Leasing a Vehicle

[SaraJayne]

We drive way too much to ever consider leasing.

 

[southernjoy]

Hey ya'll

I have been leasing for I don't know how long. I think I'm on my 8th vehicle now and love it!

And I just got a early Christmas Gift from the dealership I lease with.

True Story:

Leased a 2011 Pilot in February 2011. Got a call in November 2012 from the dealership. Would you be interested in turning in your 2011 Pilot for an identical brand new 2013 pilot. It would be a new 3 year lease and we will bump your monthly mileage allowance from 12K to 15k. Same payment and no money down.

I jumped at it!!!

Well I found out why they did it. The dealer bought out my 2011 lease for $28k and were selling similar used Pilots on their lot for $33k-$35k.

It was a win win for everyone!

I Love Leasing!!!

 

[tvguy]

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.

Yeah, this was BMW.

Doesn't surprise me about the sales tax, California always wants the tax money up front. You even have to pay sales tax on the amount of any rebate in California.

 

[Squirlz]

You ever think about why all the ads talk about lease prices? It certainly isn't because the dealers are trying to do you a favor. A customer shopping "payments" is a salesman's dream.

 

[joedplumber]

You ever think about why all the ads talk about lease prices? It certainly isn't because the dealers are trying to do you a favor. A customer shopping "payments" is a salesman's dream.

Could not agree more! I always do internet shopping and research. Than fax a deal sheet to about 6 local dealers that say here is exactly want I want and here is what I will pay (never not found a dealer work with me). Then we can work out the financing afterwards. Works every time and make the whole experience much more enjoyable.

 

[joviroxx]

I see a vehicle as an expense not an asset to own. I will always figure a car payment into my budget. I have leased vehicles for the past 16 years. In all that time, Ive only had 1 disagreement with a leasing company about wear and tear. I love leasing. I have a new car, under warranty all the time. Ive never had to have any kind of major car repair expense.

One of the easiest freebies to negotiate into a lease is free maintenance.My current and past leases both did. I didn't pay for oil changes or tune-ups.

Ive also had the experience that with market fluctuation the lease vehicle actually had equity. The dealer buys the vehicle and then had extra money to put into my next lease.

Leases aren't for everyone, but I will never buy a vehicle again.

 

[BlovesC]

I see a vehicle as an expense not an asset to own.

I'm definitely starting to feel that way too. My last two cars I purchased new, but I'm already looking into a lease for next time. The car I'm driving now I paid for in cash when I bought it, which was a huge mistake for many reasons, but mostly because I wound up hating it. It's only a few years old but barely worth half what I paid for it. I really have no desire to throw money away like that again. If I had leased the car, I could have gone right back and negotiated into a different model.

Also, I simply can't handle car trouble. It's too stressful to me, and I have a bit of an issue with mechanics because the last time I took a car in for servicing, it wound up bursting into flames the day after I picked it up. By the time the fire department extinguished it fully, there was no way to tell what had caused it, so I never found out what they did, but it certainly wasn't a "normal" problem.

I seem to have a three or four year limit with cars before I turn to something newer, so leasing just seems to make the most sense for me. It's funny how many in this thread have mentioned their dads...I know my dad will be SO disappointed in me for leasing and I'll probably try to avoid mentioning that over the phone for quite awhile. But I'm going to give it a try!

 

[BeachLove]

I lease one of my cars and its great. Love having a warranty and a constant new car for travel/work. I plan on getting another lease after this one, its not because I can't afford to buy. Free maintenance is a great bonus! Don't really care if I always have a payment. I do have cars that I own outright and once those are run into the ground I will also purchase again in addition to leasing.

My parents on the other hand are outraged that I lease one car. Yet, not outraged enough since they keep asking if they can buy it out after the lease.

 

[njcarita]

well i dont know...... i ran the numbers for my car leased than buying out...........vs financing out right and it was CHEAPER to lease????..............and my car comes with free tires for life and free oil changes for the first yr....................

 

[antmaril]

I see a vehicle as an expense not an asset to own. I will always figure a car payment into my budget. I have leased vehicles for the past 16 years. In all that time, Ive only had 1 disagreement with a leasing company about wear and tear. I love leasing. I have a new car, under warranty all the time. Ive never had to have any kind of major car repair expense.

