Hey everybody just wondering if anybody here had any thoughts one way or the other about leasing a vehicle. Wife needs a new ride (she thinks) and I don't really feel like making two $400/month car payments. I've heard some horror stories about people leasing vehicles but seems like they were more self-inflicted then anything else. Any pros and cons anybody here has experienced would be appreciated. Thanks.
OT: Leasing a vehicle
- Thread starter siebo454
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Pros: You always have a newer vehicle if thats what's important to you.
Cons: You will always have a 'car payment'.
My personal take, leasing a vehicle is not a good idea. But having the newest or newer ride is not important to me. I still drive a 2002 Pontiac Grand Prix every day (we have a 2008 Chevy Equinox (my wife drives) and 2010 Ford F150 (sits in the driveway)) and plan on doing so until the wheels fall off or until there's an issue to where it costs more to fix than what it's worth.
It's been nice not having a car payment the past couple of years and we save a little on the side so when we do need to buy a new vehicle we'll already have it paid off or at least a nice downpayment on it.
Again, depends on what's important to you.
Cons: You will always have a 'car payment'.
My personal take, leasing a vehicle is not a good idea. But having the newest or newer ride is not important to me. I still drive a 2002 Pontiac Grand Prix every day (we have a 2008 Chevy Equinox (my wife drives) and 2010 Ford F150 (sits in the driveway)) and plan on doing so until the wheels fall off or until there's an issue to where it costs more to fix than what it's worth.
It's been nice not having a car payment the past couple of years and we save a little on the side so when we do need to buy a new vehicle we'll already have it paid off or at least a nice downpayment on it.
Again, depends on what's important to you.
I bought a sedan in December of 2013 and just leased a CUV last month.
If you're leasing, you have two big variables:
1. How much your vehicle will depreciate over your term.
2. What's your finance rate.
My best advice is if you can get a good rate on a slow-depreciating make like Toyota and Honda, you'll end up with the lowest monthly payment.
Re: Horror Stories : The only horror stories I've heard are people getting into leases on cars they hate and getting into leases on cars that are outside warranty. If you can avoid those two circumstances then usually you're okay.
If you're leasing, you have two big variables:
1. How much your vehicle will depreciate over your term.
2. What's your finance rate.
My best advice is if you can get a good rate on a slow-depreciating make like Toyota and Honda, you'll end up with the lowest monthly payment.
Re: Horror Stories : The only horror stories I've heard are people getting into leases on cars they hate and getting into leases on cars that are outside warranty. If you can avoid those two circumstances then usually you're okay.
I buy my vehicles and lease for my wife since I kept losing money on trade ins when she wanted a different car every three or four years so leasing for that purpose has been good. Have never had a bad experience with a lease but always knew how many miles she was going to put on the vehicle. Always best to pay for mileage upfront instead of getting charged for excess mileage on the back end. You do not have to pay for taxes upfront like on a buy since the sales tax is spread out through the monthly payments. Just take care of the car over the term of the lease and you won't have any surprises. Just my .02 cents.
Biggest hurdle for most people is the miles, 12K is pretty standard, but even 15K wouldn't work for me so I never did it, but the biggest mental hurdle for me is the coin. Factor in everything the lease will cost you, every last penny, then divide that out for the miles driven and unless you just have to have a new car, it wasn't worth it to me. Your mileage may vary. Honestly, I think leasing sucks unless you make pretty damn good money. If you do, go for it.
Depends to me on how much you actually save vs buying. If you have to put a couple thousand down and pay $315 @ month. Or say $415 @ Mont to buy it. Then buy it. But you have to run the #s on your own.
I've never leased, but I considered it carefully last year. Great monthly payments were advertised, but of course the mileage limit was way too low for my commute (and I'm pretty normal in distance). But if you wife doesn't drive too far it might be worth it.
