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I am going to buy a new car soon for myself... should I lease it considering I will upgrade in about 2-3 years when the car gets revamped with other options? What are the downsides of leasing? What happens if I leave the lease 2-3 years later?
Downside of leasing: You lose anywhere from 2-$4000. just on your down payment. Then you pay for 2-3 years on something you wont even own at the end.
The upside: You can return it and get into something new.
I have never seen the point in leasing, I don't like giving my money away, but to each's own.
Leasing is fine if you can sustain the monthly payment and if it's not a daily commuter car and you don't have to put down too much. Put as little down as you can get away with, preferably NOTHING. And get at least 12K annual miles.
Many leases will rape you unless you follow a few simple tips:
* Only lease vehicles with high residual values. Above 50% on a 3-yr lease is a good bet, below 45% and you'll be paying thru the nose for depreciation. Go to a site like ridewithg or ask on the Edmunds forums to get a sense of what the residuals are for your specific make/model. Be aware the numbers can change monthly.
* If you drive more than 15k miles/yr leasing isn't for you. The best rates go to those who only have a short commute to work and keep their mileage under 10k annually. And god help you if you go over your alloted miles. It can quickly add up to hundreds of dollars in penalties when you turn in your car.
* Don't put any cash down! Cash down works like a huge pre-payment and in reality you're only saving $30/month for every $1k you shell out. Plus in many states like Cali you actually have to pay sales tax on that downpayment up front. That's almost 10% here in LA. Also it fools you into thinking you can afford a more expensive car than what your budget allows. Remember, once you get past $25k or $30k, you're basically paying for icing on the cake: marquee name, soft-touch surfaces, Napa leather, Navi, various tech gizmo's like pre-collission braking, blind spot warning, etc. Most of these options are non-essential items that will never be used.
*Lastly, take advantage of cash rebates for leases. Sometimes it's direct to buyer, other times it's dealer cash. You can often save $1000 to $2500, which translates into a $30 to $65 discount on a monthly lease. Just be aware that many times incentives listed on Edumunds ( New car incentives, auto rebates, dealer incentives at Edmunds (http://www.edmunds.com/incentives/RebateController?step=1&setzip= - broken link) ) may only pertain to cash sales or financing thru the company. Ask in the Edmunds forums if a certain rebate is good for leases. Never rely on the dealer's sales agent to tell you the truth. Many will flat out lie and say that a rebate has expired or excludes your specific model until you ask them to double-check. You can only negotiate from a position of strength when you yourself have all the facts & figures.
Oh as to the downsides, one is that you can't abuse your car. They have an inspection when you turn the vehicle in and will penalize you for big dents & scratches & chips. So any scraped bumpers or dings need to be fixed at then end of the leasing period. My friend had a hairline scratch on his hood where his gf's cat clawed & he had to cough up $600 for a respray since his deductible was $1000.
Another downside is that with an auto lease you really are stuck for the entire term. It's cost prohibitive to break the lease since the penalties can be thousands. You can transfer the lease to someone else for a nominal fee but it can be hard to find interested parties unless you've got a mega low monthly (due to a huge downpayment).
With leasing you are also going to be responsible for every last ding and dent and on the interior any coffee spills, If you need a new car go to your local dealer and pay cash,then the car is all yours with no monthly payments.
I would say no to a lease and if you can't afford new a car paymnet just save up $5K buy a nice 6-8 year old low mileage, well maintained certified pre-owned honda civic and then you will be debt free and own a decent car that seats 5 and gets pretty decet fuel mileage.
and in 3-4 years when you save up a bit more money for a newer car you can sell it for pretty much what you paid for it.
I would say no to a lease and if you can't afford new a car paymnet just save up $5K buy a nice 6-8 year old low mileage, well maintained certified pre-owned honda civic and then you will be debt free and own a decent car that seats 5 and gets pretty decet fuel mileage.
and in 3-4 years when you save up a bit more money for a newer car you can sell it for pretty much what you paid for it.
Excellent advice,
Unfortunately the trend today with easy credit is if you have a few thousand dollars most people will use it as a down payment on a new car rather than buying a car for the few thousand dollars they have.
There are great used cars out there for under $5k that will give years of reliable service.
I've taken great care of all my cars. I don't do a whole lot of driving. And I like to easily be able to change cars every few years. So leasing is good for me. My current car is a lease and I didn't put any money down.
As far as wear and tear. I get those types of things fixed whether I owned the car or not. A lot of people say leasing is dumb because you never own the car, but you actually have the option to buy it if you wanted.
Buying a 5 year old car with cash might look like a cheaper option, but a lot of times you have no idea what that car has been through. It could turn into a money pit over the years. With a new car, maintenance is very minimal and I like having the peace of mind that my car has never been abused.
Buying a 5 year old car with cash might look like a cheaper option, but a lot of times you have no idea what that car has been through. It could turn into a money pit over the years. With a new car, maintenance is very minimal and I like having the peace of mind that my car has never been abused.
I like people like you Hemi, as you take good care of the future cars i buy for $5K
Personally i think your new leased car is the money pit as every month its going to cost you $300-$400? whereas my $5k used Japanese car with a mechanical inspection before purchase will easily run to 300K with proper maintenance so i really like buying cars like a Toyota Corolla thats 5 years old and has around 100K on the clock..
Excellent advice,
Unfortunately the trend today with easy credit.
Credit is not "easy" now.
Mid-00s, yes. Today, no way.
In fact if someone qualifies for a lease, chances are they have their finances in order anyway the credit requirements are tougher than for financing, and tougher than they were a couple of years ago.
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