Leases aren't for everyone, but I will never buy a vehicle again.

This is exactly how I feel. I haven't owned a car in over 20 years. I've only paid for excess wear and tear once and that was only $260. It was not unreasonable. Leasing works for me and I most likely will never own again.

 

[tvguy]

I'm definitely starting to feel that way too. My last two cars I purchased new, but I'm already looking into a lease for next time. The car I'm driving now I paid for in cash when I bought it, which was a huge mistake for many reasons, but mostly because I wound up hating it. It's only a few years old but barely worth half what I paid for it. I really have no desire to throw money away like that again. If I had leased the car, I could have gone right back and negotiated into a different model.

This kind of is what I don't get about leasing. With a lease you are paying owner for the depreciation on the car, the interest on loan that whoever is leasing the car to you is paying, and profit to the leasing company. And generally there is an early termination fee. There is no free lunch. At least if I buy the car, at the end of the payments I have something, and with modern cars, you likely will be able to go 10 years without major repairs.

 

[Squirlz]

Sounds like a lot of people are falling for the hype. Math is good.

 

[AndyLL]

This kind of is what I don't get about leasing. With a lease you are paying owner for the depreciation on the car, the interest on loan that whoever is leasing the car to you is paying, and profit to the leasing company. And generally there is an early termination fee. There is no free lunch. At least if I buy the car, at the end of the payments I have something, and with modern cars, you likely will be able to go 10 years without major repairs.

You are not required to buy a lease based on payments. You can lease it based on price just like you can with a purchase.

When you purchase a car you lose 30% of the value of your 'asset' the day you drive off the lot.

As you said... you have something at the end of the payments. Of course it may not be worth much and you are stuck with it.

WIth a lease if market value of your car at the end of the lease is high you can purchase it. If the market value is lousy you can dump it and the lease company takes the hit.

When you purchase you pay sales tax on the full purchase price. With a lease you only pay taxes for the years you own it.

With a lease you are usually under warrenty for the entire time you have the car.

If you look at Edmonds the maintaince/repair costs double after 3 years and go up every year.

Leases rarely require a down payment... you take that $5000 down payment and invest it you will earn more then you are paying in lease charges.

Financing a car is typically done by banks not owned by the car manufacturer. That want to make a profit on the financing and dealers will offer financing through banks that give the dealers the best deal... not the buyer. Most car manufacturers now do the lease financing themselves and advertise sweetheart lease deals that the dealers really can't get around.

Sounds like a lot of people are falling for the hype. Math is good.

I agree but probably not in the same way as you.

Paying a premium upfront to purchase an asset that will depreciate 60% in 5 years doesn't make sense... especially since that 'asset' will be technically out of date after those 5 years.

I used to program 15 years ago the software that dealers use to try to take every extra dollar out of your wallet that they could.

Dealers loved the 'educated' buyer who would spend hours negotiating a price around invoice and then would procede to make 1000s off the trade in of that 'formerly purchased' car and then really make their profit off the financing.

Back then used cars ( profit off of trade ins ) and financing were the profit centers of dealers.

Today it is used cars and service ( mainly from out of warrenty cars ) that are the profit centers for dealers.

That 'math is good' people are making dealers a lot of money these days.

Dealers use leases to move cars and buyers to make profit.

 

[AndyLL]

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.

You got a lemon. If you had purchased it you still would have had a lemon. You would have still had to put in the money during those 3 years. If you had purchased it and it had mechanical issues after 3 years you still would have had to put in the money to fix it or discount the selling price if you got rid of it.

The high milage you had on it would have affected what you could have sold it for if you had purchased it.

If you had purchased it you would have been likely to have been stuck with it for another 1-2 years with all of its problems.

Yes, what he said!

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.

No difference with a purchase. That loan doesn't magically go away if you total it. Cars depreciate 20-30% once you drive it off the lot.

 

[tvguy]

.

WIth a lease if market value of your car at the end of the lease is high you can purchase it. If the market value is lousy you can dump it and the lease company takes the hit.

THAT DEPENDS WHETHER TO PURCHASE GAP INSURANCE, OTHERWISE YOU ARE ON THE HOOK FOR THE DIFFERENCE AT THE END OF THE LEASE.

When you purchase you pay sales tax on the full purchase price. With a lease you only pay taxes for the years you own it.

