Car lease vs. buying -- what am I missing here?

[EdiePA]

I have a 2003 Toyota Rav 4, which is starting to nickle and dime me. (Brakes, tires, oil pan leak, etc.) I'm also a female and always feel like I'm being ripped off when I take my car in for servicing.

So, I was looking at leasing vs. buying a new car. Right now I'm saving $300 a month toward a new car. Toyota has leases starting at $199. I realize that I wouldn't have the equity of a car. BUT I would have:

a car under warranty
a lease that's less than what I'm budgeting now
less worries (and car repairs always freak me out)
lower costs

So, what am I missing here? Why does everyone always say that owning a car is better than a lease?

Thanks for your thoughts,
Edie

 

[leslie826]

My dad always leases cars. He keeps his cars in immaculate condition and loves having a brand new car every few years. Also he doesn't mind always having a car payment.

I, on the other hand, would end up owing money for all the scratches, dents that mysteriously appear on my car. Also when my payments are done in a few years I would still have a car and not have to turn it back in.

 

[momxx5]

All the reasons you listed are exactly why we lease our vehicles.

Our Honda van was leased at $199/mo for 2 yr lease with 15,000 miles and I got a check for $1,000 because of the equity we had on our trade.

At the end of the lease we were able to extend the lease for 2 more yrs same conditions. It turned out to be the best for our budget.

 

[momxx5]

There is some negotating with leases too.

Try to get it with 0 down and extra miles up front.
Good luck.

 

[quentina]

I leased for years and loved it. I have since got a new position at work that requires lots of miles........over 40,000 per year, so, I bought to avoid large out of pocket.

They do allow for basic wear and tear. I have 3 kids, mine were never perfect when turned in and I never got any fees.

 

[LisaRN97]

Lease works great for my Dh....his commute is 6 miles a day to/from work so the mileage is no issue for him. Also he keeps the car very, very clean and loves the idea of getting a new one every 2 - 3 years with the option to buy at the end.

 

[clutter]

Like you, I like having a car under warranty. Given that, there are two circumstances that leasing works. 1) if you plan to always have a monthly payment. 2) If you drive less than 15,000/year. More than that, and the payments go up. (I now drive about 20+, so I now own.)

 

[dfchelbay]

Make sure you check with your auto insurance carrier to see if they require you to have high dollar coverage. When we leased, we had to carry $100,000/$300,000 coverage for a leased vehicle.

Negatives to leasing is you will always have a car payment and FULL COVERAGE insurance to maintain. When you buy, it's paid off after a few years and if you desire, you can drop your coverages to lower your auto insurance premiums, which you can't do in a lease, because you aren't the only one on the title/loan documents.

 

[DawnM]

It depends. It would be very different for us if my DH didn't know how to fix cars and do routine maintainance.

We have a '96 Saturn that won't die! We have a '02 that runs like the day we bought it, and we have an '04 Sequoia that runs perfectly as well.

They have all been paid for for 3 years now. THAT is why owning is better.....but if you are putting over $199/month into it, it may not be worth it to you.

Dawn

 

[jodifla]

I have a 2003 Toyota Rav 4, which is starting to nickle and dime me. (Brakes, tires, oil pan leak, etc.) I'm also a female and always feel like I'm being ripped off when I take my car in for servicing.

So, I was looking at leasing vs. buying a new car. Right now I'm saving $300 a month toward a new car. Toyota has leases starting at $199. I realize that I wouldn't have the equity of a car. BUT I would have:

a car under warranty
a lease that's less than what I'm budgeting now
less worries (and car repairs always freak me out)
lower costs

So, what am I missing here? Why does everyone always say that owning a car is better than a lease?

Thanks for your thoughts,
Edie

We have a '95 Buick and a '97 Accord. Haven't had a car payment in years. THAT'S why it's a better idea to own then lease.

And if anything happens to your leased car, you are out major money. Or, if you actually put real miles on it.

 

[ElizK]

Brakes and tires are normal maintenance issues that you would be paying for even on a lease, so you really shouldn't add that into your "nickle and diming" .

 

[bumbershoot]

I leased happily for 10 years. And then I gritted my teeth through the next 2 years, waiting out the end of my 3rd lease.

You cannot drive across the country on a whim, unless you put the extra mileage money aside or just garage it at the end of the trip to make up those miles.

You do have to keep FULL coverage, at least on my leases.

At the end of the lease, you can buy it for much more than you would normally pay for a 3 or 4 year old car (though knowing exactly how it was driven is a plus!), or you turn it in and have no car, or you turn it in and get a new lease.

If you turn it in and get a new leased car...after my experience, I'd do it in separate bits. Turn in the car completely, have them figure out any extra costs, end-of-lease costs, etc, and pay those. And get a new lease as a separate event. Why? Because they'll be so sweet and offer to just roll it in...which means you're paying a chunk of interest on those end of lease charges! Oh I soooo did not understand that when I was tired of my Jetta and got a Beetle, then was tired of my Beetle and wanted a Golf...I thought I got it, but I didn't. Kept wondering "why are my payments going up from car to car?" Well, because you're rolling over a thousand or so and paying interest on it!


