It will also alter the buy/lease decision quite considerably, depending on the car's cost and CO2 emissions, so she needs to talk to her accountant before committing.

The VAT should make a lease expensive for a non-VAT registered customer as she won't get any of the VAT back on the rentals or the maintenance, but if the lease is cheap enough, and she can get the credit it may still work out.

Leasing companies have noticably tightened up on refurb charges - when they cars made good money in excess of the Residual value they could afford to turn a blind eye to damage they should have charged for - but now, with cars coming back and losing them money every day, they just can't afford to.

Excess mileage charges are a way of covering the extra depreciation and wear and tear (if maintenance is included) if a car goes beynd the contract miles. They aren't there as a penalty or a disincentive, just a means to recover these extra costs.

Early termination could be the equivalent of the remaining rentals - it is a long-term business contract, so why shouldn't the lessor get their agreed amount of money? It's not as if the depreciation on a car happens in a nice straight line over the next 2-4 years. As soon as it is registered they have lost 30%+ of the new value.