- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Own vs Lease
Posted on 4/21/13 at 9:26 pm to Layabout
Posted on 4/21/13 at 9:26 pm to Layabout
quote:
And if you deviate from the manufacturer lease specifications then the dealer gets to determine the residual value and you the customer get screwed.
What do you mean by this? Excessive mileage or abnormal wear/tear? These are covered on the front end by fees, which of course can negatively affect your advantage. And like I mentioned, even outside the confines of the "small print" on their incentive deals, the MF and Residual % are unchanged across a model, sans Toyota. All closed end leases have a predetermined residual when you sign. The dealer cannot change this during the lease. However, as the consumer you do have the option to sell the vehicle privately at the end of the lease, and simply pay the residual value (ie. the vehicle in current condition is selling for more than the predetermined residual). In a closed end lease, you are not responsible for the difference if the reverse is true.
Some negatives not touched on yet are complete loss of down payment or equity if the vehicle is "totaled". Most lease programs include GAP coverage (verify if considering), but do not pay you any equity if totaled. This is the major disadvantage to large out of pocket lease deals. Also, if for some reason you needed to get out of a lease early, some are very difficult to terminate. It's not like a car loan you simply payoff and walk away.
Edit: Looking again at OP, since a trade-in is involved, I'd be cautious of leasing IF you have large equity in your trade or it's worth a fair amount of money. In addition, with a trade-in and purchase, you are given a tax credit for the trade in value (total value, not equity). This is not the case when leasing since tax is paid [in LA] on the monthly payment.
This post was edited on 4/21/13 at 9:32 pm
1
Posted on 4/21/13 at 10:55 pm to LSUtigerME
quote:
Excessive mileage or abnormal wear/tear?
No. I mean adding a $10,000 luxury package which will not hold its value the way the base model does. That means the residual is up for negotiation between you and the dealer and the dealer almost always wins.
Posted on 4/21/13 at 11:12 pm to Layabout
I decided to lease my latest vehicle rather than purchase for a few reasons (and it wasn't because I couldn't afford to purchase):
1. I wanted to treat myself to a new car. I've never had a "new" car and wanted one.
2. I didn't want to ante up a fistful of savings on a down payment.
3. Given I only drive about 8k-9k miles per year I qualified for low mileage incentives for drivers under 10k/year which lowered my note tremendously (another case of a lease benefiting low mileage drivers more than a purchase would).
4. I didn't want to worry about/be responsible for major maintenance in the next few years.
5. I have the option to purchase the vehicle at the end of the 3-year lease term.
6. The purchase price at the end of the term is already predetermined based upon the negotiated price at the beginning of the lease. This sale price will be based upon average usage - i.e, 12-15k miles per year - depreciation. When I'm done my term, I'll have less than 30k miles on the car (per my mileage cap), so if I decide to purchase, I come out ahead really because the car will be "worth" more than the purchase price.
7. The dealership cut me a check for my trade-in, which I used to pay the lease note for about 4-5 months. This meant I got into a new car and wasn't "out of pocket" really for nearly six months.
These are some practical examples of why leasing was best for me...
1. I wanted to treat myself to a new car. I've never had a "new" car and wanted one.
2. I didn't want to ante up a fistful of savings on a down payment.
3. Given I only drive about 8k-9k miles per year I qualified for low mileage incentives for drivers under 10k/year which lowered my note tremendously (another case of a lease benefiting low mileage drivers more than a purchase would).
4. I didn't want to worry about/be responsible for major maintenance in the next few years.
5. I have the option to purchase the vehicle at the end of the 3-year lease term.
6. The purchase price at the end of the term is already predetermined based upon the negotiated price at the beginning of the lease. This sale price will be based upon average usage - i.e, 12-15k miles per year - depreciation. When I'm done my term, I'll have less than 30k miles on the car (per my mileage cap), so if I decide to purchase, I come out ahead really because the car will be "worth" more than the purchase price.
7. The dealership cut me a check for my trade-in, which I used to pay the lease note for about 4-5 months. This meant I got into a new car and wasn't "out of pocket" really for nearly six months.
These are some practical examples of why leasing was best for me...
Posted on 4/22/13 at 9:02 am to Layabout
quote:
No. I mean adding a $10,000 luxury package which will not hold its value the way the base model does. That means the residual is up for negotiation between you and the dealer and the dealer almost always wins.
I can't figure out if you're messing with me or not.
