Lease or Buy -- WWYD?

[MrInfinity]

About three years ago I got into a car accident and totaled my car. We ended up leasing a new Honda CR-V from a friend of a friend. Our lease is coming up and for various reasons we didn't put a lot of mileage on our car. This now means that we can either lease a new car for $279 per month (about $20 cheaper per month than our current lease) for 39 months, no money down, OR we can finance the buy out of the remainder of the lease for $325 per month for 60 months. The total payments for the life of the lease would be about $11K. The total payments for the life of the car loan would be about $19,500. So the loan would cost us about $8500 more. I asked our dealer friend what the expected trade-in value of the car would be at the end of the loan term and he said he couldn't really predict, but that if we bought a CR-V about 8 years ago and were trading it in today it would be worth about $8K. So economically it seems to be a break-even proposition.

Thoughts on what the better route is? Lease or buy? To me, this is entirely an economic decision -- I don't care about features, keeping up with the Joneses, etc.

One other point. I don't see myself driving our existing car much past the 8 year mark -- our last car starting to suck up repair costs at around year 9 or 10 and also started to feel a lot less safe.

Always strive to buy. Try to not get trapped in a lease cycle, especially at a young age. As you age and buy car after car, owning a little more of them each time, eventually you'll hit a point where you've got yourself a car fully owned, with no payment. With lease, you are committing to never owning and always paying-- and with limitations on top of it. If you damage a leased car, you have problems. If you go over your leased mileage, you've got to pay them. They hold all the cards, right up to requiring you to go to them first when it's time for the next car. When you buy, you own the car, or at least you do thru your loan. You walk away from the dealership with no further obligation to them. Then what you do with it is up to you. Want to run it for high miles with vacations? Go for it. Want to give it to your kids someday? No problem. Car dealerships are pushing lease in the last 10 years or so because it's so profitable to them. They give you a car, lock in payments, and lock you in to coming back when it's time to turn it in. Even with buyouts you have to use their valuation, not what you think it's worth.

Lease will have some value in specific cases, but not as a general recommendation.

 

[Anthony1971]

I have never leased... to many horror stories when the car gets turned in and that was from a good friend who worked for a dealer.
However if you can find and are willing to drive the special price one they have you can get a good deal with a lease... However in most cases they do not have the base car with roll down windows but for only 50 more a month.... (39 month lease or 1,950 over the life) we can give you this one with floor mats and power windows... even Honda does it as if you live in the northeast you will never find a 2wd CRV lease special... but as I said if you can get the special it may be worth it... but make sure you take care of it as excess wear and tear is billed to you...this is mainly for people who drive the car everyday not for those who lease and drive to the mall on weekends...
Also consider a 39 month lease at 279 is 10,881.00 you can walk out with a base CRV for 22,500 (a little over 2,000 off sticker with destination) plus fees and tax just like the lease and I can tell you I will gladly take your 3 year old CRV from you in 3 years with under 30K on it for 11,619.00

 

[tvguy]

I grew up believing you should only buy.
Yet 2 years ago I scoured research & came up with about the same answer as you--it is pretty much a wash anymore. (remember you can make a lease your own based on money down--or not--length of lease, maximum yearly miles, etc.)
The advantage to leasing is that it is new & will probably have few mechanical issues.
The advantage to buying (in your case) is that the Insurance will likely be a bit less.
But that pretty much puts it at a break even again...
Our teens have cars that are around 15 years old. We are starting to put some serious upkeep $ into them...and honestly wish we had not put the $3500 over 2 months we put into a '99 Nissan Altima. We could have leased a new vehicle for $99/month (no money down). Yes, with upkeep over the next few years, again I think it would be close to a break even.
Everything I researched about leasing v. buying (and researching is my job...), basically it said if things are a break even leasing is the better deal.

I know nothing about leases, but I can't find a lease anywhere for only $99 with nothing down. A Nissan Note S with a sticker price of $12,835, on a 36 month lease, 12,000 miles a year leases for $234 a month.

