Tips for Leasing a Car

[Winsor_Pilates]

I've never leased a car, but am thinking about it for tax purposes and to put some cash back in my pocket by selling my car.

Any advice on leasing 101?

brand new, or lease takeover? brands that have good lease value? money down or 0 down? anything

[Bertuzzied]

I've done a couple of lease takeovers. Just make sure if you are going that route that the original owner put down a fair size down payment or pays you a lump sum of cash to take over their lease. Otherwise there is no benefit or savings and it's just better for you to lease a new vehicle.

www.leasebusters.com is pretty good. Actually someone from CP here recommended that site for me.

[blankall]

Totally depends on what your plans are. If you take over someone's lease a major factor is that you are not under warranty and who knows what that person did to the vehicle during their possession.

[Bertuzzied]

Originally Posted by blankall

Totally depends on what your plans are. If you take over someone's lease a major factor is that you are not under warranty and who knows what that person did to the vehicle during their possession.

All lease vehicle's warrantys are extended to the length of the lease. so no worries.

[TylerSVT]

Leasing cars makes no sense IMO.

While the rates are lower you are effectively renting a vehicle because often the buyout is more than the value of the car. I couldn't justify spending 300+ dollars a month on a car that i technically do not own.

[squiggs96]

Originally Posted by TylerSVT

Leasing cars makes no sense IMO.

While the rates are lower you are effectively renting a vehicle because often the buyout is more than the value of the car. I couldn't justify spending 300+ dollars a month on a car that i technically do not own.

Leasing is good for people who want something newer all the time and don't know much about repairing. It also costs substantially less money. If you want to upgrade a car every three years or so, leasing would be cheaper as the monthly payment is smaller (assuming you financed either the purchase or the lease). At the end of three years you'd likely have to take a loss on a car if you had purchased it and wanted to sell or trade it, since the majority of the value depreciates in the first few years. With a lease you can just walk away with less money spent on the vehicle and no future money to spend. If you are going to keep the car longer than five years it makes sense to purchase. The longer you intend to own the car, the more it swings the decision to the purchase side.

Just because you are renting a car doesn't mean you are throwing money away. It means you are paying less money for the flexibility to not have to keep the car for a long period of time. Since the buyout can be more than the value of the car, you don't have to buy it out.

If you bought a car and take it to the shop for all repairs and maintenance, like I do since I don't know how to fix vehicles, the repair bills will be much higher after year five when parts need replacing. You won't have this problem with a leased vehicle, since it is new and should be under warranty the entire time you are leasing it. Since vehicles are depreciable assets, many times it is advantageous to lease them, especially considering the time value of money.

Leasing is great for tax purposes as the expense (tax/accounting, not necessarily cash) is usually much higher than purchasing. You can usually expense the full lease payment for a car, whereas with a purchased car, you can only take CCA.

[Bertuzzied]

Originally Posted by TylerSVT

Leasing cars makes no sense IMO.

While the rates are lower you are effectively renting a vehicle because often the buyout is more than the value of the car. I couldn't justify spending 300+ dollars a month on a car that i technically do not own.

They make sense if you can write it off, or if you are taking over someone's lease where they put a huge down payment down.

[Knut]

Leasing is also worth it if you are a low mileage driver and get a vehicle with solid resale value. I leased a 2005 Tacoma for 342 a month. Bought it out at 17,500 after three years and then sold it for 22,000. Put that difference towards a 2009 Tacoma down payment. I like new vehicles and only drive about 15,000 KM a year.

Be careful if you plan on just dropping off the vehicle at the dealership as they will want the windshield and tires replaced, as well as any other mechanical work taken care of. It is only worth going this route if you cant sell the vehicle privately for more than your buy-out.

[Bring_Back_Shantz]

Originally Posted by TylerSVT

Leasing cars makes no sense IMO.

While the rates are lower you are effectively renting a vehicle because often the buyout is more than the value of the car. I couldn't justify spending 300+ dollars a month on a car that i technically do not own.

That's not true at all.
It's actually working out cheaper for me to lease my truck for 4 years and then buy it out at the end of the lease.

If you sit down and figure out what you're actually paying on the car, and what you intend to do with it (keep it long term, turn it in after the lease, whatever), it may be a better idea to lease, or it may be a better idea to buy. But you won't know until you sit down and actually figure out the whole cost.

In my case, if I have the cash to buy it out at the end, them I'm actually ahead about $1000. If I have to pay it off over 2 years on my line of credit, then I'm breaking even, but I'm actually paying it off over a longer period, so there's added value with that.

[GreatWhiteEbola]

Just the kind of advice I was looking for, CP delivers. Now, get out of my head!

