Tips for Leasing a Car

[Bring_Back_Shantz]

Originally Posted by DementedReality

i would rather the car be worth less then the amount owing. that means the car company subsidized you for the term of the lease.

In some cases yes.
For me it's like this.

At the end of the lease I'll have the option to buy my truck out for x ammount. If the resale on the truck is higher than that, then I'll stick with my original plan and buy it out. Then I can either sell it and make some cash, or I can pay it off and keep driving it, and as I said, this will actually save me ~$1000 over if I had bought it on day 1.

If the resale is lower than the buyout, then I'll just give the truck back, take the money I was going to spend on the buyout, and buy a better truck for the same value. Now I've spent the same (again less than if I'd bought it outright) as I would have in the first case, but now I've got a slightly better truck at the end.

Either way it worked out to a win-win for me to lease my truck.

[TylerSVT]

I guess its a difference of viewpoints as well.

I like to buy a car and own it for 6-10 years and beyond.

IMO people waste money on cars because they feel they want or need the next big thing, they want the more power, the more leather the more this and that and they want to show people their pretty new BMW or Audi.

Ironic that i drive a souped car but i did that before i matured and grew up.

IMO i would much rather have a 10 year old vehicle, no debt, and be able to save. Than have constant debt and have a new car every 4 years. People live beyond their means. I don't like owing people anything... ever. I like knowing that my stuff is mine. Id rather pay off my house than buy a new car.



Edit:

Another problem is i dont like buying new cars, you take such a stupid hit on depreciation out the door, probably another reason why i dont like leases. I also dont mind working on a older vehicle.

[blankall]

Originally Posted by firebug

You should really re-think this.

'A', 'B' and 'C' each buy an identical new car for exactly the same price ($25,300+gst) and maintain and drive them similarly for 4 years (64,000km).

'A' Leased with Zero down for 48 months at 3.9% and their monthly payments are $408 (incl. taxes). At the end of 48 Months they have put $19,584 into the vehicle and have the option to walk away or buy out for $11,502.

'B' Financed with Zero Down for 60 months at 2.9% paying $511/month. They have put $24,528 into the vehicle and have $12,264 in payments remaining.

'c' paid cash up front $28,517 including all taxes and fees.

After 48 months, all 3 Cars are now worth $12,500 each. Who is further ahead?

** All figures are from the Toyota.ca 'Build and Price" website for a base 2011 Camry

Not everyone has an extra 30k in cash laying around.

If person A uses their vehicle for work, they can write off the lease payment. Person B and C can only write off interest and depreciation of the vehicle.

You also have to factor in the opportunity cost of paying 30k upfront. If I can invest that money in an investment that pays out more than 3.9 or 2.9% I can still come out ahead of the financed guys.

Person B and C can also run the risk of a major repair once the warranty expires.

Leasing is a better option if you can write off a decent sized portion of your payments.

[Bring_Back_Shantz]

Originally Posted by TylerSVT

What do you get at the end for putting your $20,000 into something?

Nothing, that is what. You are paying for something you do not own.

I get that Leasing can be cheaper than financing, but at least with a finance you are using your money towards owning something.

What you fail to see is that putting more money into a depreciating asset that you own, can end up being a worse value than putting less money into something that you don't own. It's actually pretty common for people to owe more on their car (that they are buying) than it is worth, in fact, that's true as soon as you drive it off the lot, only over time do you end up with a car you owe less on than the actual value of it. If you intend to get out of the car prior to that happening, leasing is ALWAYS going to be the better option. If you're going to hold onto the car longer than that, then buying is USUALLY the better option. In my case due to financing, and the length of time I'm paying off the car, leasing and then buying out was actually the cheaper option.

[Bring_Back_Shantz]

Originally Posted by TylerSVT

I guess its a difference of viewpoints as well.

I like to buy a car and own it for 6-10 years and beyond.

IMO people waste money on cars because they feel they want or need the next big thing, they want the more power, the more leather the more this and that and they want to show people their pretty new BMW or Audi.

Ironic that i drive a souped car but i did that before i matured and grew up.

IMO i would much rather have a 10 year old vehicle, no debt, and be able to save. Than have constant debt and have a new car every 4 years. People live beyond their means. I don't like owing people anything... ever. I like knowing that my stuff is mine. Id rather pay off my house than buy a new car.



Edit:

Another problem is i dont like buying new cars, you take such a stupid hit on depreciation out the door, probably another reason why i dont like leases. I also dont mind working on a older vehicle.

