Vehicles-leasing vs. buying

Watching some of the car commercials on television tonight I was wondering why anyone would want to lease a vehicle? Just plain lease and not lease to buy. Seems like it would work for someone who is flat out rich or for those people who think they are rich (people making $50,000 a year driving brand new BMWs). But when you turn in a leased vehicle you better have it spotless with the right mileage on it or they'll charge you for being over milage. And you still do not own it. Do people just get it in their heads that because it is brand new they think it will not break down? I was always told it was more expensive to buy then to lease but you see some of these vehicles where they want $2500-3500 down on a LEASE. The vehicle I'm buying now I put less than that down and I'll own it (hopefully) in two and a half years. Then I can choose whether to keep it or not and can sell it to whoever or not. I see a new Ford Focus is 169 a month for 24 months with 2000 down. Sure it gets pretty good gas milage but $6000 for a two year lease on a small car?

A friend of mine wanted so badly to lease his current vehicle, but it didn't work out for him, something about the special lease deal didn't fit his situation.

None of us could talk him out of that idea, fortunately the deal didn't work and he had to buy it the normal way.

My friend is a tight wad, would make many of us proud how he handles his money; but when it comes to vehicles, his eyes glaze over & he loses all thought processes and - well it's just something to see.

I swear, he buys a vehicle and takes it on it's first ride to other dealers to look at what better cars are out there to lust for....

I can understand a lease on big farm equipment if you are a big-time farmer, roll over the equipment and never have it out of the warrenty, and not have money tied up in owning the iron. (Not my way, but I understand the business setup.)

But, for a personal vehicle, a lease is just not a good $$$$ deal. I don't get it either.

--->Paul

Buckeye Oliver, Here in the abundant Center of The Universe....Austin Tx area, the New Silicon Valley the Techies that Make 6 figure incomes and want a new car every 2 or so yrs, or even the 50K to 100K income and say they have.... Only have about 16000 miles or so on it, are leasing for it makes a better deal for them because the Mileage is low, the Turn In is high. So they retain more of the value of the car @ Turn In. and that translate into less money spent for for a really nice set of Wheels!
There are a couple of companies that specialize in Leases Taylor-ed to you and the way you drive, Even High Mileage too.
I have looked into it and I drive still waaayyyy too many miles a yr to do that!
Hope this helps,
John A.

I sold new cars for about a year and half. Most of the time you'll pay more on a lease but you do have a little more protection, the depreceation side of cost to drive it X anount of miles is known the day you drive it off the lot. So if NBC does a feature news article on how your car has "sudden unintended acceleration" or how the "saddlebag" gas tanks are dangerous or even if the cost of fuel triples so the resale value of your Suburban tanks you aren't exposed. Sometimes the money factor (lease speak for intrest rate) is attractive, on some models at times it was way cheaper than a loan. Of course many new car dealers will use your lack of knowledge to capture more money on the deal. Most leases from the major auto manufacturers aren't all that critical about vehicle condition you get fair wear and tear, a good lease and a fair dealer isn't going to abuse you on condition. Mileage- you know what you're going to pay if you go over before you drive away and many times you can buy more miles cheaper up front. Ford Red Carpet leases used to provide gap insurance, meaning if your car got totalled and your lease buyout was less than the insurance settlement Ford got paid the gap from somewhere else. You do have a purchase option so if your car is real nice or under mileage you might be able to find someone to purchase it for more than the lease you get to keep the difference. A good number of the lease care I "took in trade" in effect were purchased by the house from FMCC and sold on our used car lot, in the early 90's the money was made in used cars. One deal I did we floated about $2,200 dollars into the deal on a 2 year old Towncar that was a lease turn in. Ford Even came out with a 2 year single payment lease where you could write a check or trade $10,000 in and drive off with a new Grand Marquis, no payment just bring it back to us in two years. I sold a new towncar thatway, thee couple buying it would have to cask out a CD that was pating more than they could get now, between trade equity and a small down payment they got the car, buy the time the lease expired the CD would also expire Some folks with a decent trade could single pay into a lease for 2K or so and make "payments" to a bank account to have the $ to buy it out on the lease end, if it was worth less at the lease end they could walk away from it. Some leases aren't that great our competitor put a bunch of folks into World Omni leases, had some guy wanting to trade a 3 year old Cougar he got with a 5 year World Omni lease, it was bad I could sell him a new Cougar for less than his buyout on the lease.

