Leasing a Vehicle

[joedplumber]

Thinking of leasing my next car since I only put about 8k miles per year.

My question is do you typically lease to be able to afford a nicer car that you could not otherwise afford to buy or do you lease the car you can afford to buy but have a lower monthly payment than had you bought it.

Just figuring what the typical reason for leasing is because leasing is much more cheaper on a monthly payment vs. buying. And of course I like the idea of a new vehicle every 3 years.

Also, I have no issue with always having a car payment (all about budgeting).

 

[goofy4tink]

Leasing our cars used to really bug my yankee minded father. He thought it was a huge waste of money...you have nothing to show at the end of the lease. But, when we lease a car, my dh knows that I have very dependable wheels.
We have always been able to have a car that we might not have been able to afford otherwise when leasing. And with my dd in college, we need something larger to get her to and from school.
When my dh's current lease is up in March, he thinks he will downsize and get something much less expensive in order to save some money.
I will look into the possibility of buying my car at the end of the lease..if the deal is good enough. That will get us through the college years. Then, I can downsize as well.

 

[kaligal]

Buying ends up being cheaper in the long run, so we buy.

 

[npmommie]

We always buy because we keep our cars for as long as possible. I had to replace my Camry 2 yrs ago after driving it 14 yrs. bought a new Fusion. But now our other car needs replacing 2005 Tucson which is worth nothing on trade. It's worth several thousand less than we got for our Camry which was totalled. Anyway I have never leased but considering it this time.

 

[wiigirl]

Buying ends up being cheaper in the long run, so we buy.

Us too...but leasing is always tempting.

 

[emer95]

I was just going to post about leasing too!

I have always owned my cars, so this is new for me. I am seriously considering leasing my next car. My minivan is a 2004, and I have 76,000 miles on it. Not bad for almost nine years, and we took that van to Florida, Georgia, Boston, Chicago, and other places. I only drive 7 minutes to work every day, plus take the kids to their various activities in town. My husband owns his car, so his can be the "road trip" car.

I am looking to do it because I had a huge car payment for 6 years, and as soon as I paid it off, things started going wrong. I haven't had A/C in three years because I'm too cheap to pay to fix it. Then I had a massive repair bill ($2,000) two years ago, and every time I take it for an oil change it needs a new this or that. I'm ready to drive something with a low monthly payment, that is always reliable. I'll still get one I can afford, in case I decide to buy it when the lease is over.

 

[AnnaS]

We have always owned our cars. My "kids" cars were also bought used or new. About six years ago I finally decided to lease for the first time. I see it as a treat since there are usually a few models I like and can't decide. This allows me to try a new vehicle and it is always new and dependable. So now we lease one and own one (I am not counting my sons).

 

[kimmar067]

....for the short term, it is most definitely cheaper [for us anyway] and I love that I know I'm getting a new vehicle in 2 or 3 years. Since we've leased from the same auto maker for our last 5 vehicles, when our lease is nearing its end, I shop around, but no one even comes close to the deals I get, which is why I keep going back to the same manufacturer....however, if I get the raise (or close to it) that I am anticipating next year, we may consider buying. We've had the same type of vehicle for our last two leases and I really love my car...

 

[tvguy]

Short answer is, if you want to do it, and can afford to do it, go for it.

Long answer, leasing is the most expensive way to operate a car, and you will never find a financial "expert" that recommends it.

Full disclosure: My family car is 25 years old, purchased new, and been paid off for 22 years. Yes, I have had some repairs in excess of $1,000 over the years....heck, the tires I bought last week were $915. But I bet my repair bills over the three most expensive years were less than the sales tax on a new car (and yes, you pay the sales tax on the FULL price of the car when you lease, even though you maybe only leasing ofr 3 years).

 

[WDWBarb]

Short answer is, if you want to do it, and can afford to do it, go for it.

Long answer, leasing is the most expensive way to operate a car, and you will never find a financial "expert" that recommends it.

Full disclosure: My family car is 25 years old, purchased new, and been paid off for 22 years. Yes, I have had some repairs in excess of $1,000 over the years....heck, the tires I bought last week were $915. But I bet my repair bills over the three most expensive years were less than the sales tax on a new car (and yes, you pay the sales tax on the FULL price of the car when you lease, even though you maybe only leasing ofr 3 years).

Yes, what he said!

I leased ONCE and would never do it again. I did it because I couldn't afford the car I wanted (and I was young and I really, really wanted it). I was a SAHM when I leased it and had a decent payment. Then I got a job that required me to drive so I had to put more miles on it than I expected. To get out of my lease would have cost me a fortune (the sum of the remaining payments + buyout value at end-of-lease) so I drove the car and figured I'd just have to deal with it at the end of lease (3 years). The car had lots of problems and I had to put money into it and there was no way I was going to buy it at the end of 3 years. When I went to turn it in, I paid $2,800 for extra miles (I had 15,000 allocated annually) and then they hit me with additional fees because the car had mechanical issues (and I had already paid a fortune for those problems).