Saying the big hit on depreciation as soon as you drive off the lot is a reason to buy over leasing, kind of shows you haven't taken the time to actually understand how leasing works. Depreciation as soon as you drive off the lot is really only important if you intend to own the car short term, wich is the exact reason why someone would benefit from leasing over buying.

[TylerSVT]

Originally Posted by Bring_Back_Shantz

Saying the big hit on depreciation as soon as you drive off the lot is a reason to buy over leasing, kind of shows you haven't taken the time to actually understand how leasing works. Depreciation as soon as you drive off the lot is really only important if you intend to own the car short term, wich is the exact reason why someone would benefit from leasing over buying.

No thats not what i mean, what i meant is that id prefer to buy a car that is a couple years old that has already taken the big hit in depreciation rather than lease a new car.

Edit: I apologize for semi-derailing the thread, i never saw leasing from a lot of your guys views.

[Sliver]

Originally Posted by DementedReality

you are missing something

60 payments x 511 = 30,660.

Well you can't exactly compare a five-year financing term with a four-year leasing term. I did both at 48 months to get my numbers.

[DementedReality]

Originally Posted by Sliver

Well you can't exactly compare a five-year financing term with a four-year leasing term. I did both at 48 months to get my numbers.

yes you can ... you are commiting to a term and a total obligation.

[Sliver]

Originally Posted by DementedReality

yes you can ... you are commiting to a term and a total obligation.

OMG guy. Then add 12 months to the lease term to make it a fair comparison. Your way only makes sense if you are going to ride your bike everywhere after your lease is up in which case you should at least add $200 for a Supercycle.

[Dan02]

Originally Posted by firebug

You should really re-think this.

'A', 'B' and 'C' each buy an identical new car for exactly the same price ($25,300+gst) and maintain and drive them similarly for 4 years (64,000km).

'A' Leased with Zero down for 48 months at 3.9% and their monthly payments are $408 (incl. taxes). At the end of 48 Months they have put $19,584 into the vehicle and have the option to walk away or buy out for $11,502.

'B' Financed with Zero Down for 60 months at 2.9% paying $511/month. They have put $24,528 into the vehicle and have $12,264 in payments remaining.

'c' paid cash up front $28,517 including all taxes and fees.

After 48 months, all 3 Cars are now worth $12,500 each. Who is further ahead?

** All figures are from the Toyota.ca 'Build and Price" website for a base 2011 Camry

Did guy A decide he was going to forgoe having a car and walk for year 5?

[psicodude]

Originally Posted by TylerSVT

I guess its a difference of viewpoints as well.

I like to buy a car and own it for 6-10 years and beyond.

IMO people waste money on cars because they feel they want or need the next big thing, they want the more power, the more leather the more this and that and they want to show people their pretty new BMW or Audi.

Ironic that i drive a souped car but i did that before i matured and grew up.

IMO i would much rather have a 10 year old vehicle, no debt, and be able to save. Than have constant debt and have a new car every 4 years. People live beyond their means. I don't like owing people anything... ever. I like knowing that my stuff is mine. Id rather pay off my house than buy a new car.



Edit:

Another problem is i dont like buying new cars, you take such a stupid hit on depreciation out the door, probably another reason why i dont like leases. I also dont mind working on a older vehicle.

This post came off as terribly arrogant and really generalizes people.

I didn't lease a brand new vehicle to compensate for my penis size. I leased a new vehicle so the chances of my wife and child sitting in a broken down vehicle on the shoulder of deerfoot are as low as I can make them. I leased a new vehicle so they have roadside assistance to bail them out if something does go wrong. I leased a brand new vehicle so if they ever get in an accident (god forbid), hopefully all the latest and greatest safety features will keep them alive.

There are dozens of reason people like to own a new vehicle other than impressing chicks and the new car smell. One day when you grow up, you will realize that some things in life are way more important than a few hundred dollars a month.

[Sylvanfan]

When it comes to cars, the way to go is buy a $500 beater and hope that you can get a year out of it without having to sink a nickle into it. If you're going to drive, and have a vehicle there is no way around having expenses of some kind.

My advice for leasing is to make sure you get the car with nothing down. If you tell them you don't want to lease another vehicle from that manufacturer and return at the end and they have any of your money they'll find a way to devalue your vehicle so that you never see that money again.