A car lease is a sucker bet for the car dealer/company. If you drive many miles at all you are always cheaper to buy the car. I have to laugh at the 3 year 20,000 mile leases. I drive 20,000 miles in a year to year and a half. The dealer/salesman can pack extra profit into the lease and still make it look like it will work on paper.

I have only leased one thing in my life. I did buy a JD 7000 corn planter on a lease in the mid 1980s. There was the investment credit on new equipment. I was not in a tax position to need/use the extra credit. So that lease did two things: 1) The down payment amount/first lease payment was less than the amount needed to buy it under a normal finance note. 2) Since JD got the investment credit the interest rate was much lower. So the total of the three years lease payments and the buy out was almost a $1000 less than a normal purchase and note.

At the end of the investment credit then a lease was always higher than just a conventional purchase and note.

In all of the years I sold JD equipment I only did one lease. Even then it was because the fellow was going through a divorce and did not want to build any equity in the piece for the lease term. The cost for a given term was always higher under the lease.

I have seen some equipment leased to match a bid term on government work. The contractor/bidder did not want to risk not getting the contract renewed and still owning the equipment. The contractor paid a pretty good premium for the ability to do that.

Read the Lease first!!! Some of the companies have draconian rules when it comes to how the vehicle looks when returned. Some leases will slap You with fines even if You have had a car wreck, & it was fixed as good as new.

Much much cheaper to buy used.

I picked up this clean no rust 98 GMC 6.5 td ,210 k on it for 4 grand two days ago. :wink:

The only way a lease works is for a company that has a month car allowance bill, and they dont care about it cause it is a tax write off. Regular guys get the shaft when we lease a car/truck. Bottom line, dont lease, buy a year old car/truck and let the original owner take the depreciation hit.

Leasing a vehichle works if you can write off all the cost against your bussines exspence.

Well, the obvious answer is that lease payments are typically less that loan payments. Mercedes, BMW, Cadillac and other luxury brands would sell very few cars if they couldn't lease them.

Obviously if you're planning to keep the vehicle a long time, it doesn't make sense to lease. But if for one reason or another you're certain you're going to replace the car in X years, you should consider leasing. Yes, you get banged for excess miles, but you can usually pay for extra miles up front at a much cheaper rate. Here in Michigan, you avoid paying the six percent sales tax by leasing, which is a pretty significant incentive to lease. You are also spared the aggravation of selling or trading your old vehicle. That said, I've only leased once and probably won't do it again.

Leases make sense if you do not drive a lot and want to trade vehicles every couple of years. You do not have the capital tied up in the vehicle. I drive to much and keep them to long for it to make sense.

A car dealer around. Billy Fucello, or how ever it's spelled, says on his tv commercial, " buying a new car is the worst investment you will ever make" I won't lease or buy new, iv always bought used trucks and have had great luck with all of them.

Buckeye, it's a personal preference.

Like others have said, if you are one that keeps the vehicle a long time and wants a car that is paid for, definately buy one.

We have leased the wife's last 3 out of 4 vehicles and will probably lease the next one in 2 years when this one is up. I have never put any money down on a lease (that's just plain silly to put money down with interest rates where they are).

With a growing family, our needs change a little every couple years. We usually buy my vehicles and lease the wife's. She gets a little nicer vehicle for less money and I know my wife and kids are in a newer vehicle with less likelihood of a breakdown than and older one.

The downside is that we always have a $400-500 car payment for her.

If you're going to trade the vehicle in 2-3 years anyways, leasing is much better. No hassle getting rid of the "old" vehicle, and at the 3 year point, you're probably upside down anyways.

When you buy, the monthly's are higher. Look at it this way, when the vehicle is 4 years old (on a 60 month buy), you are still paying the same thing per month that you were when it was new.