 

[tvguy]

I have never leased... to many horror stories when the car gets turned in and that was from a good friend who worked for a dealer.
However if you can find and are willing to drive the special price one they have you can get a good deal with a lease... However in most cases they do not have the base car with roll down windows but for only 50 more a month.... (39 month lease or 1,950 over the life) we can give you this one with floor mats and power windows... even Honda does it as if you live in the northeast you will never find a 2wd CRV lease special... but as I said if you can get the special it may be worth it... but make sure you take care of it as excess wear and tear is billed to you...this is mainly for people who drive the car everyday not for those who lease and drive to the mall on weekends...
Also consider a 39 month lease at 279 is 10,881.00 you can walk out with a base CRV for 22,500 (a little over 2,000 off sticker with destination) plus fees and tax just like the lease and I can tell you I will gladly take your 3 year old CRV from you in 3 years with under 30K on it for 11,619.00

All those 2WD CRVs were leased our here in California. There is a glut of 3 year old 2WD CRVs and 2wd Toyota RAV 4s just off lease on the dealer lots here.
A lot of my under 30 co-workers lease, with them favoring BMW, Lexus and Infinitis. I have heard a few horror stories about items hidden in the least. Things like tires have to have over 50% of their tread life left, or replacement tires have to be the same make and model as the car came with.
One gal has hit with a $1,500 bill for a new windshield in her BMW, because the replacement windshield she put in was not a BMW windshield. That got interesting because she took it to BMW to have it replaced, and BMW put in an aftermarket windshield, but the bill said it was a BMW windshield. BMW dealer threatened to sue until her dad....a lawyer pointed out.....that what they did was a criminal offense with a potential fine of $10,000 plus punitive damages of twice the cost of the windshield, plus all lawyer fees.

 

[smokeyblue]

If you are going to buy, I would shop around a bit and see what you can purchase a used CRV from another source, especially from a private seller. Lease buyouts often aren't the best deal. Also look at vehicles that may have more miles on them. If you don't put on a lot of miles, buying higher-mileage used vehicle will save you money. Also I would just look and see how much it would be to just buy a brand new vehicle. Sometimes the payments aren't all that much more for a brand new vehicle. Often you get 0% financing and at very least you are starting with a fresh warranty.

 

[manning]

Buy cash and drive it until it quits or too expensive to maintain

I got my first when I was 19. I am in my 70's. In that period of time I have had four cars. With the savings I was able to build a nice retirement.

My present car is a 1993 town car I got brand new. Twenty three years and over 200,000 miles and still running. Have to add a little oil but oil is a lot cheaper than a price of a new car. I take good car of it and it looks like it just came out of the showroom. Pretty good considering salted roads here in northern Illinois. Air suspension is starting to leak. I know someone who has owned town-cars. He says forget the air suspension and go with shocks. Will hardly know the difference.

 

[Anthony1971]

One gal has hit with a $1,500 bill for a new windshield in her BMW, because the replacement windshield she put in was not a BMW windshield. That got interesting because she took it to BMW to have it replaced, and BMW put in an aftermarket windshield, but the bill said it was a BMW windshield. BMW dealer threatened to sue until her dad....a lawyer pointed out.....that what they did was a criminal offense with a potential fine of $10,000 plus punitive damages of twice the cost of the windshield, plus all lawyer fees.

On girl here owned a BMW 3 series mind you (not a lease) and she paid 1500 to replace her windshield at BMW as well... I just find I funny that a windshield costs that much... I have a new Avalon that has a sound proof windshield and I looked up how much it would be to replace... can still get it for around 350.. But yes lease companies will sometimes nail you at the end as people do not realize a lot of times the lease is through an outside company not the car manufacturer... Just like financing specials... talk the dealer down to a low price and they will not give you the special as they get sometimes very large kickback from an outside bank... Can't get the lease special as the dealer will not even stock those cars.. outside leasing company whole new set of rules... If you must lease make sure your lease is through the car maker itself.. Buy a Honda make sure it is Honda that you will be paying not any other place not Honda through bank of??? and that usually requires you get the special listed on the car manufacturer website not the dealer website (but it is usually there as well).

