The Lemon Fool

Assuming you have the capital, what are the relative merits of leasing a car, using the dividends or interest to help pay the lease costs, as against buying outright? I'm assuming a new or nearly new car, so a chunky expenditure.

At one level it may depend on whether you can earn more by being invested than are charged for the implicit borrowing in the lease. There may however be incentives and promotions available to those leasing, not available to cash buyers.

As you must be aware, this subject crops up from time to time, although not I think on this Board. Not so long ago, I looked in to leasing my Q5, and if you get the right deal when there is a special offer on, it at the very least I think breaks even and I can retain the capital. However, my gut feeling is always simply to buy by trade in and cheque, but it needs very careful evaluation. I will not be doing this for another couple of years maybe because I tend to keep my cars for about 5 years.

Dod

With the current uncertainties in the market for 2nd hand vehicles due to dieselgate and electric vehicles coming over the next two to five years then leasing may make sense since you can be absolutely certain of total costs of ownership over that time period. I current lease a Golf that cost me £250 a month for two years so £6k in depreciation hit over two years which I feel was about the same as if I had bought new and traded in in two years time.

John