If you are leasing becaused you can't afford to buy - you can't afford the lease either.

i leased for buisnesses a few times,one thing that is good about it is you have basicaly a new vehicle and dont have to have someone on the payroll to do repairs and things. its definitly not for everyone though. where i found i had trouble was guys were using their company cars for personal use which drove the mileage way up.

Depends on your situation.

I buy all used vehicles, and I keep it simple. I will not buy a vehicle I can't pay cash for.

Our daughter, however, lives in Washington DC and works in McLean, VA. Her daily commute is only 14 miles each way, and next month she will be moving to Falls Church, VA from where she will have about a 6 mile drive each way.

She recently leased a new 2013 Hyundai Veloster. It's a small coupe that looks like it's going 200 mph sitting in the parking lot. On her model, however, performance doesn't necessarily match appearance.

Her rational on leasing is this: Her $200 per month payments roughly match what she would lose in depreciation anyway, had she bought the car. The limited driving she does will keep her well within the terms of the lease. She has a new car with no maintenance worries 'cause it's within factory warranty for the term of the lease. And when the lease expires, she has the option of buying the car for $12,000, the predicted retail value of the vehicle at the lease expiration.

A major attraction for her is the chance of a mechanical breakdown in a less than desirable venue is virtually nil, a very important factor for an unmarried gal in an urban area like DC.

In her case, a lease makes sense. It also makes sense for a buddy of mine to lease a new Lincoln Navigator and use it as a tax write-off for his company.

I, myself, have never been a fan of leases. I once worked through numbers on a Dodge pickup offered for lease by a local dealer. Without going through the numbers again, between the lease and the retail value of the vehicle at the expiration of the lease, the dealer would have taken in some $35,000 on a pickup that probably cost him maybe $18,000. That's a pretty good mark-up.

So--lease versus purchase simply comes down to a matter of personal circumstances and preference.

I leased for the first time. mostly for tax purposes and to see what the pitfalls are. so far, i'm happy. i planned to buy the van when the lease is up from the start.
in 2 more yrs; i'll let you know. so far the money i saved from not having to pay sales tax for the complete vehicle has made my payments.

I think leased cars are great. Let someone else lease them and the I buy them used with usually less than 20,000 miles on them and save close to half on the price of a comparable new car. Buy most of our vehicles that way and have never got stuck with a bad one yet.

I think that if you'll ask ANY financial planner, they'll ALL say that leasing a vehicle for personal use is not a good thing to do; may well be different if leasing for a business.

Leasing at this point in time is probably only really effective for a business. Generally a lease payment can be expensed whereas a purchase has to be capitalized and depreciated. Sometimes it is an advantage to lease and expense it direectly. Sometimes not.
For personal use where it can't be expensed... I don't see a lot of point to leasing unless you can get some kind of sweetheart deal that doesn't exist on an outright purchase or finance plan. I don't think there's many of those deals right now.

Rod

What Goose said his daughter got in her lease are the major selling points, but overall it's usually going to cost you more money. Of course driving a new car every 2-3 years is going to cost you more money than buying one (new or used) and running it 10-20 years. Yes some dealers will use your lack of knowledge on leasing and your unwillingness to read all the fine print to get more of your money than you have to pay. The house I worked for when selling cars was going through some changes, they went from being the 2nd largest Lincoln-Mercury dealer in the world to being the 2nd largest in the Tampa bay area. A few years before I got there Ford came out with their new Short term Red Carpet Lease (2 Years), a few of our hotshot salesmen somehow managed to roll people into leases and "absorb" the paid-up trade as profit. They were writing deals on $20,000 dollar cars with $6,000 to $10,000 in profit. Unfortunately the chickens came home to roost, people came back after 24 months, all the time they're driving their new lease car they suspect they were taken, at trade time or lease end it becomes obvious, all that equity they were promised wasn't there. Of course since all those hot shot salesmen are now sales managers the reason we can't resell them is because the salesforce is weak, so our former customers go across they bay and buy their cars from what is now the world's largest Lincoln-Mercury dealer. There is a lot of information out there about leases, read it and know what's going on before you lease. Ford billed their RCL lease as fair, one of their intentions was to give the customer a break IF they could be moved to a 2 year trade cycle. Many dealers took advantadge (what do you expect from an industry with a pay structure of $40/ a car and 20% of what you can steal). Ford eventually got sued and lost.