 

[tvguy]

On girl here owned a BMW 3 series mind you (not a lease) and she paid 1500 to replace her windshield at BMW as well... I just find I funny that a windshield costs that much... I have a new Avalon that has a sound proof windshield and I looked up how much it would be to replace... can still get it for around 350.. But yes lease companies will sometimes nail you at the end as people do not realize a lot of times the lease is through an outside company not the car manufacturer... Just like financing specials... talk the dealer down to a low price and they will not give you the special as they get sometimes very large kickback from an outside bank... Can't get the lease special as the dealer will not even stock those cars.. outside leasing company whole new set of rules... If you must lease make sure your lease is through the car maker itself.. Buy a Honda make sure it is Honda that you will be paying not any other place not Honda through bank of??? and that usually requires you get the special listed on the car manufacturer website not the dealer website (but it is usually there as well).

My son's fiance just went through this with the VW dealer. She had a choice of buying a used lease return 2011 Jetta, or leasing a new one for the same payment. After explaining how the used lease return had new tires, and brakes, put on at the expense of the leasee who turned it in, they then tired to sell her on leasing the new car. She just smiled and said "so that I can buy new tires and brakes for the person that buys it from you after I turn it int?

 

[MillauFr]

In the near future, you won't have to buy or lease. It will be far cheaper to use autonomous taxis. Paying thousands in insurance and registration fees to drive my truck 2,000 miles per year is very expensive for me. The only reason I have the truck is because I got it for free a few years ago. If I get rid of it I will go back to using Uber, Lyft, Car to Go, or ZipCar when I need a vehicle.

 

[aprincessatlast]

Leasing just seems like such a scam

Uhmm no not a scam simply a numbers game. You just have to sit down and see how the numbers work for your family. Many (not all) who say buy only because it "seems" like a scam have not done their homework. Its based off stories they have heard or things their parents have taught. Nothing wrong with that. Yet to say it is a scam is a bit insulting to those of us who have done our homework and see it works for our family. Now don't get me wrong there are many instances where is seems crazy to lease or "rent" as you put it. Certain trucks or makes of cars are a good example of this however it is still not cut and dry.

There are however times where it completely works in favor for the customer and for the car manufacturer. (the ones who are actually leasing the car) The dealers could care less wether you buy or lease when it comes down to it. They get the money regardless. Well unless of course the manufacturer is running a dealer only incentive that month on leasing. For those who run their cars into the ground it is obvious that leasing does not really benefit you however there are loads of people out there who change out their car every 3-5 years and to us we simply need to run the numbers!

What is the car make? Does it hold its value? The big thing is what is the Money factor! These factors can make a leasing a car make total sense or something that has you walking out of a dealer going "they must be crazy" . Equip yourself with this knowledge before you walk into a dealer and you will be so much better off. Kind of like knowing your credit score. You reduce the whole song and dance quite a bit and hold more of the cards so to speak.

When comparing look at the two big things-
Residual (what the car is worth at the end of the lease)
Money factor (what is cost to "rent" the car every month from the manufacturer)
You usually have a $250 fee (forgot the name) but basically a documentation fee for leasing. All the other figures for the dealers should be the same. However call and ask ahead if it is not find another dealer!
other than that the numbers are pretty much the same. Sales tax at least here is about the same although there are states that make you pay it on the whole vehicle at the time of the lease which is ridiculous and I would not recommend leasing in those states.

My recommendation is negotiate the car price first. If they ask you simply say you are unsure and still debating. After you have the car price where you want it then run the numbers!! Don't forget when you got to turn the car in it there is a chance it has more value in it. So just like trading a car in shop around for the best dealer. So again check before you do. There are other times the value is way off where you throw them the keys from the road. lol

 

[aprincessatlast]

About three years ago I got into a car accident and totaled my car. We ended up leasing a new Honda CR-V from a friend of a friend. Our lease is coming up and for various reasons we didn't put a lot of mileage on our car. This now means that we can either lease a new car for $279 per month (about $20 cheaper per month than our current lease) for 39 months, no money down, OR we can finance the buy out of the remainder of the lease for $325 per month for 60 months. The total payments for the life of the lease would be about $11K. The total payments for the life of the car loan would be about $19,500. So the loan would cost us about $8500 more. I asked our dealer friend what the expected trade-in value of the car would be at the end of the loan term and he said he couldn't really predict, but that if we bought a CR-V about 8 years ago and were trading it in today it would be worth about $8K. So economically it seems to be a break-even proposition.

