Leasing a car question

[simba20]

I have a question what happens if you have an accident in your leased vehicle?

I mean at the end when you go turn it in...the accident occured at any point in the lease and it was fixed (unless totaled).

 

[jlewisinsyr]

I have a question what happens if you have an accident in your leased vehicle?

I mean at the end when you go turn it in...the accident occured at any point in the lease and it was fixed (unless totaled).

As long as it was repaired using appropriate repair process (ie. you didn't use touch up paint to cover the paint scratch), no issues with lease.

You're making my point for me. My point is that there's a lot more than meets the low monthly lease price that's flashed up on the screen during car ads. Mileage clauses can be a major hidden cost. Yes, you may be able to "plan" for it, or you may opt that it's better to pay the penalty for early termination of the lease. Either way, it's a cost that people can EASILY find themselves facing and many have walked away financially "smarting" from. And yes, I understand that paying for a transmission rebuild for a car you own (done that) "smarts" a lot too.

I don't think I ever said that there is nothing else to consider but the lease price, rather, I think I made it clear that the consumer needs to understand their obligations and plan for variances.

The couple in question were just married, only a year or so out of college and, as I recall, only one of them had a job. I think they opted for a lease because the low price worked in their budget (they had that and a "beater" pickup truck). We also didn't hear them tell of the mileage issue until they were about to buy their next car, but I suspect that they either a) Didn't realize that they were really "over" until later in the lease, and/or b) thought that they could "make up for it" with reduced driving before they had to cough up. And in their position, $1,200 was a lot of money.

Sounds like they didn't do their research and were not well prepared financially for any large purchase (ie. car) that could result in a large car repair (if they had purchased the car) or in a lease, failing to meet the requirements of the lease (over mileage). Unfortunately they made a poor decision, didn't plan for it and had to pay for it, but in each of your a or b scenarios it was fully on them and they could have avoided the situation via proper planning and/or understanding.

 

[bumbershoot]

I leased 3 cars for a total of 12 years. I was happy for 10 of those years.

I didn't have to pay at the end of the first two car leases b/c I was rolling it in. The VW people never actually told me that I was rolling over the costs I would have owed into my new leases...and I do read contracts, but didn't really get that until the end.


With the last one, I knew I was going to have over-miles, and I was planning for that, but my own stupidity remembered the price wrong. I'd planned for half the cost. My fault. Whoops.


Leasing was great for those 10 years b/c I was single and wanted a NEW car with a nice warranty. That was the best with my first, the Jetta, b/c at that time I got 2 years of everything covered....nice. That deal had ended by the time I turned that in and got the Beetle though!


The insurance I had to keep on the cars was the exact same level that we had to keep on our car-loan car. Companies that have an interest in the car want it to be fully covered!

I understand where that would leave someone with a sour taste in their mouth about leasing, but the terms of leasing are well spelled out in the contract, including mileage and excess mileage charges. Personally, I think the person you know failed to plan accordingly and failed to save up the additional funds over the course of the lease when they realized and started going over the average miles per month that their lease worked out to be. It's not like mileage just suddenly appears, so it's poor planning that played into the issue you describe.

I completely agree.

You don't know anyone that's had an unexpected change in jobs that suddenly required a different commute?... A kid that decides to go to college three states away?... Due to jet fuel prices, driving to WDW suddenly becomes a lot more attractive this year?... Your kid finally makes the travel hockey team this year? There can be LOTS of unplanned changes to your driving habits.

But as soon as those things changed, they KNEW that the miles were going to be impacted.

Shortly after I leased my Jetta, I decided to move back to Washington state. From near Washington DC. I drove the long way, going down the east coast, turning right at Florida, going along 10, then going up I-5. As SOON as I decided to do this, I knew that the miles were going to be painful, and that I would need to be careful or plan to pay a whole bunch. (or get a new lease and roll over those charges, which is what happened, but I didn't entirely realize that b/c I was young and much less intelligent than I thought I was)


The only thing that blindsided me with the Jetta was that part of the lease deal was that they would pay for the registration stickers for x number of years. When I moved to WA, I expected that to stay the same, but it turns out that b/c VA and WA call their tabs different things, they are different sorts of taxes and based on different calculations, and because the lease stated it in VA terms, it did NOT follow me to WA. But wow I'm not sure anyone could have seen that coming, unless they had lived in both states and knew exactly what they call them. My stepdad, who is VERY savvy, didn't realize that was going to happen. (and it was a bummer b/c WA tabs cost a LOT more than VA tabs at the time!)

