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Leasing advantages are very specific to the individual deal and customer ...
Be aware that the upfront cost of the lease vehicle can be as negotiable as if you were buying a car.
Be realistic about the mileage you'll put on per year, because this is specific and capped. At the end of the lease, you'll pay a per mile overmileage fee to turn it back in if over on the miles.
The fees and charges of the lease deal vary a lot. There may be promo's, there may be other incentives, there may be none, just like buying a vehicle.
If you have a situation where you can write off a portion of the lease, you need to visit with your accountant for his input into your tax situation before you make a deal.
What counts for you is the deal you can make as a comparison to the best deal you can make in buying a comparable vehicle. You can't know these total out-the-door and overall long term costs without shopping both options to make an informed decision. Keep in mind that when you buy a vehicle, you've got ownership from day one until you sell the vehicle. With a lease, you've got the use of the vehicle until the expiry of the lease; you own nothing at that point and have no equity in the vehicle. You can turn it in and walk away after paying any end of lease charges.
The only person who can decide which option is better is you, knowing your financial/tax situation, and having a deal in hand to consider. There is no blanket statement either way which will be correct for you and your situation.
Having just come out of a GM lease I may be able to give some recent insight.
So, here are my questions:
1. IF we lease a vehicle with low mileage, are the payments usually higher than when buying? or lower?
Payments will "usually" be much lower BUT there are cases where this is not true (residuals,factor (interest rate) and no incentives on the lease. Heaven help you if you go over milage and there is NO refund for milage purchased and not used.
2. IF we lease a vehicle for more than 6 months, can we buy it if we like it? and if so...
It will be a huge disadvantage to purchase prior to the lease end as it will save you nothing, they will charge all payments due plus residual amount.
3. Will we get a better overall price on it? or they'll charge us the same as if we walked into the dealership for the first time? Or will they appraise it at the current mileage/features?
Generally no, you will not get a better price and in fact may get a worse price. With a lease you want as high a residual as possible since that is one primary thing that will lower the lease payment below a purchase. The problem is the residual (what the bank says the car is worth at lease end) could very well be higher than the actual worth of the vehicle. I had this issue on my leased Equinox, I considered buying it but the residual was $5000 more than the car was worth on the open market. When that happens it's best to walk away as you lose nothing, the bank eats it.
4. Can we lease a vehicle for less than a year?
No. One year is the absolute shortest but you will pay a heavy price for that year. 24/48 are "generally" the best deal but sometimes they've got specials where they require 36 months. A couple of rental companies have a "rent to own" program which may just fit your needs.
5. When leasing a vehicle, if it breaks down, will they fix it and give us something to use until it's fixed? Or we're on our own if say the engine blows! (exaggerating).
Yes and no. If your lease is no longer than the warranty term then (depending on the make) everything will be covered and you "should" get a free loaner. After the warranty (GM it's 3/36 bumper to bumper) you're on your own.
6. Do they lease vehicles to families? or just singles?
Anyone can lease as long as you can qualify for financing.
7. How is "leasing" different than "renting" a car? (We've never rented a car before).
It's not, just cheaper long term deal. One thing to remember is sales tax is spread over each payment, not upfront like a purchase because you only pay tax on what you've actually bought (purchase price minus residual).
8. Do they lease Suburban's? or they just do sedans?
They will lease most anything nowadays.
9. IF we don't like it, can we change the lease for another car? or are these locked in?
Once you sign you're done with a couple of exceptions. One exception was a GM buyback of a problematic Traverse we leased prior to the Equinox. The other exception is some dealers/manufacturers have a 100% satisfaction program that allows you to return the vehicle within a certain time/milage period.
One other thing that may crop up depending on who the leasing company is. You may have termination fees. This is fees that are due when the lease is done and you return the vehicle on top of any excess milage or excessive wear. You won't know if you owe them any money for a few weeks after the lease end as they have to sell the car before they tell you. Don't ask me why, it's in the Ally Bank contract is all I can tell you.
As an aside;
One of our friends just bought a brand new Suburban, husband works at a GM dealership so they got a good price. When I heard what they paid I almost fell over.
How about upwards of $65,000?
If I were in your position I'd seriously look at a lease return Suburban, a former rental or lastly a repo. Get it after the depreciation is already paid off.
I just bought my 3rd prior rental vehicle and besides saving a bunch of money they're normally still under factory warranty not to mention the national rental companies service their cars/SUV's regularly unlike many private owners.
