British Expats - International Auto Source

Quote:

Originally Posted by Pulaski (Post 11757266)

So far as I can tell, having never looked closely at leasing myself, you have no right to buy a car that you have been leasing. If you do buy it, the price isn't fixed ahead of time, so if you look after your vehicle nicely and don't put too many miles on it, you risk somewhat shooting yourself in the foot because the market price of the vehicle will be higher at the end of the lease than if you hadn't looked after it so well.

I have been leasing cars for the last 15 years in the UK and about to do so here. There are 2 types of the lease, Hire purchase and Finance lease. Under HP you will never own the car, it is similar to car rental and is used in the UK mainly for corporate fleet. I don't think it exists here. Under Finance lease, which I have been using, the residual value of the car at the end of the lease is set up upfront. It is a proxy of the future market value (ie 50%-60% of the new price for 3 year lease). You have an option to buy the car at this price plus exit fee (around $300). As mentioned here, you'll have to pay new registration and title transfer fees as well ($100-$200).

Here is the question. Why did I use it rather than buying? The answer is cashflow. Usually finance lease is the only way to drive expensive brand, if you have to rely on the loan. In the UK you can't get a bank loan for car purchase in excess of GBP25k. Finance lease is the only way to get it.

Under finance lease you pay interest on the full amount of the loan, but repay a portion of the capital up to the residual value only, which means you pay off approximately half of the original price. This helps a lot to manage your monthly cashflows compare with outright loan.

There is another cashflow advantage of the lease here - sales tax. You only pay sales tax on the total amount you repay over the lease. If you decide to buy the car at the end, you pay the remaining balance of the tax at that point.

In my personal experience I bought my cars at the end of 3 years lease and kept them for another 1-2 years, before taking out new cars.

I used IAS for 2 cars here. The option to buy at the end of the lease is $350. As a general comment on IAS, I found them very helpful and patient (I waited for my SSN nearly 6 weeks :)). Their prices for the lease are steep though :(, but they manage all paperwork for you and save on other hassle getting loans on your own here, while you have millions of things to do, when you just arrived. I also used their rental offer for 1 month, which they reimburse.