- There are those that can drive a car until the wheels fall off. I'm not one of those so I have leased many vehicles. If you like the idea of having a new vehicle every 3 yrs., sometimes less, and don't drive more than 15K miles each yr., then leasing is for you. Just remember the selling price can be negotiated just like you were buying it. Then the residual (value at end of lease), Money Factor (interest rate), length of lease and down payment are part of the calculation. Other advantages are the vehicle is always under warranty, sales tax is pd. for each month rather than up front, and your payments are less than they would be if you were purchasing. I have been able to comparison shop almost completely over the phone or web, and only visit once I'm comfortable the deal is one I like.There are lease calculators on line. Make sure to ask each dealer for the msrp, sales price, add on costs, money factor, and residual and do your own calculation. That way you can make sure you are comparing apples to apples. I've had situations where the dealer has quoted the wrong money factor, or where one is not willing to reduce the selling price to where another will, but you will know if each gives you the above info. Most experts don't recommend putting money down, if the something happens to the vehicle during the lease, the down payment is gone. Any lease showing a down payment can be done with 0 down, the monthly payment just goes up. By using edmunds.com you can find a lot of leasing advice, even the information needed to make sure you are being quoted the correct numbers. Leasing isn't for everyone, however, for some, if done correctly, it can be a good option.
not a good investment, just my 2 cents. I can find much better ways to spend $300-400 a month. In practical terms, it's much better to by an older car (even if it's only 4-5 years old) than to lease. If you want a "new" car every few years but always have a car payment than leasing is the way to go. I'm not in my car for more than 30 minutes a day, so it's not a big deal to drive a 5 year old car that is paid off. I keep $400 in my pocket each month.
I have leased...no issues no problems...It just sucked when the lease was up and buying my Jeep would have still cost a fortune.
So true. I like to buy lease returns. The first couple years are the steepest on the depreciation curve. I usually get two years with no payment and then I get enough from a junk yard or buyer to cover taxes on the next car I buy. I drive A Lot for work
I guess I'm talking about how you can invest a lease payment in investments that go up in value and come out ahead in the long run. For me driving a new car 30 minutes a day isn't worth a $300-400 monthly payment.
Nothing inherently wrong with leasing a vehicle - just don't be swayed by the ads plastered with $299/$349/$399 or whatever per month. To get your true monthly cost, you need to also include all money due at signing and any overages you are likely to pay at the end of the lease. If at that point you still think it's a good deal, go for it. But in many cases, your outlook on the lease option will be a lot different once you calculate the true cost.
Exactly. Everyone is different, and I think leasing a car makes a lot of sense to the right person. Single women, less mechanically inclined, people who just want a new car for the sake of it, and people who do well financially are where it makes the most sense. I'm a car guy personally, I like taking anal care of my car and watching it last and stay reliable. I am that guy who has floor mats on top of his floor mats to keep his floor mats clean, but of course not everyone feels the same about their car. I know for many people it's just a necessary evil they don't get to excited about. So for me I hate the thought of taking care of a car that I am basically renting, only to give it back at the end and I have absolutely nothing to show for it, nothing. However, my well to do sister and her husband lease everything and it makes perfect sense for them. They have their place, just not in my garage, but I have recommended a lease many times to the right person. I drive on average 25K a year just on my car, not to mention what I put on my wife's, so it's a no-go for me.
Own the best house in the neighborhood and drive the oldest car.
That's advice I got when I was young. I think it's tempting for all of us to drive that nice car or the biggest truck, but it is never a good investment. Of course, there are some car purchases that are worse investments than others. As long as you know what you are getting into, it's your money to spend as you like. If you or the Mrs. wants a new car every couple years, I would buy a vehicle that doesn't depreciate much with cash. The next option would be to get a 0-2% finance loan and plan on paying off the vehicle before you trade it in. If you can't do that, then you cannot afford the vehicle. That said, again, it's your money. Go ahead and lease if you cannot afford to make payments on, say a three year loan, just know that you are not making a good investment. The reason I am saying that is that in buying the car, you will make bigger payments but at least you will have something in the end and you will have no mileage restrictions.
