What should I know about leasing a car?

[Psychodisney]

We need to get a used car for our DS19 to drive. I'm on the fence about how much I want to spend. My DH brought up leasing. Neither of us know much about leasing(we usually pay cash). Good idea? Bad idea? and why....

 

[Angrypenguin]

That's quite the loaded question! Leasing or purchasing both have advantages and disadvantages.

I know there's sometimes a stigma against leasing, but it can be really advantageous if you know what you're doing and armed with knowledge. I highly recommend spending sometime on leaseguide.com, as it will explain ALL aspects and variables of leasing, from the concept if leasing to interest/money factors, residuals, etc.

Remember, almost everything is negotiable during a lease. Don't just go by the numbers you hear or see on dealer advertisements!

 

[bumbershoot]

Leasing will be more expensive at the end than you think/remember by the end of the lease period.

They will have to be vigilant about keeping under the mileage. No big road trips. Unless they want to pay pay pay at the end.

You still have to do the maintenance on the car, even replacing tires if needed, even though you don't get to keep it at the end.

If you want to keep it at the end, you'll be paying a LOT. Probably more than you would have paid for another car as old as the leased car will be at the end of the lease.



I was a happy leaser for 10 years. Alas, I leased for 12 years, LOL. 3 cars in that time. Even though I read through the contracts and thought I was savvy, at the end I realized they hadn't "erased" the turn-in/end of lease fees when I would switch cars; they just rolled them into the payments for the next car. This is NOT what they were telling me verbally, but it's what was happening...ugh. I went over mileage with the first (leased it in Virginia then decided to move back to Washington State, which pretty much obliterated the miles for that year, LOL) and nearly did with the next two as well. Whoops!

Anyway, it served me well for 10 of those years. And even though I had forgotten things by the end of the last lease, it still worked for me. But...my only option was to do it on my own; my parents weren't buying it for me. I personally can't imagine leasing a car for *someone else* to drive, though, since I'd be responsible for what that other person might do. I personally would just buy him something. Something sturdy and safe, like an old Volvo.

 

[Cheshire Figment]

Leasing is not a good idea for a used car. (Even if you could find one.) If the lease includes maintenance the price will be very high to cover expected problems; if it does not include maintenance you will be required to pay for all repairs as a requirement of the contract and must have repairs performed prior to returning the car.

 

[Tinkerbelle32]

I would never do it again! Very expensive at the end, as stated already. Also, at turn in they get you for every little ding, tiny scratch, etc. Not worth it!

 

[Gumbo4x4]

There's enough small cars out there now that you can BUY for ~$200 a month that I can't imagine doing a lease. I know lots of folks who've done it & almost all of them at some point had a bad experience in one way or another (some like PP were happy for years, but eventually had that ONE that went bad, others got hosed the first time out). It seems a better option for business purposes than for personal.

 

[dh464]

You should also check insurance,it tends to be higher with lease cars since you have to carry the max coverage with a lease and your son is only 19 .

 

[bettymae1121]

I thought about a lease myself, as we needed a new car. I drive less than 30 miles a week on average and wanted a low-ish payment. But when I crunched the numbers, buying a 4 year old used vehical made more sense. The "due at signing" lease amount was about what I'd have as a down payment on a purchase and the montly payment on a purchase wasn't that much more than the lease, although I'd be paying for 4 years rather than 3 with a lease. And at the end of the payment term, I'd own the vehical. Buying made more sense, for a little more money a month and a year of "extra" payments I'd own the car out right, rather than having to start over with a new lease. I tend to keep cars forever, having a new one every 3 years isn't that important to me.

 

[Abbeys_mom]

I know DR is polarizing on these boards, so take it for what it is worth:

http://www.daveramsey.com/index.cfm?event=askdave/&intContentItemId=115934

"A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.

During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.

Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.

People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car."

Get a cheap car for to get him where he needs to go, pay $2,000 cash or whatever you and he can afford. Save those payments since you would have been paying them anyway. Then roll that in to a "paid for cash" car for the next car. No debt for either of you, and he has a car.

 

[taaren]

Leasing I've only heard good things about from people who used it for business purposes, mostly real estate agents.

They are: people who never want to own a car (ie the business holds the lease and it doesn't want another asset on the books), people who always need a new car (things have to look shiny for clients that they drive around). They just trade in the car at the end of a lease and get a new one, the business has paid for the expenses and they get another nice tax write-off.

If you want to own the car leasing isn't cost-effective as PPs have mentioned.

 

[MagicallyDelicious]

I'm currently on my fourth lease. We actually got $3,000 back on my last lease, because our mileage was under the allocated allotment, and the car was actually worth more than the set residual (partially due to its low mileage).

I had some scrapes in the underside of the front ground effects (getting a little too close to curb stops - whoops), and some minor scratches here and there. I also needed new tires and brakes when I traded it in. It was a simple return. As a matter of fact, I've leased from Ford, Mazda, and twice from Lexus without any issues at all.

But - can you even lease a used car? I had no idea that you could even do that. And I'd be very leery about letting a teen lease a car, because you really do need to keep good care of them. I parked routinely in Timbuktu to avoid scratches and dings. I can't imagine a teen doing that. I know mine wouldn't!

ETA: By the way, I have never, not one time, put one cent down when I've leased. I've also never paid a thing turning one end. I've also had the option of purchasing every car, and every time, I was offered a very good price.

 

[MAH4546]

Leasing makes sense for more expensive luxury cars. They hold value very well and therefore leases on BMW, Mercedes, etc. are a relative bargain. Other than that, I'd avoid it.