I am pretty sure I stopped breathing for a minute when they gave me those figures.

In the end, I paid what I had to pay, turned over that car and went shopping for a new one. I had no trade-in and nothing to sell for a downpayment. It was awful.

So I bought a car that I could afford, paid it off early (by choosing a car that was a little under my budget) and I will never finance a car (purchase or lease) ever again. My most recent car had a GREAT trade-in value (love the Prius!) and I was able to finally get the car of my dreams (OK, still a Prius, but a newer one with more gadgets!).

And I'll drive it with no payment for many years.

That's just my $.02.

Oh! But if you do lease, don't drive it off the lot without GAP insurance. If you total your leased vehicle, your insurance company will pay only for the (depreciated from the second you drove it away) value of the car. But you'll still owe the remaining payments and the buyout value. I know a guy who totaled his car the day he leased it and made payments on it for 5 years because he didn't get GAP insurance to make up the difference.

 

[emer95]

Yes, what he said!

I leased ONCE and would never do it again. I did it because I couldn't afford the car I wanted (and I was young and I really, really wanted it). I was a SAHM when I leased it and had a decent payment. Then I got a job that required me to drive so I had to put more miles on it than I expected. To get out of my lease would have cost me a fortune (the sum of the remaining payments + buyout value at end-of-lease) so I drove the car and figured I'd just have to deal with it at the end of lease (3 years). The car had lots of problems and I had to put money into it and there was no way I was going to buy it at the end of 3 years. When I went to turn it in, I paid $2,800 for extra miles (I had 15,000 allocated annually) and then they hit me with additional fees because the car had mechanical issues (and I had already paid a fortune for those problems).

I am pretty sure I stopped breathing for a minute when they gave me those figures.

In the end, I paid what I had to pay, turned over that car and went shopping for a new one. I had no trade-in and nothing to sell for a downpayment. It was awful.

So I bought a car that I could afford, paid it off early (by choosing a car that was a little under my budget) and I will never finance a car (purchase or lease) ever again. My most recent car had a GREAT trade-in value (love the Prius!) and I was able to finally get the car of my dreams (OK, still a Prius, but a newer one with more gadgets!).

And I'll drive it with no payment for many years.

That's just my $.02.

Oh! But if you do lease, don't drive it off the lot without GAP insurance. If you total your leased vehicle, your insurance company will pay only for the (depreciated from the second you drove it away) value of the car. But you'll still owe the remaining payments and the buyout value. I know a guy who totaled his car the day he leased it and made payments on it for 5 years because he didn't get GAP insurance to make up the difference.

Holy cow, you just talked me out of it!

 

[jlewisinsyr]

I love leasing, new car every three years, no worries about mechanical issues and down time (time is money to me, having to deal with a car with mechanical issues drives me crazy, and with a used car, it's bound to happen, and usually unplanned).

If you drive under 15,000 miles a year, and especially under 12,000 and you often get a new car every 4 - 5 years, leasing is definitely a good option.

When people give lower cost figures typically they reference keeping a car beyond 5 years; this is a very true statement if you keep a car beyond a typical loan (typical loans on vehicles are 4 - 5 years). If you consistent in rolling over vehicles, leasing can be a much easier option.

 

[tvguy]

I love leasing, new car every three years, no worries about mechanical issues and down time (time is money to me, having to deal with a car with mechanical issues drives me crazy, and with a used car, it's bound to happen, and usually unplanned).

If you drive under 15,000 miles a year, and especially under 12,000 and you often get a new car every 4 - 5 years, leasing is definitely a good option.

When people give lower cost figures typically they reference keeping a car beyond 5 years; this is a very true statement if you keep a car beyond a typical loan (typical loans on vehicles are 4 - 5 years). If you consistent in rolling over vehicles, leasing can be a much easier option.

Well, with 78% of people keeping their cars 10 years, that would be a pretty good measure of cost of car ownership. And as another posted, YOU are responsible for non-warranty upkeep and repairs, on a vehicle you will not be keeping. A co-worker also ran into hundreds in reconditioning fees at the end of her lease to deep clean her coffee spills out of the carpet, chips in the paint and windshield....all things she thought were normal wear and tear.


http://content.usatoday.com/communi...ple-waiting-up-to-10-years-to-buy-a-new-car/1

 

[jlewisinsyr]

Well, with 78% of people keeping their cars 10 years, that would be a pretty good measure of cost of car ownership. And as another posted, YOU are responsible for non-warranty upkeep and repairs, on a vehicle you will not be keeping. A co-worker also ran into hundreds in reconditioning fees at the end of her lease to deep clean her coffee spills out of the carpet, chips in the paint and windshield....all things she thought were normal wear and tear.


http://content.usatoday.com/communi...ple-waiting-up-to-10-years-to-buy-a-new-car/1

Agreed, a lot of people keep there cars beyond the initial loan, but there is also a lot that do not, that cycle through them.

