Leasing a car: tell me the good the bad and the ugly

[PRINCESS VIJA]

We are looking at buying a new vehicle. since I drive low miles many people are saying that a lease would be good. The dealership we went to today said they have a good program and seemed to be trying to really talk up leasing, I've never done it, and don't know what to expect. Any and all comments appreciated!

 

[MsPeggySue911]

To me, leasing is throwing away your money, much like RENTING a house as opposed to owning it. You are giving your money away to someone and you will never own what you are paying for. It only take 5 years to pay off a car then you own it forever and can drive it payment free for 10 more years if you want to. If you are the type who wants to constantly keep a car payment your whole life (like my brother) then a lease might be for you.

 

[HsvTeacher]

I went through a phase of leasing, because I was buying a new car every two years. When I was ready to turn in my last two-year lease, I had positive equity in it. I had kept the mileage really low, so I ended up financing the balance for two years. It would have cost more in the long run if I had purchased it new and financed it for five years.

That being said, now we purchase low-mileage pre-owned cars. Someone else has paid for the depreciation, and we get an almost new car with a warranty.

 

[surfergirl602]

I'm just gong to tell you our story from leasing a car. we leased a 2008 subaru impreza. GREAT car, very low payments, 2% interest on it. We did a three year lease. We were allowed 15000 miles a year, when we turned it in, three years later, we only had 20,000 on it. There was no damage to the car, way under the miles. We turned it in because we had another child and we didn't all fit in it.

Anyway, when we turned it in, the leasing company sent us a bill over a month later for a disposition fee, inspection fee, damage fees, totalling almost $500. I was furious, and in shock, because the reason we went with this certain leasing company (chase) was because they would not charge us the disposition fee. They didn't do their inspection for over a month after the car was turned it. They listed several bogus damages, like a cracked windshield and dents in the body. We took pictures in the lot of the car when we turned it in. None of what they listed was there when we turned it in. We filed an appeal. the damage they stated could have happened at any time while the car was sitting in their lot for over a month. In that time, we'd had various hail storms, tornadoes, even.

We won our appeal. But it was a hassle. I had to provide the pictures of the car the day we turned it in, and show that the damage was not preexisting. And because the company waited over a month to do the inspection, our mediator agreed that they damage could (and probably did) happen while the car was sitting in the lot. I will never lease again. This left a really sour taste in our mouths. We really just threw our money away because in the end we were left with nothing but a bill. So really, we just rented the car for three years. We may have bought it had it still fit us as a family, but I can't be too sure on what the payments would have been after that.

We've looked into leasing another vehicle, but when it comes down to residual value and saving money, its much cheaper in the long run to purchase a really nice pre-owned vehicle.

 

[YodaGirl]

To me, leasing is throwing away your money, much like RENTING a house as opposed to owning it. You are giving your money away to someone and you will never own what you are paying for. It only take 5 years to pay off a car then you own it forever and can drive it payment free for 10 more years if you want to. If you are the type who wants to constantly keep a car payment your whole life (like my brother) then a lease might be for you.

My thoughts, exactly.

Leasing is not right for us, because we tend to keep vehicles for quite awhile, and we like to get out from underneath payments as soon as possible.

DH's granny should have leased. She went through a 20 yr stage of buying/trading in her car every 2 years or so.

 

[LuvOrlando]

went through a lease phase then went back to buying but regret buying our vehicles. why? the payments are higher for the same thing and instead of putting the $ towards a new vehicle every few years instead Ihave to to put it into maintenance and repairs like tires and brakes, dents and ever reducing gas milage. I'd rather get the new car. To me buying only makes sense if i am putting on very high milage

 

[abdmom]

went through a lease phase then went back to buying but regret buying our vehicles. why? the payments are higher for the same thing and instead of putting the $ towards a new vehicle every few years instead Ihave to to put it into maintenance and repairs like tires and brakes, dents and ever reducing gas milage. I'd rather get the new car. To me buying only makes sense if i am putting on very high milage

I've had the same experience as the previous poster. I purchased my current car because I was putting on 25-30K miles/year. Now that I'm putting on only about 10K/miles per year, I'll get a lease on my next car.

 

[OceanAnnie]

To me, leasing is throwing away your money, much like RENTING a house as opposed to owning it. You are giving your money away to someone and you will never own what you are paying for. It only take 5 years to pay off a car then you own it forever and can drive it payment free for 10 more years if you want to. If you are the type who wants to constantly keep a car payment your whole life (like my brother) then a lease might be for you.