If the residual was 50% on the base model, as in the incentive deal, even adding the $10k package or other options will still residualize at 50%.
*Example: The base model is $30k with a residual of $15k, the model with a $10k option package ($40k sticker) will have a residual of $20k. No need to negotiate the residual value.
Also, residual values are always based on MSRP (plus packages and dealer options).
* Toyota is the only manufacturer I've encountered that does not use this method. They will not residualize packages the same as the base model. They establish residual values for each model they sell, and do not use the % multiplier the other manufacturers use. In the example, Toyota may set the residual of the higher model at $18,500 instead of $20k. This method is more accurate for the resale, but not beneficial to the consumer.
Posted on 4/22/13 at 1:09 pm to LSUtigerME
I had never leased and I did it, basically cause I wanted a car that I didn't want to be stuck with if I didn't like it long term. Glad I leased as with the issues it has, I don't want to own it. If I wanted a new car, i would certainly lease over buying. I know I am in the minority.
Posted on 4/24/13 at 9:45 am to TthomasJR
quote:
What are the pros and cons?
Pro's:
Lower monthly payments, little to no down payment, less maintenance to deal with (never lease a vehicle longer than its warranty), less taxes to pay and you can get a new car every two to four years.
Cons:
“Leasing is nothing more than a long term deal with Hertz.” – Dave Ramsey
Leasing provides a good deal for four parties - the sales person, the F & I guy, the dealership’s owner and the finance company (leasing company). It is a lousy deal for the customer. You owe something, but you own nothing. Leasing adds a layer of complexity to the deal that allows the salesman to hide or misrepresent the true purchase price.
Leasing has become an incredibly effective tool for dealers to sell their product at a significantly higher price and profit margin and is often “pushed” or “encouraged” through the sales process.
• Leasing makes the car more affordable and therefore easier to sell. The buyer gets focused on being able to drive a nicer vehicle for a lower monthly note than what they most likely could not afford to buy.
• It allows the customer to afford a more expensive car, and the more expensive the car, the larger the profit.
• Leasing allows the dealer to legally hide the true cost/price of the vehicle and charge you a higher price than you would normally agree to.
• A leasing customer is more likely to return to the same dealership to get their next vehicle and next vehicle and next vehicle. Even though your original sales person will be long gone, the dealership is able to maintain customer retention and that’s where it pays off in the long run.
Leasing is the equivalent of throwing a $100.00 bill out of your vehicle’s window every week for 3 years in terms of depreciation. The bottom line is this … any way you look at it, leasing is a convenience that you’ll pay for in the end. Put another way, if you can’t afford to buy your next vehicle with a four-year loan or less, then you really can’t afford it.
Posted on 4/24/13 at 9:50 am to LSUtigerME
quote:
. Also, understand leasing is just a method of financing. You must still negotiate and haggle the price all the same.
Most people don't know how to successfully negotiate a lease.
The less the average customer understands about the following terminology, the more susceptible they are to accepting a bad deal:
Capitalized Cost
Capitalized Cost Reduction
Acquisition Fee
Disposition Fee
Money Factor
Residual Factor
Most people are quick to answer a sales person when he/she asks if they’re planning to buy or lease a vehicle. As soon as you give away that you’re planning to lease, the price of the vehicle (capitalized cost) will freeze up. You’ve essentially lost any leverage you had at this dealership. You should negotiate the price of the new vehicle as if you’re going to pay for it with cash out of your own pocket and then bring that over to the lease.
Posted on 4/24/13 at 10:43 am to Will Cover
quote:
Leasing is the equivalent of throwing a $100.00 bill out of your vehicle’s window every week for 3 years in terms of depreciation. The bottom line is this … any way you look at it, leasing is a convenience that you’ll pay for in the end. Put another way, if you can’t afford to buy your next vehicle with a four-year loan or less, then you really can’t afford it.
I respect what you're saying here (entire post) and agree it's generally good advice due to the average consumer not understanding the variables associated with leasing. However, this statement is absolutely no different than financing/paying cash for a vehicle. That vehicle is going to depreciate no matter how you choose to pay for it. Obviously, the majority of that depreciation is taken in the first few years. If you are planning to replace this vehicle in the next few years, leasing can actually work out to be a cheaper option, even in the "long run".
Posted on 4/24/13 at 12:51 pm to LSUtigerME
I have a paid for Ford Fusion. It has 190k on it, going for the record!
Page 2 of 2
Back to top
Follow TigerDroppings for LSU Football News