Leasing a car question

[BELLE1109]

Please share your experiences with leasing- good or bad.
DH and I have always purchased, but we have seen some great leasing deals lately.
TIA!

 

[golfgal]

Leasing only makes sense if you want a new car every 2 or 3 years. Yes, the monthly payments are usually lower but it isn't really a "deal". You get limited mileage on your lease, usually 15,000/year. If you drive close to that, you may want to reconsider. If you want a new car every couple years, then it is better to lease-but you will always have a car payment too.

Leasing is basically comparable to renting an apartment, yes you need a place to live but after 3 years, you move out, get nothing for it vs owning a home and having equity when you sell (trade in/sale of old car).

 

[Longsx3]

We don't know anyone who has walked away from a lease without owing extra at the end. Whether it be for excess miles or door dings, etc plus the extra insurance required for leases, so while the payments look appealing there really is not much savings plus you are left with nothing in the end.

 

[sue1013]

We don't know anyone who has walked away from a lease without owing extra at the end. Whether it be for excess miles or door dings, etc plus the extra insurance required for leases, so while the payments look appealing there really is not much savings plus you are left with nothing in the end.

I've leased 5 vehicles and never owed anything at the end. I know I want a new car every 3 years. As to mileage you need to know the amount you need your lease can include whatever amount you want. It's cheaper to add the miles in the beginning than to end up over then the charge is higher. I've discussed the insurance issue with my agent she told me if you usually purchase the lowest coverage allowable you will need to pay more if you lease. In our situation I purchase higher amounts so it doesn't make a difference in our case. We do also own our other vehicle. If you are the type that drives a car forever no leasing is not for you.

 

[joviroxx]

Ive leased my last 4 vehicles and never owed anything at the end. I really don't compare it to renting a home as a home appreciates (well, it used to LOL) and a car depreciates. Buying a car is not an investment. I see it the following: A car payment is always part of my budget and will remain so.

Personally, I dont like the idea of paying off a car, then it starts breaking down as cars are not made to last anymore, then , after being used to NOT having a payment, boom... a new payment pops into your budget.

So, always a payment and always have a car under warranty. Ive never had an issue.

 

[jlewisinsyr]

I've never paid on my lease turn-in's either. Some leases are more stringent then others, Chrysler has a very liberal lease IMO in terms of scratches, dings, etc, yet VW's is more stringent. In short read the contract on what is considered major/minor, chargeable, etc. before you sign.

There doesn't seem to be much of a happy middle ground in terms of people leasing, either people love it or hate it. I've found a good portion of those who hate it have misconceptions in leasing and have never leased. The balance are those who are not necessarily good candidates for leasing or have had a bad experience (smaller portion).

Leasing a car is definately much different then renting versus buying a home (which is whole other subject and is not cut and dry either, IMO). Almost all cars devalue (there are rare exceptions) and rule one of investing is you don't invest in depreciating assets so buying a car should not be considered an investment.

 

[antmaril]

I haven't owned in a car in probably 20 years. I have never had to pay anything at the end of a lease. I drive less than 15,000 miles a year and I like a new car every two or three years. Leasing works for me.

 

[BELLE1109]

Thank you all for the responses!!
I will need to look into the insurance issue, however, DH works for one of the largest insurance brokers in the world so we get a large discount. This wouldn't really be a concern for me.

My main concern was owing at the end. I heard a few tales of people owning substantial amounts but perhaps they miscalculated miles in the beginning. Good to know most on here didn't owe.

Personally, I dont like the idea of paying off a car, then it starts breaking down as cars are not made to last anymore, then , after being used to NOT having a payment, boom... a new payment pops into your budget.
.

This is my exact thought! DH finished paying off his Saab 2 years ago and it has been nothing but repair bills ever since.

 

[Geoff_M]

My main concern was owing at the end. I heard a few tales of people owning substantial amounts but perhaps they miscalculated miles in the beginning. Good to know most on here didn't owe.

We know someone that leased and got burned on the mileage. They owed over $1,200 in excess mileage when the lease was up. They didn't have the extra cash at the time, so they accepted the offer of the dealer to roll the amount into the loan for their next car. Basically, it handcuffed them into buying from that same dealer and they lost any pricing negotiation leverage that they might have had otherwise if they could have threatened to buy from somewhere else.

Yes, paid off cars do require maintenance, but many cars now come with 100K mile coverage and they DO last a lot longer than they used to.

 

[jlewisinsyr]

We know someone that leased and got burned on the mileage. They owed over $1,200 in excess mileage when the lease was up. They didn't have the extra cash at the time, so they accepted the offer of the dealer to roll the amount into the loan for their next car. Basically, it handcuffed them into buying from that same dealer and they lost any pricing negotiation leverage that they might have had otherwise if they could have threatened to buy from somewhere else.

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 will need to look into the insurance issue, however, DH works for one of the largest insurance brokers in the world so we get a large discount. This wouldn't really be a concern for me.

What I've found is if you're properly insured to begin with, insurance is a non-event in a lease. Many people drive around with inadequate insurance coverage, taking state minimums which fail to protect themselves, never the less the owner of a leased vehicle. Many leases don't like deductibles in the $1,000 + range either, they prefer under $500.

 

[Geoff_M]

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.

Understood. But it was their first time leasing (and last) and "How many miles do you drive a year?" wasn't a question that they had really computed before when they considered the lease terms. I think their allowance was 12,000 a year, and that sounds like a lot until you start doing the math with your own habits. Yes, they failed to plan and save. But that didn't change the matter that the cost of their lease effective was $1,200 over what they thought it would case and that worked against their "savings" over purchasing to begin with. My whole point what that the "mileage" issue can be a landmine that CAN easily blow up in your face if you aren't careful.

