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If you don't have neg equity, 2 yr lease can be great. The depreciation is usually much higher, which means you are paying the difference between otd and the depreciated cost. That said, the mf may be higher depending on who you lease through. Most manufacture finance companies sweet spot is around 36 mths, some 39 and a few at 24. Remember if you have a choice in tranny, manual will depreciate more, same with hb if you can choose between sedan and hb.
Also don't worry about the people who want to tell you what to do with your money, most of them are still living in the 60s.
Right about one thing, need to know the sweet spot AND incentives for any lease. Also need to consider accelerated wear....not a popular topic but, predicated on where you live, it can be. A fair number of dealers will try to ding folks returning leases on "accelerated wear" real, or imagined. That can be a real bite in the behind if not careful. Some of it is well deserved, most of it is not.
If you are going to lease again, their "concern" tends to vanish but, it's like an addiction for some at that point. It keeps some in a vicious cycle because they are cash-flow poor each time it comes up for "renewal/disposal".
Typically, if you drive in excess of 12,000 miles per year, it's not always so great. Less than that and you really should consider it. That, and if you have no mechanical aptitude or how to deal with dealers in the repair bay.
However, if you look at the LONG term cost of transportation through the decades, rarely is leasing a "good value". Folks who know how to buy good deals in used cars (3-5 years old, or for the mechanical gifted, 10) can show you on paper that it is exponentially cheaper to buy a few used cars over a 2 decades than it is to lease or buy new. But, then again, they are probably living in the 60's, right?
Wrong....
Example:
New Car Payment vs.........Lease Average Used Car
$350-$450 vs................ $8,000/67 per month ten years
$84,000 - $108,000 vs.....$16,000 (2 in ten years...not common granted)
$0.00 residual when through vs. $2,500 for each if still running
I did not account for inflation in either. I did not count electric or Hybrid. Granted, few keep a car 10 years but, even if I were to double that number and subtract say, $2,500 in value for each as you get rid of them, it would balloon this up to what, $22,000 effective?
Now, add insurance on the new or leased vehicle versus straight liability on the used....save what? $300 per year? Tack on another $6,000 saved over term?
Add another $1,200 for tires and fluid changes on a 3 year lease.....times 6.666 for 20 years....ahem.what, $7,000 ish???? push those totals up top up another 7K....
Now, add repairs on the used versus new/leased....say $4,000 per car over term.....$16,000 or back up $32,000 effective?
It's fair to say, that IF you can stand a used car and IF you can drive it for at least 5 more years and IF you can miss the new car smell, that savings could mean on average, $50,000-$75,000 over time. It becomes bigger the longer you keep each car.
But hey, that's living in the 60's for you as I quietly drive a 15.8 year Toyota Camry....paid 17K for it new plus Tax, Title and Tag....220,000 miles later she is still going strong.....I'm on a mission to see this through to 20 years and I think it will do it. Soooooo, assuming I do and add up all the repair bills on this car to include ALL oil changes, tires, brakes, starter, battery, etc...and I'm into it for roughly $23,000 tops....and it of course, if it's still running it will pull $2,000 if the AC works......
Had I gone the "modern" way, I would be into something close to 80-90K at the end of this same period. I guess I was wrong for saving all that money. Ego aside, I did have to drive an old car a long, long time and frankly, never cared. It's transportation.
If you want to stroke your ego, spend time in the gym and dating sites. If you want to save money on your transportation utility, consider recently used and drive them as long as you possibly can. Believe me, for 3/4 of the time you own it, no one will give a Shiite except maybe the car dealer and the folks who have it "figured out" regarding new and leased autos......
Want to fund a kids college tuition or two???? Hereeeeee's your sign......
Right about one thing, need to know the sweet spot AND incentives for any lease. Also need to consider accelerated wear....not a popular topic but, predicated on where you live, it can be. A fair number of dealers will try to ding folks returning leases on "accelerated wear" real, or imagined. That can be a real bite in the behind if not careful. Some of it is well deserved, most of it is not.
If you are going to lease again, their "concern" tends to vanish but, it's like an addiction for some at that point. It keeps some in a vicious cycle because they are cash-flow poor each time it comes up for "renewal/disposal".
Typically, if you drive in excess of 12,000 miles per year, it's not always so great. Less than that and you really should consider it. That, and if you have no mechanical aptitude or how to deal with dealers in the repair bay.