That's advice I got when I was young. I think it's tempting for all of us to drive that nice car or the biggest truck, but it is never a good investment. Of course, there are some car purchases that are worse investments than others. As long as you know what you are getting into, it's your money to spend as you like. If you or the Mrs. wants a new car every couple years, I would buy a vehicle that doesn't depreciate much with cash. The next option would be to get a 0-2% finance loan and plan on paying off the vehicle before you trade it in. If you can't do that, then you cannot afford the vehicle. That said, again, it's your money. Go ahead and lease if you cannot afford to make payments on, say a three year loan, just know that you are not making a good investment. The reason I am saying that is that in buying the car, you will make bigger payments but at least you will have something in the end and you will have no mileage restrictions.
1. A vehicle is not an investment, and never will be. It's a depreciating expense (for business).
2. I have lease 3 Lexus SUV's, a chevy avalanche, a saab, and several others. I have also bought several cars as well. You don't pay the taxes up front, which is a chunk of change year over year on a purchase. The payments are often much much lower as is the interest rate. Select your miles, 12k, 15k, 20k, whatever. Do the math on it. Buy the lowest miles and if you go over, you just pay it at the end. If you know you will go over save the money to pay off the miles at the end. It's cheaper to do the lowest miles and pay for overages, it's like .25 per mile (which is cheaper per mile on a purchase), figure out the math on what's the smart play and go that route. That's what i do rather than going for a higher mile lease and paying for miles upfront (in your payment) because if you don't use them, they don't reimburse you.
3. It's NOT your car, so any damage done to it they take care of. IF you don't destroy the damn thing that is, and you can buy packages for say, $500 that fixes everything when you turn it in.
4. Leases today are much different than those of even 5 years ago. They are better and more friendly, not that they were awful before.
As a business owner, to me it's a no-brainer. As a personal vehicle, pick your battle but i still thinks it's a better option. However, i do like to own my stuff rather than always paying on it.
2. I have lease 3 Lexus SUV's, a chevy avalanche, a saab, and several others. I have also bought several cars as well. You don't pay the taxes up front, which is a chunk of change year over year on a purchase. The payments are often much much lower as is the interest rate. Select your miles, 12k, 15k, 20k, whatever. Do the math on it. Buy the lowest miles and if you go over, you just pay it at the end. If you know you will go over save the money to pay off the miles at the end. It's cheaper to do the lowest miles and pay for overages, it's like .25 per mile (which is cheaper per mile on a purchase), figure out the math on what's the smart play and go that route. That's what i do rather than going for a higher mile lease and paying for miles upfront (in your payment) because if you don't use them, they don't reimburse you.
3. It's NOT your car, so any damage done to it they take care of. IF you don't destroy the damn thing that is, and you can buy packages for say, $500 that fixes everything when you turn it in.
4. Leases today are much different than those of even 5 years ago. They are better and more friendly, not that they were awful before.
As a business owner, to me it's a no-brainer. As a personal vehicle, pick your battle but i still thinks it's a better option. However, i do like to own my stuff rather than always paying on it.
I used to lease a lot of new cars, but really ended up wasting a lot of money doing things that way. I don't put a lot of miles on my cars, so it's financially much better for me to find a late model with a lot of miles already on it that someone else took the depreciation hit on. Also, at the point, it's easier to tell if the particular car is going to have some longevity or if it has a bunch of issues as there will be some history built up on that model.
It's def nice to have a new car every 2-3 years, but I've done a 180 in my thinking on it.
It's def nice to have a new car every 2-3 years, but I've done a 180 in my thinking on it.
All of the financial advise in this thread is sound. It is just what makes sense to you. Some people play golf or go out to eat and drop $100 a meal. Neither are good investments either. Neither is upgrading a smart phone every year. They are all luxury items.
If you like nice cars and can afford a lease payment do it. As many have said, if you find yourself getting a new car every 2 to 3 years you will likely be better off.