Thoughts on what the better route is? Lease or buy? To me, this is entirely an economic decision -- I don't care about features, keeping up with the Joneses, etc.

One other point. I don't see myself driving our existing car much past the 8 year mark -- our last car starting to suck up repair costs at around year 9 or 10 and also started to feel a lot less safe.

What is the value of the CRV? If there is lease equity in the car to lease another one it should be the same if you decide to buy a new CRV. Have you looked at that as well? I would try that first and run the numbers. Edmunds.com typically has the lease numbers on their forums. I like true car to see what others are paying as well.

 

[DawnM]

We never lease and would only lease if one of our work offices paid for it.

We keep our cars 15-17 years though. We finally got rid of our '96 in 2013. We now have a 2002 and still drive it daily. We may sell it when my son gets his license as we feel he needs a newer car with more safety features, but it still runs fine.

But to me, leasing is just like renting. If you don't plan to stay in it long term, then it might make sense. If you plan to invest in keeping it long term and go for a long period with no payments, then buy.

 

[aquabone1109]

Leasing from now on after always buying. Our leases always include maintenance for the lifetime of the lease. My wifes BMW requires synthetic oil changes which cost about $150 every time and even covers wear and tear like brakes and all tune ups and they even come to my work to pick up the car if it needs maintenance and they give me a loaner. We only drive about 6000 miles a year. With buying, after year 3 everything is on you if it breaks.

 

[Anthony1971]

Leasing from now on after always buying. Our leases always include maintenance for the lifetime of the lease. My wifes BMW requires synthetic oil changes which cost about $150 every time and even covers wear and tear like brakes and all tune ups and they even come to my work to pick up the car if it needs maintenance and they give me a loaner. We only drive about 6000 miles a year. With buying, after year 3 everything is on you if it breaks.

All new cars require synthetic oil... if you go to BWM yes you may pay 150.00 (without using their special offer) if you go elsewhere it will be far cheaper. You can also buy a package that includes oil changes and normal maintenance for any car these days...BMW like all luxury brand will pick up your car give you a loner etc as this is part of what you pay for even when out of warranty they will do it hence 150 to change your oil... BUT I do agree with leasing BMW, Mercedes and like (exclude most Lexus, Acura and like) as the resale values of those cars plummet once out of warranty as they can easily cost more to fix than they are worth after 5 or 6 years..... My friend had an X5 he took it in for normal maintenance every year around 1,000-1,200 after year 6 (7years old) it would have cost him more to repair then it was worth so they traded it for a new one for him... the good people of BWM that is... He also put very few miles on it as it was only a weekend car.

 

[aquabone1109]

All new cars require synthetic oil... if you go to BWM yes you may pay 150.00 (without using their special offer) if you go elsewhere it will be far cheaper. You can also buy a package that includes oil changes and normal maintenance for any car these days...BMW like all luxury brand will pick up your car give you a loner etc as this is part of what you pay for even when out of warranty they will do it hence 150 to change your oil... BUT I do agree with leasing BMW, Mercedes and like (exclude most Lexus, Acura and like) as the resale values of those cars plummet once out of warranty as they can easily cost more to fix than they are worth after 5 or 6 years..... My friend had an X5 he took it in for normal maintenance every year around 1,000-1,200 after year 6 (7years old) it would have cost him more to repair then it was worth so they traded it for a new one for him... the good people of BWM that is... He also put very few miles on it as it was only a weekend car.