What I should have mentioned is, our daughter is a paralegal, and an attorney buddy she works with was with her when she did the deal.

She did her homework ahead of time, and attorneys are trained to read all the fine print ten times before anything is signed.

I doubt the salesman snuck anything past her.

SWMBO leased one back years ago when she was going about 12 miles to work because the payments were less. Then she got transferred to a new office that was about thirty miles away. Lease was going to cost a small fortune due to the mileage, so she decided to buy it. Cost a small fortune to buy the lease back.Guess she learned her lesson. She doesn't want to lease anymore. And we now save enough that we walk into a dealers' place with cash. If we don't like what they say, we can walk out.

jay,

thats huge!!!!!!!!!!!!!!!

There are several pros for leasing. It really depends on your situation. The tax write-off for leasing is always a major consideration for some.

There is also a common line of thought that states you should buy items that appreciate and lease or rent those which depreciate.

That being said, I buy but I tend to keep vehicles for long periods.

Hi bill, you got me that's so funny, I hate those commercials, lol hahahahaha

(quoted from post at 06:15:21 10/01/12) Depends on your situation.

I buy all used vehicles, and I keep it simple. I will not buy a vehicle I can't pay cash for.

Our daughter, however, lives in Washington DC and works in McLean, VA. Her daily commute is only 14 miles each way, and next month she will be moving to Falls Church, VA from where she will have about a 6 mile drive each way.

She recently leased a new 2013 Hyundai Veloster. It's a small coupe that looks like it's going 200 mph sitting in the parking lot. On her model, however, performance doesn't necessarily match appearance.

Her rational on leasing is this: Her $200 per month payments roughly match what she would lose in depreciation anyway, had she bought the car. The limited driving she does will keep her well within the terms of the lease. She has a new car with no maintenance worries 'cause it's within factory warranty for the term of the lease. And when the lease expires, she has the option of buying the car for $12,000, the predicted retail value of the vehicle at the lease expiration.

A major attraction for her is the chance of a mechanical breakdown in a less than desirable venue is virtually nil, a very important factor for an unmarried gal in an urban area like DC.

In her case, a lease makes sense. It also makes sense for a buddy of mine to lease a new Lincoln Navigator and use it as a tax write-off for his company.

I, myself, have never been a fan of leases. I once worked through numbers on a Dodge pickup offered for lease by a local dealer. Without going through the numbers again, between the lease and the retail value of the vehicle at the expiration of the lease, the dealer would have taken in some $35,000 on a pickup that probably cost him maybe $18,000. That's a pretty good mark-up.

So--lease versus purchase simply comes down to a matter of personal circumstances and preference.

Click to expand...

OK, goose, She leases the car for 2 years so it's covered by warranty. A car that has bumper to bumper coverage for 5 years and 50,000 miles and 10 year 100,000 mile powertrain? Yet she drives so little that she don't have to worry about going over on lease miles? Please explain to me just how this makes sense again. Don't get me wrong, I'm not attacking her.

I got a BIL who leases or did. Had to have that new car every two years. Didn't do it cause it was good for them financially, did so he could impress people. I know other people who lease cause that's what's "cool" with their crowd.

Rick

(quoted from post at 08:41:37 10/01/12) What I should have mentioned is, our daughter is a paralegal, and an attorney buddy she works with was with her when she did the deal.

She did her homework ahead of time, and attorneys are trained to read all the fine print ten times before anything is signed.

I doubt the salesman snuck anything past her.

Click to expand...

Unless the salesman agreed to do any and all maintenance and repair, pay the insurance, wash it 3x a week and create some sort of energy shield all around the car to prevent any possible nick, scratch, dent or accident, he most certainly did get something past her. Sorry guy, but she might better have just rented the car.