Exactly. I know a guy who every time I make a $50 purchase comments if I had put the money in a no load mutual fund making 6% interest it would grow to $165 in 20 years. Yes, he is retiring quite young with a nice nest egg, but has spent years living in the hood and driving junk cars to do it. More power to him, but my preference is to retire a little later and enjoy life just a little along the way.
To each their own and there is nothing wrong with that way of thinking with a little self control. I just think many people take it too far and want everything shinny and new and don't think about 30 years down the road. If we are talking extremes, I would rather be the person above that saves every penny to retire early than someone who buys/wants everything new to "keep up with the Jones" and then in 30 years realizes they don't have any retirement saved up and have to work until they are 80 years old.
Paid off my Trailblazer over 3 years ago and it's been great not having a payment over that time. I try to take good care of it, make it last, but like my last SUV, I will simply run it into the ground. Once the repair is worth more than the vehicle, sell for what I can and start over.
I'll tell you one thing that would really irritate me is having a mileage cap. Can you imagine looking out at your driveway and stressing about putting excess mileage on your car to avoid fees? The heck with that.
I'll tell you one thing that would really irritate me is having a mileage cap. Can you imagine looking out at your driveway and stressing about putting excess mileage on your car to avoid fees? The heck with that.
The thing with a lease is you're paying the depreciation with your payment. Usually the at the end of the lease there is a stated residual value of what you can buy the car for. Where you can come out ahead potentially with a lease is if the vehicle depreciates less over time you lease it and is worth more than that residual balance. Then you can buy the car outright at the end and sell it.
The dealer has nothing to do with this. The car at the end is going back to the car company, not the dealer, usually to be sold at auction.
Also, try to negotiate the lease off the best deal on the vehicle. If a car is $25k but the invoice is $20k try to negotiate to get the your payment off the 20k. This is called your Net Capital Cost. If the residual is figured off the 25k you just made 5k... 3 years down the road or however long you lease is.
Another thing to consider is the Money Factor or Finance Fee. This is what they want to use to figure out your interest payment.
I suggest searching "car lease math" or something similar to see it all broken down.
When leasing you need to know the invoice price of the car, typical dealer hold back if you can get it, residual value, and the money factor which leads to your interest rate, to know if you're getting a good deal.
Good luck. If you have more questions see if you can get some actual numbers for us to play with.
The dealer has nothing to do with this. The car at the end is going back to the car company, not the dealer, usually to be sold at auction.
Also, try to negotiate the lease off the best deal on the vehicle. If a car is $25k but the invoice is $20k try to negotiate to get the your payment off the 20k. This is called your Net Capital Cost. If the residual is figured off the 25k you just made 5k... 3 years down the road or however long you lease is.
Another thing to consider is the Money Factor or Finance Fee. This is what they want to use to figure out your interest payment.
I suggest searching "car lease math" or something similar to see it all broken down.
When leasing you need to know the invoice price of the car, typical dealer hold back if you can get it, residual value, and the money factor which leads to your interest rate, to know if you're getting a good deal.
Good luck. If you have more questions see if you can get some actual numbers for us to play with.
There is a pretty wide gap between having to work until I am 80 and sweating buying my niece a $50 gift until I run the financials on how that potentially affects my portfolio. I buy new cars and then drive them for 10-15 years. I'm 50-something and have purchased five new cars in 35 years for both me and my wife. I think that is more than frugal, but I still have people trying to shame me that a new car loses X percent of its value the second I drive it off the lot. Buying new cars makes me happy so they can go fish.
We're currently leasing a Camry - it's a beautiful car. No money down and our payment is around $200 a month. Probably the best I've ever felt about a new vehicle.
It works for us because my wife is the primary driver of the car. Her commute to work is about 5 miles round trip, so that allows us to use the new car for most of our side trips and still not worry about the 12K per year limit. We have three other cars that are completely paid for, but obviously have higher maintenance costs. We needed a 4th vehicle to accommodate all of the drivers in the house, and this was the most economical way to do it. We're kind of in a "sweet spot" where leasing made perfect sense for us.