My wifes old X5 had major issues right before year 7 when we bought it. Thankfully it was covered under our extended warranty through BMW. Would have cost about $2k to fix. We fixed it then got rid of it immediately afterwards (mechanic recommended that we should get rid of it)

 

[morgan98]

All new cars require synthetic oil... if you go to BWM yes you may pay 150.00 (without using their special offer) if you go elsewhere it will be far cheaper. You can also buy a package that includes oil changes and normal maintenance for any car these days...BMW like all luxury brand will pick up your car give you a loner etc as this is part of what you pay for even when out of warranty they will do it hence 150 to change your oil... BUT I do agree with leasing BMW, Mercedes and like (exclude most Lexus, Acura and like) as the resale values of those cars plummet once out of warranty as they can easily cost more to fix than they are worth after 5 or 6 years..... My friend had an X5 he took it in for normal maintenance every year around 1,000-1,200 after year 6 (7years old) it would have cost him more to repair then it was worth so they traded it for a new one for him... the good people of BWM that is... He also put very few miles on it as it was only a weekend car.

We leased one vehicle. It was a black BMW M3 convertible. I call it my husband's mid-life crisis...lol! Anyway, we did not want to tie up all of our money in purchasing that vehicle, so did a 30 month lease. While the car was fun, it was really not practical. At the end of the lease, my husband was done with the car. All maintenance was covered and it did have some issues. We were able to negotiate the lease payment, but we did not do it because it was a great "deal". We did it basically because it was a "dream" for my husband and he needed to get it out of his system.

After the lease was done, he paid cash for a 2015 Acura RDX.

 

[Anthony1971]

We leased one vehicle. It was a black BMW M3 convertible. I call it my husband's mid-life crisis...lol! Anyway, we did not want to tie up all of our money in purchasing that vehicle, so did a 30 month lease. While the car was fun, it was really not practical. At the end of the lease, my husband was done with the car. All maintenance was covered and it did have some issues. We were able to negotiate the lease payment, but we did not do it because it was a great "deal". We did it basically because it was a "dream" for my husband and he needed to get it out of his system.

After the lease was done, he paid cash for a 2015 Acura RDX.

And I would lease for the same reason..... I just no longer have a desire to drive a BWM or Mercedes or??? seen to many problems from friends that own them and a good friend owns a shop... saw a 9 year old BMW 7 series sitting there (it looked great) asked him..... the bill was 4,500 to fix it and he is honest and tries to help people out this was a few years ago so I do not remember exactly what the problem was. Do not get me wrong BWM, Mercedes, Audi are nice cars but there is a reason they come with tool kits....but they never claim to be a reliable driver car. The Acura RDX is a Honda pilot underneath costs as much to maintain as one but has all of the luxury car perks.

 

[redsonja76]

I have zero desire to ever have any kind of car payment ever. So I drive my paid for cars (all four of them lol) until they literally die on me. Then I buy a new one with cash. No payments. I hate payments.

 

[leebee]

Sometimes circumstances change, though. We have ALWAYS driven used cars, sometimes VERY used cars, but where we live now there is a terrible issue with cars rusting out. Too much salt/chemicals on the roads all winter long results in rust that is difficult to stay ahead of, even with monthly (or more frequently) car washes, and cars die long before they are very old or have very high mileage. When my minivan died unexpectedly, it wasn't worth the cost of the repair (almost $3K) and the cost of the rust repair we knew needed to be done before April ($2K)- and we aren't in a position to pay that kind of money. We got $1K in trade for the downpayment on a lease for a brand new Equinox, with payments of $169 a month, no maintenance, 12000 miles a year, 39 months. By the time the lease runs out, we'll use our old PT Cruiser for trade on something else, used, for DH to drive. The buyout on the Equinox will be a rip-off.

 

[DnA2010]

I would buy- be prepared you could have your CRV a long time- we have a 98 CRV with 620,000km/385,000miles on it, and my inlaws have a 2004 (I think it is) with 249,000miles on it. DH's 98 is getting pretty beat up, but the longer we drive it the longer we are without a car payment (we paid out my car within 2-3 years I think)