This talk of lease extensions not being good value for money I really don’t understand. I only look at the value from a customers perspective. Every time I look at private lease deals the 3, 4 and 5 year options are very similar in price. We are all on the Scheme because it offers us either the best value, it is the most convenient or both. If the option to extending your lease is buying new, buying second hand at massively inflated prices or choosing a new vehicle from the existing list. I think that an extension is a great option and makes financial sense.
The only reason that I say that it’s not good value is because it costs the customer over £6k in additional sacrificed benefits for the extra 2 years, but the actual cost to Motability is probably well under £1k (servicing, MOT and tyres) plus the extra depreciation (unlikely to be £5k for most cars as the bulk of the loss has already happened), less the saving in capital outlay of buying a new car every 5 years rather than every 3 years. If people were able to buy the car at 3 years old, run it privately for 2 years and then sell it I very much doubt they would be down by over £6k. However, the current flies in the ointment are the current high prices of used cars, so you could end up buying ‘high’ and selling ‘low’.
Whilst I stand by these comments, given that many Motability customers won’t have the option to leave the scheme, with the current poor choice and high AP’s I can completely understand why so many people are extending and it is indeed a good thing that this option exists.