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Not an expert in leasing but my plan for leasing is usually for cars I don't want to purchase and not to use them as daily driver. So after paying off both of my daily drivers, I end up doing swap lease or lease takeover with incentive and short term contract such as 12 months or so. The downside is longer wait time with the finance company taking ages to complete the transaction. I get bored with cars fairly quick so I usually do lease take over for shorter periods. Might be an option for people who like luxury cars/trucks and don't want to be stuck with them for ever without any spare miles. So far I have been able to lease S500 AMG, X6, Range Rover etc. Provided the short term lease take comes with more hassles / transportation costs and wait time but in the end it turns out cheaper than long term luxury rental.
My 22 year old cars transmission died and due to the age and cost (3k) I've decided to get a new car. I went to get quotes and compare costs and saw that they had a leasing deal. I've never owned a car other than my current vehicle (bought used). I've had a LOT of trouble with in the last 2 years with it being in and out of the shop 5-6 times a year and I'm not eager to deal with it again.
The offer given was a down payment of $3500 for $159/month for three years for a 2014 Honda Civic.
I'm currently paying off student loans aggressively and they should be gone by the time the lease is up. I can only really afford a $200 car payment a month because my budget is tight.
Is this a decent deal or should I keep searching? I don't really need a new car as I just need something inexpensive and reliable to get me through the next three years (once debts are settled).
you can only afford a $200 monthly car payment and yet you can afford a 3,500 down payment which amounts to 17.5 months of 200 monthly car payments all at once?
when it comes to financing, I don't put anything down. if financing is the right choice, then financing everything is the right choice.
Buying is worth it if you plan on keeping the car for 10+ years and don't mind driving an outdated car or dealing with costly repair cost when they occur.
Personally I lease because it gives me peace of mind with the car always being under warranty. Plus I like the idea of being able to trade up to something new/different after 36 months. My wife and I are currently leasing 2 vehicles. A 2012 nissan rogue sv and a 2014 honda civic ex. Combined our lease payments are $502 a month. $279/month for the rogue and $223/month for the civic.
Leasing has nothing to do with your car being under warranty. A leased car doesn't have a better warranty. The only thing that matters is how long you drive it and how many miles it has.
Leasing has nothing to do with your car being under warranty. A leased car doesn't have a better warranty. The only thing that matters is how long you drive it and how many miles it has.
I think his point is that if he perpetually rolls 3 year leases he'll always have a car under warranty whereas if he were to buy and finance he'd either be out of warranty before the car is paid off or would continually be upside-down on his car loan.
If always driving a late-model car is a priority, leasing will pretty much always be less expensive than buying and trading every three years.
Having gone both routes, I personally find the benefit of having no car payment preferable to the benefit of driving a newer car, but to each his own.
Basically, leasing is usually a better idea if you are burying the cost as a business expense. That goes for all manner of equipment including computers.
It also can make sense if you don't drive many miles. That's what kills many people who lease, they drive more than they realize or anticipate and end up paying additional charges for mileage overages. I have a friend who has had that happen every single time.
For me, now at age 60, buying still makes sense. In 10 years at 70? Maybe not so much.
wow, so much bad information here as well as good ones.....I can't even start to comment....esp people who probably never leased here.
If miles are the problem, you can negotiate more miles upfront. Its a cheaper in the long run. Now if someone drives gobs of miles....25k or 30k miles a year..buying is cheaper hands down.
wow, so much bad information here as well as good ones.....I can't even start to comment....esp people who probably never leased here.
If miles are the problem, you can negotiate more miles upfront. Its a cheaper in the long run. Now if someone drives gobs of miles....25k or 30k miles a year..buying is cheaper hands down.
Yes you can negotiate more mile upfront. Your payment will also go up to account for the lessened residual value.
I have leased 4 cars. Definitely has benefits. Keep as much cash out of the car and in your investments. Why pay cash for a $30K car when I can have that money make me $2K+ a year, which almost pays for half my lease payments? There are guys doing sign and drive leases on 2013 Infiniti G37 Journeys for $300/month (10k miles a year). If you want a new vehicle every 3-5 years, leasing usually works out better. It's always under warranty and no major maintenance items need to be performed.
Guy pays cash for a $30K car. Drives it for 5 years, gets $10K for it on trade in. Cost him $20K to drive it for 60 months, or $333/month. Doesn't include maintenance/repairs. Not much cheaper than a lease. The leaser will be on his 2nd car already. Leaser will tend to have a little more expensive insurance/registration.
Guy pays cash for a $30K car. Drives it for 10 years, gets $5K for it on trade in. Cost him $25K to drive it for 120 months, or $208/month. Problem is, he wants a new car, so buys a $30K car, $25K out of his bank. He's now out $30K+$25K=$55K of cash at the 10 year mark. The guy leasing for $350/month with $0 down is out $350x120=$42,000. Leaser is ahead in the cash flow game, with better investing opportunities.
That being said, I may not lease my next one. I'm getting impulsive with cars and need to stop looking at the latest and greatest. Probably will get a CPO luxury car that is 2 years old and has 3+ years of warranty. Drive it until it hits 100K miles (5 years) and see what else is out there. I'll do the math and see what works out best for my investing.
Last edited by PokerMunkee; 05-20-2014 at 04:18 PM..
Leases are negotiable. Why would you put nearly 40% "down" on a rented car?! Your budget is razor thin as it is. Why part with a comparatively large amount of cash just to artificially decrease your monthly obligation over time? Is it an issue of qualifying?
Here is what could happen to you: A week after you buy the car, it could get totaled. GAP insurance does not cover the down payment. The lessor gets paid for the car. You no longer have a car. You no longer have your $3500. Now you get to start over on another lease, minus your 30% up front payment for the total cost of the lease.
New 2004 Audi A8L- 39month /15K yr lease @ $1055 including tax, nothing down = $41,145 and then they wanted almost 45K at the end of the lease to buy it. Actual cash value was closer to 30K!
So it was a bad deal. A few points;
1. As a VERY rough rule of thumb, be looking at $1 per $1000 as a payment over 36 months/12,000 miles PA lease with $0 down. Any more than that and it isn't a good deal.
2. If looking at an advertised lease deal, ALWAYS count the down payment. $3000 down plus $199 a month over 36 months isn't $199 per month, it's $282.33 per month.
3. Who cares was the lease end buyout is? You don't have to buy the car, you just hand it back and walk away. You want the lease end value (residual) to be higher because the lease charge you're paying is the difference between the negotiated price of the car and the value at the end of the lease. That's the way the luxury makers tend to keep their lease prices down.
What people tend to forget when leasing is that it should be negotiated just like a purchase. To the dealer there is no difference. It goes down as a sale. Negotiate on the price as you would with an outright purchase. Why? Take this example;
MSRP = $30,000. Negotiated price = $27,000. Residual value after 3 years (not negotiable)=60%. The residual is always calculated on the MSRP, not the negotiated price. In this example, the financed depreciation is $9,000. If the price wasn't negotiated, it would be $12,000.
As another poster said, make sure you know the money factor and residuals. The lease forums at Edmunds are a good resource for this. Also check for incentives and dealer cash. I once got an Infiniti M45 on lease that had $10,000 dealer cash on it. I got the price negotiated down from $52,000 to $39,000. With a 62% residual, I ended up financing around $6,800 of depreciation at 1.5% over 3 years. A $52,000 car for less than $200 per month, $0 down. Model year changes for Mercedes can throw up some good deals.
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