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I'm not going to attempt to discuss actual number crunching between leasing vs. owning but there are a couple of points that almost no one has mentioned.
1) New car dealers only seem to want to lease vehicles anymore. Every ad on tv and the newspaper always mentions leasing prices and options, generally not purchasing. Yes, I'm sure that's because the monthly prices are lower and lower prices are more likely to draw consumers into the dealership. But if you go into a dealership generally all they want to talk about is leasing. From what research I've done, dealerships make just as much if not more money on leasing than buying so generally if it's a very profitable option for the dealership, then it must cost more for me the consumer.
2) Financial planners and financial gurus seem to be all over the place on many things relating to money, but one thing that nearly every single one of them agrees on is that it costs you far more over your lifetime to lease vs. buy your vehicles. I'm not saying I agree with everything any financial planner would say, but if nearly every financial person out there all says the same thing on this subject, wouldn't you think there might be something to it?
The only way I can see that it would be cheaper for a lease vs. purchase is if (1) you absolutely have to have a brand new right off the assembly line luxury car every 2 - 4 years, (2) you are someone who has the discipline to not damage or dirty up the car inside or out, (3) you don't ever let any pets or kids ride in the car (4) you don't ever come close to 12,000 - 15,000 miles a year driving (5) you don't ever have a reason to haul anything other than a shopping bag from the mall (6) you never drive off a paved road or driveway and (7) you live somewhere that snow and ice are uncommon (or you don't drive the car during the winter). If you can say yes to all these items then you will likely save money by leasing. Otherwise, I just don't see how it can pencil out over a lifetime.
I'm not going to attempt to discuss actual number crunching between leasing vs. owning but there are a couple of points that almost no one has mentioned.
1) New car dealers only seem to want to lease vehicles anymore. Every ad on tv and the newspaper always mentions leasing prices and options, generally not purchasing. Yes, I'm sure that's because the monthly prices are lower and lower prices are more likely to draw consumers into the dealership. But if you go into a dealership generally all they want to talk about is leasing. From what research I've done, dealerships make just as much if not more money on leasing than buying so generally if it's a very profitable option for the dealership, then it must cost more for me the consumer.
2) Financial planners and financial gurus seem to be all over the place on many things relating to money, but one thing that nearly every single one of them agrees on is that it costs you far more over your lifetime to lease vs. buy your vehicles. I'm not saying I agree with everything any financial planner would say, but if nearly every financial person out there all says the same thing on this subject, wouldn't you think there might be something to it?
The only way I can see that it would be cheaper for a lease vs. purchase is if (1) you absolutely have to have a brand new right off the assembly line luxury car every 2 - 4 years, (2) you are someone who has the discipline to not damage or dirty up the car inside or out, (3) you don't ever let any pets or kids ride in the car (4) you don't ever come close to 12,000 - 15,000 miles a year driving (5) you don't ever have a reason to haul anything other than a shopping bag from the mall (6) you never drive off a paved road or driveway and (7) you live somewhere that snow and ice are uncommon (or you don't drive the car during the winter). If you can say yes to all these items then you will likely save money by leasing. Otherwise, I just don't see how it can pencil out over a lifetime.
Your last paragraph is a bit of a stretch. I have a friend who absolutely abuses his leased vehicles. Turns them in dirty with some body damage and always over the allowed mileage. The dealership waves the fee's for him so long as he re-leases with them. He just jumped into a 2015 Pilot after trading in his 2012 Pilot that had a deep rusted scratch going from the passenger side door all the way to the quarter panel. A slight crack on the rear bumper. Interior damage from his dog that he hauls in the rear. Not to mention he went 6k miles over what he was allowed. Drove off an hour later with a brand spanking new Pilot with no money down and the same payment as his previous.
If you lease you are always paying the depreciation cost. If you buy at some point the car's depreciation slows down and value is preserved as long as you do ordinary maintenance.
In most leases, in 5 years you basically paid the price of the car but you still have no equity. While someone who financed who paid about the same, owns the car probably after 4-6 yrs and has equity.
If you lease you are always paying the depreciation cost. If you buy at some point the car's depreciation slows down and value is preserved as long as you do ordinary maintenance.
In most leases, in 5 years you basically paid the price of the car but you still have no equity. While someone who financed who paid about the same, owns the car probably after 4-6 yrs and has equity.
There is definitely an issue of comfort level, once you get to the point where the resale value stabilizes.. because it stabilizes pretty close to nothing. The real problem I have with leasing is this: every asset is also a liability, but if you're leasing a car, you still get stuck with a great deal of liability and no asset.
Your last paragraph is a bit of a stretch. I have a friend who absolutely abuses his leased vehicles. Turns them in dirty with some body damage and always over the allowed mileage. The dealership waves the fee's for him so long as he re-leases with them. He just jumped into a 2015 Pilot after trading in his 2012 Pilot that had a deep rusted scratch going from the passenger side door all the way to the quarter panel. A slight crack on the rear bumper. Interior damage from his dog that he hauls in the rear. Not to mention he went 6k miles over what he was allowed. Drove off an hour later with a brand spanking new Pilot with no money down and the same payment as his previous.
Whether or not you get hit with fees for excessive wear & damage at the end of the lease term, has a lot to do with weather you re-lease from the same dealer.