You're making my point for me. My point is that there's a lot more than meets the low monthly lease price that's flashed up on the screen during car ads. Mileage clauses can be a major hidden cost.

They are not hidden. They are a line item that you are expected to read, understand, and then initial. Anyone who believes the ad and doesn't read the 10 pages of paper that they are supposed to read, initial, and sign shouldn't be signing legal forms to begin with. Ads are ads, asterices leading to fine print mean "READ ME!!!!!", and everything is spelled out in lease forms. But ya gotta read 'em!

I have a question what happens if you have an accident in your leased vehicle?

I mean at the end when you go turn it in...the accident occured at any point in the lease and it was fixed (unless totaled).

That's why you carry the full insurance!

 

[DeluxePrincess]

I've leased 3 times. The first 2 times I had no problems or extra charges when it was time to turn the vehicle in. The last time I leased, I was charged $300 for a scratch that was inside the headlight area and not visible to anyone who wasn't looking VERY carefully. I didn't even know it was there. Leasing is fine if you need to drive a new vehicle every couple years. You don't need to worry about car repairs, etc. I currently own my present car and not having that monthly payment sure is nice. I plan to get a few more years out of it and buy a new one again.

 

[Geoff_M]

I don't think I ever said that there is nothing else to consider but the lease price, rather, I think I made it clear that the consumer needs to understand their obligations and plan for variances.

Then it would appear that we agree with one another. My entire point was that many people do not consider all facets of the price when considering the leasing of a car. They see the "due at signing" amount and monthly rate, and their thought processes often stop at that point. I used the term "landmine" because things like changes in driving habits, not carefully factoring in current driving mileage, and such can "trigger" extra financial penalties. That's it.

Sounds like they didn't do their research and were not well prepared financially for any large purchase (ie. car) that could result in a large car repair (if they had purchased the car) or in a lease, failing to meet the requirements of the lease (over mileage). Unfortunately they made a poor decision, didn't plan for it and had to pay for it, but in each of your a or b scenarios it was fully on them and they could have avoided the situation via proper planning and/or understanding.

Again, we agree with one another. They didn't do their research... perhaps they should have found a cheaper used car... perhaps they should have watched the mileage and put money in (or take money out) a special budget account according their running overage. I mentioned their case as a precautionary note to others to keep in mind when making lease/buy decisions. I wasn't making a blanket condemnation against car leasing. I was trying to remind people of the "whole picture".

If you think I'm defending/excusing my acquaintances actions, or implying that the car dealer "cheated" them in any way... I'm not.

They are not hidden. They are a line item that you are expected to read, understand, and then initial.

Exactly in what sense did you think I meant by "hidden"? Do you really think that I was implying that such possible excess fees aren't in the contract boilerplate signed and aren't mentioned during the signing by the dealer? The problem, and warning to others, is that it's one thing to hear about such possible fees, and another to think that there's much chance that you'll be hit with them. In fact, people DO need to prepare for them and indeed consider them before signing.

 

[ZachnElli]

We've leased at least 8 times without any major hiccups. My dh turned in a truck that was over miles by like 115 miles, I had to pay them $23 at the end, big whoop. Dh also traded in one well before the lease was up and when he lost his job, he had a very expensive lease and he listed it on lease trader.com and the local paper and someone else took over the lease (they had to be approved through the leasing company). We are currently saving to put half down to purchase a suv, because we just don't feel it's cost effective to fly our family of 5 (and our crap) anywhere anymore. But we won't vacation until we have the suv.

 

[Squirlz]

They really do make leasing easy and attractive don't they!

Must be because they like you so much...right?

Nope. It's because of the HUGE profits in leasing. Do your homework. It's a rare situation when leasing is best for the consumer.

 

[LuvOrlando]

We own now but leased 2 Chryslers and 2 Hondas without any issues. The only time we went over on mileage was with the Accord but we bought it to prevent the mileage payment and it turned out to be the best car we've ever had. We bought our Jeep because it was supposed to be my husbands commuter vehicle, but now it's mine. It's nice but I didn't need to spend so much for a 'around town' vehicle, I could have leased.

Next time around I will totally lease if I can find an attractive rate. It used to be that leasing was a great deal but the automakers got greedy and started making lease programs very unattractive to discourage it, and make buying look more reasonable.

