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1. i would never take this car on trips, or at least long trips
2. i like newness, and the idea of having a new car every few years.
4. would be nice not to have to pay any expenses on the car.
These are reasons to have new vs used/old...
very little to do with the lease vs buy Q
Quote:
3. i also like being able to own the car though.
Then buy. The credit aspect (lease/buy) is pretty much a wash.
The only question is how long to own before making a change.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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If you want to buy it at the end you will spend more than looking for a used one on your own. The biggest credit difference is less down but harder to qualify. You won't be able to make any modifications, and will not have any flexibility in doing the factory specified maintenance. Also, you can't just sell it if you get into a tough financial situation.
I'd never lease, too much like renting for a long time, I'd much rather buy.
Credit-wise, it's easier to finance. You need rock-solid credit to qualify for the money factors used in the lease specials automakers offer at various times throughout the yr.
If you're going to lease, only do it with specific makes & models that are on sale & being subvented with rebates/cash-back & high residual value. Otherwise, it's way too costly.
I leased my latest car. I'll let you know how it goes 2 years from now.
Subarus make a great car to lease with their 58%+ residual. In fact, at least here in Colorado, you can sell them for more than your buy out at the end of the lease, thus have positive equity.
I have no desire to own a car. The majority of the people that "buy" cars finance them, so it's no different than leasing. And the majority of them don't keep it until it's paid off.
You pay half in taxes when you lease a car, so that helps the cause.
You just need to work the numbers and see if it makes sense.
Leasing is really about convenience. You pay more for it versus buying and trading in a new car every 2 or 3 years.
Leasing lowers payments because you pay a ton when you trade in. Take a 3 series. $3,600 due at signing (plus TTL) for a 3 year lease at $359/month. If you drive it 15,000 miles a year you're looking at 15,000 x .20 in mileage charges or $3,000. Then you've got disposal fees $375 and damage is probably another $500 (could be more). So when the lease expires you're looking at $4,000 or so to terminate the lease and another $3,600 to get into your next lease. That's why the lease payments are so low. If you pay for more miles up front, you'll get a better deal but not by all that much.
In most states, when you trade in a car and buy a new one you pay tax on only the difference. Trade in a car worth $30,000 on a $45,000 car and you'll pay sales tax on $15,000. There's no tax advantage to leasing vs. buying and trading.
Lower payments applies to the first vehicle you purchase. Subsequent vehicles you'll be trading in what you previously bought and only financing a fraction of the next car. Same deal as leasing. The difference is you tie up capital buying and trading in that you do not leasing. For businesses running fleets, that's a big consideration. For the individual... it really shouldn't be. If it's very important to drive the nice car you can't afford payments on, then lease. It sure beats taking out a 7 year note on a car you know you're going to trade-in where you'll be deeply upside down on the loan.
The pros of leasing is you know what it's going to (more or less) cost you = less risk. You're not dealing with depreciation risk, you know what the trade-in (residual) is before you enter into the deal. There's less haggling versus buying and trading in. If you're smart, leasing is zero haggle. Just pick from the specials currently being offered. They're almost always better than you could do on your own because the manufacturing is subsidizing them to move cars. Of course, you have to pick from what's available. Beggars can't be choosers and your preferred car might not be running any specials. Pay more and haggle or find something that is.
Lets say you buy the car for $22k for 4 years and 2% interest. That's a $477/month car payment. Lets say you sell the car after 4 years with 55k miles for $15k. It cost you $477x48=$22,900-$15,000=$7,900 to drive it for 4 years or $164/month.
Even if you finance it for 5 years, it's a $386/mo payment. The $250/mo sure is nice.
That doesn't include any maintenance you had to pay after warranty. That also assumes you can get $15k for it, which is highly unlikely.
So a lease does cost a bit in the long run, but your monthly payments are way less and you get into a new car every 36 months. So worth it, especially if you don't/can't put $$$ down to reduce your monthly payments.
i liked leasing since i like new cars every 3 years or so. 2 things about leasing made it worth it for me being i kept them short term.
i didnt have to pay sales tax on the entire car which is a huge savings and most important folks negotiate the best deal they can buying and then trade the car back to the dealer at wholesale most of the time.
i figured out the bmw i bought and just traded in after 2-1/2 years and got top dollar for on the trade in would have worked out cheaper when all was said and done if i took a lease.
many cars include full maintaince like my bmw for 4 years so the lease was really a nice deal.
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