When the lease is up, we should be back to just my wife and I as drivers in the house, so we'll have more flexibility on what to do to replace the vehicle - i.e., lease or buy.
It works for us because my wife is the primary driver of the car. Her commute to work is about 5 miles round trip, so that allows us to use the new car for most of our side trips and still not worry about the 12K per year limit. We have three other cars that are completely paid for, but obviously have higher maintenance costs. We needed a 4th vehicle to accommodate all of the drivers in the house, and this was the most economical way to do it. We're kind of in a "sweet spot" where leasing made perfect sense for us.
When the lease is up, we should be back to just my wife and I as drivers in the house, so we'll have more flexibility on what to do to replace the vehicle - i.e., lease or buy.
Leasing is essentially high-rate financing. If you don't believe me, then ask yourself why do auto dealers push leases? The truth is they make more money off of leases than they do on a sale. Anyone who says different is lying. If you are considering keeping the car beyond the lease, then when you throw in the cost of purchsaing at the end of the lease, the relative cost of the car to financing from the start is even greater. But, as you can see above, for some people paying the higher financing cost of a lease makes sense to them.
One more thing to consider before leasing....Ask the dealer your leasing the car from "What happens if (insert partners name here) gets hit by the proverbial city bus and the car was not involved and now I have a car with lease payments I no longer need because (he or she) is dead, what then"? Few quick finger strokes on Google will lead you to some horror stories. Can you imagine how much that would suck to have a leased car that is now sitting in your driveway for somebody that is now dead, just sitting there reminding you of the situation? Now some might say that can happen with anything and they are right, but I would imagine making lease payments on your dead partner's car would rank pretty far up on the sucky scale.
I just want to raise one issue that no one is talking about which is just because you don't have a payment, it doesn't mean you aren't losing money. Your vehicle still depreciates whether it's paid for or not.
The reason I made my last trade was I estimated my "paid in full" SUV was depreciating at roughly $200/month and I was getting into between $150-$200/month in maintenance but I could get a new 0% lease on a fully warrantied CUV for $325/month ($0 down/$0 Trade In).
So when the math made sense, I made the trade.
The reason I made my last trade was I estimated my "paid in full" SUV was depreciating at roughly $200/month and I was getting into between $150-$200/month in maintenance but I could get a new 0% lease on a fully warrantied CUV for $325/month ($0 down/$0 Trade In).
So when the math made sense, I made the trade.
All a bunch of great advice and I truly appreciate it. My wife works in town so she literally put on about a mile a day (one advantage to a small town.) So it's the question on if I want to lease a new vehicle or buy used now. I might try and get some numbers to throw around also.
Same here. Did that with my last SUV and I've got 119,000 miles on my current one-- which I bought with 97,000 miles on it. Now I'm putting "payments" into a savings account to buy the next one with cash once this one reaches the end. However, I did get my wife a brand new vehicle the last time around, but it's a Honda Accord that will hold it's value and we'll have it for a long time.
I like to have the pride in ownership and take care of my vehicles so leasing isn't for me. I also would not someone telling me how many miles I can put on my vehicle. Call me cheap, but I could not stand paying a per mile penalty for driving a vehicle.
For those that are worried about the mileage overage, it really only comes into play if you choose to just turn the car back in. Paying the penalty may be less costly than buying more miles on the front end, as others have mentioned. Other options at lease end, where the mileage penalty does not apply, is you can trade it in on your future vehicle, or, sell it outright. I personally have had more than one instance where carmax offered me more than the pay-off and I walked away with money in my pocket. Selling it personally is also an option that can put money in your pocket. The issue there is that the leasing company will charge you sales tax to buy it, then your buyer will be charged sales tax again. There are online companies that will process this sale as dealer (for a fee), to avoid the double sales tax. Again, leasing is a personal choice based on personal preference and circumstances, but it can be a good choice for some.