I always looked at it this way too.

I had a boss that leased his vehicles. I asked him why he did that. He told me most of the "well off" people he knew did this. Okay.

He had to buy new tires for the leased car and I asked him what happens when he turns the car in? They get to keep the tires after pay off? He didn't know at the time. I finished paying my vehicle off during this same time frame and told him I didn't understand leasing. I have read where the leasing contracts are complicated and something about balloon payments that didn't look very good to me. I told him I did understand buying and that it's nice to actually have something when the payments are done.

I never did hear what happened with those tires.

 

[surfergirl602]

I always looked at it this way too.

I had a boss that leased his vehicles. I asked him why he did that. He told me most of the "well off" people he knew did this. Okay.

He had to buy new tires for the leased car and I asked him what happens when he turns the car in? They get to keep the tires after pay off? He didn't know at the time. I finished paying my vehicle off during this same time frame and told him I didn't understand leasing. I have read where the leasing contracts are complicated and something about balloon payments that didn't look very good to me. I told him I did understand buying and that it's nice to actually have something when the payments are done.

I never did hear what happened with those tires.

If he did turn the car in, the tires would go with it. You are responsible for maintaining the tires, oil, etc. on the vehicle.

 

[tvguy]

The benefits of a lease are intangibles.
Fixed predictable cost. Allows you to get more car for the same monthly payment. Allows you to get a new car more often. In some circumstances, it may be easier to write off a vehicle for business use, although the IRS really cracked down on that in recent years.

A lease NEVER makes sense if you are looking for the lowest cost per mile. But people who have the things I mention above as a priority, they are willing to pay for those intangibles.

 

[antmaril]

I haven't owned a car in more than 20 years. I always drive a new car and I've never been charged a disposition fee or received a bill for damages. I've never gone over the mileage. I just return the car to the dealer and pick up my new car. No down payment - easy peasy. It works for me.

 

[BernardandMissBianca]

To me, leasing is throwing away your money, much like RENTING a house as opposed to owning it. You are giving your money away to someone and you will never own what you are paying for. It only take 5 years to pay off a car then you own it forever and can drive it payment free for 10 more years if you want to. If you are the type who wants to constantly keep a car payment your whole life (like my brother) then a lease might be for you.

Not true.
you can buy out your lease at the end of the leasing period. Now what you have to watch out for is making sure the ballon payment at the end of the lease term is comparable to a lease to own type payment. We turned in our VW passat because we were A) coming to the end of the milage cap, B) because we had a 3rd kid in a car seat and the car seats didn't fit, and C) the ballon payment was way more then we would have owed if we had just purchased it.

That being said, DH currently is leasing a VW GTI which we will buy out because the lease agreement is a good one and he put high miles on it (drives from CT to DC 3 times a month).
Sometimes leases are a good thing especially if you put either really high miles and trade frequently or do low miles and get a good trade in. And for those who aren't emotionally invested in their cars.

 

[VAfamily1998]

We had a good experience with a lease several years ago (2000).

We leased a Jeep Grand Cherokee for 3 years. Dh is military and we figured we would only be in the area for about 3 years anyway, and there was a good chance we would be sent overseas after that.
The car was mainly for my use, and I was a SAHM so I was mostly just driving to the grocery store, playdates, etc. locally and didn't need too many miles.
We did end up making a few long distance trips (about 600 miles each way) in it, but still we stayed pretty low on mileage. I think by the end of our lease we had gone over the mileage by a very small amount, we would have had to pay just a few dollars, which they just wrote off.

It ended up being a positive/convenient experience for us because although we did not move overseas, we did end up expanding our family and that was about the same time we really started to need the 3rd row of seats. Even if we had purchased the Jeep, after about three years we would have started looking at trading it in for a larger vehicle.

 

[OceanAnnie]

If he did turn the car in, the tires would go with it. You are responsible for maintaining the tires, oil, etc. on the vehicle.

Yeah. I just wanted him to tell me about it.

 

[BernardandMissBianca]

ETA:
I purchased my car because I average 1000 miles a week, and I could get a 6 year loan on it. But we'll probably have this car for over 10 years.

 

[Jason@dvcstore]

That being said, now we purchase low-mileage pre-owned cars. Someone else has paid for the depreciation, and we get an almost new car with a warranty.

Ditto.

