Car Leasing in the bay area (sales, insurance, credit card)

[exploringtim]

Hey guys,

So i've been having a cruise around looking at the various options for car leasing and wanted to get some input from the community here. What (fiscally speaking) is typically the best route to go? Deal-based lease? Fetch a loan from the bank and handle the transaction with the dealer directly in order to own the vehicle? Anything I should be aware of that people get stung on?

I'm probably looking at getting a new car, somewhere in the $40-50k mark (list price - of course, one hopes to haggle down to something more financially palatable!).

And hell, why are the european cars really, really expensive? I'm assuming its some status or brand bluster, but they are certainly not that expensive in Europe itself.

Any input welcome :-)

Cheers, Tim

[marcopolo666]

Generally, unless you have plenty of money to throw away, leasing is generally not the best option.

Concerning your specific question "Anything I should be aware of that people get stung on?". If you are really leasing (basically, you are "renting" the car and the dealership is the owner) then :
- you must turn in the vehicle in "good shape". Often there are painting or "body shop" charges when you return the vehicle with a few parking lot "dings" in the fenders
- there's a max amount of miles/yr. If you go past that, then you have to pay a high $$/mile charge when you return the car
- you are required to show proof of insurance for the entire time you have the car. (Not such a big deal now since that's all tracked electronically, but I knew a guy that let his insurance lapse and they repossessed the car AFTER he had paid it off.)

If you go the "lease with an option to buy" route (and end up buying the car), the above MAY or MAY NOT apply (depends on the contract).

I've never understood why somebody would lease rather than buy (in most cases). It's certainly cheaper to buy. Now if you:
- absolutely want to have a new, different car every 3 years, it is "simpler" to lease
- have such crappy credit that you can't get a decent car loan

then I guess you lease. But back when I was broke, I just bought a used car (~ 5 years old) instead of a new one. It was a lot cheaper than a lease. (I also turned over my "used" cars every 3 years or so, before everything started to break.)

[exploringtim]

Hey thanks for the reply,

This might be a lost-in-translation thing, as typically in the EU most people do lease their cars... its also known as "hire purchase"; does that ring any bells? It sounds more like the 2nd thing you spoke about. My apologies as I didn't realise they were separate in the US.

Cheers, Tim

Originally Posted by marcopolo666

Generally, unless you have plenty of money to throw away, leasing is generally not the best option.

Concerning your specific question "Anything I should be aware of that people get stung on?". If you are really leasing (basically, you are "renting" the car and the dealership is the owner) then :
- you must turn in the vehicle in "good shape". Often there are painting or "body shop" charges when you return the vehicle with a few parking lot "dings" in the fenders
- there's a max amount of miles/yr. If you go past that, then you have to pay a high $$/mile charge when you return the car
- you are required to show proof of insurance for the entire time you have the car. (Not such a big deal now since that's all tracked electronically, but I knew a guy that let his insurance lapse and they repossessed the car AFTER he had paid it off.)

If you go the "lease with an option to buy" route (and end up buying the car), the above MAY or MAY NOT apply (depends on the contract).

I've never understood why somebody would lease rather than buy (in most cases). It's certainly cheaper to buy. Now if you:
- absolutely want to have a new, different car every 3 years, it is "simpler" to lease
- have such crappy credit that you can't get a decent car loan

then I guess you lease. But back when I was broke, I just bought a used car (~ 5 years old) instead of a new one. It was a lot cheaper than a lease. (I also turned over my "used" cars every 3 years or so, before everything started to break.)

[marcopolo666]

Originally Posted by exploringtim

Hey thanks for the reply,

This might be a lost-in-translation thing, as typically in the EU most people do lease their cars... its also known as "hire purchase"; does that ring any bells? It sounds more like the 2nd thing you spoke about. My apologies as I didn't realise they were separate in the US.

Cheers, Tim

Of the ~30 people I know if France, ~10 in Italy, and 3 in Germany only one person leases. The others all buy their cars outright. The one who does lease her car is an elderly lady who just doesn't want to deal with car (mechanical) problems (all mechanical problems, including routine maintenance, are handled by the dealership).

[jaypee]

Originally Posted by exploringtim

Hey guys,

So i've been having a cruise around looking at the various options for car leasing and wanted to get some input from the community here. What (fiscally speaking) is typically the best route to go? Deal-based lease? Fetch a loan from the bank and handle the transaction with the dealer directly in order to own the vehicle? Anything I should be aware of that people get stung on?

I'm probably looking at getting a new car, somewhere in the $40-50k mark (list price - of course, one hopes to haggle down to something more financially palatable!).

And hell, why are the european cars really, really expensive? I'm assuming its some status or brand bluster, but they are certainly not that expensive in Europe itself.

Any input welcome :-)

Cheers, Tim

Car Leasing

[hsw]

Do own arithmetic

Suspect new MBs (or any car) are cheapest in world in US

Many rather affluent people in US $0-down lease their Mercs for 24mos for various sensible reasons (not unlike buying their daily SBUX or mundane stuff w/credit card w/cash rewards, which they pay off every mth never incurring fin charge): can earn more on capital elsewhere than in dumping cash in depreciating item like car; CA sales tax calc on car leases vs purch; lease-gap insurance advantages of leased car vs owned in event of major collision; reality that cars are mobile computers w/decaying airbag sensors/systems, making any modern car far less safe after 2-3yrs post-manufacture etc etc

Poor folks get iPhones/Nikes every <2yrs: suspect vast majority of alleged "middle-income" in CA can afford to lease a new C250 every 2yrs as well....hell, HS dropout 30yo bus drivers and cops in CA earn far more than $100K/yr w/better healthcare/pensions than nearly any private worker at a tech co. in SV....so essentially anyone semi-competent can "afford" to lease a new Merc these days, much like they can figure out how to afford latest iPhone w/its data plan or wear latest $200 Nikes or afford a $200/mo pet....all about priorities: suspect safety of any well-engineered car far supersedes safety value of any Apple/Nike/mutt vs one's health...

[sonarrat]

I see leasing as basically paying only for the depreciation of a vehicle over the time you own it, which makes it a bad deal to begin with since you're resetting it to the steepest part of the depreciation curve every time you take up a new lease. Then, the mileage limits make a bad deal even worse. If you drive less than 10,000 miles a year, then you don't need a new car every 3-4 years anyway. If you drive more than that - I'm closer to 20,000, even though I live in the same city where I work - then you get hit with large per-mile fees when you turn it in at the end of the lease. The fact is for most people, their lifestyles don't mesh with the confinements of leasing, and even if they did, it would still be a bum deal. It only makes "sense" for people who, for whatever vain reason, find it necessary to have the latest model luxury car every year or two. And to such a person I simply say: a fool and his money are soon parted.

[jaypee]

Although leasing is not for me, I can see why it makes sense for some people and it doesn't have to be because they're vain. Perhaps they are a business and can write off the lease, or they are in a sales role where they need to impress clients, or they simply don't want the hassle and expense of maintaining a car outside of its warranty period (ahem, BMW and MBZ)

[marcopolo666]

Originally Posted by jaypee

Car Leasing

This is a very, VERY useful link - very informative. Thanks!