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

[marius97]

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" .

The point of a lease though is that you wouldn't have the car long enough to have to worry about bad breaks or old tires.

 

[MrsPete]

Are you a person who just accepts that you'll have a car payment forever? If so, then a lease (really, it's a long-term rental) might be a good deal for you. Just keep in mind that you'll pay a larger portion of your income towards always having a new car -- forever.

On the other hand, if you're the person who's going to pay cash for the car (or who's going to pay it off and keep driving it for years), then owning the car is better. This'll save you money -- lots of money -- in the long run.

Keep in mind that once you start leasing, you may find yourself in a "leasing rut". Unlike owning a car, you won't have a trade-in towards your next vehicle. Do you see yourself renting a car forever?

 

[princessbride6205]

There are pros and cons. I did a 3 1/2 year lease on a VW Jetta and I'm nearing the end of a 3-year lease on a Honda Accord. My dad only leases vehicles and I know nothing about cars. Mileage is not an issue for me and lease payments are often lower than buying a car (on a monthly basis and with little money down). These factors make leasing attractive to me. But like a PP said, I am in a leasing rut. I'm saving up towards a new or used car but it's slow going. The biggest problem I have with leases, though, is that you are stuck. If your financial or life situation changes, it's not easy to get rid of the leased vehicle.

Other things to think about - our Honda dealer told us that certain cars do not "lease up" well. Basically there are certain models they can give better deals if you lease, and certain models they can give better deals if you buy.
Also, look at the terms of turning the vehicle in. It can be several hundred dollars just to turn it in, not including any damage they find. I think VW had a $350 turn-in fee. Some dealers (including Honda) give you an allowance toward wear and tear.

Leasing can be a good decision for certain people, good luck!

 

[mousebymarriage]

When we first got married (well actually a few months before) we purchased our first vehicle together , a 1993 Jeep Cherokee which we absoluely loved. Shortly before DS was born in 2001 we decided to lease a minivan but, we still had the Jeep (DH sold his old clunker, kept the Jeep as his car and I had the new minivan because I would be home with both kids). After the first minivan we leased 2 more and now on our 4th van (which we purchased in July) we decided to buy rather than lease. Honestly, I loved getting a new car every couple of years like you do when you lease I just wasn't a big fan of having to worry about going over the allowed mileage. If you exceed the allowed mileage then it can add up to a nice chunk of change due when the lease is up. I also hated paying all that money every month with a lease and having nothing to show for it, it was a never ending car payment.

When we owned the Jeep it was ours after 5 years of payments and we kept it for almost 12 years. When we sold the Jeep after 12 years it still worked great and we got $1000 for it. The only reason we got rid of it was because my MIL got a new car and her old one was only 3 years old and she gave it to us for free. So we went from a 12 year old car to a 3 year old car with VERY low mileage and had an extra $1000 in our pocket!

I know that we won't be getting a new car in a couple of years but, I am still happy because after 5 years of paying for the new van it will be mine and we won't have a car payment.

 

[wmharley]

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.

See this is why leasing most times aren't worth it... a 2 yr lease on a honda, then adding another 2 yrs.. they probably paid close to $10-13K in payments.. And the car still has a balance, if they wanted to buy it of $10K at least. so they are paying all this money and no where close to having it paid off.

The point of a lease though is that you wouldn't have the car long enough to have to worry about bad breaks or old tires.

a 2yr lease COULD require a time where tires are needed depending on the tires and how you drive. The point of a lease is that you will have a lower payment while always being under warranty.

If you drive hard enough, those tires and brakes will need replacement, even within 2 yrs..

We had a lease, it was 42 months and we paid $148 per month. It was good at the time as my DW(formerly DGf) paid it while it was under my name. She helped my credit, she got a new car, then afterwards we got her a new car outright. We only had put 30K on that car in 42 months, but it needed new brakes (which we didn't bother replacing prior to turn in).

would i lease again? nope as we drive too much (or I do) to warrant the lease.

