Mole62

Yes, but if we're just looking at leasing vs buying without using your own savings then it's [monthly payments + service costs - resale value]) against [monthly payments (finance + service costs) with final option to buy (based on resale value)] - it really just comes down to the specific numbers for any particular deal. If you have a car from a dealer and trade it back to them a couple of years later they want the same margin, whether it's a lease deal, finance, purchase or whatever. There's less risk and less freedom with leasing but the underlying maths is pretty much the same.

If the car devalues for the customer, it will do the same for the finance provider so this will be built in to the monthly cost. A 2012 car is now seven years old, and I don't see them being given away very often. These schemes are not for seven years though. It's maybe not worth tying your capital up in a vehicle if you can safely earn a good rate of return on it. I'm not aware of many ways that's possible these days - "safe" investments seem to return less than inflation. It all comes down to the numbers on any individual deal, but I believe the capital being tied up will cost the finance provider more than any individual can earn from it (without adding their labour). I'm sure they work well if you want to regularly buy a new car, want to pay for full main dealer servicing and don't do many miles. As soon as the miles start to clock up it can get expensive. I was working for Ford Europe (R&D) then Ford Britain (Service) years ago when these schemes were first launched, we were told was that customer loyalty would be markedly increased by keeping them in contact with their local dealer for servicing (depends on the dealer!), also the option of a lower monthly cost (first time, with a trade-in) had to be offered to compete with other manufacturers. There didn't seem to be any notion it was any more or less profitable than just selling the cars.