Buying vs. leasing a new car

[BoardWalkBelle]

What are the pros and cons to leasing vs buying a new car?

 

[lost*in*cyberspace]

A simple Google search will give you a lot of information.

 

[taylor3297]

To me the biggest con is the limited number of miles that you can drive each year. Most companies allow you 12,000 miles a year. If you go over the amount there is a hefty fee in the end.

So if you lease for 3 years that is 36,000 miles and go over that amount you can be charged anywhere from .10 to .25 per mile.

 

[redrosesix]

To me the biggest con is the limited number of miles that you can drive each year. Most companies allow you 12,000 miles a year. If you go over the amount there is a hefty fee in the end.

So if you lease for 3 years that is 36,000 miles and go over that amount you can be charged anywhere from .10 to .25 per mile.

I agree this is the biggest deciding factor, since it really comes down to how much you save.

Where we live we would pay tax on the whole vehicle if we bought it -- just a portion of each payment if we lease it. That makes a huge difference in how much we actually pay for a vehicle. If you plan to walk away from the car when the lease ends, you really don't want to be paying tax for the whole thing.

For us the payments for leasing are about 60% of what they would be if we bought the vehicle. And right now I'd rather commit to a lower payment than a higher one -- 3-4 years is a long time when you have kids, and there really is no way to calculate exactly how your circumstances will change

We leased our last vehicle and then bought it out at the end and financed those payments (just because the car was fine and we really didn't want a different one) -- but we also payed less than 1 % interest on the lease and those purchase payments. we'll be leasing the next one too.

 

[klawso@att.net]

Mileage is negotiable...the big thing here is know how many miles you will drive and negotiate based on that (and then don't go over or under substantially or you'll get less bang for your buck).

 

[pigletto]

It's really not something we have ever considered because we would go way over the mileage with my husbands commute. He's driving 2.5 hours a day to get to work and back. We rack up the miles very quickly.
I realize the mileage is negotiable, but I can't imagine being able to double the yearly maximum.

Even if I could, I don't want to constantly worry about going over either. It would be nice to have the lower payment but we'd get hammered with fees at the end of the Lease most likely.

 

[ssawka]

Another con is if you are in a fender bender, you have no choice but to get the car repaired if it is leased. If you own it you can decide to do what you want.

I would never lease our primary car since I know we would probably go over the mileage. I would possibly consider it for a commuter car, if your commute is relatively short.

 

[MAJPLO]

I agree this is the biggest deciding factor, since it really comes down to how much you save.

Where we live we would pay tax on the whole vehicle if we bought it -- just a portion of each payment if we lease it. That makes a huge difference in how much we actually pay for a vehicle. If you plan to walk away from the car when the lease ends, you really don't want to be paying tax for the whole thing.

For us the payments for leasing are about 60% of what they would be if we bought the vehicle. And right now I'd rather commit to a lower payment than a higher one -- 3-4 years is a long time when you have kids, and there really is no way to calculate exactly how your circumstances will change

We leased our last vehicle and then bought it out at the end and financed those payments (just because the car was fine and we really didn't want a different one) -- but we also payed less than 1 % interest on the lease and those purchase payments. we'll be leasing the next one too.

How long was the lease and for how long was the financing after the lease period was over? How did the payments compare between the two periods?


What type of deal do you usually end up getting to buy at the end?

 

[goofyredraider]

My husband is in the car business, and we lease for several reasons. Yes, there are limits on mileage, but there are ways to "get out of that" without racking up fees. I also think you need to know what kind of driver you are - how many miles per year, wear and tear, whether you want a new car every 3-4 years or drive until it dies, whether you have negative equity in your trade, etc.

 

[BoardWalkBelle]

Im not llooking for a new vehicle now, but am thinking about two yrs down the road. I am thinking with leasing because you dont need as much of a down payment, and monthly payments are lower(i dont earn alot so this would help me).Also, dont you have to have a better credit rating to lease vs. buy? My credsit is pretty bad right now, but in two years or so it should be much better. Also can you trade in your old vehicle on a lease? I keep my vehicles forever..my vcurent vehicle is 15 yrs old(i am the original owner).

 

[windycitymom]

Leasing a new car only makes sense if you are the type of person who always gets a new car every 2-3 years. Leasing is not a "budget" thing to do. You are responsible for all repairs, dings and other upkeep. If you owe money at the end of the lease, they will conveniently roll that amount into the cost of your next lease so you are paying even more for the next car.