I don't pay for any maintenance on my car, it's all included.

As for reconditioning, these would be deductions on a trade-in as well, if you poorly maintain your vehicle (ie. fail to keep it clean, spill stuff and don't get it cleaned, don't the scuffed rim fixed from running up on a curb, etc.) then yes, you will be charged or you will need to pay for it to be fixed at turn-in.

You are renting the vehicle, just long term compared to say from a rental company. You are paying for the use and normal wear and tear; normal wear and tear doesn't include coffee stains, large scratches (these are documented in the lease materials of what qualifies), cracked glass, etc.

 

[njcarita]

i ran the numbers for us leasing vs buying................ and leasing was cheaper for us in the long run......cuase the incentives were so much better for leasing........... so we plan to buy out our car at the end of the lease period.......

 

[clarkshel]

The lease on our Honda van is coming up in a couple months, we will just buy out the lease. I leased my 07 Jeep and bought that out last year. I am looking forward to no vehicle payments in a couple months. We usually always lease out vehicles. If we don't like it or it is a POS, then we can just give it back to them and walk away. That is what we did with our 05 Grand Caravan. We also buy the extended warranties on our leased vehicles. That way we are never without a warranty while we are leasing.

 

[jlewisinsyr]

I'd strongly discourage anyone from buying out a lease, you're only extending your payments on 3 - 4 year vehicle further down the line; it makes zero sense. Not many people would consider taking a 6 or 7 year loan on a car, buying out a lease, especially financing it is very similar.

 

[tvguy]

Agreed, a lot of people keep there cars beyond the initial loan, but there is also a lot that do not, that cycle through them.

I don't pay for any maintenance on my car, it's all included.

As for reconditioning, these would be deductions on a trade-in as well, if you poorly maintain your vehicle (ie. fail to keep it clean, spill stuff and don't get it cleaned, don't the scuffed rim fixed from running up on a curb, etc.) then yes, you will be charged or you will need to pay for it to be fixed at turn-in.

You are renting the vehicle, just long term compared to say from a rental company. You are paying for the use and normal wear and tear; normal wear and tear doesn't include coffee stains, large scratches (these are documented in the lease materials of what qualifies), cracked glass, etc.

Well, when you keep your cars forever, there are no deductions for reconditoning because they are pretty much used up when you get rid of them. Which is why I never consider the resale history of a particular car when buying a new one, I plan to use up all the cars value before getting rid of it.

Slightly off topic, but I tried to donate a 27 year old car to charity. Around here, I found out all the charities contract their car donation operations to the same private company. Kept getting turned down by different charities, finally the company called me and told me what was going on. They were looking for 7 year old cars or newer, less than 100,000 miles, with a current smog check, ready to be sold without any reconditioning. Gee, if I had that kind of car, I wouldn't be donating it!

 

[clarkshel]

I'd strongly discourage anyone from buying out a lease, you're only extending your payments on 3 - 4 year vehicle further down the line; it makes zero sense. Not many people would consider taking a 6 or 7 year loan on a car, buying out a lease, especially financing it is very similar.

In our case we paid cash for the remaining balance, so we didn't have an extra loan to pay off. We will put the Honda on our line of credit when we pay that out. We will pay that off completely in about a year. When my current jeep dies, I will lease my next vehicle.

 

[joedplumber]

Well, with 78% of people keeping their cars 10 years, that would be a pretty good measure of cost of car ownership. And as another posted, YOU are responsible for non-warranty upkeep and repairs, on a vehicle you will not be keeping. A co-worker also ran into hundreds in reconditioning fees at the end of her lease to deep clean her coffee spills out of the carpet, chips in the paint and windshield....all things she thought were normal wear and tear.


http://content.usatoday.com/communi...ple-waiting-up-to-10-years-to-buy-a-new-car/1

I really think it also depends are the car company as well. Friend of mine leased an Audi and got nickled and dimed at the end of the lease.

My inlaw on the other hand leased a Honda for 3 years stayed under the mileage allowance 30k and did routine oil changes and tire rotations and never paid another dime and hopped into another 3 year lease when it was done.

On another note. In CT you do not pay sales tax on the full lease amount. Sales tax is added to each monthly payment (confirmed with dealership and leasing owners). If you choose to buyout the vehicle at the end of the lease you will owe sales tax on the residual value.