Not best leased?

I am currently in negotiation for a Golf from a local VW dealer, and he is pushing a leasing deal whereby I pay £280 per month (old car trade-in £5,750) and can trade in the car at the end of the period and get a new one or purchase it outright, or just hand it back and walk away. He is also talking about a payment for inclusive servicing which I believe to be circa £900 for three years. I have never owned a car via this method, usually just paying cash. I am not sure if this is a good deal or not. My husband seems equally fazed.

Asked on 30 January 2010 by S.S., via e-mail

Answered by Honest John
With VAG ‘longlife’ servicing the car may only get one service in 3 years, which isn't a very good deal for £900, is it? A PCP leaves you with an amount to pay at the end. If that is less than the trade value of the car at the time you still have a bit of equity to use as the deposit on the next car. Probably only a few hundred pounds, though. If the amount to pay at the end is more than the trade value then you have
nothing, and if you return the car you will have to pay for any damage to it. That's how M.T. of Henley got done last year. Alternatively, if the amount to pay at the end is more than the trade value, but less than you would have to pay retail, you might choose to buy the car and not have a new one.
Similar questions
I am selling my 2003 Renault Clio 1.4 Expression automatic (owned since new). I am looking to purchase a new, larger car with 5 doors and more BHP to transport four adults in comfort when required. I need...
Changing from Ford Fiesta to medium-size diesel used car. Don't want problems with fly wheels or DPFs. What would you recommend?
I have just retired and my current car is a diesel automatic Skoda Octavia. The car is okay, but does seem rather noisy on some road surfaces. Our driving will be a mix of pottering about South East London...
Related models
Comfortable and quiet on the move, enjoyable to drive. Nicely trimmed with great attention to detail. 1.4 TSI sweeter to drive than a diesel.