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1: you are regularly changing cars out every couple of years for business reasons
2: if you are rich enough to own anything you want, but dont want to own anything
It also makes sense if you always want to drive a new or late model car.
Not that always driving a new car really makes sense from a financial standpoint; but if that's your primary goal, leasing will usually cost less than buying outright and trading every 2-3 years.
So what? I and millions of others don't want to drive a 14-year-old truck, car or any other vehicle. I can barely get through the three years of my lease before I'm itching for the next big thing. For example, a backup camera....the keyless fob....LED headlights, etc. etc. etc. In my 25 years of leasing, I've only once put a down payment down and that was only $1000. Now that lease is almost up and I just got an offer of a lower lease payment on the 2017 model with zero down. I'm very happy with leasing....it is a stable expense in my budget and I have a new car every three years. To each his/her own.
If you really think about it, he could have saved during the years without a payment. He could probably walk in to a dealer and pay cash for a nice new car, while you have to keep paying far a new lease. Yes, he would still need to make a payment to his savings, but if he does it for, what was it, 12 years, then it's less than the cost of a lease.
I considered it recently, as my 18 year old Acura finally kicked the bucket for good (with 315,000 miles, so no complaints!) at the worst possible time for me as I am not working and scheduled for back surgery in a couple of weeks. I considered it because parting with savings for a down payment when I don't know when I'll be back at work sounded scary to me. I ended up not leasing however because in the end, the parking lot for my apartment is awful, people are always over the line, and I get dings and dangs a lot. With a lease, I can't even imagine what they'd charge me for all those dings and dangs when I turned the car in. Also my family lives about 50 miles from me, and I didn't want the mileage restrictions.
I ended up getting a 2009 Hyundai Azera with 32,000 miles from one of those stores that sells only cars that come off lease (and all have 6,000 mile warranties, but I bought a 60,000 mile one). So the other person ate the depreciation and I got a car that I am absolutely in love with that is all mine. Since I drive my cars into the ground, I hope to have several years of use after the payments (got 8 more years after my Acura was paid off)
My niece and her husband both started leasing really more out of necessity than choice, as their cars died and they can't afford much down payment or monthly payment at the moment (my monthly payment for my used car is still higher than their lease monthly payment for a brand new car)
What advantages are there to leasing a car? I've always thought leases were for people that couldn't afford to buy a car, and that they aren't a smart financial decision. But almost every successful person I know leases a car, vs buying it, so there has to be some sort of financial advantage to it, and I am not smart enough to figure it out. I've also always assumed I drive too much to lease a car (18,000 or so a year), but I've found out you can structure leases for that amount of mileage.
I always lease. Why? Because I have a short attention span for cars. Very short. I am not one of those people that can keep a car for 5 or 10 years. A lease take the worry of depreciation away. I can get a new car every 3 years and have no worries about being "upside down."
I generally do not make it 3 years though. My last 2 leases have been traded in a 8 months (the most recent) and 2 years. The one I am on now I have had for about 14 months, and am already itching to trade it in.
Generally, with a lease, your payments are considerably lower (depends on the lease, not always true, shop around). I can get a $50,000 car for about $450 a month... my current lease. On a traditional 3 year loan I think my payments would be double that.
If you drive 18,000 miles a year, you can still do a 36,000 mile lease. You'll lease for 3 years, but trade it in at 2 years when you hit 36,000 miles. You won't have to pay for the extra miles!
So basically, check this out. I'm going to use simple numbers for the ease of illustration.
You lease a $20,000 car for 36 months for $100 a month. The residual is $10,000 at the end of the lease. After 2 years, you will still owe $1200 in lease payments ($100 a month payment, 12 months remaining =$1200). If you trade it in at 2 years, you still owe the $1200. But, the $10K residual is the assumed resale value of a 3 year old car in your make and model. Since it's only 2 years old, it should be worth MORE than $10,000. If the car is worth $12,000, you trade it in early for a $12,000 value. That $12,000 covers the $1200 you owe on the lease, plus your $10,000 residual, and you come out ahead $800... so you get an $800 credit towards your next car.
That's why I traded in my last lease at 8 months. The value of my 8 month old car was MORE than my residual and lease payments remaining, so I traded it in. I got exactly the same car, one model year newer, for a LOWER payment due to the credit of trading in my lease with money left.
Maybe more successful people lease because of the ridiculously high down payment.
Doesn't make sense to me. Put down a lot of money, pay almost as much every month, and then you don't own the car after 3 years
I never put money down. The commercials that talk about money down are a gimmick to illustrate low payments. You can still put zero down and have slightly higher payments.
Lease a 2016 Toyota 4Runner Today! TAX, TITLE, LICENSE, DEALER FEES AND INSURANCE ARE EXTRA. DUE AT SIGNING INCLUDES $2600 DOWN , FIRST $399 PAYMENT, AND NO SECURITY DEPOSIT.
So there is a down payment.
$2600 down over 36 months is $72 a month. You could put zero down and pay $471 a month instead of $399. You don't have to put the money down.
$399 a month sounds better than $471 a month, so they're advertising the hook of low payment.