Jason

 

[jlewisinsyr]

A quick rule of investing, you do not invest in assets that are guaranteed to depreciate, it doesn't make sense. We have done financing, straight purchase and leasing, it all depends on our current circumstances.

Leasing is a great option for those who do not drive a lot of miles, prefer to drive a new car that is under warranty and who take good care of their vehicles. We've never had to pay for damage under any of our leases and they were easy to understand. Most (99.9%) consumer leases are modified balloon loans with a set residual value, you have the option at the end of the lease to pay the balloon loan amount off (finance, cash, etc.) or turn the vehicle in. It rarely makes sense to finance the balloon loan amount, unless you plan on selling the car (ie. someone is willing to pay you more then the residual value).

To another poster who compared leasing to renting versus buying, please stop watching Suze Orman, they are completely different, although I question many who discredit renting over buying your home (it's not as cut and dry as people make it out to be, if you actually run the numbers).

 

[OceanAnnie]

A quick rule of investing, you do not invest in assets that are guaranteed to depreciate, it doesn't make sense. We have done financing, straight purchase and leasing, it all depends on our current circumstances.

Leasing is a great option for those who do not drive a lot of miles, prefer to drive a new car that is under warranty and who take good care of their vehicles. We've never had to pay for damage under any of our leases and they were easy to understand. Most (99.9%) consumer leases are modified balloon loans with a set residual value, you have the option at the end of the lease to pay the balloon loan amount off (finance, cash, etc.) or turn the vehicle in. It rarely makes sense to finance the balloon loan amount, unless you plan on selling the car (ie. someone is willing to pay you more then the residual value).

To another poster who compared leasing to renting versus buying, please stop watching Suze Orman, they are completely different, although I question many who discredit renting over buying your home (it's not as cut and dry as people make it out to be, if you actually run the numbers).

I was one that made the comparison. I don't watch Suze Orman. I made the comparison for myself and my circumstances.

I take extremely good care of my vehicles. In fact, after driving one vehicle for 7 years and paying it off I sold it for almost 2/3rds what I paid for it. It retained it's value, looked great, ran great, and the guy really wanted it. So it paid off for me.

It just makes sense for me to buy vs lease. I understand it makes sense for others to lease. We all do what is best for ourselves.

 

[Dancind]

I'm driving a leased car, a Prius. Got it in 2010 when Toyota was offering deals on their cars because of all the bad publicity they were getting. My payment is $250 a month because I decided I needed the cool moonroof that cools the car when it's parked, which meant I had to have the navigaton system. ha

I love my car. I don't usually drive a lot, but we took it to CA and got 50mpg! That made it a cheap trip to Napa. I was able to negotiate a decent residual if I decide I want to buy this car, which I may do. It will probably be a better deal than buying the equivalent, low mile Prius in 2013.

I went with the lease because my 7 year old car was breaking down, and DD was in college so I needed low payments. It made sense for me at this time.

 

[Dan Murphy]

ETA:
I purchased my car because I average 1000 miles a week, and I could get a 6 year loan on it. But we'll probably have this car for over 10 years.

That will be 520,000 miles!!!

Hi Vija.


I have leased all my cars, and most of Marie's also, since 1990. About 8 or 9 cars for me, 6 or 7 for Marie. The leases have all been for either 2 or 3 years, just depends on what the leasing company is pricing more desirably, and they do price them significantly different. I do not like having a car out of warranty, most any repair cost today can be astronomical. I like having a new car, current safety and convenience features. I can take a business deduction on my car. Leasing is generally better than a purchase if one can deduct automobile expenses.

We have never paid any money down, including taxes, never have paid a balloon or exit fee, never been charged for damages or excess wear/tear. Vehicles are always inspected at our home before returning to dealer, about a week before. I never have maintenance expenses, other than oil changes, no tires, no brakes, no nothing.

Leasing is good for some, buying/financing is good for some. In any case, having possession of a car, whether lease, buy, or finance, a person will always have auto expense of some sort....lease payment, finance payment, depreciation, repairs and maintenance. It just depends on what is best for you, what you want to pay for and how you want to pay for it. The only way not to have an automobile expense is to not have one in your possession. And yes, leasing is not renting, LOL.

Here is a fairly concise explanation...

http://www.leaseguide.com/lease03.htm

And a number of others.

http://www.google.com/search?hl=en&...avclient-ff&rlz=1B3GGLL_enUS367US379&ie=UTF-8


(Not to be taken as financial advice)