I should have done that when I leased my 2006 vehicle because than I could have just given it back. Instead they had some of my money which I gave them to get a better lease rate and they tried fudging the value of the vehicle to the point where I could have miraculously returned it and get nothing back. When I asked to see their calculation sheet and pointed out a $3500 void....they might as well have started chanting "LOUD NOISES" because they went off in circular patterns to justify where the money went.

[TylerSVT]

Originally Posted by psicodude

This post came off as terribly arrogant and really generalizes people.

I didn't lease a brand new vehicle to compensate for my penis size. I leased a new vehicle so the chances of my wife and child sitting in a broken down vehicle on the shoulder of deerfoot are as low as I can make them. I leased a new vehicle so they have roadside assistance to bail them out if something does go wrong. I leased a brand new vehicle so if they ever get in an accident (god forbid), hopefully all the latest and greatest safety features will keep them alive.

There are dozens of reason people like to own a new vehicle other than impressing chicks and the new car smell. One day when you grow up, you will realize that some things in life are way more important than a few hundred dollars a month.

You are probably in the minority here, North Americans love living beyond their means, its one of the reasons you can take out 85% of the equity of your house on a line of credit.

I realize that you might want nice new safety features, but unless you are buying a brand new BMW/Volvo/Merc you are getting the same safety features in a 2010 golf as a 2005 BMW 328i.

[ken0042]

Originally Posted by Sliver

Unless I'm missing something the guy financing the car is further ahead. He's put $4944 more in than the leasing guy, but as long as he has more than $4944 equity in the car - which I think he would - he's ahead of the guy leasing.

No, he has paid $4944 more that "A", and has a few hundred in equity. Keep in mind he still owes around $12K for the car; and it is only worth $500.

Leasing really makes sense if you plan on getting rid of the car in 3,4, or 5 years. Because you are only financing the difference between the price of the car and the trade in value, you end up paying a lot less in interest.

One major downside of leasing; if your circumstances change it is a lot harder to get out from under your payments. I have a 2 month old vehicle which we bought; and if something happened where we couldn't afford it; I could sell it a lot easier than trying to get out of a lease.

[theonlywhiteout]

friends in the industry that i know refer to leasing as 'fleecing'
its been well documented how much of a cash vampire this concept is

[Sylvanfan]

Originally Posted by theonlywhiteout

friends in the industry that i know refer to leasing as 'fleecing'
its been well documented how much of a cash vampire this concept is

And selling cars isn't fleecing people either?

Fact is that when you go to a dealership and leave with a vehicle, you lost and they won, unless you find a way to turn around and sell the vehicle to some other sucker for more than you just paid less your expenses. Vehicles are an expense, and many people myself included chose to pay that expense because it offers a convenience that public transit and riding a bike doesn't.

[Golden Jet]

Read the fine print for penalties for being over your kilometer limit. That can be expensive. Make sure you tailor your lease to the amount of kms you drive consistently in a year.

[DementedReality]

Originally Posted by theonlywhiteout

friends in the industry that i know refer to leasing as 'fleecing'
its been well documented how much of a cash vampire this concept is

i dont believe this and the proof is pretty obvious.

if leasing was indeed fleecing, why did American car companies STOP leasing cars right about the same time they hit financial hardship?

because it was TOO good for the consumer. if it was so bad for the consumer, no way they would eliminate leasing as an option.

[Rathji]

Originally Posted by Golden Jet

Read the fine print for penalties for being over your kilometer limit. That can be expensive. Make sure you tailor your lease to the amount of kms you drive consistently in a year.

This is the only downside of leasing a car that otherwise makes financial sense for your situation.

[Bring_Back_Shantz]

Originally Posted by Sylvanfan

When it comes to cars, the way to go is buy a $500 beater and hope that you can get a year out of it without having to sink a nickle into it. If you're going to drive, and have a vehicle there is no way around having expenses of some kind.

My advice for leasing is to make sure you get the car with nothing down. If you tell them you don't want to lease another vehicle from that manufacturer and return at the end and they have any of your money they'll find a way to devalue your vehicle so that you never see that money again.

I should have done that when I leased my 2006 vehicle because than I could have just given it back. Instead they had some of my money which I gave them to get a better lease rate and they tried fudging the value of the vehicle to the point where I could have miraculously returned it and get nothing back. When I asked to see their calculation sheet and pointed out a $3500 void....they might as well have started chanting "LOUD NOISES" because they went off in circular patterns to justify where the money went.

Ahhh, I've never heard of anyone getting money back when they return a lease, that's kind of how they work.
Were you actually expecting the dealership to give you part of your down payment back?