The lease in that add is a total of $16,964 (36 months times $399 a month plus $2600 down= $16,964). If you put $16,964 down, you'd have a payment of $0 per month for 36 months.
The dealer doesn't care how they get their $16,964 over the 3 years, as long as they get it. How it's broken up can be negotiated.
$2600 down over 36 months is $72 a month. You could put zero down and pay $471 a month instead of $399. You don't have to put the money down.
$399 a month sounds better than $471 a month, so they're advertising the hook of low payment.
The lease in that add is a total of $16,964 (36 months times $399 a month plus $2600 down= $16,964). If you put $16,964 down, you'd have a payment of $0 per month for 36 months.
The dealer doesn't care how they get their $16,964 over the 3 years, as long as they get it. How it's broken up can be negotiated.
And once again, that "lease offer" is based on a certain price, which may be MSRP or somewhere close. One still needs to negotiate purchase price before telling the dealer they are interested in leasing. That $2600 down may be able to be negotiated away without having to pay it monthly. Leasing is just a financial calculation. Residual value is based on MSRP, so any amount you can negotiate off MSRP reduces the amount you owe for depreciation as part of a lease. Also, there are forums which publish lease residuals and finance rates so you can double check the dealers math to ensure they don't adjust one of the numbers too high after negotiating price.
Lease a 2016 Toyota 4Runner Today! TAX, TITLE, LICENSE, DEALER FEES AND INSURANCE ARE EXTRA. DUE AT SIGNING INCLUDES $2600 DOWN , FIRST $399 PAYMENT, AND NO SECURITY DEPOSIT.
So there is a down payment.
This one lease example is not proof there's always a down payment.
The lease can be manipulated many ways, but many times when you see ads for ridiculously low lease prices, there is a down payment in the fine print. And some people are OK doing a down payment to keep their monthly payments lower. I am not. The lease payments are also affected by the term of the lease and the mileage allowed. For example, I pay $399 with $1000 down for a base Acura RDX with 10K miles/year. Now that lease is coming to an end, so they're offering me $389 with zero money down. However, it's a 7500/mile per year lease.
So you can always get a lease with zero down.
But one thing is certain: People need to understand how leasing works before they lease. An elderly neighbor leased a Honda Civic (lured by the low monthly payment), then got in an accident with it (her fault), decided it was the car's fault and wanted the dealer to take it back after the body shop fixed it. She wanted a younger male neighbor to go make that happen, but he had no clue about leasing. I told him they're not gonna just let her out of the lease, especially given the car is now devalued due to the accident. I tried to explain to him how it works with payoff figures, residual value, etc. but he wasn't really getting it. Bottom line is she got out of the lease by buying another smaller used car off their lot, but still had to pay dearly for it.
[quote=ocnjgirl;45595820]I considered it recently, as my 18 year old Acura finally kicked the bucket for good (with 315,000 miles, so no complaints!) at the worst possible time for me as I am not working and scheduled for back surgery in a couple of weeks. I considered it because parting with savings for a down payment when I don't know when I'll be back at work sounded scary to me. I ended up not leasing however because in the end, the parking lot for my apartment is awful, people are always over the line, and I get dings and dangs a lot. With a lease, I can't even imagine what they'd charge me for all those dings and dangs when I turned the car in. Also my family lives about 50 miles from me, and I didn't want the mileage restrictions.
I ended up getting a 2009 Hyundai Azera with 32,000 miles from one of those stores that sells only cars that come off lease (and all have 6,000 mile warranties, but I bought a 60,000 mile one). So the other person ate the depreciation and I got a car that I am absolutely in love with that is all mine. Since I drive my cars into the ground, I hope to have several years of use after the payments (got 8 more years after my Acura was paid off)
My niece and her husband both started leasing really more out of necessity than choice, as their cars died and they can't afford much down payment or monthly payment at the moment (my monthly payment for my used car is still higher than their lease monthly payment for a brand new car)
QUOTE]
I didn't know there were dealers who exclusively sold vehicles coming off-lease, but I see there are. Do they have proof that the vehicle is coming off a lease? A car coming off lease is usually two or three years old, not seven. And a seven year old car with only 32K miles sounds a little shady as well -- under 5K per year. If someone drives that few miles, they most likely wouldn't be leasing as it wouldn't make economic sense unless they buy the car at the end. Just wondering how that all works. I know if a car is in good shape when it comes off-lease, many times the dealer will just put it on their "pre-owned" lot.
So what? I and millions of others don't want to drive a 14-year-old truck, car or any other vehicle. I can barely get through the three years of my lease before I'm itching for the next big thing. For example, a backup camera....the keyless fob....LED headlights, etc. etc. etc. In my 25 years of leasing, I've only once put a down payment down and that was only $1000. Now that lease is almost up and I just got an offer of a lower lease payment on the 2017 model with zero down. I'm very happy with leasing....it is a stable expense in my budget and I have a new car every three years. To each his/her own.
My 14 year old truck was a third vehicle. It was paid for and there is always a need for a truck when you live in Alaska. My primary vehicle was much newer. Right now the oldest vehicle I own is a 2015. And it's loaded with all the technology you mentioned and then some.
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Since I drive my cars into the ground, I hope to have several years of use after the payments (got 8 more years after my Acura was paid off)