 

[crisi]

One I didn't see mentioned is that getting out from under a lease is HARD. If in the next three years you think you need to downsize your car and get rid of the lease payment, chances are you'll need to buy out your lease.

You'd need to buy out your car loan when you sell your car, too...but you'd have the car to sell.

 

[bumbershoot]

See this is why leasing most times aren't worth it... a 2 yr lease on a honda, then adding another 2 yrs.. they probably paid close to $10-13K in payments.. And the car still has a balance, if they wanted to buy it of $10K at least. so they are paying all this money and no where close to having it paid off.

Yes, but a person who really knows about leasing knows this and doesn't care. I certainly didn't the first 10 years! Now of course I smack myself, because even though my '95 Jetta was a borderline Lemon I would LOVE to have it back now, shouldn't have submitted to the siren call of the New Bugg.


a 2yr lease COULD require a time where tires are needed depending on the tires and how you drive. The point of a lease is that you will have a lower payment while always being under warranty.

And I thought I was devastating to tires from running over things all the time! Wow!

If you drive hard enough, those tires and brakes will need replacement, even within 2 yrs..

Brakes too????

We had a lease, it was 42 months and we paid $148 per month. It was good at the time as my DW(formerly DGf) paid it while it was under my name. She helped my credit, she got a new car, then afterwards we got her a new car outright. We only had put 30K on that car in 42 months, but it needed new brakes (which we didn't bother replacing prior to turn in).

Did you look into the Lemon laws? Seems way too short of time to need to replace brakes.

It's important to know what leasing is and isn't, preferably learning from others rather than through experience that you might regret!

Anyone got a '95 Green Jetta GLS they wanna sell? Preferably not a Lemon?

 

[wmharley]

It's important to know what leasing is and isn't, preferably learning from others rather than through experience that you might regret!

Anyone got a '95 Green Jetta GLS they wanna sell? Preferably not a Lemon?

brakes are not dependent on how old the car is, but rather how much stopping you do, and whether you do hard stops or not. having a 500 tread rated tire will last longer on a car (generally) than a car with a 240 tread rating.

also, if you live in areas where its hotter, that effects the rubber on the tire. If you take corners harder, or there is gravel, etc... Assuming tires should last 4 yrs is false. i'd rather get a performance tire that will last 2 yrs and offers excellent wet and dry traction, than a higher tread rated tire that will wear in 3-4 yrs but doesn't hold a candle to the performance of the other.

i routinely do most of my driving at highway speeds in Florida and I need a tire that will handle wet driving (summer) and high temps. My car also has 17" wheels standard so the tires will usually be a higher performance summer or all season tire. i'm fine with it as I don't want to hydroplane, or lose control of my car, just like folks up north get quality snow tires, i get quality all seasons here.

If you get a Yaris, that will have one set of tires that performs differently than if you get a BMW.

I know folks in various locations, including my parents that are buying tires or brakes (especially) or shocks due to the mountainous conditions they live in as often as yearly (mainly the brakes).

lemon laws don't cover wear items, unless they are results of something else. lemon laws vary from 12-18 months on average when you buy new.

Seriously, if you think all your cars need or can wait until 50K to get new brakes or new tires, please let me know what car you drive and where, so I can avoid that area, especially in a rainstorm. I don't want to be around you when your car loses control.

BTW, do you even check your oil too, or assume magic leprechauns change the oil by itself?

 

[AristocatFan]

This year we came to the end of our leases on both our vehicles. The Toyota van was a 5yr lease and the Hyundai was a 3yr lease. They just both happened to come to an end this year. DH loves to negotiate, both the leases were at 0% with very little down and 15,000 a year mileage allowance. We never worried about the mileage since the over mileage charge was only going to be 10cents a mile. Leasing worked for us. But I can see the concerns if you turn the vehicle in at the end. The turn in charges are ridiculous. For both vehicles we went to another bank and secured a loan for the remaining amount owed on the lease (it's on the contract). Our payments even went down $30-$50 for each.

