# Is the "life for rent" now killing the car market?



## Kerr (Mar 27, 2012)

In these modern times less and less people own things they require in life.

Lots of people can't obtain or afford mortgages to buy the house they desire. They then are forced or desire leads them to go down the leasing route to acquire on a monthly basis something that they can't afford otherwise. 

The knock on effect is people are buying up the properties to rent back and help fund themselves. Supply is ramped up and that is driving the prices of houses through the roof.

Now cars seem to be the next way of doing this. Not so much accumulating money, just minimising their loses.

Few folk seem to own anything and this is driving the purchase prices up, new or used. The dealers have so much control over the market now.

So is all this leasing malarkey really hitting the motorist's pocket?


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## robertdon777 (Nov 3, 2005)

The way cars are purchased and used has deffo change in the last 15 years.

New buyers are likely to buy on PCP/lease etc and just see it as another monthly bill. Which is good because its a set figure (some include maintenance and tyres)

I think people could save money by running second hand cars and learning to do basic mechanics (I was under a car from 7 years old with my grandad). Cars and most maintenance are pretty simple pieces of machinery.

Yes I do think dealers control the market, much more than 15 years ago. They have been marketed well to the general public and many younger people see it as normal to have brand new cars every couple of years so this suits the dealers.

I don't think its a case of right and wrong though, its just the way the population views cars compared to years ago.

The actual price of a car has stayed quite cheap though compared to say food and housing.

Go back 25 years and an Audi Quattro would set you back £25K. Now you can get and S3 or Golf R for not a lot more. Even something like an S5 isn't double the price, but houses and food in that time are tripple the cost (probably more with food).


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## Dixondmn (Oct 12, 2007)

robertdon777 said:


> The way cars are purchased and used has deffo change in the last 15 years.
> 
> New buyers are likely to buy on PCP/lease etc and just see it as another monthly bill. Which is good because its a set figure (some include maintenance and tyres)
> 
> ...


25 years ago, a 4 bedroom detached house could be had for £100k, the same today would cost over £400k.

The car market has been americanised. The leasing a car you could otherwise not afford has become the norm as it has been over there for decades.

The scrappage scheme over here killed any chance of picking up a half decent motor for a couple of hundred quid.


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## S63 (Jan 5, 2007)

It's not killing the market, quite the opposite, after some very lean years since 2008 sales are soaring, thanks in part to the many PCP deals available. Consumers are changing their ways in how they like to use their disposable income and the idea of leasing rather than purchasing is very appealing, I expect to see this trend mirrored in the housing market and like some of our foreign neighbours renting will become the norm.

By the way, it's the manufacturers that determine the market not the dealers.


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## stangalang (Nov 27, 2009)

But we are talking to very different money spends. A house, will, for the most part be worth more when you sell than when you buy. Yes they take advantage with new fan dangled mortgages etc, but basic maths says a house is an investment. Cars on the other hand are worth 20% less the second you drive away, meaning you need to be able to throw away a set amount of cash just to afford a new motor. Most people don't even own their cars, let's be honest few people buy out right, if you have finance or a loan on it that car isn't yours at all, so you may as well lease, and not have the headache of the haggling to buy, haggling to sell, maintenance etc if you like a new car every 2 or 3 years. 
The only way to be smart with cars now is to be mechanically minded, buy nearly new OUTRIGHT and run it for short periods to get your money back almost in full. Money free motoring so to speak. 
I have owned and leased cars, and have to say leasing suits me


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## steveo3002 (Jan 30, 2006)

when i was younger people drove what they could afford , folks with one or two kids would just have a normal hatchback and get on with it

now as soon as folk have a kid they have to have the biggest newest people carrier or 4x4 to keep up with the other mums even if gets em into money troubles 

too much worry about keeping up with next door and having the latest plate


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## S63 (Jan 5, 2007)

stangalang said:


> But we are talking to very different money spends. A house, will, for the most part be worth more when you sell than when you buy. Yes they take advantage with new fan dangled mortgages etc, but basic maths says a house is an investment. Cars on the other hand are worth 20% less the second you drive away, meaning you need to be able to throw away a set amount of cash just to afford a new motor. Most people don't even own their cars, let's be honest few people buy out right, if you have finance or a loan on it that car isn't yours at all, so you may as well lease, and not have the headache of the haggling to buy, haggling to sell, maintenance etc if you like a new car every 2 or 3 years.
> The only way to be smart with cars now is to be mechanically minded, buy nearly new OUTRIGHT and run it for short periods to get your money back almost in full. Money free motoring so to speak.
> I have owned and leased cars, and have to say leasing suits me


Spot on. It was interesting when working for the mega rich and often being involved in their car purchases that even with the where with all they nearly always chose to lease.


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## SteveyG (Apr 1, 2007)

Leasing is very appealing, but I do a bit over 20k a year and it starts to make less sense at that mileage. If I only did 10k a year I'd probably be right on it.

I bought my commuting car outright when it was 6 months old and saved a packet, but I think I'll keep it until it's not economical to keep it running. Next time I probably won't spend the same kind of money and instead buying 2 years old and run it into the ground again. The figures work better for me this way, and I'm not bothered about having the latest plate on the car.


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## GleemSpray (Jan 26, 2014)

Old school here. I buy a clean car that is up to two years old and then run it for about five years. It then gets traded for another. 

I might be missing something, but I reckon I get good value for money this way. 

Having said that, I don't buy anything flash or exotic.


