Car Financing - Leasing vs Purchasing

[purbeast0]

my wife is looking for a new (to her) car right now and i was doing some research on leasing a car vs purchasing a car.

i'm just wondeirng if anybody here has done both, and which they prefer, and for what reasons.

i realize that if you lease the car you will be held to some mile limitations, but she only works like 3-5 miles from where we live. i also realize that you are basically renting the car and won't get your initial downpayment back, but you will also have the option to purchase the car at it's original price at the end of your lease, and in the long run, that is going to cost more than if it was purchased outright. at the beginning.

but we make decent money together, and we prefer to have nicer things in general, and we plan on never having that issue where we aren't working (at least not me, she will not be working when we have a kid, initially at least), and the $200/month or so that would be the payment just does not seem like it would be that much of a burden with our salaries.

so i'm basically just wondering if anyone here has leased and purchased, and if so, what was their experience with it.

 

[Cuda1447]

Wife leased her last car. The driving distance was not a concern at the time either, as she worked close to home. She is changing jobs and will be driving considerably further now, so it has become an issue.

Aside from that, I would say it was more difficult to get a good deal on a lease, simply because the car salesmen can hide the real cost of that car even better. Usually they like to play in monthly payments but you can stop them and say, how much is the car, not how much monhtly. With the lease game, I think it takes that a step further and gives them an even easier way of confusing you and playing with the numbers.

Personally, I don't think we'd ever lease again. That's not to say it is necessarily a bad idea though.

 

[OutHouse]

this has been talked about a lot in here and there are two camps.

one side loves it, the other side hates it.

i hate leases because
1. it gets you to buy more car than you can afford (for exactly the reasons cuda just listed about playing with the monthly numbers)
2. i dont like renting my car for 3 years.
3. keeps you a customer for a long time, the auto maker never wants you to pay off your car, they enjoy their monthly pay check.
4. having a new car every 2-3 years is not important to me. my Camry is a 2004 and runs great.

 

[OutHouse]

$200/month or so that would be the payment just does not seem like it would be that much of a burden with our salaries.

dude it may not be a big deal financially but do you really want to be mailing out a 200.00 check 5 years from now?

all my cars are paid off and nothing is more satisfying than getting the title in the mail. that makes it official the car is mine and i get to KEEP that money and 5 years down the line you can pay cold hard cash for your car. that is if you pay yourself instead of the finance company.

i hate oweing money and do my best to keep from doing so.

 

[amdhunter]

I learned buying used (done 2x) will get me a better deal than buying new (which I've done 2x) or leasing (1x, will never do again.)

My used cars have never given me real issues, and I can do whatever the hell I want with them.

 

[vi edit]

Leasing can be made or broke by how you state treats them tax wise. Look into how you are taxed on them on purchase, for licensing, and what happens if you want to buy our the vehicle at the end of the sale.

Some states are much better than others for leasing. Leasing in IL is a joke. Leasing in Iowa or Nebraska isn't too bad. Check into how you state handles them and be sure to account for it.

 

[purbeast0]

dude it may not be a big deal financially but do you really want to be mailing out a 200.00 check 5 years from now?

all my cars are paid off and nothing is more satisfying than getting the title in the mail. that makes it official the car is mine and i get to KEEP that money and 5 years down the line you can pay cold hard cash for your car. that is if you pay yourself instead of the finance company.

i hate oweing money and do my best to keep from doing so.

honestly to have a nicer and newer car, $200/mo (which is only $100/paycheck), isn't really that much at all, especially considering we have no other debt (well other than student loans). me personally i have had my car paid off for the past year and yea it feels good, but it would also be nice to drive a nicer/newer car. although i DO like my current car, but it's getting to the point I'm going to have to start puting some $$ into it.

 

[JTsyo]

I'm in the "buy a car and keep it till it dies" camp. Though I did consider leasing my next car if my current one dies. I'm thinking of getting an electric due to my driving conditions but don't think they are quite there yet. I figured a 3 year lease would carry me into the new models. I nixed the idea and will probably just get a hybrid if the car dies.

