End of car lease - options?

[The Goon]

In a couple of months, my car lease comes to an end and I've just been getting the reminder calls from the dealership.

I leased my Honda Accord back when I had a job that required driving, which meant I could write off my lease payments. Unfortunately, I didn't have that job very long so the whole idea of a lease has been a mistake overall.

I'm hoping others have insights as to different options I might have; I'm thinking that financially I probably won't have another option other than to re-lease the vehicle.

Thoughts?

[DementedReality]

if the car is worth more than the buyout, then sell it privatly and pay the residual. if it is worthless, then give it back.

i would lease again. i made a long analysis about why leasing is almost always better than buying in the "ask a car salesman thread".

[Sylvanfan]

Yeah, with the strength of the Canadian dollar these days do your research about the resale value of the car today, what your buyout is, and if it's worth your while to buy a similar used car in the US and bring it over.

[Bill Bumface]

Originally Posted by DementedReality

if the car is worth more than the buyout, then sell it privatly and pay the residual. if it is worthless, then give it back.

i would lease again. i made a long analysis about why leasing is almost always better than buying in the "ask a car salesman thread".

As long as you know you won't get sick of the car before your lease is up, the km restrictions won't be hit, and the lease rate is the same or less than the purchase rate, I agree. You're completely protected from greater than expected depreciation, yet at the same time you can cash out on less than expected depreciation. When I used to drive new cars I'd lease and some people would try tell me it was the same as renting a car. Ugh.

Now I've moved on to buying cars that are a couple years old and getting something way more upscale than what I could have afforded new, although there are many nice things about new cars. There are tradeoffs for sure.

[Machiavelli]

Originally Posted by hulkrogan

As long as you know you won't get sick of the car before your lease is up, the km restrictions won't be hit, and the lease rate is the same or less than the purchase rate, I agree. You're completely protected from greater than expected depreciation, yet at the same time you can cash out on less than expected depreciation. When I used to drive new cars I'd lease and some people would try tell me it was the same as renting a car. Ugh.

How often does this happen, though? Financing rates on purchases are as low as 0% for 60 months, and usually never more than 5.9%. Aren't lease rates usually around 7%?

[Sylvanfan]

For what a high end luxury car? Usually lease rates aren't that much different than purchase finance rates. I last looked at vehichles in 2006 and the lease rates were usually withing 1% of the purchase rates.

[old-fart]

For the current car, find out what it is worth now and what you'd have to pay (if anything) to give it back (KM overages, damages, etc.). If it is worth more than the buyout, buy it out and either sell it privately or keep it.

If you want to re-lease, look at leasing a new vehicle not releasing this existing vehicle.

[flamesaresmokin]

Originally Posted by Sylvanfan

For what a high end luxury car? Usually lease rates aren't that much different than purchase finance rates. I last looked at vehichles in 2006 and the lease rates were usually withing 1% of the purchase rates.

Not much different except purchase rates mean you are actually paying to own a vehicle . I've never been a fan of leasing vehicles, you pay to essentially rent the car for a few years and when its up you still have to buy the car after spending thousands on it already.

I always go by the principle unless you can buy it in cash you probably shouldn't take on purchasing a vehicle.

[Knut]

Originally Posted by flamesaresmokin

Not much different except purchase rates mean you are actually paying to own a vehicle . I've never been a fan of leasing vehicles, you pay to essentially rent the car for a few years and when its up you still have to buy the car after spending thousands on it already.

I always go by the principle unless you can buy it in cash you probably shouldn't take on purchasing a vehicle.

FAct is that cars will depreciate in Value.... so you might as well lease a vehicle that has a good resale, and reinvest the difference between the lease and the finance as a downpayment on real estate, or in other investments. In the long run that gets you a better ROI.

[flamesaresmokin]

Originally Posted by Hesla

FAct is that cars will depreciate in Value.... so you might as well lease a vehicle that has a good resale, and reinvest the difference between the lease and the finance as a downpayment on real estate, or in other investments. In the long run that gets you a better ROI.

Thats all well and good if you never want to own anything. You can end up with 21 grand down on a car after a typical 5 year lease and you'd still have to buy it for what its now worth or end up with nothing to show for all your payments.

To own a honda accord after a lease you would end up paying 35-37 grand for a car that was originally worth 30 grand to begin with.

[Deegee]

Leasing versus buying depends on your needs and situation I think.

In my case due to the millage we put the vehicle it would have cost us significantly more to lease, so we did financing to own.

In hindsight I feel dumb and would have looked into the cash purchase discount to find a better deal through a bank then the dealerships finance price at 0%.

[DementedReality]

Originally Posted by flamesaresmokin

Thats all well and good if you never want to own anything. You can end up with 21 grand down on a car after a typical 5 year lease and you'd still have to buy it for what its now worth or end up with nothing to show for all your payments.

