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If someone was willing to lease, why wouldn't they also be willing to stretch out a loan?
In my case, my lease is $200/mo for 36 months with nothing due at signing. Had I bought the same car and put nothing down and down 60 months my payment would be $400. Big difference and I'm not sure many want to go out more than 5 years.
Oh look, a debate between the merits of purchasing and the merits of leasing! What a fascinating and new topic that I'm glad someone finally the courage to broach.
But there are tons of other lease deals that are similar out there for not so basic economy cars. negotiate the price down, get the incentives, and then talk lease numbers, it's easy to get into a decent new car for under $150 a month, which is comparable to a phone or cable plan. It's easy to budget for a low fixed monthly expense than a higher one that MIGHT get paid off by the time you trade the car in. Or tie up your cash in a depreciating asset that still may need huge repair dollars sunk into it.
Most people keep their new or used cars 3-5 years. In either case you are constantly paying for OR saving up for the next car, so leasing a cheap one makes perfect economic sense when you want your family in the latest safety systems.
this is a fantastic link, thank you for sharing it
really great unadvertised lease deals..... all with $0 down
and the best part is it discloses the interest rate (yes, leases have an interest rate, but they call it "money factor") and make you convert it to APR via multiplication
ok, so based on this link....
'Money Factor' The alternative method of presenting the amount of interest charged on a lease with monthly payments. A money factor can be translated into the more common annual percentage rate (APR) interest by multiplying the money factor by 2,400.
2016 Subaru Legacy Premium ---- Money Factor (MF) = .00025 x 2400 = 0.60% apr
2016 Volkswagen Passat S ------- Money Factor (MF) = .00001 x 2400 = 0 .02% apr…. lowest, almost 0%
2016 Mazda 6 Sport Automatic --- Money Factor (MF) = .00001 x 2400 = 0 .02% apr
2016 Honda Accord LX CVT ------ Money Factor (MF) = .00051 x 2400 = 1.22% apr
2016 Nissan Altima S ------------ Money Factor (MF) = .00003 x 2400 = 0.07% apr
2016 Chevrolet Malibu 1LT ------- Money Factor (MF) = .00040 x 2400 = 0.96% apr
2016 Toyota Camry SE ---------- Money Factor (MF) = .00023 x 2400 = 0.55% apr
2016 Hyundai Sonata SE -------- Money Factor (MF) = .00131 x 2400 = 3.14% apr…. highest, over 3%
2016 Kia Optima LX -------------- Money Factor (MF) = .00054 x 2400 = 1.29% apr
2016 Ford Fusion SE ------------- Money Factor (MF) = .00010 x 2400 = 0.24% apr
2016 Chevy Malibu Limited 1LT --- Money Factor (MF) = .00040 x 2400 = 0.96% apr
Last edited by azsportpilot; 02-17-2016 at 12:13 PM..
Technically yes. But if you are trying to lease an expensive car with a short lease term, if you don't pay the down payment, your monthly payments could suddenly exceed the debt to income ratio they are willing to approve someone for.
They want to get a good chunk of their money upfront, because if a person only leased for 3 months and then defaulted, they've lost money because they can't sell that car as a new car anymore.
Not for nothing, but if you're looking at that type of car, odds are pretty good that you can afford whatever the monthly payments are. When I leased my BMW, the only two things they looked at were credit score and income that exceeded the purchase price of the car.
I'm not sure many want to go out more than 5 years.
Why not? Especially if one tends to keep cars a long time and gets a great interest rate. If you're flipping cars every 3 years, or one of those who trades a car in as soon as it's paid off...might not be a good approach.
This is one of those "one size doesn't fit all debates".
you can't stretch to loan enough to get the payment down as low as a lease
they want to drive a new car every 36 months
they don't want to make payments on an out of warranty car
My point was people lease with the intent of buying out the car after 4-5 years or whenever lease is up. Now they have perpetual $200 payments for 8-9 years. For them that is better than a shorter 4-5 years of $400-500/month payments
If someone was willing to lease, why wouldn't they also be willing to stretch out a loan?
A stretched out loan would have to be in the 7-10 year range (or more) to get the payments down to what a lease is, and why make those payments on an out of warranty car with old safety features?
Leases are not advantageous in states that tax the entire value of the car, not just the lease amount. Or in situations where you are buying the car to last a lifetime (most people simply don't). Leases for me have been cheaper than buying a car then selling it in 3-5 years, which is typically how long I want a car for. And of course, EV and PHEV buyers are usually better served by leases as the tech is so quickly obsolete and when the leasing company gets the federal and state tax incentives they pass that along to the lessees to help reduce the cost of those types of cars (I'd only ever lease an EV until they become mainstream).
They want a new car not no payments. That is the difference in mentality of a buyer vs someone that uses a lease. What they forget to calculate is 10+ years without a payment and the new car ego boost is appealingto them. If they are leasing they aren't putting on tons of miles otherwise it's an even worse deal.
They want a new car not no payments. That is the difference in mentality of a buyer vs someone that uses a lease. What they forget to calculate is 10+ years without a payment and the new car ego boost is appealingto them. If they are leasing they aren't putting on tons of miles otherwise it's an even worse deal.
Or 10 years plus of out of pocket repair costs that may come at inopportune times, leaving them without a car or without a savings buffer. Or 10+ years of driving a car that is now 10-15 years behind in safety features that they are carrying around their family in. Lots of things to factor into the decision process and merely having no "payments" is not very high among them for people that aren't cheapskates or poor.
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