However, if you look at the LONG term cost of transportation through the decades, rarely is leasing a "good value". Folks who know how to buy good deals in used cars (3-5 years old, or for the mechanical gifted, 10) can show you on paper that it is exponentially cheaper to buy a few used cars over a 2 decades than it is to lease or buy new. But, then again, they are probably living in the 60's, right?
Wrong....
Example:
New Car Payment vs.........Lease Average Used Car
$350-$450 vs................ $8,000/67 per month ten years
$84,000 - $108,000 vs.....$16,000 (2 in ten years...not common granted)
$0.00 residual when through vs. $2,500 for each if still running
I did not account for inflation in either. I did not count electric or Hybrid. Granted, few keep a car 10 years but, even if I were to double that number and subtract say, $2,500 in value for each as you get rid of them, it would balloon this up to what, $22,000 effective?
Now, add insurance on the new or leased vehicle versus straight liability on the used....save what? $300 per year? Tack on another $6,000 saved over term?
Add another $1,200 for tires and fluid changes on a 3 year lease.....times 6.666 for 20 years....ahem.what, $7,000 ish???? push those totals up top up another 7K....
Now, add repairs on the used versus new/leased....say $4,000 per car over term.....$16,000 or back up $32,000 effective?
It's fair to say, that IF you can stand a used car and IF you can drive it for at least 5 more years and IF you can miss the new car smell, that savings could mean on average, $50,000-$75,000 over time. It becomes bigger the longer you keep each car.
But hey, that's living in the 60's for you as I quietly drive a 15.8 year Toyota Camry....paid 17K for it new plus Tax, Title and Tag....220,000 miles later she is still going strong.....I'm on a mission to see this through to 20 years and I think it will do it. Soooooo, assuming I do and add up all the repair bills on this car to include ALL oil changes, tires, brakes, starter, battery, etc...and I'm into it for roughly $23,000 tops....and it of course, if it's still running it will pull $2,000 if the AC works......
Had I gone the "modern" way, I would be into something close to 80-90K at the end of this same period. I guess I was wrong for saving all that money. Ego aside, I did have to drive an old car a long, long time and frankly, never cared. It's transportation.
If you want to stroke your ego, spend time in the gym and dating sites. If you want to save money on your transportation utility, consider recently used and drive them as long as you possibly can. Believe me, for 3/4 of the time you own it, no one will give a Shiite except maybe the car dealer and the folks who have it "figured out" regarding new and leased autos......
Want to fund a kids college tuition or two???? Hereeeeee's your sign......
Not everyone wants to drive the same car that long. Since I would t drive a car that is worth a minuscule amount, I would not carry just liability only. As for fluid changesm that is with all cars, same with tires. Rarely do I keep stock tires on my car, so a tire change is expected. My insurance rate went down, my first two years of basic maintenance is free. My cost over the next 3 years will be lower leasing than buying.
I don't disagree with your statement, like you said IF...However that is not the typical buyer. In 10 yrs less people will buy or lease new and used cars, but those who decide they need a car will most likely lease. Leasing year over year is becoming more common. For more and more people it doesn't make sense to own a vehicle.
Not everyone wants to drive the same car that long. Since I would t drive a car that is worth a minuscule amount, I would not carry just liability only. As for fluid changesm that is with all cars, same with tires. Rarely do I keep stock tires on my car, so a tire change is expected. My insurance rate went down, my first two years of basic maintenance is free. My cost over the next 3 years will be lower leasing than buying.
I don't disagree with your statement, like you said IF...However that is not the typical buyer. In 10 yrs less people will buy or lease new and used cars, but those who decide they need a car will most likely lease. Leasing year over year is becoming more common. For more and more people it doesn't make sense to own a vehicle.
This is how I see it. A vehicle to me is nothing more than a depreciating appliance that I use to get me where I need to go. I see it no differently than I see my cell phone. Its a tool that I use to make my life convenient and I don't mind paying a monthly bill for that convenience. I see no pride in car ownership unless its a sought after classic, sports car, or exotic that you plan to keep for years and drive it on sunny wknds.
My 2014 Honda Civic ex?.... Currently leasing at $229/month. When the lease is up I'll swap it out for a 2017. Its an affordable payment that isn't breaking the bank what so ever. It will always be under warranty and with that comes peace of mind.