To own a honda accord after a lease you would end up paying 35-37 grand for a car that was originally worth 30 grand to begin with.

why would you want to own something that is not only going down in value, but as it ages is going to cost more and more to maintain?

if you pay cash for a car, say 25k, you have just turned 25k into 20k instantly and after 4 years, that 20k is now 12k or so.

i can lease that car for a cost of about 14k over 4 years and take the other 10k and invest it. after 4 years, i have an appreciating asset (the 10k) and you have a depreciating one (the car). and as the car ages, it starts costing more and more until you have to do it all over again.

why dont you "owners" see a hunk of metal in your driveway that represents tied up & depreciating capital? fact is, at low interest rates, you dont want equity in a car, let the bank own as much of it as possible. its a waste of capital.

[Ironhorse]

Originally Posted by DementedReality

i can lease that car for a cost of about 14k over 4 years and take the other 10k and invest it. after 4 years, i have an appreciating asset (the 10k) and you have a depreciating one (the car). and as the car ages, it starts costing more and more until you have to do it all over again.

But after 4 years, you're either taking the bus or shopping (and paying) for another automobile...

[DementedReality]

Originally Posted by Ironhorse

But after 4 years, you're either taking the bus or shopping (and paying) for another automobile...

so? its still more cost effective than buying a car. after 4 years, the warrenty is up and the car just starts costing more and more and is worth less and less.

why do people insist on turning 25k into 20k and then eventually into 5k .. what a terrible waste of capital. everyday, look at your car, it represents depreciating capital. when i look at my car, i dont see any of my money sitting in the drive way, my money is in the bank.

[Bring_Back_Shantz]

I used to be wholly against leasing, but that was when I didn't understand how it works.

When I went to trade in my Cavalier after three years I found myself wishing I had leased it instead, because it had depreciated faster than the financing payments (even at 0%) so it was worth less than I still had owing on it and it cost me money to trade it in.

If you're going to keep a car for a long period of time, then buying is probably the best option, but if you're only looking to keep the car for a few years, leasing is actually a pretty good option as well.

[Knut]

If you want a brand new vehicle, you lease one that does not depreciate as quickly as others (eg. Toyota and Honda). IF you want to buy, you go for a used vehicle, as you can potentially re-sell the thing for the same that you bought it for.

Buying a vehicle (short of a sports car/antique) is not a good investment. Leasing will lessen your 3 to 4 years financial burden on the thing (vs. financing and buying outright) and let you walk away from it right when things start to break down.

I pay about 350 per month to lease my 2005 Tacoma... it would be 550 to finance it.... that 200 per month = 2400 per year in money i could use elsewhere... I put that 2400 towards a new condo/stocks, and i have the chance to recoup the 350 per month i pay for the vehicle with a good return on my investment.

[onetwo_threefour]

After getting rid of the teenager and university student s'boxes, I have never owned a car. I am on my third lease, and love the fleexibility of not tying up a bunch of money in something that wears out.

In one case I bought out my lease at the end dorve it for a afew more months, then leased again. So I guess I did own a car for a short while but it was a matter of waithng for lease rate sale on the car I wanted.

[DementedReality]

Originally Posted by Hesla

If you want a brand new vehicle, you lease one that does not depreciate as quickly as others (eg. Toyota and Honda). IF you want to buy, you go for a used vehicle, as you can potentially re-sell the thing for the same that you bought it for.

Buying a vehicle (short of a sports car/antique) is not a good investment. Leasing will lessen your 3 to 4 years financial burden on the thing (vs. financing and buying outright) and let you walk away from it right when things start to break down.

I pay about 350 per month to lease my 2005 Tacoma... it would be 550 to finance it.... that 200 per month = 2400 per year in money i could use elsewhere... I put that 2400 towards a new condo/stocks, and i have the chance to recoup the 350 per month i pay for the vehicle with a good return on my investment.

thank goodness, someone else gets it!

[Barnes]

Originally Posted by DementedReality

thank goodness, someone else gets it!

no kidding. i've also looked into leasing computers as well.

[Sylvanfan]

Originally Posted by DementedReality

thank goodness, someone else gets it!

Actually I think the cheapest way to have a vehicle is to keep buying $1000 beaters, that you can drive for 9 months to a year, put minimal maintainance and than sell off for $800 a year later and repeat. In terms of per month cost, that's the cheapest you get and you don't tie up very much money. But if you want to drive a nicer/newer reliable vehicle I agree with you that leasing and using the difference on appreciating assets is a better way to go than buying new. Depending on how often you switch vehichles it's probably a better choice than buying a good used vehicle too for many. Leasing and drinking away the difference....thats a different story and a different topic!