Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I may not be designed to benefit a buyout at the end but there are times where it does. I've known quite a few people who end up with equity at lease end. Its all about doing your homework and choosing the right vehicles to lease.
Friend of mine leased a Subaru Forester a few years back and ended up with almost $3k in equity.
Agreed. Do the homework. As I said, it is never designed to be bought out. It is designed to get you back in the door of the dealer in a set amount of time so they get another swing at putting you in a new car.
If you know there is equity, use it to your advantage and either buy it or negotiate to gain some of that equity back from the dealer towards a new deal.
Then how do you explain this. I negotiated a lease for a 2014 RAV4 Limited(for my son) back in September. The end deal was this. $3600 down+$225/mo for 24 month with a residual of $21000 or so. The MSRP for the vehicle was $30K, which is exactly the sum of all payments. There is not even room for finance charge in there (although I am sure the dealer has incentives built-in). The book value for a 2 year old RAV4 is almost certainly more than $21K. He will come ahead if he buys decides to buy at the end of the lease. Now, 4 months later we leased a Highlander and that didn’t come out as good.
There's nothing wrong with leasing and then buying out as long as one understands the cost. Using this as an example, assuming all things are equal, a 3% interest rate for lease and loans, the new price of the car is $26,500 lease or loan (yep, you got a deal on the price!), by leasing for two years then buying with a five year loan, you end up paying about $6,000 more TOTAL than if you just bought it out right at the beginning on a five year loan.
Of course then the payments are $447 instead of the $225 lease (and then the $341 for the subsequent loan).
I've leased and bought, nothing wrong with either but once you know how a lease is calculated you're loath to do it again!
There's nothing wrong with leasing and then buying out as long as one understands the cost. Using this as an example, assuming all things are equal, a 3% interest rate for lease and loans, the new price of the car is $26,500 lease or loan (yep, you got a deal on the price!), by leasing for two years then buying with a five year loan, you end up paying about $6,000 more TOTAL than if you just bought it out right at the beginning on a five year loan.
Of course then the payments are $447 instead of the $225 lease (and then the $341 for the subsequent loan).
I've leased and bought, nothing wrong with either but once you know how a lease is calculated you're loath to do it again!
Absolutely a good decision. Once you're at the point of lease-end the best decision IMO is to buy it out, its likely the cheapest way into another comparable car and you know its service history. The last car I leased I didn't buyout because it was a Ford with that infernal Microsoft infotainment system, Piece of junk, glad to get rid of it. Loved the car and would have kept it otherwise.
2 year leasing worked for me - then I bought the vehicle as it was still relatively new, didn't show signs of any issues, and I knew its entire history ;-)
In retrospect, I should have financed to own, but at the time the 2 year lease seemed right for me. If I was going to lease again I would do the shorter of two available terms. That way I could either trade-in and find another better vehicle or buy it outright sooner rather than later.
Not here to argue lease vs buy but in some states the registration fees are pretty exorbitant (Colorado for one). So you do take an additional hit if you constantly register new or newer cars. We're talking $500-$1000 a year for registration fees on brand new cars. Goes down a bit each year as the car ages.
Again, do the math. If you like the vehicle then buying may be a reasonable option and it may be affordable. Before you sign that contract, look at the new lease numbers. If fiance' is commuting less, there may be a lower mileage lease that could put her in a new vehicle for less money, and extend the amount of time you won't need to repair or maintain the vehicle. Either option may work for you, but know the choices before you decide.
Be careful of "book" value. There are many books and most are written by/for people who are not looking out for your best interest. Look online at autotrader, cars.com, and even eBay to see what the comparable vehicles are actually selling for. Then decide if it is a good idea.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.