Now If I were to come across a showroom condition Grand National GNX that I'm able to afford, I would certainly go into the piggy bank and purchase it cash! It's a car that I've always loved and can keep it in the garage and drive leisurely as I please. If something breaks or needs repair, I can fix it at my own pace as its not my daily driver.
Not everyone wants to drive the same car that long. Since I would t drive a car that is worth a minuscule amount, I would not carry just liability only. As for fluid changesm that is with all cars, same with tires. Rarely do I keep stock tires on my car, so a tire change is expected. My insurance rate went down, my first two years of basic maintenance is free. My cost over the next 3 years will be lower leasing than buying.
I don't disagree with your statement, like you said IF...However that is not the typical buyer. In 10 yrs less people will buy or lease new and used cars, but those who decide they need a car will most likely lease. Leasing year over year is becoming more common. For more and more people it doesn't make sense to own a vehicle.
No argument for the most part. As stated, most can'/won't do it and that's fine. It's a free country for the most part and to each, his own. I was simply trying to illustrate all sides. For a lot of people, leasing is a good option. However, when it comes down to raw numbers, not so much.
That's also why I mentioned 4 cars in the same period of time. Most people just want something different at the end of 5 years, or less. Buying one that is perhaps 3-4 years old and dumping it at 8-10 years of age nets a similar effect.
Probably just depends on how long you like to be in the same car. Some folks, quite a few actually, are fine with car payments in perpetuity. It works for them.
One major thing to be concerned with on a 3-year lease vs a 2-year lease is tire/brake wear and out-of-warranty repairs. You are required to turn the vehicle in with things in good working condition and a certain amount of tread/brake life left.
Its very rare for a tire/brake to wear out within 3 years.....having said that, that is why most people like 36 months or less for leasing.
In my experience, most dealers or leasing companies are most focused on is damage to the vehicle and over the allocated mileage. My brakes was squealing from debris and they didn't care when I gave it back
Probably just depends on how long you like to be in the same car. Some folks, quite a few actually, are fine with car payments in perpetuity. It works for them.
I can easily afford to pay cash for all my cars. My SO likes the latest & greatest safety features & toys....so I own 2 cars and always lease one. It makes no sense for me to sell & buy a new car every three years.
Its very rare for a tire/brake to wear out within 3 years.....having said that, that is why most people like 36 months or less for leasing.
In my experience, most dealers or leasing companies are most focused on is damage to the vehicle and over the allocated mileage. My brakes was squealing from debris and they didn't care when I gave it back
Depending on the car you can easily wear out a set of tires by the 45K mileage mark. My friend's Hyundai Sonata had a set of low-pro sporty tires (18 inch wheels) and he just replaced them at 32K miles. They were down to 2/32 tread at that point....
I have a Ford Fusion with 235/40R19 tires and there is no way those will make it to 45K miles, either. I might get 40K if I'm lucky as I have 30K miles on the tires with 4/32 tread left.
Just depends on the car....SUV's and Pickups almost always have tires that will go more than 45K miles. Not all cars do, however, especially ones with "sporty" wheels and tires.
You have to know the residual value, the higher the better the lower the more your monthly payments.
Actually, no. If I plan to buy it, I like low residual. Higher residual is supposed to mean lower payments but it doesn’t always. My son’s RAV4 will have a residual substantially lower than book value when its two years are up.
Actually, no. If I plan to buy it, I like low residual. Higher residual is supposed to mean lower payments but it doesn’t always. My son’s RAV4 will have a residual substantially lower than book value when its two years are up.
If the residual value is lower on the lease then you already paid it in depreciation in the course of the lease. If you are leasing a vehicle with low residual then you are not coming out ahead on the lease, but have an opportunity to gain back what you have already "overpaid" by market standards.
Leasing in NEVER designed to be beneficial to buy out. NEVER.
Low residual means it already depreciated and you paid for it in the payments/lump sum of the lease.
High residual means you paid less depreciation and will pay more for it at lease end.
The total will always be =/> the original cost of the car (capitalized cost).
Actually, no. If I plan to buy it, I like low residual. Higher residual is supposed to mean lower payments but it doesn’t always. My son’s RAV4 will have a residual substantially lower than book value when its two years are up.
Which means you've overpaid for the depreciation. If you want to buy the car, just buy it. Leasing only really works if the residual is a lot higher than the market value at the end of the lease and you're handing it back in. My Infiniti was worth around $22,000 at the end of its lease. The buyout was $29,000, so I underpaid the depreciation by $7,000 compared to buying it.
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