The biggest issues you need to consider with leasing is do you have gap insurance, which pays the offset if you have a loss before you pay up the equity in the vehicle, do you think the 'purchase price' agreed to in the contract is fair, have you lined up your mileage properly with your needs and does the warranty cover the entire life of the lease? The warranty is very important, if you have a 3 year lease and the warranty only lasts 2 years you can end up with expensive repairs on a vehicle you won't keep. When we got our Accord & Odyssey we had 3 year leases and I dug in my heals over the warranty so they threw in an extension to 6 years because they didn't have anything in between, I also never did more than oil changes and tire rotations and the Accord is still going strong.

If all these terms are met then leasing is a great way to pay less for a better car while never paying any maintenance, I am probably going to do this for a big carpooling SUV next year.

 

[jlewisinsyr]

...The biggest issues you need to consider with leasing is do you have gap insurance, which pays the offset if you have a loss before you pay up the equity in the vehicle...

GAP insurance is important in financing too unless you put significant amounts down or pay cash. The purpose of GAP is to offset the negative equity in a car that has an outstanding balance, whether it is leased or financed.

They really do make leasing easy and attractive don't they!

Must be because they like you so much...right?

Nope. It's because of the HUGE profits in leasing. Do your homework. It's a rare situation when leasing is best for the consumer.

And I guess its wrong for companies to make a profit. Also during the economic downturn and when gas prices spiked that companies actually lost A LOT of money in leases because sales plummetted on lease returns, leaving companies with a lot of losses on their books.

 

[manning]

In the long run it's less expensive (cheaper?) to buy a car than lease one.

Read this

http://www.money-zine.com/Financial-Planning/Leasing-or-Buying-a-Car/Lease-vs.-Buying-a-Car/

 

[jlewisinsyr]

In the long run it's less expensive (cheaper?) to buy a car than lease one.

Read this

http://www.money-zine.com/Financial-Planning/Leasing-or-Buying-a-Car/Lease-vs.-Buying-a-Car/

It's less expensive to buy a 5 year old used car and keep it maintained and repaired for 10 years then it is to buy a new car be it leased or financed. But none of these "factors" take into account convenience factor and personal satisfaction.

 

[manning]

Got rid of my 1977 ford in 1993 150,000 miles

Still have my 1993 lincoln with 187,000 miles.

 

[tvguy]

I can't imagine having a car out of warranty today, repair costs can be horrendous. Most cars have 'bumper to bumper' warranties for 36/36, a very few have 50/60. I also do not have to concern myself with 'routine maintenance beyond oil changes. When it is tire, battery, brakes, etc time, I am turning the car back in.

(not to be taken as financial nor tax advice)

I don't know, even Consumer Reports says cars are built better and are more reliable now than they ever have been. I have a 2007, 2006, 2003 , 2000 and 1987, and the '87 is the only vehicle that has required any repair beyond brakes/fluid/oil/filter/tires.
Of course you need to read your lead, but a co-worker turned in a BMW leased through BMW and they hit her up for new tires, brakes because the lease contract specified 50% of tire/brake life had to remain at turn in. What she really got hit on was on body work. She had an accident, and had one of the best body shops in town do the repairs. BMW said they were not up to their standards, and charged her $5,000 to redo the work in their body shop.

 

[Lassie Lynne]

I did a lease once, when I needed a new car, but really didn't have enough money to make bigger car payments. It was just a three year lease and it worked out well for me in that situation. When I turned it in, the dealer actually said it was one of the best conditioned leased cars he had ever seen returned, but I did have a friend detail it out. I stayed within my milage too, so no charges at the end.

I wouldn't probably do another lease unless circumstances really warranted it.

 

[PatsGirl]

I've leased several cars over the past 20 years but only bought one out, a 1998 Jeep Cherokee Laredo, which I loved. I've never had to pay anything additional at the end on any of the trucks/cars.

I'm currently leasing a 2010 Rav4 4x4 for $199/mo ($248 inc.) but not loving the car so I probably won't keep it past the 36 months. One reason I continue to lease is that I can't afford the car payment on ANYTHING new and I can't fix even the smallest mechanical problem so everything is costly AND I have to have a 4-WD to get in and out of my driveway in the winters if it snows. I got rid of the Jeep when it started costing me $$ nearly every other month for repairs but I now wish I had kept it because I'll never be able to afford another one (this was a fantastic lease deal with 20K already on the vehicle) and did I mention I loved it? The current lease price for a new one is $369 which easily translates to $425...

Will I lease again, sure. If I find a car I love I'll probably buy it after the lease too. It isn't great financial advice but you can lease for three years and then finance for another 5 which spreads the payments out a bit more than the 48 or 60 months you may get from the very beginning. This is what I did with the Jeep to make purchasing it possible.