The dealers tend to be very forgiving if you re-up with another new lease. Turn it in and walk away, and you're guaranteed to get hit with fees for the excessive wear, possibly thousands of dollars.
in theory it shouldn't be hard to figure out what the price of the car actually is when you lease. But if it was really so simple to understand, why is there so much debate about which is the better option financially?
Your question has absolutely nothing to do with trying to determine the "sales" price of the car itself. There is no difference between negotiating the "sales" price of a leased car and negotiating the sales price of a car you're going to purchase. Whether buying or leasing that same vehicle is a better option financially for you is dependent upon other factors. To reiterate, there's no mystery or trickery involved in ascertaining the underlying cost of the car itself because you should be determining the price of the car yourself through negotiations with the dealer. Once you agree on the price of the car, you then move on to other factors (length of lease, miles included, money factor, residual value, fees to be charged, etc.)
At least, that's the way it should be done. As I noted in a previous post, many people walk into a dealership concerned only with the amount of their monthly payment. These financial illiterates usually end up paying too much for the car itself because they don't realize that they are, in fact, "buying" the car and then "selling" it back at the conclusion of the lease. These are the people who usually end up confused about the leasing process in general (even though they just went through it) and haven't the slightest idea what they paid for the car they just "purchased." In fact, they don't even realize that they purchased the car to begin with! They also probably couldn't tell you how much they are paying in interest charges even though it is in black-and-white on the document they just signed. But, oh, they can tell you to the penny how much their monthly payment is and the fact that had they gone with a normal purchase their car payment would be much higher.
These are the people who think they got a great deal when they actually got screwed because they walked into the dealership without understanding how leasing works. These are also the people who, when they ultimately realize that they overpaid for their car, go around screaming that leasing is a terrible way to acquire a car and that they won't make that mistake again.
Actually, one nice thing about leasing is that, dependent on your goals, you don't have to care about anything other than the monthly payment. If you don't plan to keep it, then the only thing that matters is cash out of pocket (don't do it) and what you pay per month. If they can get you to a dirt cheap payment and get the miles you need, who cares about the rest if you know you're going to toss the keys to them in 3 years?
Your question has absolutely nothing to do with trying to determine the "sales" price of the car itself. There is no difference between negotiating the "sales" price of a leased car and negotiating the sales price of a car you're going to purchase. Whether buying or leasing that same vehicle is a better option financially for you is dependent upon other factors. To reiterate, there's no mystery or trickery involved in ascertaining the underlying cost of the car itself because you should be determining the price of the car yourself through negotiations with the dealer. Once you agree on the price of the car, you then move on to other factors (length of lease, miles included, money factor, residual value, fees to be charged, etc.)
At least, that's the way it should be done. As I noted in a previous post, many people walk into a dealership concerned only with the amount of their monthly payment. These financial illiterates usually end up paying too much for the car itself because they don't realize that they are, in fact, "buying" the car and then "selling" it back at the conclusion of the lease. These are the people who usually end up confused about the leasing process in general (even though they just went through it) and haven't the slightest idea what they paid for the car they just "purchased." In fact, they don't even realize that they purchased the car to begin with! They also probably couldn't tell you how much they are paying in interest charges even though it is in black-and-white on the document they just signed. But, oh, they can tell you to the penny how much their monthly payment is and the fact that had they gone with a normal purchase their car payment would be much higher.
These are the people who think they got a great deal when they actually got screwed because they walked into the dealership without understanding how leasing works. These are also the people who, when they ultimately realize that they overpaid for their car, go around screaming that leasing is a terrible way to acquire a car and that they won't make that mistake again.
Sounds good on paper. I'm saying that's just not what I experienced with the Subaru dealership when we were going over the lease. He kept on going back to the amount of the monthly payment, not the actual price of the car. That's probably their sales tactic to confuse someone, which they succeeded with me. At least I didn't sign.
So according to your guidance the dealership was lying. How is that transparency? Maybe it just comes down to really playing hardball with the dealership on this, but it's another layer of aggravation to deal with.
I don't know if leasing is growing in popularity vs buying, I think it seems to be given the number of threads I've seen in this forum, but there should probably be a thread like "the best way to negotiate a lease".
Leasing is tricky; to begin with the dealerships don't want to give you the actual full price of the car you want to lease, like they give you when you buy a car. They make it complicated to understand. There's no clear right answer all the time because there are so many variables that are being manipulated by dealerships to net them the greatest profit, and the amount of profit a dealership is willing to lease/sell a car for can vary dealership to dealership I guess.
so how is any consumer supposed to get the exact same deal someone else got in another state for another car from a different dealership?
Honestly, cars are a money pit either way. Lease if you like driving new cars, buy if you're ok driving the same car for a while.
No. "They" have to give you every bit of info up front. If you dont understand dont sign. It is your fault if you dont get it.
Cap cost. Lease factor. Term and mileage.
That is is. And it is all disclosed up front. If you dont get it you got no business taking delivery.
The dealers don't give a damn how you buy as long as you buy.
No. "They" have to give you every bit of info up front. If you dont understand dont sign. It is your fault if you dont get it.
Cap cost. Lease factor. Term and mileage.
That is is. And it is all disclosed up front. If you dont get it you got no business taking delivery.
The dealers don't give a damn how you buy as long as you buy.
I'll do that the next time I'm looking to lease a new car, thanks.
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