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The Masked Tulip

Is Renting A Car Like Renting A House

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I have to change my car in the next few months as my local garage says it is about to go - radiator knackered amongst other things.

Anyhow, doing some research of models online I came across contract hire and, not knowing much about it, I just wondered if there were similarities between contract hiring a car and renting a house?

After all, cars are depreciating assets are they not when you buy them?

I suppose the best way to buy a car is to buy a 2 or 3 year old one that, hopefully, has suffered most depreciation. But in the case of new cars surely it makes more sense to pay X hundred a month to lease it than to buy it outright? Or am I missing something fundamental?

(Sorry, not a big car person. Don't know much about them. Four wheels, petrol, furry dice, that's about it for me.)

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makes more sense to pay X hundred a month to lease it than to buy it outright? Or am I missing something fundamental?

they factor the depreciation in

so usually speaking if you buy the car, use the car for say 2 years then sell the car it costs you less than if you lesase the car for 2 years.

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they factor the depreciation in

so usually speaking if you buy the car, use the car for say 2 years then sell the car it costs you less than if you lesase the car for 2 years.

Ah, that was a simple short answer. Thanks. Roll on transporter beams when we are all being beamed here and there.

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I have to change my car in the next few months as my local garage says it is about to go - radiator knackered amongst other things.

Depends on the other things in terms of that judgment call.

I have always bought 4-6 year-old cars with highish mileage for their age at around £1.5 to 2.5k, run them until it no longer makes financial sense to keep them on the road, then send them to the scrappie and start again. Over a four-year ownership period, this reduces the depreciation cost to £300-500 a year, but you've got to factor in the maintenance costs to the overall sum, which will be significantly higher than for a new or nearly new car. Insurance and fuel are also usually a bit more. The trick is not to keep pouring money into maintaining one of these cars once the cost of doing so means that effectively, you're paying as much as the depreciation on a new or nearly new equivalent anyway. The more DIY maintenance you can do, the more this tips the balance in your favour; as does choosing a model for which spare parts are relatively cheap and easily available.

As the car racks up more and more miles, the judgment call becomes more difficult. Is it worth shelling out £200 for a new cat or suspension wishbones, given that something else could go wrong immediately afterwards, for example? That having been said, I'd be a bit surprised if a radiator on its own is enough to condemn the car, unless it's a very expensive radiator for a very old or high miles car.

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People are always trying to make money there must be money to made if companies can rent out cars, its not like your going to sell your stock and retire on appreciation.

If they can buy in bulk they might be able to pass the savings on, however that begs the question why not negotiate a bigger discount on a car yourself when you buy?

Edited by moosetea

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they factor the depreciation in

so usually speaking if you buy the car, use the car for say 2 years then sell the car it costs you less than if you lesase the car for 2 years.

I here it's cheaper to lease, due to economy of scale.

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TBH I have a lease car at the moment - an 06 Ford Fiesta Style. My brother leased it for my sister-in-law (they put down a large deposit on it, and had the lease for 3 years), but they split up, so I took over the lease a year ago (without having to pay the deposit back). it suited my situation at the time, and in a year, I can either hand it back, pay the difference (plus interest on the loan) or swap for a new model. I'm useless with car maintenance, so not having to worry about MOTing is a real bonus.

Edited for a superfluous "it"

Edited by medusa

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It is me, Ling.

Hi hi. I see many people on my website from here, so I thought I would comment.

The "deposit" on all my cars is an initial payment of 3 x payments. that's it. I avoid "document fees" as they are rip-offs.

It is true a car is a depreciating asset, and a house (should be) an appreciating asset. This is key I think.

I would say this, wouldn't I: - Why take the risk on car ownership, plus why put a large chunk of cash down, or take borrowing etc? Why not simply look at a monthly rental price list which enables you to compare (on a level playing field) most types of popular models of new cars? Then, you choose the one you want.

Are you a car dealer? When Pendragon, the largest car dealer in the land can only make a 1% profit on several £billion turnover buying and selling cars, why think you can do better? A lot of people do, and good luck to them. They enjoy spending money.

Also, people say they save money on an old car. Fine, if you want an older car. Most people want the less polluting, NCAP 5* safety, fully warranted, nice smell, new cars.

For customer comfort: I rented £28m of new cars at retail values last year (2007). I have over 850 customer letters published in full on my website, and 150 press items, so I think you can trust my feedback. I would love to discuss with anyone, I simply do my best.

Thanks for the kind comments, Durch.

I would say if you can buy new cars and sell them after 2 years, cheaper, I would not rent so many cars! Many factors are involved. Manufacturers bonuses, oversupply from factory, cashflow at manu/dealer, dealer targets, dealer bonus, a low selling price when new, a high residual when 2-years old, finance company is not already fully exposed to this brand/model. Some cars work really well, others don't. Deals come and go often. Metallic paint (you pay for at retail) is often free as it enhances residuals. The cars I get from dealers are for volume, not profit. No way would they sell them at those prices, retail. It would "distress the brand" as BMW say.