See you guys are aiming big with that Christmas bonus :awe:

 

[D1gger]

I've looked at lease versus purchase many times both for myself and for my company, and I have yet to find an example where it wasn't cheaper to purchase and get either the company financing or private financing.

The final payout was almost always significantly more than the vehicle would be worth at the end of the term, and the implicit interest rate in the lease payments was more than the loan rates were. I also don't like being tied into making an end of term decision of either buy out the lease or get another vehicle. Maybe I want to delay for a few months or a year and get new model, or maybe the timing isn't great financially, but most leases do not give you an option except to pay it out or return it.

 

[OutHouse]

it would also be nice to drive a nicer/newer car. although i DO like my current car, but it's getting to the point I'm going to have to start puting some $$ into it.

how much is your car worth and how much money are going to have to sink into it? is it something major like a bad transmission that can cost an easy 3 grand to fix?

 

[spidey07]

As long as you realize leasing is "typically" a bad move from a financial standpoint and the emotional side of wanting that new car is worth it, then go lease.

Leasing "can" be decent financially but only when the residual value of the car is significantly less than what the car is actually worth and you got a good interest rate on the lease. I leased a car and the residual lower than what I predict it to be worth and the interest rate is .9%.

A lease is nothing more than a loan on the price of the car and it's residual as a percentage of MSRP. If those terms are good it "can" be no worse than buying a new car if you can buy it off lease at the end with cash or another stupid low rate loan.

 

[OutHouse]

what new car are you wanting to get that cost 200 bucks a month?

 

[AstroManLuca]

The only problem with buying is if you get a really reliable car that you hate. But in the end, it's worth it to be able to ditch the monthly car payment eventually. I'm looking forward to paying off my (horrible, and reliable) car so I can suffer through the next seven or eight years with it.

 

[vi edit]

Also with leasing be sure to check the fine print on downpayments and other things that get nickel and dimed in...security deposits, required gap insurance, ect.

Lots of little things that aren't all that clear in initial enticing $189 a month rate they advertise.

 

[rcpratt]

I lease and I like it, but I am able to get better-than-employee-pricing, which drastically reduces the difference between the MSRP and residual and gets me a pretty darn good rate (i.e., $290/mo for a $33k car, 2 years, 16.5k miles/year).

The mileage may become an issue for me soon. Not sure what I'll be doing in the future.

 

[spidey07]

Also with leasing be sure to check the fine print on downpayments and other things that get nickel and dimed in...security deposits, required gap insurance, ect.

Lots of little things that aren't all that clear in initial enticing $189 a month rate they advertise.

*3560 due at lease signing
*extra comprehensive insurance required
*500 dollar damage deposit required
*750 dollar "MYLease special treatment protection"

The lease should be cap cost - residual and a low rate on that difference. Nothing else, no down payment, no nothing.

 

[airdata]

Leasing can be made or broke by how you state treats them tax wise. Look into how you are taxed on them on purchase, for licensing, and what happens if you want to buy our the vehicle at the end of the sale.

Some states are much better than others for leasing. Leasing in IL is a joke. Leasing in Iowa or Nebraska isn't too bad. Check into how you state handles them and be sure to account for it.

Yeah, in Texas at the time of lease you pay taxes as if you're buying the car... then at the end of the lease if you want to buy it, you pay the same taxes again. Which makes no sense at all.

I'm a little skeptical of how the lease return will work.. I had hail damage and the guy who sold me the car told me to come in and what not and was telling me about the lease having some sort of damage forgiveness and that they'd swap it with a newer model...

They then proceeded to treat it as if I owned the car, and tried to tell me my 2011 civic w\ 5k miles was work 13k and that I was 6k upside down... LOL. So, it will be interesting when my term is up.

Lots of little things that aren't all that clear in initial enticing $189 a month rate they advertise

Yeah, 189 to get you in the door... then another couple hundred to that after taxes and fees and whatever else.

 

[Hugo Drax]

what new car are you wanting to get that cost 200 bucks a month?

The new Toyota Yaris 2012

http://www.toyota.com/itsacar/getbrowser/

The dude in that commercial is funny.

 

[purbeast0]

So I just did a little bit of math in my own current car situation, which is just totally different than my wifes... kind of for shits and giggles to see if it would have been worth it for me leasing previously.