Leasing did not affect our insurance and we only carry liability.

You have to do what's right for you and your budget.

 

[FamilyGuy]

When looking at vehicle ownership cost, you consider the total cost, not just the monthly payment.

The total cost of the lease would include
a) any cash paid at inception (plus trade in value or equity, if any)
b) the TOTAL of payments over the course of the lease
c) the disposition fee at the end of the lease
d) any anticipated other charges, excess wear, use and/or mileage

If you look at the full details of that $199/mo lease, you will see it costs a lot more than just that low monthly payment.

I think your 6 yr old Rav4 (which I am guessing is paid off) likely has quite a bit more useable life... Plenty of people drive Toyotas (or any brand of autmobile these days) for 150,000+ miles and 10+ years. Obviously as a vehicle ages there will be more maint and repair costs involved, but it's a reasonable trade-off for most people.

 

[dvcgirl]

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.

Same here....97 4-Runner and a 03 Highlander.....no car payment in years. The real way to save money with cars is to buy them and drive them forever. Save up for a new car during that time. We've done that and funded a "new car fund". And so when the 97 SUV dies, we're ready to buy, but there's nothing wrong with 97 SUV. I'd say we average about $400 a year in maintenance on that vehicle....which is next to nothing.

Most people who lease do so for the lower payment. Leasing, at least in the past, has been cheaper (on a monthly basis) than buying. But it's also a way to keep you chained to a payment book for life. I'd view car leasing as a discretionary spending decision.

So for me, when things go into "discretionary", meaning "not necessary"..
I 'd have to take a look to make sure that all of the financial goals ahead of "discretionary spending" are met.

 

[Chicago526]

Same here....97 4-Runner and a 03 Highlander.....no car payment in years. The real way to save money with cars is to buy them and drive them forever. Save up for a new car during that time. We've done that and funded a "new car fund". And so when the 97 SUV dies, we're ready to buy, but there's nothing wrong with 97 SUV. I'd say we average about $400 a year in maintenance on that vehicle....which is next to nothing.

Most people who lease do so for the lower payment. Leasing, at least in the past, has been cheaper (on a monthly basis) than buying. But it's also a way to keep you chained to a payment book for life. I'd view car leasing as a discretionary spending decision.

So for me, when things go into "discretionary", meaning "not necessary"..
I 'd have to take a look to make sure that all of the financial goals ahead of "discretionary spending" are met.

Exactly. I've had my '98 Saturn for 11 years now. I had a 5 year payment plan at about $250 a month.

So, after the payment was up, had I saved the $250 a month (which I didn't! oh well), I'd now have $18,000 saved up. Enough to buy a brand new car outright.

Now, I've had maitenence on the car of course. Fortunatly I have a brother and now a husband that can do all the work on it, so it only costs us parts and not labor. I'd have to look at my records to be sure, but I'd guess that for repairs other than minor maintenence, I've spent about $3k on it since the warrenty lasped after year three. So, even if you subtract that from the $18k, that's still $15k I'd have in the bank.

Unfortunately, other events in my life prevented me from saving that car payment. The upside is that now that my DH's truck is paid off, we no longer have a car payment of any sort and will roll that savings into paying off our CC debt by the end of 2010. The Saturn needs to be replaced soon, so we won't have time to save up to pay cash for a car, but we'll be in a position that without CC debt, we can easily afford a small payment on an inexpensive late model used car.

I know it works for some people, but I'd never in a million years lease. I want the flexability to drive as many miles as I want, have the kind of insurance that I want, and be able to sell the car and get out of the payments (if any) at any point.