I'm now very much OVER leasing, but the positives worked for me for 10 years.

 

[LSchrow]

buying cost less, & you don't have additional debt every month for all those years of leasing. we buy good cars to begin with, so haven't have many major repairs (TG!)

we either buy our cars outright (mostly) or pay them off with low interest or interest free financing. but our only debt is a mortgage, as i refuse to take out loans for non-essentials. credit cards are paid off in full every month.

my neighbors do lease, have loans on almost every large purchase, etc.
in a few years we'll be totally debt-free (mortgage), while they will still have to work to pay for their cars and "stuff".
we prefer debt-free

 

[mrodgers]

Brakes and tires are normal maintenance issues that you would be paying for even on a lease, so you really shouldn't add that into your "nickle and diming" .

My thoughts exactly.

I have always bought used, 5 year old vehicles. Always Toyota. In several 100,000 miles of driving Toyotas I have put 1 clutch in to the tune of $100 doing it myself (not possible for everyone, shop would have charged $1200) replaced shocks twice, and have had of course, many sets of tires and brakes. Brakes are cheap. Tires not so much. These are maintenance, not nickel and dime repairs.

In contrast, my first brand new car when I was young was a Chevy. I had over $10,000 in repairs and routine maintenance and I only drove that vehicle for 3 years and 60,000 miles (surprise surprise, the thing practically fell apart right after the 36k mile warranty.) Since that vehicle, I had purchased only used Toyota 4x4's and all of them had over 100,000 miles when purchased. I had never done a repair and the routine maintenance couldn't have gotten any more routine (front pads every 50k, rear brake shoes every 150k, clutch at 150k nearly on the nose)

 

[disneycruising]

We have done both.

My purchased car is a car I love and want to keep forever. But, it doen't get a lot of use because I am always driving the family car. Our family car is lease, with 4 kids it gets alot of use. We leased our family car for safety & security. As a women, I feel more comfortable knowing that if there was a problem with the car...I can just take it to the dealership & they will deal with it.

 

[MAH4546]

I lease, but my commute is 4 miles each way and I can't stand driving the same car for more than 2-3 years, let alone would I ever drive a car out of warranty. Leasing makes sense for me because I replace cars so often and drive well less than 12,000 miles a year.

 

[jlima]

DH is in a lease right now that's 12K miles/year, 3 years. Not enough miles. He drives our minivan a lot. That's my biggest gripe - you have juggle the mileage if you will come close to going over.

 

[DisneyAndRedSox]

We leased 3 cars, but I got sick tracking miles and DH I would have to swap cars not to go over. So, for 6 months I got to drive our 04 Rav (I have lower back problems and very long legs- the seats have poor lumbar and not a lot of leg room) and our 06 Pilot got to sit at Boston airport Mon-Thurs when DH traveled.

One thing to look into, when we leased our Pilot we had up to $1500 from the dealer when it was turned back in for dings, etc. Turns out we needed $0, but it was nice knowing we had a $1500 cushion. That car didn't have any equity due to high gas prices at the time, but when we turned in our 04 Accord lease that had equity.

Leasing worked well for my husband before kids, once DD came I wasn't good for us anymore. If you don't think you are going to have any major life changes (move to another town farther away, kids, etc) it might be a good choice.

Now I have a used car, I am 37 and it is actually the first used car I have ever owned in my life!

 

[happymommy]

We leased one time, but I prefer owning.

My DH's Toyota 4Runner is 11 years old, has about 200,000 miles on it, still runs really well (it is ugly and a bit old looking, but still works fine) and he's happy with it. It's been paid off for a long time now. I personally don't like to ride in it! But still...

After our old lease was up, of a Honda Civic, we sold it to friends. So it all worked out well, we were about even, but they wanted the car, so we paid it off and then they paid us.

If you do decide to go with a lease, I'd only go with a great deal. Also, the PP was right, you CAN negotiate a lease! So if you can get very little down as well, and definitely LOTS of miles, it can be a good option.

My good friend leased a Honda Pilot, didn't really drive a lot, but still found the miles were so very limited that she's going to buy it when the lease is up. She said the miles would have cost her a fortune. Our leased car was in Hawaii, so we had little miles (and we shared it, but lived on a military base where DH biked to work, and I maybe drove to Honolulu a couple times a week, which was like a half hour drive, so not much driving).

Just be careful and shop around. You may find a good sale with payments that work for you as well!

 

[Pigeon]

buying cost less, & you don't have additional debt every month for all those years of leasing. we buy good cars to begin with, so haven't have many major repairs (TG!)

we either buy our cars outright (mostly) or pay them off with low interest or interest free financing. but our only debt is a mortgage, as i refuse to take out loans for non-essentials. credit cards are paid off in full every month.

This. We buy Toyotas and for us, they've been extremely reliable. We've typically owned them for 15-18 years. We haven't had to spend a great deal on repairs, and after four years, we own the cars outright and the rest is gravy. It would be even better if we had enough saved to pay cash, but alas we don't, and a single modest car loan isn't much more than a lease payment.