 

[jlewisinsyr]

Understood. But it was their first time leasing (and last) and "How many miles do you drive a year?" wasn't a question that they had really computed before when they considered the lease terms. I think their allowance was 12,000 a year, and that sounds like a lot until you start doing the math with your own habits. Yes, they failed to plan and save. But that didn't change the matter that the cost of their lease effective was $1,200 over what they thought it would case and that worked against their "savings" over purchasing to begin with. My whole point what that the "mileage" issue can be a landmine that CAN easily blow up in your face if you aren't careful.

You do bring up a good point about figuring out your average mileage before you go in to lease. I know we drive an average of 950/miles a month based on the mileage on the car and how long we've owned it, so any lease over 12,000 miles a year is sufficient.

I still don't agree that it is a landmine, because it's not really unexpected. Sure it can change the relationship in the equation, but it's not like one turns in the vehicle and all of a sudden gets hit with an unexpected bill, this would be expected over the course of the lease. I might say getting hit with a "repair" bill for door dings might be a landmine if you don't consider them excessive but the leasing company does. Mileage is a little more finite and cut and dry.

 

[smkiya]

I am currently leasing. As of August the lease ends. I want to purchase it and will have to come up with $12000 to do so. It was a 4 year lease and if I would have just bought it then, I'd probably own it in a year. Not worth it. In April we make the last payment on dh's car and couldn't be happier. It's got several more years to live and we'll save close to $500 per month for those years. Wish I never leased mine.

 

[Geoff_M]

I still don't agree that it is a landmine, because it's not really unexpected.

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.

 

[jlewisinsyr]

I am currently leasing. As of August the lease ends. I want to purchase it and will have to come up with $12000 to do so. It was a 4 year lease and if I would have just bought it then, I'd probably own it in a year. Not worth it. In April we make the last payment on dh's car and couldn't be happier. It's got several more years to live and we'll save close to $500 per month for those years. Wish I never leased mine.

The point of a lease is not to buy out the car, and almost anyone will tell you not to do that. You're basically doing a big disservice to yourself.

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.

Yes, I do, but again, when it happens, you can easily see the impact of the change and plan for it. It's still not really a landmine, IMO.

 

[Geoff_M]

Yes, I do, but again, when it happens, you can easily see the impact of the change and plan for it. It's still not really a landmine, IMO.

When it impacts the calculus of the lease/buy decision, it most certainly is. I know people that have lost their jobs locally and then accepted new ones that were 45 or 60 miles away. On average that's 500 miles of commuting per work week on top of normal driving. If those people had been leasing their cars instead of buying them they'd be faced when a set of decisions that they wouldn't have had to deal with otherwise.... those are "landmines" in my book. Do you suck it up and plan to get killed on extra mileage charges? Do you rent an apartment where your new job is and only see your family on weekends (one friend did)? Do you go ahead and pay the penalties to break the lease?

 

[jlewisinsyr]

When it impacts the calculus of the lease/buy decision, it most certainly is. I know people that have lost their jobs locally and then accepted new ones that were 45 or 60 miles away. On average that's 500 miles of commuting per work week on top of normal driving. If those people had been leasing their cars instead of buying them they'd be faced when a set of decisions that they wouldn't have had to deal with otherwise.... those are "landmines" in my book. Do you suck it up and plan to get killed on extra mileage charges? Do you rent an apartment where your new job is and only see your family on weekends (one friend did)? Do you go ahead and pay the penalties to break the lease?

You plan for it, you cannot change things that are out of your control, but when something happens you need to plan for the things that will be impacted. In the example provided, if I needed to pay a lot of additional mileage because my driving habits changed, I'd look to swap cars with my signficant other first who may be driving less, then I'd look into buying out the vehicle if the mileage would be signficantly over ($1,200 is not much IMO over the course of a lease for excess mileage - on a 36 month lease that would be an extra $33) or I'd start setting aside money to cover the excess amount.

There are many ways to manage mileage on a leased vehicle and if it became too problematic, before it balloons out of proportion look to get out of the lease, either by paying a penalty or by swapping the lease with someone.

 

[Dan Murphy]

I have leased for over 20 years, mostly 2 year leases, a few 3 year. If you can deduct your car expenses on tax return, generally leasing is preferable to buying, relative to the depreciation schedules.

I have never had to pay additional at the end of a lease. My mileage has varied from almost 30K, 20 years ago, to 12K today. You do need to do your homework.

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.

Lot of advantages to leasing, though certainly not for everybody. In actuality, buying is probably better for most.

(not to be taken as financial nor tax advice)

 

[Geoff_M]

You plan for it, you cannot change things that are out of your control, but when something happens you need to plan for the things that will be impacted. In the example provided, if I needed to pay a lot of additional mileage because my driving habits changed, I'd look to swap cars with my signficant other first who may be driving less, then I'd look into buying out the vehicle if the mileage would be signficantly over ($1,200 is not much IMO over the course of a lease for excess mileage - on a 36 month lease that would be an extra $33) or I'd start setting aside money to cover the excess amount.

There are many ways to manage mileage on a leased vehicle and if it became too problematic, before it balloons out of proportion look to get out of the lease, either by paying a penalty or by swapping the lease with someone.

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.

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.

 

[AristocatFan]

We've leased twice and both times purchased the vehicles at the end of the lease. The contract has what is owed at the end, went to a bank and got a loan for that amount, paid the car dealership, payments remained the same so it was easy and simple. Never worried about keeping track of the mileage because that was only .05 a mile, no biggie and we never went over any mileage allowance anyway and we do a lot of traveling. If we could do it again we would but the biggest part of leasing is having that deposit to put down.