Car Financing - Leasing vs Purchasing

[Mr. Lennon]

so i just talked to the guy on the phone about leasing a new infiniti to my wife (she's at the dealership right now) ...

$2000 down, $480/month (or something) for 39 months, 12000 miles a
year. and at the end of the terms, it will be a $23k buyout.

ffuucckkkk that, told her NOT to do that shit.

i thought she was talking about leasing a 2008 car (the model she's looking at purchasing) not the brand new ones. thought it would be taking over someone elses lease or just a lease on a used car. but no. no way in hell she's going to do that.

First rule of thumb when it comes to leasing...

NEVER state that you are looking to lease. Do not mention anything about leasing until AFTER the purchase price has been negotiated.

As for leasing vs. buying...

Everyone is right in saying that it doesn't make much financial sense. For me it makes a huge emotional sense. Why keep a car for 10+ years when I can enjoy a new one every 3? I get tired of things easily...hell I'm already bored with my Mazda 3 S 2010 and it's only been 2 years. Not having to worry about major repairs is also a huge plus.

 

[purbeast0]

First rule of thumb when it comes to leasing...

NEVER state that you are looking to lease. Do not mention anything about leasing until AFTER the purchase price has been negotiated.

As for leasing vs. buying...

Everyone is right in saying that it doesn't make much financial sense. For me it makes a huge emotional sense. Why keep a car for 10+ years when I can enjoy a new one every 3? I get tired of things easily...hell I'm already bored with my Mazda 3 S 2010 and it's only been 2 years. Not having to worry about major repairs is also a huge plus.

yea she told me that she wasn't interested in leasing but he mentioned it to her and he called me.

and yea i agree with you. if you can afford it and get bored of stuff, and always want the newest cars ... might as well do it.

 

[soulcougher73]

so i just talked to the guy on the phone about leasing a new infiniti to my wife (she's at the dealership right now) ...

$2000 down, $480/month (or something) for 39 months, 12000 miles a
year. and at the end of the terms, it will be a $23k buyout.

ffuucckkkk that, told her NOT to do that shit.

i thought she was talking about leasing a 2008 car (the model she's looking at purchasing) not the brand new ones. thought it would be taking over someone elses lease or just a lease on a used car. but no. no way in hell she's going to do that.

I was under the impression you can only lease new cars. not used. Is that not true?

 

[nace186]

How about this: http://forums.anandtech.com/showthread.php?p=32575375#post32575375

 

[mvbighead]

Everyone is right in saying that it doesn't make much financial sense. For me it makes a huge emotional sense. Why keep a car for 10+ years when I can enjoy a new one every 3? I get tired of things easily...hell I'm already bored with my Mazda 3 S 2010 and it's only been 2 years. Not having to worry about major repairs is also a huge plus.

I have to sort of laugh at this one.

I have heard a number of stories whether from these forums or from individuals I know who have bought new, and then had this, that, or the other go wrong with their brand new "worry free" car. Now granted, a good amount of issues may be covered by a warranty, and that's fine and dandy, but you are not free from worry with any automobile.

Every time you drive down the road, keep an eye out for the vehicles that are around you. Chances are, a good portion of them are 5+ years old or older. And for every 2-3 older vehicles you see broken down on the side of the road, you'll see a new vehicle broken down on the side of the road. You might call it peace of mind that your newer vehicle won't break down. I simply saw myself in the same situation and figured car maintenance is a thing of life. Car payments don't have to be.

 

[OutHouse]

I was under the impression you can only lease new cars. not used. Is that not true?

http://www.leaseguide.com/articles/leaseusedcar.htm

Beginning in October 2008, financing companies, banks, and car leasing companies in the U.S. virtually stopped leasing used cars.

 

[Fern]

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.

The last time I ran the numbers on it (I'll explain the method later) I found little to no difference between leasing/purchasing. Mileage wasn't an issue for as I don't drive many miles.

Also, in the leases I've had if I didn't make the decision by the deadline they merely charged me for another month. No penalties etc.

I.e., you can extend it. They also factored the additional months' lease payments into the buy-out amount. It went down.

Fern

 

[Mr. Lennon]

I have to sort of laugh at this one.

I have heard a number of stories whether from these forums or from individuals I know who have bought new, and then had this, that, or the other go wrong with their brand new "worry free" car. Now granted, a good amount of issues may be covered by a warranty, and that's fine and dandy, but you are not free from worry with any automobile.