I've had several neighbors who have leased a Lexus, BMW, Escalade, etc. and then come to find out they can't afford to help their kids pay for college. Well, if you drove a Ford Focus instead, then you could afford to help your kids. What's your priority?

The last thing I want to do is keep up with the Jones' or drive what the Jones' drive because they are in debt up to their eyeballs trying to impress people. The guy driving the American made compact or mid-size car - he's probably got a hefty bank account. Don't believe me? read The Millionaire Next Door by Dr. Thomas Stanley.

 

[BoardWalkBelle]

LOrd knows im not looking to drive an expensive luxury vehilce..just an average american compact or so, or maybe an suv nothing luxury..egads no lol

 

[angierae]

I don't lease because I would like a period of time with no payments. I buy my cars, keep them about twice as long as the payments cost (or as long as the repairs aren't as much per year as payments would be) and then buy another one. I kept my 99 Ford for ten years and 160k miles before buying my 2008 Cobalt (in 2009, slightly used) and I'll probably have that car for another six or seven years.

 

[ssawka]

The guy driving the American made compact or mid-size car - he's probably got a hefty bank account.

LOrd knows im not looking to drive an expensive luxury vehilce..just an average american compact or so, or maybe an suv nothing luxury..egads no lol

What is an American made car? You cannot determine that by brand anymore.

 

[Handbag Lady]

I just can't lease a car. It goes against my nature to throw away money and have nothing to show for it at the end of the lease.

 

[ssawka]

I don't lease because I would like a period of time with no payments. I buy my cars, keep them about twice as long as the payments cost (or as long as the repairs aren't as much per year as payments would be) and then buy another one. I kept my 99 Ford for ten years and 160k miles before buying my 2008 Cobalt (in 2009, slightly used) and I'll probably have that car for another six or seven years.

This is a very good point. If you lease, your monthly payment may be less, but you are committing to always having a car payment.

DW and I used to buy a new car every 5 years and run it for 10 years so we would only ever have 1 car payment and 2 fairly reliable cars. This worked out great until the transmission went on my PoS Mazda Tribute (a Ford product) at 86K miles. I'm still bitter about that, because if it was a Kia or a Hyundai it would have still been under warranty.

 

[mrodgers]

This is a very good point. If you lease, your monthly payment may be less, but you are committing to always having a car payment.

DW and I used to buy a new car every 5 years and run it for 10 years so we would only ever have 1 car payment and 2 fairly reliable cars. This worked out great until the transmission went on my PoS Mazda Tribute (a Ford product) at 86K miles. I'm still bitter about that, because if it was a Kia or a Hyundai it would have still been under warranty.

If it was a Toyota RAV4, it wouldn't have gone out at all needing the warranty

Just an FYI, had you changed the transmission fluid in the pan (4 quarts in the pan, I think 8 or 9 quarts total in the engine) every other oil change, you wouldn't have had problems with the transmission.

It is a POS transmission though as is the whole vehicle. I have more repair/maintenance cost in 6 years and 117k miles purchased brand new in that one vehicle than I have combined total in my last 6 Toyota, Honda, and Nissan cars all purchased used with 60-100,000 miles at purchase and driven to at least 175,000 miles.

I hate our Mazda Tribute (I usually call it a Ford Escape on the net since that is what folks will recognize) but it does only have 117k miles and only has 2 payments left. A lot of miles to still have payments, but it is my normal low mileage vehicle that I would otherwise purchase used.

 

[dhuba]

I also feel that I wouldn't want to pay for something and then have nothing in the end. Suze Orman thinks leasing is a bad idea, too.

 

[njcarita]

I've had several neighbors who have leased a Lexus, BMW, Escalade, etc. and then come to find out they can't afford to help their kids pay for college. Well, if you drove a Ford Focus instead, then you could afford to help your kids. What's your priority?

maybe they chose to have their kids responsible for their own educations????? My parents did not pay my college or my sisters..... and yes they drive caddys and own 2 apartment building and 2 lovely homes.......... why because the thought it was a good life lessons and it was ............. I worked my tail off in school cause I was writing the check for my tuition from selling shoes at Macys................ my son thus far has been awarded an academic scholarship for 1/2 his college tuition next yr............ an he is busily working and saving up his tuition.................... NOT everyone feels its a parents responsibility to put there kids thru college..................

 

[njcarita]

i leased for the first time this yr................. and we plan to buy the car out at end of lease.................. we ran number leasing than buying out against financing from beginning............ and leasing than buying was much cheaper for us cause of all the leasing incentives when we went to buy............... run the numbers either way and see what works for u