Currently, Fiat Grande Puntos at £129/mth, Citroen Xsara Picassos at £164/mth and 7-seat Chrysler Voyager 2.8 CRD (150bhp) Executive AUTO Met at £281/mth are hot. As well as loads of other stuff. No way could you buy and sell these cheaper, plus, save the cash, go on a holiday or pay off your mortgage.

To have full warranty, full road tax paid, manufacturers AA cover and free delivery/collection must be worth having?

Why own a depreciating asset?

- Ling

Edited by LINGsCARS.com

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Why spend £600pm on renting a car , you can buy an 1995 one with airbags and get free fuel, tax, insurance, labour, repairs, consumables and a fully functioning mode of transport, way more environmentally friendly and no depreciation.

The only reaons I could see would be safety, as a newer car will plow through anything old through a design of using the taut car as a crash barrier. Or style and image. Fuel efficency on my 100K Citroen ZX diesel is 55mpg combined.

Edit: After buying it for £500 you would be saving about £6K per year and could buy the new car in about 3 years or whenever. Or put it towards the mortgage/deposit and save tens of thousands of pounds.

Edited by maxwell

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Depends on the other things in terms of that judgment call.

I have always bought 4-6 year-old cars with highish mileage for their age at around £1.5 to 2.5k, run them until it no longer makes financial sense to keep them on the road, then send them to the scrappie and start again. Over a four-year ownership period, this reduces the depreciation cost to £300-500 a year, but you've got to factor in the maintenance costs to the overall sum, which will be significantly higher than for a new or nearly new car. Insurance and fuel are also usually a bit more. The trick is not to keep pouring money into maintaining one of these cars once the cost of doing so means that effectively, you're paying as much as the depreciation on a new or nearly new equivalent anyway. The more DIY maintenance you can do, the more this tips the balance in your favour; as does choosing a model for which spare parts are relatively cheap and easily available.

As the car racks up more and more miles, the judgment call becomes more difficult. Is it worth shelling out £200 for a new cat or suspension wishbones, given that something else could go wrong immediately afterwards, for example? That having been said, I'd be a bit surprised if a radiator on its own is enough to condemn the car, unless it's a very expensive radiator for a very old or high miles car.

Nah, it is not just the radiator. There is something else that my local garage said the car is about to go - didn't even bother registering what it was. I have kept it a year longer than when they first mentioned it but when it was in for some bodywork repairs a few weeks ago - someone in one of those Range Rover Vogues reversed into it when it was parked - my mechanic said that I should change the car ASAP.

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Some multi-millionaire - can't remember who- was reputed to say

"If it flies, floats or f*cks, always rent. It works out cheaper in the long run."

Don't know if he stretched that to cars!

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From what I can quickly work out in my head, the difference between renting and buying is small.

eg. Renault Clio 1.2

Buy: ~£9000 new (probably less with deals)

After 2 years and 30K miles probably worth between 4K and 5K.

Cost around £4000-5000

Rent: over 2 years at max 15K miles a year = £4500

Of course, this is buying new and doesn't take into account unforeseen circumstances after the 3 year warranty - but then it doesn't cost anything each month once paid off.

Probably haven't spotted something obvious but I'm tired.

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Cheapest motoring ever, is to buy an old but good, largeish car that has been looked after!

When it becomes uneconomical to fix, scrap it and get another. Yes the fuel and insurance will cost more

than that shiny new tiny hatchback, but for drivers beyond a certain age (like 25+) the insurance won't matter too much.

And that tiny hatchback will be a banger long before yours goes to the scrappie!

IMHO Government is totally wrong on this!

Surely the "green" thing to do is keep the old one running!

The Gov. has an interest in "car churn" just as much as "housing churn", since it generates revenue,

and look what a nice "green" car the ideal consumer might decide to purchase next , what,

tempted by a £50 discount off the Road Fund License. I think not!

Now what do we, as a country, do with the old ones these new "green" cars replaced ?

If you are in well paid, but irregular work, then renting could make sense, but good,

reliable and smart S/H motors are available for under £1500, and how much is a year's rental!

if you don't mind too much exactly what model you drive, and there's miles left in them!

Don't get caught up in the "must have new shiny motor, Only small deposit and then only so much a month for ...how long?" mentality!

It's a depreciating asset, from the minute you sign the form, and you will be paying interest on that, if you got finance.

Get one that has done it's depreciation!

Anyway I practice what I preach on this. Never bought a new one!

Last one just bit the dust after 11 years mostly trouble-free motoring!

Still drives well, and is legal but looks like poo!

