CAR LEASING OR BUYING – WHICH IS BETTER?
This is always a question that causes a lot of debate and many people just say “I like to buy because you always own the vehicle at the end of three years”. This is true but the bigger question is how much will it be worth? When our finance partners calculate a contract hire rental (or car leasing as it is sometimes called) they set a future residual value. This is calculated by using a number of factors and there will always be variances between each FN50 vehicle leasing company. The depreciation of a particular vehicle is the biggest factor in what the contract hire rental will look like.
If you want to get an idea of the running costs of your future car where can you go to find this information? Well one of the answers would be What Car magazine, who publish running costs and future residual values at the back of their hard copy magazine. If you want to see the data on-line, on all manufacturers and makes, on different mileage parameters, then have a look at the Fleet News website under running costs.
You can drill down to an exact model or just look at a range of cars i.e. Ford Fiestas for example. It’s simple to use and you will get an idea of all running costs including the MRV figure (residual value) which is also shown as a monthly depreciation figure.
This is only a guide but you will see the sorts of residual value variances between different manufacturers and the different maintenance costs as well. The forecasted maintenance costs are displayed as a pence per mile figure under the SMR (Service Maintenance Repair) column. So for example if it shows 2.17p and you travel 10,000 miles a year, your annual servicing and maintenance costs will be approximately £217 per annum.
So before you buy, think about depreciation as none of the MRV (residual value) figures shown are higher than what the car cost at the outset - they will all lose money over time!
This is why it is best to choose your car, when contract hiring, by the monthly rental rather than by how much it costs. You will see some cars that actually cost more to buy, may have a lower rental on contract hire, due to a better residual value.
Fleet News is the UK’s leading motoring publication for the fleet industry and is part of the Bauer Media Group.