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Old 01-10-2016, 08:25 AM
 
Location: San Antonio
3,369 posts, read 9,901,344 times
Reputation: 5370

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I usually lease. I drive about 7k miles a year so I never worry about going over my miles. In fact, my last lease I MADE money. What do I mean by that? I got a great lease deal (yes, you can negotiate and negotiate on the price of your trade) and because I only drove about 4k miles that first year, my car was worth MORE than I owed after a year. I traded it in for the same car, more features, year newer model, and it dropped my payments because I had positive equity in the lease. Yes, you can have equity in a lease.

I'll use dumb numbers for ease of math....say your lease is $100 a month, and your residual is $1000. (Residual is the cost to buy the car at the end of the lease).... for a 36 month lease that is $3600 in lease payments and another $1000 to buy the car. For a grand total of $4600 to buy the car at the end of the lease if you want. If the car has a sticker of $7000 that is a GREAT deal. If the car has a sticker prices of $3000 that is a horrible deal.

Leases on cars like BMW and Audi aren't always worth it. The lease payment is often VERY high. Lease payments depend on depreciation. If a car is going to depreciate FAST, the lease payment are high. The dealer has to sell it as a used car at the end of your lease if you don't buy it. So, if they know they can't sell it for much, they will charge you way higher lease payments so they come out on top. If you lease a car that holds its value relative to it's sticker price, you get way smaller lease payment than if you'd buy because the dealer knows they can make money on the back end.

I almost leased an Audi SUV the lease payment was going to be higher than the payment to buy because of expected depreciation relative to sticker price. My current lease is on a decked out Ford. Sticker Price is $52K and the payments would have been crazy if I'd have bought ($1500 a month for a 36 month note). The Lease is just at $450 a month because It's a low mileage lease and Ford expects to be able to make money selling it as a used car.

Just make sure you ask about the residual. The residual on my Ford is $26,000 so I can buy it for $26000 at the end of my lease if I want. That's a grand total of $42,000 in payments+ Residual on a $52,000 car. Way better deal/option than buying first, in my opinion.
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Old 01-10-2016, 08:56 AM
 
Location: NC Piedmont
3,911 posts, read 2,881,013 times
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dmarie123,
I would be interested in seeing some actual numbers where you come out ahead like that. The leases I am familiar with (from actually leasing) are really written like a purchase with a balloon (residual) and option to walk away a few years in, so the price of the car is clearly defined and is generally not less than they would sell it outright for. We did a lease a little while back partly because we weren't sure we would still want a minivan (Odyssey) a few years down the road and we only came out what seems like slightly ahead because they had a CPO buyer and really wanted our van. I say what seems like because if we had been buying they still would likely have contacted us about trading. They ran the numbers for us both ways (lease or buy) using the same price for the car. If you want to add options, they increase the price and adjust the lease; the selling price is always in there somewhere IME.
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Old 01-10-2016, 08:58 AM
 
Location: Houston, TX
14,698 posts, read 8,497,826 times
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Quote:
Originally Posted by rjm1cc View Post
Keep the car for at least 10 years.
Agreed. Why get rid of a 4 year old BMW? If it ain't broke, don't fix it.
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Old 01-10-2016, 11:23 AM
 
2,375 posts, read 2,394,406 times
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Just turned in my lease on my cmax energi. Was so glad I made the financial decision to lease, instead of buy. Buyout on my 24 month lease vehicle with 19.5k miles was $20.6k. I turned it in because I can buy a 2yr old Leaf for $9k. My cmax just sold at auction for $12.9k so Ford took a huge hit on that one.
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Old 01-10-2016, 02:37 PM
 
Location: Austin, TX
16,721 posts, read 41,016,262 times
Reputation: 9205
Once I retired the number of miles I drive each year dropped to about 4,000. If you lease, you are typically paying for a lot of miles each year that you are not using. I have always found it more economical to buy a car, pay it off and drive it until it starts becoming problematic or you get tired of it. That can easily be 15 years these day with the quality improvements they have made.
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Old 01-10-2016, 04:11 PM
 
6,835 posts, read 3,872,820 times
Reputation: 15589
Leasing is a waste of money IMO, unless it is for business and you can take 100% write off on your taxes. For an individual, leasing makes no sense financially.
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Old 01-10-2016, 04:17 PM
 
Location: Wasilla, AK
7,266 posts, read 4,150,962 times
Reputation: 15697
Quote:
Originally Posted by CptnRn View Post
Once I retired the number of miles I drive each year dropped to about 4,000. If you lease, you are typically paying for a lot of miles each year that you are not using. I have always found it more economical to buy a car, pay it off and drive it until it starts becoming problematic or you get tired of it. That can easily be 15 years these day with the quality improvements they have made.

A lot of people don't understand that. If you exceed the mileage allowance, you pay x amount per excess mile. If you turn it in with less than the mileage allowance, do you get y x or y amount for the miles you didn't use? So you just turned in an underutilized vehicle and the dealer is one who will stand to gain. For personal use, leasing makes no sense.
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Old 01-10-2016, 06:58 PM
 
14,261 posts, read 24,004,620 times
Reputation: 20081
Quote:
Originally Posted by AlaskaErik View Post
A lot of people don't understand that. If you exceed the mileage allowance, you pay x amount per excess mile. If you turn it in with less than the mileage allowance, do you get y x or y amount for the miles you didn't use? So you just turned in an underutilized vehicle and the dealer is one who will stand to gain. For personal use, leasing makes no sense.

Most people don't realize that leasing is no different than renting a car. You take the sum of ALL payments and divide by the number of miles allowed by the contract. I have yet to see a car lease that is a better deal than an outright purchase when looking at the cost per mile.
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Old 01-10-2016, 07:01 PM
 
14,261 posts, read 24,004,620 times
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Quote:
Originally Posted by Scooby Snacks View Post
Agreed. Why get rid of a 4 year old BMW? If it ain't broke, don't fix it.

Most of the consumer BMW leases that i have seen include full service on the vehicle for 30-36 months. Many drivers drop the vehicles when they go off-lease and pick up another vehicle.

Most people don't want to hold BMWs past five years and 100k miles as the cost of maintenance can be very pricey.
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Old 01-10-2016, 08:05 PM
 
2,375 posts, read 2,394,406 times
Reputation: 2373
Quote:
Originally Posted by jlawrence01 View Post
Most people don't realize that leasing is no different than renting a car. You take the sum of ALL payments and divide by the number of miles allowed by the contract. I have yet to see a car lease that is a better deal than an outright purchase when looking at the cost per mile.
I just posted an example several posts ahead of yours. Ford took a huge depreciation hit on the leased car I just turned in because they guessed wrong on what it would be worth at the end of my lease (maybe they thought gas would be $6/gallon instead of $2/gallon). If I had bought, true I could have held onto it, but then I would have taken that depreciation hit.
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