Car experts! Buy vs Lease ?

[dakcp2001]

Hi all! You were all so much help with the car buying tips, but well, frankly the salesman spoke to my DF as if I did not exist and as though I was not there, and since it was ME looking for the new ride, this did not end well for said salesman. I left rather quickly. I have not been able to get ANY info out of dealers via email, they all insist on coming in person so I was getting nowhere with that avenue. And I got a lot of receptionists when I called.

Anywho, I have always been a fan of buying a car, since I think its odd to pay into something for years that leaves you with nothing in the end. Can someone please explain to me the PROS of leasing a car? I guess I am trying to figure out if leasing would be an option for me, and well, I know nothing about it.

SHould I buy or lease? Pros & cons of each? Thank you all in advance for your help!

 

[Cheshire Figment]

If you own a business and file a Schedule C then it may make sense to lease as the lease payments could be considered a business expense (within certain limitations) and would be tax deductible. Or if the vehicle is leased by a partnership or corporation, again with primary use for business.

However, for a private party at the end of the lease period you end up with nothing, unless you purchase the car at the residuary value, and even then you now have to either come up with cash or make payments on a three year old car.

 

[princessbride6205]

I think it depends where you are financially. I have family who wouldn't dream of doing anything BUT leasing. They can afford to always have a car payment and like the flexibility of not buying something that's going to depreciate so much and that they'd have to fix. They like only having the car while it's under warranty. Your monthly payment with a lease will nearly always be lower than if you tried to finance a car.
The best bet from a financial advisor's point of view is always going to be to purchase a car, particularly a used car.
The other thing to think about is that there isn't an easy way to get out of a lease. I got talked into a lease just before I finished college - with the salesman and your own father telling you its the best way to get a car, it's hard to resist! About a year later, I was low on money, wishing I had lower payments and could get rid of the car, but couldn't. If your situation might change, what would you do if you were stuck with this car?
One more thing - I learned this at the Honda dealer where we got our last car. On certain car models, the dealer is able to make better deals if you lease. Whereas on other car models, they can negotiate more on purchase/finance. For example, they could offer low lease payments on an Accord but the payments for a Civic were almost as high.
Certain brands of cars won't even do leasing. A family member was looking at a Buick SUV a few months ago and the dealer said they can't do leases.

Do your research and see what option is best for you.

 

[bumbershoot]

I leased for 12 years. I was happy with it for 10. The last 2 I was just waiting it out.

I liked the relatively low payments. I liked having a new car. With the first car (Jetta), VW was giving 2 years of free maintenance, and that was LOVELY. By the Beetle, that deal was gone. Then I got a Golf.

Although I *thought* I knew what I was doing, towards the end I finally realized that I hadn't gotten a DEAL on each new one where they waived fees as they hinted at...instead, I'd been paying those fees b/c they were rolled into my new lease. No wonder my Golf's payments were almost twice the Jetta's...

At the end of the Golf, I paid about 1500 in lease end fees. I had a scratch on the front and they charged somewhere between 100 and 200 for that. PLus interest on it (I just saw that yesterday...I'm reorganizing my filing system and checked it out with fresh eyes). Over-mileage, etc etc. Turn-in fee, that's a fun one (considering you also get a delivery fee...and it's not like they are bringing it to you or coming to your house to pick it up, LOL).

What did I get out of it? 3 really lovely new cars that gave me enjoyment for 10 years. Because I knew I had to turn them in, I took really good care of them. I had relatively low monthly payments that weren't a burden until the last couple years.

I did have to keep full insurance coverage on them, which gets spendy. But I think you have to do that with a loan as well, so that might not be a difference.

The person I am now is better with owning a car, especially given what we all know about the chemicals that create the new car smell. But those 10 years were good! And whlie I've realized I didn't know as much as I thought I knew about the lease...I knew much more than others, and wasn't ever really surprised by charges at the end, etc. I knew they were coming.

Oh, there's no point to pre-paying, as the amount you'll pay over the lease is the amount you'll pay. It's not like our car loan where if we pay the Sept bill on August 14th instead of Sept 1, we pay a third of the interest that we would have paid on the 1st. With a lease, the total is the total.

 

[MAH4546]

I can't stand having the same car for more than 2-3 years nor do I want to bother with a car outside of warranty. I always lease because I switch cars often and I don't drive more than 12,000 miles a year.

If the fact that you "own" nothing from the money you are spending does not bother you and if you don't like keeping cars long, leasing makes sense. Also, you can typically get a nicer car leasing than the same amount of cash would get financing.

 

[roliepolieoliefan]

Leasing is like renting or like having an eternal car payment.

I know people who lease because they like a new car every 3 years and don't mind having an eternal car payment.

I like paying on something knowing it will be mine when I'm done and not have to worry about mileage and things like that. Plus we keep our vehicles for a long time.

 

[penguin087]

I've purchased 2 new cars and leased 2 new cars. I like having a newer car and I don't mind having a payment. I was happy with the leases until the end of the 2nd one. At the end of the lease the miles on the vehicle were so low and it was in such great shape it would have been a gift to the dealer to turn it in. I only owed $10000 on it. They had one on the used car lot that wasn't nearly as nice as mine for $23000! That was almost what it cost new. I had no choice but to buy out the lease even though I didn't really want the vehicle.
So here I am, still driving the same car, still making payments on it, and I'll never lease again. Not for the same reasons as most people but because I'm so easy on cars and I dont get near the mileage allowance. I could just sell it out right but it is in great shape so we decided to keep it for our son or just as an extra when I finally do get a new car. Its 4 wheel drive so it is always nice to have around.

 

[BridgetBordeaux]

From a money/cost standpoint--leasing is generally more expensive than owning. Like someone said....it is like renting a car just about forever.