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I'm afraid to say that I'm of the old banger school of thought myself. Whilst I've had some very nice cars for fun, day to day it's never been anything over about £600 - 700 quids worth, and they tend to do me for 6 to seven years at a time (at least, usually more). I don't do many miles, and I do my own repairs, but it doesn't get any cheaper. Haven't broken down for 15 years either! It gets bashed, so what ?

If you get something known to be very reliable, and buy an old one with good history and not too high mileage then you should be good to go.

I suppose many people think that an old car is dangerous/unreliable, but that's really not been my experience, for what it's worth.

I'll admit that now I'm not stoney broke, if I really needed a car I might get something newer, mind you ( but I somehow don't imagine myself ever buying a new one unless I get v.rich and want another toy).

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isn't renting a car a lot like renting a beautiful young woman....

i'll get my coat.

Exactly! :))) Do you want an older model that's been around the clock a few times, or a fresh virgin car? :) You don't often get that choice with beautiful young women.

What you are doing by renting a car, is FIXING all your costs (as you estimate your mileage) for the next 2 or 3 years. You can then budget perfectly. And use your cash lump for something useful. Not only that, but on the cars I think are good value (the ones on my price list) they are MUCH cheaper than buying/selling a car.

Note,, when you buy from a car dealership, they never have these fixed prices. You always have to negotiate and they seem to add in many extras and they always take at least £1000 profit to cover their massive overheads. It is the same if you sell them a PX car, they buy it cheap. They are always messing with the figures, it is confusing and never straightforward.

If you want to run an older car, fine. But you have to suffer the MOTs etc, etc, and services on an older car (new cars need little servicing) and breakdowns and tyres and brake replecements etc. It is totally up to each person, of course. But to take my new metallic Grande Punto as an example, at £137/month after absorbing the 3 payments up front (or £4.57 a day, that's less than 20 cigs or the same as fish and chips and mushy peas) you get a brand new car, fully taxed. How on earth can anyone do it cheaper than that, apart from getting a banger? What else can you buy for £4.50? That's less than a gallon of petrol! You pay nearly that for one of those 1l smoothies. If you are fortunate, I am sure you can match or beat my figure by running a banger - but that is a banger... and you have to be lucky. If you prefer a banger (well I have a 1966 London Routemaster bus!) that is fine :)

But, there is no luck involved in my cars, whereas often with a £500 car you will be driving with your fingers crossed. Plus, you will probably save some of the daily cost of my cars on reduced petrol consumption. And free road tax.

I will say, and this is no criticism of anyone, none of my customers can be called "sub prime". All of them fall into the top half of the UK demographic and many are in the top 10%. No offence, but their time is generally worth more than juggling a banger, replacing exhausts and getting MOTs, bleeding warm aircon units, and hoping it will start in the mornings.

Unlike just about all other marketing (try comparing mobile phones, energy tariffs, train ticket prices, car prices in garages, broadband costs), my prices are levelled for ALL makes and models, with no extras. They are 100% comparable. You must all appreciate THAT. :)

You see, I am brainwashed. After moving £28m of new cars in 2007, I belieeeeeeeeeeeve!

Edited by LINGsCARS.com

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I sit and wait for those once a year bargains to pop along, always one if you keep your eyes and ears open, Seven weeks ago bought a P reg Micra automatic, "oooh" I hear you say 66k miles 9 months tax and Mot for £150.00 cause the guy wanted it off his drive, so I made really low offer as you should with all cars and houses, by doing this in the last few years I have actually made money on cars or broke even for the first time in 23years of driving.

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Cars with high mileage are substantially less than cars with normal mileage - particularly medium to large cars.

Company rep cars have been fully serviced reguarly, looked after, haven't had (usually) screaming families in them, and have... extremely high mileage. this means they have probably been serviced at least every couple of months, and all thier mileage tends to have been pounding up and down the motorways. They tend not to have been razzed, as the drivers depend on the cars for their job. Just there is this stigme about cars with high mileage.

I would agree, a familiy car with the same sort of mileage as a reps car would probably be wrecked after that sort of mileage - I would not like a car that had done 100k fully loadeed with kids, camping equipment, which had most of it's mileage around town or on didgy B roads, had missed most of it's servicing.

Rep cars also tend to be the mass production, largeish, reliable sorts of car - the Modeo, vectra, Passat... usually nice, (relatively) cheap insurance.

Anyway, that's my strategy - high mileage, new-ish cars at bargain bucket prices. Probably 100k miles, and just under 3 years old.

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RENT,RENT,RENT.

aesthetic value plummets after a few years of heavy use.Particularly if you have her pulling the plough on the farm

Trouble with renting is that at the first sign of any delay in payment all you see is a cloud of dust disappearing over the horizon. Ownership gives you more security of tenure...

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