 

[chyam]

I have leased for 15 years now! and I personally wouldn't have it any other way! I too am female and I like the fact of having a reliable vehicle all the time...without the hassle of always wondering what was going to break down next. Yes you have a car payment all the time, and yes you don't have the option of ending payments and owning the car outright...but most of the time when people finally pay off their car, they start having problems and the trade in value isn't all that great anyways.
I can drive a new car every 3 years, I don't have to worry about major repairs (since 95% of the time the cars aren't having major issues in those first 3 years)
I am driving a car that quite honestly I would not be able to afford if I were to purchase it.
I have been driving Toyotas and love their leases.
The only drawbacks would be if you really put on alot of miles in a year...I have turned in my last 2 leases with less than 25000 miles on it and they were both 5 year leases.
Right now I am 27 months into another 5 year lease and have 11000 miles, so leaseing works very well for me. I can't say that I am overly careful with keeping up with my car but I do take care of it!
Insurance is a little more, but quite honestly that doesn't bother me the most important thing to me is having a reliable car.

 

[MrsPete]

Obviously as a vehicle ages there will be more maint and repair costs involved, but it's a reasonable trade-off for most people.

Right. A moderately-sized repair once or twice a year costs less than a payment every month. Most repairs don't run into the thousands, but a payment -- made over the course of a year -- will. We've kept our last couple cars literally 'til they just wouldn't go anymore, and each of them has "made it" about two years longer than we expected them to last. Even with some repairs here and there, we saved a ton of money by "driving for free" during those years.

. . . I'd view car leasing as a discretionary spending decision.

So for me, when things go into "discretionary", meaning "not necessary"..
I 'd have to take a look to make sure that all of the financial goals ahead of "discretionary spending" are met.

I agree and disagree. Most of us NEED transportation, so a basic, reliable car falls under "necessary" . . . but we don't really NEED something shiney and new every couple years . . . that's where it becomes "discretionary".

...but most of the time when people finally pay off their car, they start having problems and the trade in value isn't all that great anyways.

Not really. A car that's been maintained well isn't going to fall apart and become unreliable after just a couple years. My 2008 Honda is paid off, and (except that it needs a new set of tires fairly soon) it's like new. I'm hoping it'll last me a decade.

On the other hand, when people finance cars for six years (Six years! If you really have to make payments for six years, you can't afford that particular car and should choose something less expensive!), the car's going to have some significant wear and tear by the end of the payments.

There's no doubt that the lease option costs more in the long run. The real question is how much of your income you're willing to spend on transportation. My husband and I have two paid-for vehicles. Last year we spent about 4% of our yearly income on transportation. That's gas, insurance and repairs. No one with a lease is going to spend that small a percentage.

 

[JB2K]

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

Becuase, at the end of the day, Edie, you are giving a car company your hard-earned $$ and have nothing to show for it.

As for the brakes and tires, those are simply normal "wear and tear" items which will need servicing at some point (most 2003 model cars are now at that stage in their "life").

 

[tinatark]

I talked to someone who leases and is very happy with leasing - he says he "gets around" the mileage limit by trading before the end of the lease - as long as the trade value is more than the lease buyout, the mileage doesn't hurt.

 

[robinb]

We leased once ... we took over someone's lease on a Saab 9-3 Convertible and paid the last year of it. When the lease was up, we bought the car. It was a great deal for us and the previous leaser paid a LOT of the money on the car upfront and we got a 2 year old car which had been taken care of well. Over 5 years later we still have the car and it's all paid off .

Having a new car is nice, but not having car payments all the time is nicer.

 

[LSchrow]

basically, it's akin to the difference between renting a house and buying one....
what will you have years from now: more payments or actually owning something?

(yes, a house is more likely to appreciate, tho that hasn't always been the case recently ).
figure the cost of leasing for 10 years, versus the cost of buying...less how much you can sell the car for.
btw, we found buying a 1 or 2 year old car is best for us. we pay substantially less than brand new (even with adding on an extended 7-10 year warranty for a few hundred). and we still can sell any of our vehicles and come out thousands of dollars ahead than if we leased. we have a 1995 and a 2005 jeep, and a 2000 hyundai that have had few repairs (mostly just maint). the nissan maxima is the only vehicle we've had major problems with, and the only brand i would never buy again (that one was bought new, and the needed repairs almost always fell into the dreaded "not covered" hole).

