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Pros and Cons of Leasing v Buying a Vehicle
Posted on 1/16/19 at 8:20 am
Posted on 1/16/19 at 8:20 am
Assuming the lease is much cheaper monthly than the loan note. I’ve read some financial guys suggesting leasing, but I’m not sure of all the ins and outs.
11
Posted on 1/16/19 at 8:26 am to Hot Carl
The 2 biggest considerations-
1. Are you a good candidate for leasing? Not every driver is. If you drive in excess of 15k miles per year, leasing usually won’t work. Do you like to customize your car? If so, don’t lease.
2. Each manufacturer and vehicle has a unique leasing program. Some cars lease really well and you’d be an idiot to buy one. Some cars, such as Porsche, make for awful leases and you’re better off purchasing.
There’s no one right answer, every situation is different. The benefit of leasing is a lower monthly payment and always in a newish car with updated tech and under warranty.
1. Are you a good candidate for leasing? Not every driver is. If you drive in excess of 15k miles per year, leasing usually won’t work. Do you like to customize your car? If so, don’t lease.
2. Each manufacturer and vehicle has a unique leasing program. Some cars lease really well and you’d be an idiot to buy one. Some cars, such as Porsche, make for awful leases and you’re better off purchasing.
There’s no one right answer, every situation is different. The benefit of leasing is a lower monthly payment and always in a newish car with updated tech and under warranty.
This post was edited on 1/16/19 at 8:29 am
Posted on 1/16/19 at 8:50 am to Hot Carl
Vehicle discussion is rarely about what is the best financial choice. The best financial choice is very simple. don't buy a new/new to you car. Keep what you have, repair it and don't have a car payment.
Just about all other discussions are more about what is wanted or desired. Many times people just want nice cars. That is fine. That doesn't make it a good financial decision.
Just about all other discussions are more about what is wanted or desired. Many times people just want nice cars. That is fine. That doesn't make it a good financial decision.
Posted on 1/16/19 at 9:54 am to 632627
Posted on 1/16/19 at 9:57 am to Hot Carl
Just bought a new vehicle. People asked me about leasing but I drive close to 30k miles a year. Not an option for me.
Posted on 1/16/19 at 10:05 am to 632627
Purchased mine, leased the wife’s.
She’s a stay at home momma so typically doesn’t drive but about 12-13k miles per year, and we were able to put her up in a nicer SUV than purchase payments would have allowed.
Definitely a case by case basis.
She’s a stay at home momma so typically doesn’t drive but about 12-13k miles per year, and we were able to put her up in a nicer SUV than purchase payments would have allowed.
Definitely a case by case basis.
Posted on 1/16/19 at 10:10 am to LSUcam7
quote:
Definitely a case by case basis.
Similar boat, but reversed. Wife works and commutes far, so we bought hers and it's the family travel vehicle. Toyota, so low maintenance and very reliable.
I travel a lot for work but by plane and office isn't that far so I'm pretty low miles and enjoy newer vehicles so we lease mine.
Posted on 1/16/19 at 10:15 am to Hot Carl
The cheapest option is to buy a 2-3 year old vehicle and drive it as long as you can. There’s no way around it.
It can make financial sense if you need or want a new vehicle routinely to lease, most leases you don’t pay sales tax on anything but your actual lease payment. So on a $40k+ vehicle every 2-3 years that’s a big chunk of change you save.
Also, selling an expensive or high end vehicle can be a PITA because you get a lot of people that just want to drive them and tire kick. And you will likely get bent over more on a trade in.
It can make financial sense if you need or want a new vehicle routinely to lease, most leases you don’t pay sales tax on anything but your actual lease payment. So on a $40k+ vehicle every 2-3 years that’s a big chunk of change you save.
Also, selling an expensive or high end vehicle can be a PITA because you get a lot of people that just want to drive them and tire kick. And you will likely get bent over more on a trade in.
Posted on 1/16/19 at 10:40 am to baldona
quote:
The cheapest option is to buy a 2-3 year old vehicle and drive it as long as you can. There’s no way around it.
I mean you could just ride a bike and save even more money. That's not the question. It's the pro's and con's.
If you are already the person that likes a newer vehicle and see yourself shopping again in 3 years, then a lease MIGHT be good for you. When taking all factors into account, you may be investing less into the car at the 3 year point by leasing compared to buying, then selling at the 3 year point. You cannot compare to keeping the car past 3 years. That's not the point. You are already resigned to the fact that you will not want the vehicle longer than 3 years. There are some other perks like no maintenance, etc. which might make it a little more worth it to people. But it's mostly just a 3 year term ownership comparison.