[blankall]

Originally Posted by Bertuzzied

All lease vehicle's warrantys are extended to the length of the lease. so no worries.

Is that true? I just got ripped off by my dealership if so.

I'm on a 4 year lease and paid an extra $1000 to extend the lease an extra year.

As for the rationale behind my leasing. I use the vehicle at work. So I get to write off the entirety of the lease payment. If I bought, I would only get to write off the depreciation of the vehicle and interest payments on the loan. Those are considerably less.

[Bertuzzied]

Originally Posted by blankall

Is that true? I just got ripped off by my dealership if so.

I'm on a 4 year lease and paid an extra $1000 to extend the lease an extra year.

As for the rationale behind my leasing. I use the vehicle at work. So I get to write off the entirety of the lease payment. If I bought, I would only get to write off the depreciation of the vehicle and interest payments on the loan. Those are considerably less.

Oh i only have experiences with Acuras, Hondas and Lexuss but all the vehicles had full warranty until the lease was over.

and to clarify. i have never acutally leased a new vehicle. only taken over someone's leased. So i'm not sure if they had to pay extra or not.

[Knut]

Lease warrantys vary. You can get basic or comprehensive coverage of varying lengths. Also you can often negotiate the oil changes and servicing be covered by the dealership for the length of the lease.

I will get an extra year of coverage longer than my lease term. Then I can sell it with a one year warranty remaining. This helps entice buyers.

[Rathji]

Originally Posted by TylerSVT

Leasing cars makes no sense IMO.

While the rates are lower you are effectively renting a vehicle because often the buyout is more than the value of the car. I couldn't justify spending 300+ dollars a month on a car that i technically do not own.

As the OP mentioned as one of his reasons, tax write offs for businesses are a major reason to lease. Not only do you get a vehicle for less in the short term, you can write off the full value of your payments, rather than just a portion of it (I think maybe the depreciation value) but I am sure someone will know better than me.

For a person without the ability to write off the expenses of a car, it doesn't make much sense unless you fit a set of fairly rigid circumstances, but for a business it is often a no-brainer.

[Winsor_Pilates]

Yeah, I'm in the self employed - can write it off boat; that's why I'm considering a lease. Most of the replies so far seem to go the route of buying the vehicle out at the end of the term.
I would be planning on just giving it back and getting something else; do you get ripped off doing this? on repairs and such?

[Knut]

^ as long as you keep up with the Maintenance it should be ok. I do not think you will get burned, but you might be required to change out the tires or the windsheild. Check the fine print as that would be listed.

[TylerSVT]

Originally Posted by Bring_Back_Shantz

That's not true at all.
It's actually working out cheaper for me to lease my truck for 4 years and then buy it out at the end of the lease.

If you sit down and figure out what you're actually paying on the car, and what you intend to do with it (keep it long term, turn it in after the lease, whatever), it may be a better idea to lease, or it may be a better idea to buy. But you won't know until you sit down and actually figure out the whole cost.

In my case, if I have the cash to buy it out at the end, them I'm actually ahead about $1000. If I have to pay it off over 2 years on my line of credit, then I'm breaking even, but I'm actually paying it off over a longer period, so there's added value with that.

But the Buyout will be higher than the worth of the car, wouldn't it make more sense to buy the same car used at a lower cost and then either pay out of pocket, or run a line of credit for that?

In the end the fact that the buyouts are more expensive than the value of the car is what puts me off of leases.

Plus i couldn't stand the idea that you are "renting" a car effectively.


Edit: If you can write it off and the numbers work out, more power to you.

[DementedReality]

leasing almost always makes sense ...

first off all, you pay 55% (approx) of the car in 1/48th increments. i dont know about you, but I dont want MY cash tied up in depreciating metal and rubber.

and yes the car is worth LESS at the end, that means the car company subsidized YOU the entire time. being upside down on a lease is GOOD. hint: dont buy the car if they want MORE then its worth!!!

why would you want to give up 25,000 for something that is only worth $20,000 the minute you take ownership?

i would rather give up $350 a month at a time and use the money in better places then watching it every day erode on my drive way.

[Dion]

Originally Posted by TylerSVT

Leasing cars makes no sense IMO.

While the rates are lower you are effectively renting a vehicle because often the buyout is more than the value of the car. I couldn't justify spending 300+ dollars a month on a car that i technically do not own.

They make sense if you can write off the expenses of leasing a vehicle.

[DementedReality]

Originally Posted by Dion

They make sense if you can write off the expenses of leasing a vehicle.

they make sense if you want a new car and value your money. write off or not.