A better financial approach is to buy a car and pay it off in 4-5 years.......than hang on to it for at least and extra year or two.

Most brands are now pretty reliable, so having it for 7-8 years and 120,000 miles is generally not too tough to do.

If you want additional peace of mind, and you are committed to keeping the car for 100,000 miles you can buy a FACTORY warranty and add that into the loan balance.

We bought a truck in 98, paid it off, and are still driving it. It gets an "A" for reliability and cost of repairs.

We bought a station wagon in 2004 (it was a 2002 model) and paid it off. It gets a "C" for reliability and cost of repairs.

Be sure to check out Consumer Reports for info on the cars themselves and sometimes you can find articles on leasing vs buying.

Good luck!

 

[Crazy Hakim]

>We bought a truck in 98, paid it off, and are still driving it. It gets an "A" for reliability and cost of repairs.

Bravo! Me too! (Knocking on wood, quickly) I have a Ford Ranger, 1997, with very close to 240K miles! Been driving FREE for almost 10 years now. Still looks good, no dents, dings or rust! Interior is clean. This car does not owe me one penny!

 

[PinkRhombus]

http://www.daveramsey.com/etc/lms/drive_free/

 

[minnie1928]

I've leased one car and at the end of the lease term I turned the car back in. For years that car haunted me because the leasing company started to report my payments as late, after I had turned the car in! Thankfully I had kept the receipt showing the car as returned, with the date. I fought with them on several occasions, I would no sooner think it was off my report and a few months later it would come back. I still have that receipt, wondering when I'll need to use it again...and it's from 1998!

I was telling this story to a friend of mine recently, she's have a very similar problem with a car she turned in.

 

[DawnM]

We have 3 cars.....all fully paid for.....I will NEVER have a car payment again. We have started a fund for a future car purchase and will purchase with cash.

IMHO the ONLY reason to ever lease is if you are needing newer cars because your business requires you to entertain or drive clients around AND your job is very well paying.

DH works in an office and noone sees his car.....his '96 Saturn gets him there just fine.

Dawn

http://www.daveramsey.com/etc/lms/drive_free/

 

[patsal]

http://www.daveramsey.com/etc/lms/drive_free/

Thanks, not a huge Dave fan but many of the things he says make sense and this was one of them. I have been working towards this for use with my next vehicle--the kids are older and need less from me and my work commute is only 34 miles round trip. I figure I could get something smallish and fully paid for and get myself back into the savings game without any real sacrifice!

 

[HM]

Do you drive a lot? Many leases are very strict about the amount of miles you are allowed and they charge a lot for the overage. If you drive a lot of miles, a lease is not for you.

 

[dawson5]

Do you drive a lot? Many leases are very strict about the amount of miles you are allowed and they charge a lot for the overage. If you drive a lot of miles, a lease is not for you.

There are different levels of mileage. I think the minimum/standard is 12,000. Because of hubby's work and who we've leased through, they often upgrade the 12,000 to 15,000 free of charge for us.

We have one car that we are buying and one we are leasing. I will never lease a car again, hubby somehow convinced me that we needed to get a new, bigger vehicle. We traded in my paid for car, his paid for car and leased a full-size expedition. we got cash back for not using all of the trade on the lease and still had a smallish payment. It killed me after 2 or 3 years to turn it in and there was a $500 fee to turn it in. They came to my house to pick it up about three days before the end of the lease, we already had the replacement car so it wasn't a big deal but I still feel like they should have credited me something for that as I didn't get the full term.

Hubby's work gives him a car allowance, so he chooses to lease a vehicle. we are still responsible for plates and insurance but in the end, I think it costs us about $200 a year for him to have the car, not including gas. He works at a dealership, so we get d plan on new cars. He feels that because of where he works, he needs to have that newer car. I don't get it but I guess that's just me. That being said, I will drive my car until it won't go down the road anymore. And agree with pp then when my car is paid off, the payment money will be going into a fund for a car when this one does die--hopefully not for a long, long time.

 

[Cheshire Figment]

Rule of "drive until it drops"

1964 Mustang - at 98,000 managed to warp heads but was able to trade it in

1969 Cougar XR-7 Convertible - at 232,000 needed engine overhaul, body work, reupholstery, and lots of other stuff. Sold it.

1987 Plymoth Acclaim - at 189,000 transmission failed. Junked.

1997 Ford Taurus - at 179,000 needed about $4,000 woth of work. Traded in.

2008 Ford Edge - currently has only 23,000 and I expect it to last many years

For me ownership is much better than leasing.

 

[dakcp2001]

Thank you all for your help! I do drive a lot, so it looks like leasing is not for me!


My current car is a money pit, over the last year I have dumped over 3K into repairs. I am so sick of being stuck on the side of the road. I am sick of my car being at the mechanics for 2 or 3 days. On one hand you think, what else could possibly break or go wrong, on the other you think of big things like Engine or Transmission. It is time to get rid of this car. I have been car payment free for a while now, but I have been spending a fortune on repairs. And I want to feel safe. I don't like being stuck somewhere.


I have never bought a new car before. But at this point, its 72 months 0% with 4500 worth of incentives, so when compared to the year or two old models on the lot where you lose the incentives and 0%, its about the same to get the newer one. I got my own financing but it ends up being a wash, either way I go. I love the idea of having a warranty and I love the idea of driving down to Disney instead of flying should I choose. That is not something we could do now with my current car, we wouldn't make it out of the state. And well it has no a/c. lol.


The Dave Ramsey link is unrealistic. Im not getting a loan with 10% interest and a payment of over 400 dollars, and he didn't mention the cost of repairs anywhere in that big projection of svings. That savings ends up being quite a bit less if your dumping hundreds of dollars into repairs every other month.