buying is more for us.: i like my money too much to give it away so easily

 

[wmharley]

I have leased for 15 years now! and I personally wouldn't have it any other way! I too am female and I like the fact of having a reliable vehicle all the time...without the hassle of always wondering what was going to break down next. Yes you have a car payment all the time, and yes you don't have the option of ending payments and owning the car outright...but most of the time when people finally pay off their car, they start having problems and the trade in value isn't all that great anyways.
I can drive a new car every 3 years, I don't have to worry about major repairs (since 95% of the time the cars aren't having major issues in those first 3 years)
I am driving a car that quite honestly I would not be able to afford if I were to purchase it.
I have been driving Toyotas and love their leases.
The only drawbacks would be if you really put on alot of miles in a year...I have turned in my last 2 leases with less than 25000 miles on it and they were both 5 year leases.
Right now I am 27 months into another 5 year lease and have 11000 miles, so leaseing works very well for me. I can't say that I am overly careful with keeping up with my car but I do take care of it!
Insurance is a little more, but quite honestly that doesn't bother me the most important thing to me is having a reliable car.

after paying for 5 yrs you get nothing to show for it, the car was obviously out of warranty for 2 yrs each, and yet they didn't breakdown did they?

Saying cars break down after warranty is false to a point. If you maintain them, they will last. I got rid of a 1999 nissan this year that in all the time i had it (original owner with 135K on it), the only things of note that were repaired was new shocks/struts, a few brakes, radiator, and a valve cover gasket, in addition to fluid changes. We have a Quest now that is almost at 50K (a 05) and its thankfully, still running good without anything happening.

i just bought an 07 Mazda (to replace the nissan as a family member offered to help pay.. I couldn't refuse) that is under warranty. I'm planning on getting an extended warranty (quest has it) so in case something goes wrong, I'm covered.

I had an 02 Cavalier that died (killed in accident) that had only a radiator fan, alternator/starter, thermostat, and again, brakes, shocks, struts replaced in almost 7 yrs and over 110K... not bad.

its how you take care of them that counts.. Your car SHOULD last at least over 100K if properly maintained.. of course there are exceptions, but on average..

 

[chyam]

after paying for 5 yrs you get nothing to show for it, the car was obviously out of warranty for 2 yrs each, and yet they didn't breakdown did they?

Saying cars break down after warranty is false to a point. If you maintain them, they will last. I got rid of a 1999 nissan this year that in all the time i had it (original owner with 135K on it), the only things of note that were repaired was new shocks/struts, a few brakes, radiator, and a valve cover gasket, in addition to fluid changes. We have a Quest now that is almost at 50K (a 05) and its thankfully, still running good without anything happening.

i just bought an 07 Mazda (to replace the nissan as a family member offered to help pay.. I couldn't refuse) that is under warranty. I'm planning on getting an extended warranty (quest has it) so in case something goes wrong, I'm covered.

I had an 02 Cavalier that died (killed in accident) that had only a radiator fan, alternator/starter, thermostat, and again, brakes, shocks, struts replaced in almost 7 yrs and over 110K... not bad.

its how you take care of them that counts.. Your car SHOULD last at least over 100K if properly maintained.. of course there are exceptions, but on average..

To each his own, I just stated that perfer to drive a lease car...I like having a newer more reliable vehicle every 3-5 years, and I budget so that I know I will always have a car payment. I also like the fact that I drive a car that I may not be able to afford if I didn't lease...perhaps that is not always the best option for some of you but it is for me...and I was just giving my perspective on how I like to lease....to each his own...in the long run it just depends on the individual and how much wear and tear they put a car through. All I know is that I have been extremely happy with each of the leases that I have had through Toyota and I have had the opportunity to purchase each of them at lease end....and although I knew they were very well taken care of and they had low mileage....I like driving a new car every few years...so if you choose to drive yours for years and years that is YOUR choice, my choice is to lease.