Every time you drive down the road, keep an eye out for the vehicles that are around you. Chances are, a good portion of them are 5+ years old or older. And for every 2-3 older vehicles you see broken down on the side of the road, you'll see a new vehicle broken down on the side of the road. You might call it peace of mind that your newer vehicle won't break down. I simply saw myself in the same situation and figured car maintenance is a thing of life. Car payments don't have to be.

I had nothing but trouble with the last 3 used cars I owned. There were always problems...and each one died (or the repair cost were just too ridiculous). I treat my cars very well too.

I live in one of the most populated cities in the U.S. I honestly can't remember the last time I saw a brand new car broken down on the side of the road. It's always some beaten up piece of shit.

I have enough on my plate to worry about. My car taking a random dump on my chest is thankfully not one of them anymore.

 

[Fern]

Car Financing - Leasing vs Purchasing

Conceptually, I don't see much difference between leasing and purchasing.

View the lease as a purchase, except it comes with a sales option at the end of term. I.e., the leasing company is agreeing to purchase it back from you if you so desire at a predetermined price.

The methodology to compare leasing to purchasing just requires an amortization program.

I've found it's easy to get the purchase price and the interest rate on a car purchase. In leasing I'm only able to get the monthly payment and cash price for me to purchase at the end of the lease.

So, plug in the purchase price and interest info you get into the amort program, then plug in the monthly lease payment as the loan payment amout. Now, looking at the loan amort schedule find the loan balance at the lease termination period and compare that with the lease purchase option amount.

If the lease purchase amount is less than loan balance number from the amort schedule, the lease is better because the implicit rate in the lease is lower than that of the purchase. If it's higher the purchase is better.

In my experience the two amounts have come out at almost the exact same. IIRC, the last time I did it the lease purchase price was about $200 higher, meaning it was $200 more costly to lease than outright purchase. However, I chose the lease because for $200 I had the option to 'sell' the car back to automaker/dealer whereas I wouldn't have had I outright purchased it.

Fern

 

[hydroponik]

You should be able to get an Infiniti G37 base journey sedan for about $300/mo and nothing down and taxes paid up front, which is not a terrible deal imo.

 

[HeXen]

i leased once, wont do it again.

 

[Jumpem]

You mentioned wanting/looking at a 200 month payment and now she's out looking at 45-50k infiniti at those payments.

Be careful, you're about to be trapped into the lease nightmare where you'll emotionally justify a 500-600 buck car payment every month for the rest of your life. "It's just 500 bucks a month and not that much money, I deserve to drive this really nice car".

Leasing is a way to save money. Go from a $500 purchase payment to a $300 lease payment for the same vehicle.

 

[OutHouse]

Leasing is a way to save money. Go from a $500 purchase payment to a $300 lease payment for the same vehicle.

not sure if serious.

if you are serious, never buy a car because you dont have a clue.

 

[spidey07]

not sure if serious.

if you are serious, never buy a car because you dont have a clue.

Hes not serious and smarter than that. As fern pointed out as long as the terms and rates are similar it CAN be a moot point.

But one cannot ignore the emotional aspect of the difference. If one can accept the impact to net worth from an emotional decision, then so be it.

Wiseman say lease depreciating assets and purchase appreciating ones.

 

[Jumpem]

not sure if serious.

if you are serious, never buy a car because you dont have a clue.

I am serious. If I buy a car my paymetns are much higher, and three years later I am hoping just to break even. With leasing, my payments would be much lower and no worries about trade in.

I get a new vehicle every two and a half to three years. I see a car payment as just another monthly expense like cable tv or electricity. Definitely looking to lease to lower my monthly expenditures.

 

[Reel]

You should be able to get an Infiniti G37 base journey sedan for about $300/mo and nothing down and taxes paid up front, which is not a terrible deal imo.

I know you could get a G37 coupe for less than that about a year ago. There used to be a guy on slickdeals that would post all the leasing numbers. Here is one of his threads but I am not sure if he keeps it current: http://slickdeals.net/f/2611065-Jan...-G-M3-Convertible-Hyundai-Genesis-Honda-Civic
This guy also posts similar details but again I am not sure if it is current as I am not in the market: http://www.ridewithg.com/

 

[OutHouse]

I am serious. If I buy a car my paymetns are much higher, and three years later I am hoping just to break even. With leasing, my payments would be much lower and no worries about trade in.

huh? dude really?