My car was $14,500. Bought it in 07 and it was an 03 model.

I put $4000 down on it, loan of $10,500.

I paid $250/month for 48 months, which comes out to a total of $12000.

So total I paid $16000 out of my pocket.

It's blue book value is about $5500 right now.

So if I were to sell it, now, and get the $5500, I would still have paid $10,500 out of my pocket to drive it the past almost 5 years.

So if I was paying $200/mo for a lease for a newer car, those almost 5 years, I would have paid like $11,600. so like a G more for a nicer newer car.

That doesn't seem THAT bad honestly.

But again I know it's all just personal choices and what not, and how it factors into other things financially. It was just interesting to see some numbers like that. But there is no way to tell how much a car depreciates either.

EDIT:

whoops, I totally forgot the downpayment on the lease in my hypothetical situation... that would be probably like $2k more.

 

[Rage187]

I drive too far each day to consider a lease. I'd need a 22-25k miles allotment to not have to pay $ .50 a mile penalty for going over. and if you go over, they hit you with extra wear and tear fees.

 

[purbeast0]

how much is your car worth and how much money are going to have to sink into it? is it something major like a bad transmission that can cost an easy 3 grand to fix?

it's not the transmission I don't think. but i have not done any maintenance to it since I got it at 24k miles, other than oil changes. but it's starting to do some odd stuff like sputter a bit if I try to floor it in 3rd or 4th gear. not even floor it, but just get a fast speed up like I usually do. i let off a bit now when I accelerate because of it. i've also been having an issue where my car won't start up right away when I turn the key. like it won't chug right away, but if I hold it there it will start chugging and then start up.

 

[vi edit]

Yeah, in Texas at the time of lease you pay taxes as if you're buying the car... then at the end of the lease if you want to buy it, you pay the same taxes again. Which makes no sense at all.

That's how IL is. You pay taxes on the full capitalized price of the car, even though you are "renting" half of that value. Then they bend you over a second time and make you pay sales tax on the residual amount if you want to buy it out. Makes zero sense. And is the reason I would never rent another car in this forsaken state again.

As for damage, I leased with both Toyota and Mazda in the past and both were very good about damages. I had a very dumb oopsie moment after working a 20 hour shift at work and clipped a car parked at the edge of my driveway trying to turn in. Left a dent and a foot long scrape behind the "C" pillar. Also had some bumper rash on the back bumper from the courteous shoppers at walmart slamming shopping carts into me.

It only cost me about $200 worth of "overages". My Highlander had a couple chips and a crack in the windshield and they didn't care at all. They just wanted new tires on it...which are another $400 that it cost me to lease.

 

[OutHouse]

Bought it in 07 I paid $250/month for 48 months,

so you just paid it off and running out to buy a new car?

if your current car runs keep it but it sounds like you are obsessed with going into debt by at least 10,000 again by buying a shiny new car.

gotta have now!!!! screw banking that car payment for 4 years and paying cash.

 

[OutHouse]

it's not the transmission I don't think. but i have not done any maintenance to it since I got it at 24k miles, other than oil changes. but it's starting to do some odd stuff like sputter a bit if I try to floor it in 3rd or 4th gear. not even floor it, but just get a fast speed up like I usually do. i let off a bit now when I accelerate because of it. i've also been having an issue where my car won't start up right away when I turn the key. like it won't chug right away, but if I hold it there it will start chugging and then start up.

so get it chekced out by a shop. $2,000 in maint cost is a lot cheaper than buying a new car.

 

[purbeast0]

so you just paid it off and running out to buy a new car?

if your current car runs keep it but it sounds like you are obsessed with going into debt by at least 10,000 again by buying a shiny new car.

gotta have now!!!! screw banking that car payment for 4 years and paying cash.

well it's not like i'm scrapping by for cash or anything. a $10k debt that I could pay off over 4 years is nothing.

and on top of that, i'm not going to be getting a car anytime in the near future. i posted this thread because my wife is in the market for a new car. but up above i was just making a comparison between my current car situation and if i had gottten a lease instead at the time.

but my wife NEEDS a car because her car was totalled.