Tips for Leasing a Car

[Dion]

Originally Posted by 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.

I tend to drive my vehicles for 10-13 years before I get a new, which makes leasing a bad deal. If I buy a vehicle for say $26,000 the cost spread out over 10-13 years is quite small as opposed to the monthly lease payments.

Also if you lease you are paying for the largest depreciation of that vehicle which is often the first 4 years. The person who gets your vehicle after that has a much lower depreciation for there on.

[Dion]

Originally Posted by DementedReality

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

Best to buy a vehicle that is 2 years old as opposed to new. Let the original owner pay for a bulk of the depreciation. That's how I buy my vehicles

[DementedReality]

Originally Posted by Dion

Best to buy a vehicle that is 2 years old as opposed to new. Let the original owner pay for a bulk of the depreciation. That's how I buy my vehicles

maybe, but some of us want a 4 year warranty on our vehicle.

however, if you are driving off the lot, i see very few cases where i would I would buy the car.

i would rather offset the risk to the car company, and if its a slight premium to keep my cash in the bank and let them potentially own a lemon, awesome!

[DementedReality]

Originally Posted by Dion

I tend to drive my vehicles for 10-13 years before I get a new,

no question, if you can own your vehicle for 10 years, buying is fine.

i have never owned a vehicle for that long and loathe any thoughts of repairs.

like i said, almost all cases, you just found one that qualifies as not the case to lease.

[Pinner]

Do the tax right offs make more sense than owning a vehicle out right ? Edit: If you have a business

FYI Vehicles didn't get as expensive as they are now until leasing artificially lowered payments...Back in the old days, you actually needed money to have a nice vehicle.

[Dion]

Originally Posted by DementedReality

no question, if you can own your vehicle for 10 years, buying is fine.

i have never owned a vehicle for that long and loathe any thoughts of repairs.

like i said, almost all cases, you just found one that qualifies as not the case to lease.

If you maintain your vehicle by doing regular oil changes, flushing the rad at regular intervals and making sure to the flush the tranny every 50,000 clicks the cost of repairs is minimal. My 05 Escape has 110,000 clicks on and all i've had to do outside regular maintinence is replace my tires. It's been a trouble free vehicle so far.

You also have to do your research to make sure you're not buying a vehicle that has a history of problems.

[DementedReality]

Originally Posted by Pinner

Do the tax right offs make more sense than owning a vehicle out right ?

FYI Vehicles didn't get as expensive as they are now until leasing artificially lowered payments...Back in the old days, you actually needed money to have a nice vehicle.

i still dont understand why anyone would want to own a car, especially a brand new one.

i always believe:
own things that appreciate
rent things that depreciate

[Dion]

Originally Posted by DementedReality

maybe, but some of us want a 4 year warranty on our vehicle.

however, if you are driving off the lot, i see very few cases where i would I would buy the car.

i would rather offset the risk to the car company, and if its a slight premium to keep my cash in the bank and let them potentially own a lemon, awesome!

If you do your research and buy a good quality vehicle you won't have to worry about that warranty. I made the mistake once of not doing that research and paid for it dearly when I bought a 91 Ford Explorer. The POS was a lemon.

[DementedReality]

Originally Posted by Dion

If you do your research and buy a good quality vehicle you won't have to worry about that warranty. I made the mistake once of not doing that research and paid for it dearly when I bought a 91 Ford Explorer. The POS was a lemon.

yup, but if you had leased it .. wouldnt have been your problem!

anyhow, even good cars have lemons, consider a lease a 4 year test drive. the premium (if any) is almost always worth it.

lets put it this way, if leasing was so bad for the consumer, why did Chrysler stop leasing cars?

because it was a bad deal for them and they didnt want their cars back!

if a car company with all the infrastructure and marketing resources doesnt want the risk of selling their older model cars, why would i want to own it?

[firebug]

Originally Posted by TylerSVT

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.

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[EDIT: The remaining payments number is incorrect, it should be half that $6,132].

'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

[Dion]

Originally Posted by DementedReality

yup, but if you had leased it .. wouldnt have been your problem!

anyhow, even good cars have lemons, consider a lease a 4 year test drive. the premium (if any) is almost always worth it.

lets put it this way, if leasing was so bad for the consumer, why did Chrysler stop leasing cars?

because it was a bad deal for them and they didnt want their cars back!

if a car company with all the infrastructure and marketing resources doesnt want the risk of selling their older model cars, why would i want to own it?

If I had leased it it would have cost me back then to get out of the lease.

Buying the book http://www.lemonaidcars.com/ will give you all the info you need on the vehicles history and problems associated with it. Secret warranties and all. Unless it's a new model being introduced it will have a history behind it, wether it be good or bad.

My 05 Escape was a 2 year old lease back. I got to see all records of maintinence from the dealer before I got it. Plus I had inspected elsewhere. It passed with flying colors and I saved about 8 grand off the price of a new one. That saving will more than pay for any costs of repairs that might come up.

[Sliver]

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

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.

[TylerSVT]

Originally Posted by 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.

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.

[TylerSVT]

Originally Posted by DementedReality

no question, if you can own your vehicle for 10 years, buying is fine.

i have never owned a vehicle for that long and loathe any thoughts of repairs.

like i said, almost all cases, you just found one that qualifies as not the case to lease.

It's ironic that you say you loathe repairs, i bet you pay more in Lease payments over 10 years than you would if you financed a car for 5 and then just maintained it...

At least then you own something at the end.

[Bring_Back_Shantz]

Originally Posted by TylerSVT

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.

Except in my case the buyout will almost certainly be LOWER than the value of the car, this isn't even all that strange of a situation, I know several people who have actually made money after buying out their lease and selling the car privately.

In any case, like I said, I actually figured out that leasing it and buying it out will actually save me money due to lower financing fees, so in my case buying it right away was acutally the worse option.

I used to think like you that leasing was a stupid option and that I'd never do it. That was before I actually took a look at it, and ran some numbers on the specific vehicle I wanted, and found out that in some cases it makes much more sense than buying outright on day 1.

[DementedReality]

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.

i get to use my money for other things, rather then watching 25,000 become worth less each day.

i dont think it makes good sense to own a new car. if you want a new car, leasing almost always makes sense.

[DementedReality]

Originally Posted by Bring_Back_Shantz

Except in my case the buyout will almost certainly be LOWER than the value of the car, this isn't even all that strange of a situation, I know several people who have actually made money after buying out their lease and selling the car privately.

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.

[DementedReality]

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.

you are missing something

60 payments x 511 = 30,660.

[Dion]

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.

It's no different than someone like me buying a vehicle. In the end it's still going to be worth little or nothing. I might be able to lower my yearly costs by driving it longer, but in the end depreciation devalues the vehicle wether you buy it or lease it.

[Dion]

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.

Then you are taking a risk as the dealer has to anticipate what they think the vehicle is going to be worth when the lease is done. Sometimes the vehicle can be worth less or more.