After talking to people in the car industry leasing is a horrible way to spend your money.
Please suggest a way for a recent graduate with a job to drive a new car. And no, putting aside $600 a month so five years later he may be able to pay cash for the car is not an option. Neither is the so called low mileage used cars that cost nearly as much as new and no incentives. He is young and he wants to enjoy life NOW.
For a private party leasing is always throwing money out of the window. You just need to pull out a calculator and run the numbers. It's not rocket science. You are literally throwing away money when you are leasing in any and all circumstances if this is a non-business purchase.
Secondly, never, ever buy a new car. The stats on this vary, but there's little argument that a 4-year old vehicle lost approximately 60% of its original sticker price. Even a 1-year old vehicle is a much much much much much better deal than buying a new vehicle.
The only reason that new vehicles sell to private parties is because people only look at the monthly payment and whether they can afford that. Buyers never look at how much they actually pay for the car/truck.
Don't be a sucker. Save your money, buy used, pay cash.
Quote:
Originally Posted by HappyRider
Please suggest a way for a recent graduate with a job to drive a new car. He is young and he wants to enjoy life NOW.
Let him, he'll pay for it later, over and over and over and over, being a slave to the lender. Some people don't learn, not much you can do about that.
For a private party leasing is always throwing money out of the window. You just need to pull out a calculator and run the numbers. It's not rocket science. You are literally throwing away money when you are leasing in any and all circumstances if this is a non-business purchase.
Isn't it interesting that those with the strongest views on a subject are invariably the ones with the least amount of understanding of that subject.
Don't be a sucker. Save your money, buy used, pay cash.
Back up your claims with numbers. A search on Autotrader for a 4 year old 2010 RAV4 at 45000 miles or else brought up ZERO for sale around us. You have to go up 60,000 miles and pay $20,000. You call this a deal. I call it NUTS.
Isn't it interesting that those with the strongest views on a subject are invariably the ones with the least amount of understanding of that subject.
Just LOL, but please, educate the uninitiated, let's see the magic you conjure to make leasing seem like it's a good deal for a private party. After all, if it's that obvious, then it shouldn't be complicated to just write up a few lines and add it all up, should it be?
Quote:
Originally Posted by HappyRider
Back up your claims with numbers. A search on Autotrader for a 4 year old 2010 RAV4 at 45000 miles or else brought up ZERO for sale around us. You have to go up 60,000 miles and pay $20,000. You call this a deal. I call it NUTS.
Can you restate what you want me to do? You aren't able to find the car you are looking for at the mileage you are looking for in your immediate area. You then use that to prove what?
Buying a new Japanese mfg makes more sense often because the resale value stays so high if you buy a 2 year old use, don't know if it was properly maintained, vs new with incentives is very close to the same price, I have checked many times with Toyota and Honda.
Please suggest a way for a recent graduate with a job to drive a new car. And no, putting aside $600 a month so five years later he may be able to pay cash for the car is not an option. Neither is the so called low mileage used cars that cost nearly as much as new and no incentives. He is young and he wants to enjoy life NOW.
As with everything else, "life" in America is supposedly lived at retirement! Little assbackwards if you ask me. I am more concerned with car problems than anything else though, because I lug kids everywhere and don't feel like being stuck on the side of a hwy "whenever" the car decides to take a dump.
I drive upwards of 15/20k a year! I drive everywhere as we live in FL, and have no choice.
Regarding "equity", I once made the mistake of buying a new car, and there is no equity like when you buy a house...it depreciates right off the lot, and it just goes bad...not everyone is retired or enjoys spending time under the car to keep it in pristine condition.
The other problem is that if we want to use this one as "downpayment" for a new car, dealers usually will not pay for it what a private owner buyer would, or what Kelly Blue book says...so to buy a new car would mean to have the tax money, plus cost of tag/registration etc., and downpayment+dealer fees. We don't have that. I was thinking that with leasing mileage didn't matter, obviously the mileage will increase...
The reason I asked about buying after leasing it (if we liked it), was because we have kids, and I was afraid of the "wear & tear"...
Regarding the cost of a new suburban that's crazy; that's because car manufacturers don't understand that if we already have a family, we're not going to, or be willing, to spend $600 a month for car payments. That money is for the kids and their education generally. It's extortion at their end to charge $65k for a vehicle that depreciates by 5 figures as soon as you drive it off property. I cannot consider a new vehicle again "because" of the equity loss.
Thank you for replying everyone! Very helpful information here!
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