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

[Planogirl]

How difficult is it to be approved for a lease vs a purchase, does anyone know? Is it the same process? And don't most leases require some kind of lump sum payment at the end of the lease?

I think that I'm just showing my ignorance here. I just never thought about leasing a vehicle.

 

[MrsPete]

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.

As a general rule of thumb, I agree with you . . . but it's wise to check the difference between new and used.

Case in point: When I bought my Honda, I wanted either a new car OR a late-model used with low mileage. I found that in my chosen car, VERY FEW late-model useds were available, and the price difference between new and used was less than $1000. I bought new and got exactly the color and details that I wanted.

However, I think this was an unusual situation. For most cars, your advice is dead-on.

 

[dvcgirl]

Right. 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".

And I guess that was my point. Nobody *needs* a shiny new car every 2-5 years. I have a nearly 7 year old Highlander and it feels like it's brand new. That's why I see leasing as discretionary.

With the financial shape that most Americans are in....they should be buying used cars, paying them off as quickly as possible and then driving those cars as long as possible.

I have family members who have been caught in the leasing trap for years...because they can't afford the payments to buy a car, and they never have enough money saved to drive buy a decent used car. None of them has two nickels to rub together.

I have a 26 year old cousin who is a great kid, but he's doing things like leasing a used Mercedes....when he makes roughly 30K a year and puts $60 a month into his 401K. Ridiculous. The Mercedes ended up going back...he's now leasing a Camry, but took a bath on the trade-in.

Anyway, the way I see things, unless you're saving 15-20% of your gross income towards retirement....leasing cars or even buying new cars every 5-6 years and taking the depreciation hit is not financially wise. If you're saving and investing that much and decide that you love a new car every few years....then leasing is part of your discretionary spending.

 

[antmaril]

I haven't owned a car in years. I like leasing because I want to drive a new car every two/three years. I would never keep a car long enough to pay for it, so I will always have a payment anyway. I like that I can just return the car and not have to sell it. My cars are always under warranty.

Leasing may not be for everyone, but it works for me.

 

[MrsPete]

And I guess that was my point. Nobody *needs* a shiny new car every 2-5 years. I have a nearly 7 year old Highlander and it feels like it's brand new. That's why I see leasing as discretionary.

With the financial shape that most Americans are in....they should be buying used cars, paying them off as quickly as possible and then driving those cars as long as possible.

I have family members who have been caught in the leasing trap for years...because they can't afford the payments to buy a car, and they never have enough money saved to drive buy a decent used car. None of them has two nickels to rub together.

I have a 26 year old cousin who is a great kid, but he's doing things like leasing a used Mercedes....when he makes roughly 30K a year and puts $60 a month into his 401K. Ridiculous. The Mercedes ended up going back...he's now leasing a Camry, but took a bath on the trade-in.

Anyway, the way I see things, unless you're saving 15-20% of your gross income towards retirement....leasing cars or even buying new cars every 5-6 years and taking the depreciation hit is not financially wise. If you're saving and investing that much and decide that you love a new car every few years....then leasing is part of your discretionary spending.

And with that explaination, I agree 100%. We all spend discretionary money on things that matter most to us -- some people choose to spend it on shiney new cars on a regular basis. My priorities are different: I prefer to travel frequently, and I'm working on plans for my retirement house right now. Those things matter much more to me than whether my car's a 2004 or a 2010.

 

[MrsPete]

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

I don't "get" why people think cars older than 3-5 years aren't reliable. A car that's been well-maintained is going to last longer than this.

 

[Cindy B]

I don't "get" why people think cars older than 3-5 years aren't reliable. A car that's been well-maintained is going to last longer than this.

We have had wonderful over 10 year old cars that works fantastically. I just bought a new car and I plan on keeping it 8-12 years.

 

[PaulaSue]

If you trade in all the time it will not be as bad as just leasing for long periods of time, many times over. The extra miles on the end of a contract can kill you. Trust me I know the hard way.

 

[ExPirateShopGirl]

I don't "get" why people think cars older than 3-5 years aren't reliable. A car that's been well-maintained is going to last longer than this.

You're absolutely right. I have had my car for nearly 3 years now and it runs as well as it did the day I bought it new. I get the oil changed 4 times a year, tires rotated, etc. It's the most reliable car I have ever owned. I plan on keeping it another 7 years, at least.

 

[EthansMom]

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.

Breaks and tires are standard maintenance items. Oil pans do leak, especially if you get your oil changes done at someplace like Jiffy Lube where the service guy isn't always good about tightening the bolts and screws correctly (learned this one the hard way).

Is the Rav 4 costing more than that? Do you need a new car? Or do you want one? (It makes no difference to me one way or the other, but YOU should be aware of your true feelings.)