 

[Jumpem]

huh? dude really?

Yeah. It makes sense to me. When I finance a car, and go to trade in three years later the trade-in value is always just about even with what I owe. Over three years the much lower lease payment could save me quite a bit.

 

[hydroponik]

I know you could get a G37 coupe for less than that about a year ago. There used to be a guy on slickdeals that would post all the leasing numbers. Here is one of his threads but I am not sure if he keeps it current: http://slickdeals.net/f/2611065-Jan...-G-M3-Convertible-Hyundai-Genesis-Honda-Civic
This guy also posts similar details but again I am not sure if it is current as I am not in the market: http://www.ridewithg.com/

Yeah, I use that ridewithg site, it's really informative if you're in the market to lease. After the earthquake though, it's been much harder to get those killer deals on infinitis...

 

[spidey07]

Yeah. It makes sense to me. When I finance a car, and go to trade in three years later the trade-in value is always just about even with what I owe. Over three years the much lower lease payment could save me quite a bit.

If your desire is to always drive a new car and are ok with always having a payment then leasing is for you. You are essentially financing the major depreciation. But this way you will always be obligated to a monthly expense that is significant.

My desire is to increase net worth and wealth. I undrsynand that the lease isn't in my best interests unless the terms are similar to purchase. But emotionally I like a newer car.

This is purely an emotional vs financial decision. Depending on terms and what you with your money sway it a big deal.

 

[Jumpem]

If your desire is to always drive a new car and are ok with always having a payment then leasing is for you. You are essentially financing the major depreciation. But this way you will always be obligated to a monthly expense that is significant.

My desire is to increase net worth and wealth. I undrsynand that the lease isn't in my best interests unless the terms are similar to purchase. But emotionally I like a newer car.

This is purely an emotional vs financial decision. Depending on terms and what you with your money sway it a big deal.

I always get a new car after three years. In that case, leasing appears to be the better financial decision. An extra $200 per month going into savings would help my net worth.

 

[gevorg]

Lease can be a better alternative to buying and the deals greatly vary from one automaker to another, so start by checking out the residual values for a new lease. For example, BMW 3-series are very nice to lease relative to buying new, while its better to buy a Toyota Camry rather than lease it.

Also, remember that the newer/better the car, the higher it is to insure it. Keep that in mind when you do any analysis on your trade-in values and monthly payments. Actually, forget about monthly payments when shopping for a car and look at total annual costs. At least at first.

 

[SabaII]

Too much readings right now. I am a car salesman. There are some awesome leases right now. No down payment and no first month payment at a lot of places on a 36 mo 36,000 mi. At our specific dealer no money down means just that. Some places you have to pay TTL. Also we give you what your buyout will be at the end of your lease so you know. So its X% of MSRP. So say we give you a figure of 11,000 for your buy out at the end of your lease but the car books for 13,000 you still only pay 11,000. If the car is worth less you can walk away scot-free. Leases include GAP coverage in the payment so you do not have to worry about extra expenses for that. Leases are really a good deal if you grab them at the right time, like now. I am sure someone will post up giving you all of the bad info but tons of people are leasing cars now.

If your looking at a 200/mo payment your looking at around a 10k car. Unless you plan to put a bunch money down but if your looking for a 200/mo payment I am going to guess you don't have a lot to put down. Your gonna have to buy used. The car probably wont have a warranty unless you buy an extended one. Honestly if you dont think your going to go over miles a lease may better in your case. I just figured a purchase vs lease on a Civic for a guy the other day and he would only end up paying about 1500 more if he buys he lease out in the end then if he bought on the spot. I think that was before TTL and financing on the lease so maybe more like 2500 or so. But I tell people who are leasing that if they can, every lease payment they make, put some money away for the buy out.

 

[OutHouse]

I always get a new car after three years. In that case, leasing appears to be the better financial decision. An extra $200 per month going into savings would help my net worth.

you are a dealerships wet dream. must be fun throwing money away.

 

[Jumpem]

you are a dealerships wet dream. must be fun throwing money away.

How is saving money each month (compared to purchasing) throwing money away?