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## Kerr (Mar 27, 2012)

robertdon777 said:


> The way cars are purchased and used has deffo change in the last 15 years.
> 
> New buyers are likely to buy on PCP/lease etc and just see it as another monthly bill. Which is good because its a set figure (some include maintenance and tyres)
> 
> ...


You can pick some cars that don't seem to have gone up in price. It was the case for a while the price of cars was actually less than previous. Technology is cheaper and better production pushed the cost down.

Thinking back to 2003, the last time I bought a hot hatch, my Vauxhall Astra GSi cost around £17k. All the hot hatches were around about that price and the Focus RS seen as very expensive at £20k.

Now the new models are well up on that. The Astra VXR is almost 60% more expensive at £27k. The new Civic will apparently cost £30k which is 75% more than the 10-12 years ago.



S63 said:


> It's not killing the market, quite the opposite, after some very lean years since 2008 sales are soaring, thanks in part to the many PCP deals available. Consumers are changing their ways in how they like to use their disposable income and the idea of leasing rather than purchasing is very appealing, I expect to see this trend mirrored in the housing market and like some of our foreign neighbours renting will become the norm.
> 
> By the way, it's the manufacturers that determine the market not the dealers.


I worded it a bit wrong. I didn't mean killing the market, as for sure sales are rising at the moment.

What I meant was killing the market for the person who is buying. The cost of buying it becoming less and less attractive. More people are then tempted to lease and this puts more control back to the dealers to manage prices.

It looks cheaper as the car only costs £xxx per month, but the real cost is the prices are going up, as are the second hand prices as the dealers have more control over the supply.

Years ago it used to be easy to get a big mortgage. People could walk in with a small deposit and low income considering the value of the property, yet the banks would be happy to lend people a large sum of money.

Now the banks want to know your life story before giving you a mortgage.

At the same time it used to be a big thing to buy a car. People weren't given a loan to buy a car the same value as their annual salary.

Now people with a small deposit can lease to a value way beyond their actual financial means as their only liability is a small deposit and a small amount per month.

They'll never own anything and spend their lives paying.

People frown upon people letting houses, yet it seems that doing it with cars is accepted and becoming increasingly more common.

In the past I've said to people leasing was a good idea to minimise their losses. However I'm beginning to change my opinion.

Collectively all this leasing is pushing the real cost up for all of us in my opinion. Prices are up, second hand values are up and the only people making money from it are the manufacturers and the dealers.


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## GleemSpray (Jan 26, 2014)

It does of course depend on how important a car is to you. Same as clothes, holidays, eating out , home improvements or anything else lifestyle.

People who just have to have the latest BMW / Mini / 4x4 because they cant possibly be seen dead in anything less will find a way to fund it.

In the old days, they just exaggerated their income on the HP forms, or got multiple loans from different sources; now they can loan the car and hand it back after 3 years.

I remember the days when you saw someone driving a Jag or a Range Rover and knew they actually had money... or that their business had not yet gone bust !


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## S63 (Jan 5, 2007)

Kerr said:


> I worded it a bit wrong. I didn't mean killing the market, as for sure sales are rising at the moment.
> 
> What I meant was killing the market for the person who is buying. The cost of buying it becoming less and less attractive. More people are then tempted to lease and this puts more control back to the dealers to manage prices.
> 
> ...


This is more about a shift and change in lifestyle which the sellers are responding to. Consumers are attracted to a package that removes the hassle of budgeting for servicing etc that is already factored in. What I guess the rise in leasing will change is the used market, many more three year old cars appearing for sale.

It seems to be in the DNA of most Brits to feel the need to own, whether it's a house or a car, not the case in some other countries, times are changing, listening just now to a financial expert, the future looks bleak for prospective first time house buyers with the interest rate expected to double or even treble in the next three years, isn't it a good thing that banks ensure you can make your payments with more vigorous means testing than in the past? It might stop the less savvy handing back their house key when they are broke and in deep debt,good news for us crinkles though with pensions maturing.


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## GleemSpray (Jan 26, 2014)

Fixed and capped rate mortgages are the way to go, i think and should be forced onto buyers who are borrowing big loan-to-value or big income multipliers.

Never mind getting the very , very best deal - get a safe deal where you wont get any shocks for the next 3, 4, 5 years and can plan your life.


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## GleemSpray (Jan 26, 2014)

S63 said:


> The future looks bleak for prospective first time house buyers with the interest rate expected to double or even treble in the next three years, isn't it a good thing that banks ensure you can make your payments with more vigorous means testing than in the past? It might stop the less savvy handing back their house key when they are broke and in deep debt,good news for us crinkles though with pensions maturing.


 I bought a house in 1993, right in the middle of the interest rate crisis, when mortgage rates hit 15%.

I remember saying to my Dad how terrible the interest rates were and he said (with a big grin) " They aren't terrible .... they are fantastic Son !! "

.... and rubbed it in about how great the return on his investments currently was. 

It bought home to me in sharp focus how the nation is just as much made up of savers as well as borrowers.


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## ivor (Sep 24, 2008)

these leasing plans are doing second hand buyers a favour,I was looking a second hand Range Rover Evoque and a three year old one with 18k on the clock comes in at 26k yet when new it was around 50k this of course is only good if you can afford to buy outright,when I looked at financing it through range rover it worked out I pay 44k ? 

I do think it's generation thing as i was brought up to believe if you buy it outright you can't afford it in the first place (except a house) people these days are caught up with the celeb/footballer lifestyle and want everything now no matter the cost,you only have to look at how much debt some people are in and it doesn't bother then as they when asked about it they usually say "i'll just go bankcrupt it's no big deal"


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