Posted on 1/16/19 at 11:47 am to Hot Carl
I wanted opinions without the bias of knowing my particular situation. Now, I’ll give you the brief summary.
1) never owned a new car—newest car I’ve ever driven was at least 3 years old
2) have to get a new vehicle—mine is totaled
3) going through a divorce and trying to build my credit—and my “wealth”—to be in a position to buy a house as quickly as possible(within reason, of course)
1) never owned a new car—newest car I’ve ever driven was at least 3 years old
2) have to get a new vehicle—mine is totaled
3) going through a divorce and trying to build my credit—and my “wealth”—to be in a position to buy a house as quickly as possible(within reason, of course)
Posted on 1/16/19 at 12:09 pm to Hot Carl
You haven’t provided the most important information- are you a leasing candidate? How many miles/yr do you average?
Posted on 1/16/19 at 12:59 pm to 632627
quote:
You haven’t provided the most important information- are you a leasing candidate? How many miles/yr do you average?
My situation makes it not that easy to predict. I hope to not have to drive very much in the next few years. And I can always rent something for longer trips.
I know the penalty for going over the miles limit(.15/mile or something), but when my wife leased her car a few years ago, they explained that she could just buy it after her lease was up and finance the current value of it—or the value it would be with $36,000 miles 36 months later. So she picked something she wouldn’t mind buying. I would do the same.
Posted on 1/16/19 at 1:34 pm to KG6
quote:
I mean you could just ride a bike and save even more money. That's not the question. It's the pro's and con's.
Please re-read the OP, he said pro's and cons of leasing v buying a vehicle. Not buying a "new" vehicle.
OP, given your info. If you need just a car, I'd personally go out and buy you a 2012 ish Honda Accord or Toyota Camry or similar with 70k miles for $9,000. That car will last you 10 years easily. Plus you can sell it in 2 years for $7000 or trade it in for $6,000 with almost.
Posted on 1/16/19 at 2:06 pm to baldona
quote:
pro's and cons of leasing v buying a vehicle
Not buying a "new" vehicle
Can you lease a used vehicle? At least is it common? When discussing leasing vs. purchasing, one has to assume the person is asking which option is financially better for the same vehicle.
Posted on 1/16/19 at 2:38 pm to Hot Carl
Outside of just getting a new vehicle every three years, what is an advantage to leasing? Just running some quick numbers, a Camry is 3500 down, and 220 a month. That equates to 320 a month for the term.
Posted on 1/16/19 at 4:15 pm to Hot Carl
quote:
I know the penalty for going over the miles limit(.15/mile or something), but when my wife leased her car a few years ago, they explained that she could just buy it after her lease was up and finance the current value of it—or the value it would be with $36,000 miles 36 months later.
it's not that simple. what if the value of the car is worth less than the residual (buyout), which is often the case? in that instance, you are overpaying for a car to avoid paying mileage penalties. additionally, there are lease inception fees which you've paid, that wouldn't have been owed if you just bought the car in the first place.
that said, if you feel you can stay under mileage for the duration of the lease, then it's something to consider.
Posted on 1/16/19 at 4:24 pm to AUCE05
quote:
Outside of just getting a new vehicle every three years, what is an advantage to leasing? Just running some quick numbers, a Camry is 3500 down, and 220 a month. That equates to 320 a month for the term.
the primary appeal is a new car @ a lower payment vs financing. secondary appeal is always under warranty, don't have to hassle with selling the car later on (as you simply turn it in), you know exactly what the cost of using the car will be (as the depreciation is in the contract).
Additionally, there are some insane lease deals out there that a savvy shopper can take advantage of. manufacturers will look to push certain models with artificially inflated residual values, minimal interest charges and huge incentives.
Posted on 1/16/19 at 4:58 pm to 632627
Thanks you. Is that typically like reduced due at signing fees, etc?
Posted on 1/16/19 at 5:34 pm to 632627
quote:
it's not that simple. what if the value of the car is worth less than the residual (buyout), which is often the case? in that instance, you are overpaying for a car to avoid paying mileage penalties. additionally, there are lease inception fees which you've paid, that wouldn't have been owed if you just bought the car in the first place.
Can you expand upon this a bit? Like I’m stupid, cause I kinda am.
Posted on 1/16/19 at 5:36 pm to 632627
quote:
Additionally, there are some insane lease deals out there that a savvy shopper can take advantage of. manufacturers will look to push certain models with artificially inflated residual values, minimal interest charges and huge incentives.
This too. What’s an insane lease deal look like?
And for the record, I am not buying new. It’s either a ‘12ish Accord like the guy above suggested or leasing an ‘18/‘19 CRV type thing.
By the way, thanks to all who’ve responded .
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