On a lease, you're going to pay through the nose if you're over the allotted mileage. And you may pay through the nose if you're in an accident (possibly even if the auto gets fixed).

Additionally, the fine print on the lease offer is that it requires some money due at lease signing, is for well-qualified buyers, and assumes you're buying the baseline auto.

Ah, just did a check... some of those same Toyotas that have special lease pricing are being offered with 0% financing (for 36 months). It's worth considering going for the free financing.

 

[SandrA9810]

If I'm paying some one to do something... I better know what they're doing. I never feel nickled and dimed when I take the cars in for repairs. And even though we've put a few thousand in repairs on each car... that's all the money we've put into them, both we're paid for by Kari's parents.

Whenever something is acting funny, I take it to the shop, pay 45$ for them to tell me what's wrong, get an estimate, then go to the auto parts store and do it myself. Although some things like replacing the raidiator is above me, and I also don't have any way to disposed of the coolant. Same thing with rebuilding a transmission.
This last time, the control valve sensor went bad. It was going to cost 100$ to get the part through the shop. I went to auto zone, bought it for 42$, and replaced it in two seconds. Of course it didn't help that I over tightened one of the bolts and broke the head off... so I had to buy a bit for the drill to remove the broken peice and put a new one in. Oops....

I nearly replaced the alternator on the van last year, but when it's put in with phnuematic tools, it makes it hard to get off... stupid last bolt. I think I spent 80$ on labor for the shop to finish the job, but it was with other major work getting done too.

Don't go through dealerships... they'll always nickel and dime you and make you feel stupid. Just find a good shop, with honest people. And the more often you go, the more willing they will be to help you out. We've used the car care center at Disney since we moved up here. And the guys know our cars. They don't talk to us like we're stupid, and they'll take me into the shop to show me exactly what's going on and why it's happening.

We're also heavy drivers... 160,000 miles on an '01. We'd pay more than the truck is worth if we ever went though a lease.

 

[dvcgirl]

Don't go through dealerships... they'll always nickel and dime you and make you feel stupid. Just find a good shop, with honest people. And the more often you go, the more willing they will be to help you out. We've used the car care center at Disney since we moved up here. And the guys know our cars. They don't talk to us like we're stupid, and they'll take me into the shop to show me exactly what's going on and why it's happening.

This is key.....finding a good mechanic/shop that you trust. We've haven't used a dealership in years in years. Our mechanic is certified to do the major tune-ups. We've taken the SUVs in a few times for little things only to be told that there really wasn't a problem and that we could address it down the road a bit (that's how you know you have an honest mechanic.....when they tell you that a particular repair isn't necessary!).

When we moved to our town here a couple of years back we got a recommendation for a mechanic and then when we first brought the 4-Runner in for maintenance...we told them our goal was to drive it until the wheels fall off. They told us that they'll be honest with us and tell us when the old girl has passed her prime. After the first tune-up, they told us that she's got a lot more to give. She'll be 13 years old in January....with nearly 142K on her. I won't be satisfied until she turns 200K! That would be about 17 years....and if we get to 17 years, I might try and push her to 20....lol!

 

[SandrA9810]

Kari is pushing her van of 15 years and at 207k miles. We've done most of the repair work, and right now it needs a new transmission. Our shop even recommended a different place, because it would be cheaper for us. Second gear is going, but once you get it shifted at 20mph, it runs quite nicely. The computer went out on the AC, so it doesn't turn cold, but Kari loves to drive with the windows down. (unfortantly, it has to be a repair done at a dealership).
And at the Car Care Center, we get a 10% discount on the total bill for Kari being a cast member. No other Goodyear center in Orlando gives that. So I skip by the shop that's less than a mile away to go to them.

It might take a few different shops to find a good one, but once you do, you'll be a customer for life, and they'll appreciate that, and help you out as much as possible.

My favorite question to ask the guys "how long before I kill it entirely??" And they always give me an honest answer.

 

[wmharley]

How difficult is it to be approved for a lease vs a purchase, does anyone know? Is it the same process? And don't most leases require some kind of lump sum payment at the end of the lease?

I think that I'm just showing my ignorance here. I just never thought about leasing a vehicle.

you have to be approved regardless... just as your credit determines your %, so does with a lease...

Good credit=better terms and rate. The teaser "$149" per month is if you meet certain levels.. have a lower credit score and that $149=$199. Add in your taxes and such, and it now is $209.

if you turn in the car at the end, you pay a termination fee and any mileage or wear and tear. If you want to BUY it, then the price was already negotiated at the start, as the residual.

Folks, don't forget, you CAN negotiate a price on the lease from the start. Just like when you purchase a new car, deal with the dealership to get the lowest price possible, THEN work on the terms of the lease. Paying MSRP versus something closer to Invoice will cost you alot over the course of your lease. Many folks don't realize you can haggle on the price.