MUST VARY FROM STATE TO STATE, HERE, YOU HAVE TO PAY THE FULL SALES TAX ON THE PURCHASE PRICE OF THE VEHICLE, WHICH CAN BE DIVIDED OVER THE TERM OF THE LEASE

With a lease you are usually under warrenty for the entire time you have the car.

If you look at Edmonds the maintaince/repair costs double after 3 years and go up every year.

Leases rarely require a down payment... you take that $5000 down payment and invest it you will earn more then you are paying in lease charges.

MOST OF THE LEASE "SPECIALS" IN NEWSPAPER HERE REQUIRE SEVERAL THOUSAND DOLLARS DOWN FOR WHAT THEY CALL "DRIVE OFF". SOME OF THE ADS SAY SALES TAX AND LICENSE FEE REQUIRED AS THE DRIVEOFF PAYMENT

Financing a car is typically done by banks not owned by the car manufacturer. That want to make a profit on the financing and dealers will offer financing through banks that give the dealers the best deal... not the buyer. Most car manufacturers now do the lease financing themselves and advertise sweetheart lease deals that the dealers really can't get around.



.

 

[bettymae1121]

When you purchase you pay sales tax on the full purchase price. With a lease you only pay taxes for the years you own it.


Paying a premium upfront to purchase an asset that will depreciate 60% in 5 years doesn't make sense... especially since that 'asset' will be technically out of date after those 5 years.

As for the taxes, it depends on the state. I'm fairly sure that where I live (IL) you pay taxes upfront for the full sale price of the vehical. Even if it's a "no money down lease" you have to fork over a thousand or two for sales tax at the time you sign for the lease.

As for the depreciation, I think that only matters if you're the type that wants a new car every 3-6 years. I bought a Saturn in '98 and almost 15 years later my DH is still driving it 80 miles round-trip to work each day. What do I care that it was only worth $5k in 2003 or $2k today?

Also, depending on the make/model you're talking about, a lot of late model used cars in good condition are selling for only a few thousand less than a brand new model these days. The used value of a 3-5 year old Honda or Toyota sedan might surprise you.

 

[I Love Pluto]

I buy my car, keep it as long as it will go, then replace it.

My DH leases - getting a new car every 3 years. It's a great idea for a husband & wife.

 

[SaraJayne]

I buy my car, keep it as long as it will go, then replace it.

My DH leases - getting a new car every 3 years. It's a great idea for a husband & wife.

If we didn't have kids, we'd probably lease, too, though I don't know if DH would go for that. LOL

Kids are pretty dang hard on cars, so there is no way we'd be able to do it until they were out of the house.

 

[jlewisinsyr]

THAT DEPENDS WHETHER TO PURCHASE GAP INSURANCE, OTHERWISE YOU ARE ON THE HOOK FOR THE DIFFERENCE AT THE END OF THE LEASE.

This is completely wrong! All general consumer leases are closed-end, meaning the final value is set and regardless of market value, there is no further obligation. It is possible to get an open-ended lease, but they are VERY rare and gap insurance would mean nothing in this case as that's not what gap insurance is.

Gap insurance is only utilized if the vehicle is declared a total loss due to an accident/comprehensive claim and the difference between the residual balance is greater than the insurance/market value. Gap insurance is almost always included in closed-end leases from a dealership and it's fairly inexpensive anyway. Rarely, if ever do you see gap insurance for consumer financing, including dealership financing, it just is rarely purchased/leveraged.

Regarding taxes, here is a great site that explains how taxes are calculated and the exceptions to how these are calculated:

http://www.leasetips.com/salestax.htm

The only state that charges up front on the purchase price is IL, all others are based on the lease payments or depreciation amounts (cap minus residual).

 

[clarkshel]

This is completely wrong! All general consumer leases are closed-end, meaning the inal value is set and regardless of market value, there is no further obligation. It is possible to get an open-ended lease, but they are VERY rare and gap insurance would mean nothing in this case as that's not what gap insurance is.

I agree with this. In 2008 when the lease on our Grand Caravan minivan was up, we where going to buy out the lease, but the buyout was about $4000 more than what the van was actually selling for. We tried to negotiate a lower buyout, but Chrysler would not budge on the price. So we let the lease go back. No extra charges.