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re: Pros and Cons of Leasing v Buying a Vehicle
Posted on 1/16/19 at 7:26 pm to Hot Carl
Posted on 1/16/19 at 7:26 pm to Hot Carl
quote:
What’s an insane lease deal look like?
relative to msrp. a lot of these deals are on entry level luxury cars. so something with a $50k msrp that leases for like $350/month with only a minimum amount due at signing. also, I think there are deals to be had on some ev/hybrids because the leasing co. passes along government rebates to the lessee in the form of incentives/discounts.
I recommend going to leasehackr.com - it's a forum where people share deals, so you can look around and see what leases well and what doesn't. I don't think there are great lease deals to be had on a CRV, it's a vehicle people typically purchase. SUV's are the most popular segment these days, so manufacturers don't need to subsidize the leases; thus, lease deals on SUVs are few and far between.
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Posted on 1/16/19 at 7:40 pm to Hot Carl
quote:
Can you expand upon this a bit? Like I’m stupid, cause I kinda am.
simplified explanation - when you lease, you are simply renting the car. a critical component in calculating the lease payment is determining the value of the car after the lease is up; this is known as the residual value, which will also serve as the buyout at lease end. it's set in stone by the finance co. and not negotiable. the largest portion of your lease payment is "Depreciation", which is the difference between the selling price of the vehicle (NOT the msrp) and the residual value. interest (determined by the money factor), taxes, and various other fees (one of which is an acquisition fee which isn't paid if you were financing/purchasing) are added to the depreciation, and thus you get the cost of the lease, which gets broken down to a monthly payment plus drive off fees.
so, you lease a car, and the finance co. sets a residual value which 3 years later doesn't jive with reality. your buyout is say $25,000 but similar cars can be purchased used for $20,000. are you going to overpay $5k ?
Posted on 1/17/19 at 8:09 am to Hot Carl
Op, you should not lease in your situation.
You can likely work similar payments on a used $10,000 vehicle as a lease. Likely a similar monthly payment or even less to buy.
The difference is that after 2-3 years, with a lease you have $0 and no vehicle. With say a 2012 Toyota Camry you have a vehicle you own worth $7,000.
You can likely work similar payments on a used $10,000 vehicle as a lease. Likely a similar monthly payment or even less to buy.
The difference is that after 2-3 years, with a lease you have $0 and no vehicle. With say a 2012 Toyota Camry you have a vehicle you own worth $7,000.
Posted on 1/17/19 at 8:22 am to baldona
quote:
You can likely work similar payments on a used $10,000 vehicle as a lease. Likely a similar monthly payment or even less to buy.
The difference is that after 2-3 years, with a lease you have $0 and no vehicle. With say a 2012 Toyota Camry you have a vehicle you own worth $7,000.
Not an apples to apples comparison, however. You’re talking about a 7-8 year old car vs a new car.
If the guy doesn’t care what he’s driving, then sure, you can just compare payments. But car tech/convenience and safety features have really advanced the last few years. It’s a different vehicle.
eta- I'm not saying whether the guy should buy or lease, but he should evaluate more than just the monthly payment when making his decision. if he truly doesn't car what he is driving, there are vehicles available that are even cheaper than a 2012 accord or Camry.
This post was edited on 1/17/19 at 8:41 am
Posted on 1/17/19 at 8:50 am to 632627
Certainly agree, but did you see his post? He’s going through a divorce and trying to save up for a house while getting his finances in order.
Eta: and lol at ‘tech’. Buying a new car for the ‘tech’ is fine but it’s one of the biggest wastes in money out there. It’s a pure personal pleasure expense.
This argument is more ‘I like something different and I like to feel wealthy when I drive around’. That’s certainly great if that’s what you prefer. The tech is cool, but at the end of the day it’s not life changing.
Eta: and lol at ‘tech’. Buying a new car for the ‘tech’ is fine but it’s one of the biggest wastes in money out there. It’s a pure personal pleasure expense.
This argument is more ‘I like something different and I like to feel wealthy when I drive around’. That’s certainly great if that’s what you prefer. The tech is cool, but at the end of the day it’s not life changing.
This post was edited on 1/17/19 at 8:53 am
Posted on 1/17/19 at 9:03 am to baldona
quote:
Eta: and lol at ‘tech’. Buying a new car for the ‘tech’ is fine but it’s one of the biggest wastes in money out there. It’s a pure personal pleasure expense. This argument is more ‘I like something different and I like to feel wealthy when I drive around’. That’s certainly great if that’s what you prefer. The tech is cool, but at the end of the day it’s not life changing
Bluetooth, CarPlay/android auto, blind spot monitors, rear view cam, parking sensors, etc. is not a waste of money. That’s the tech going into cars these days. They are convenience and safety features. Absolutely life changing if it prevents an accident.
Posted on 1/17/19 at 9:31 am to baldona
quote:
You can likely work similar payments on a used $10,000 vehicle as a lease. Likely a similar monthly payment or even less to buy.
The difference is that after 2-3 years, with a lease you have $0 and no vehicle. With say a 2012 Toyota Camry you have a vehicle you own worth $7,000.
this is where your logic is flawed. for him to payoff a $10k used car in 3 years (so he actually has 7k worth of equity), he's probably looking at close to a $400 note, inclusive of interest and taxes. that much, on a 7 year old used car, is a tough pill to swallow.
if he shops around, he can probably find a base model new car (worth much more than $10k) to lease for $150-200/month. The new car will come with a warranty and updated features not found on a 7 year old car.
the lower monthly payment on the lease will be beneficial for mortgage underwriting, and he would be able to save and invest the rest.
again, if it's just about finances and he doesn't give a shite what he drives, he can buy something much cheaper than a 2012 accord. If he's just in search of the lowest monthly payment possible, there are leases out there in the low $100s.
OP should have stated his situation from the start. this thread isn't about leasing vs buying - it's really what he should do in his situation.
This post was edited on 1/17/19 at 9:43 am
Posted on 1/17/19 at 10:47 am to 632627
quote:
this is where your logic is flawed. for him to payoff a $10k used car in 3 years (so he actually has 7k worth of equity), he's probably looking at close to a $400 note, inclusive of interest and taxes. that much, on a 7 year old used car, is a tough pill to swallow.
How much is a lease downpaymen? $2000 at least right?
Estimated Payment : $264 /mo
Vehicle Price: 10,000
Down Payment: 2,200
Trade-In Value Check my car's value: 0
Sales Tax: 10
Interest Rate (APR): 5.04
Term: 36 months
I used $2200 because that's the quick glance lease downpayment on a honda civic.
This post was edited on 1/17/19 at 10:48 am
Posted on 1/17/19 at 11:06 am to 632627
quote:
Bluetooth, CarPlay/android auto, blind spot monitors, rear view cam, parking sensors, etc. is not a waste of money. That’s the tech going into cars these days. They are convenience and safety features. Absolutely life changing if it prevents an acciden
If I leased a car in 2016, would it not have most of that? Why should I get another lease in 2019?
Posted on 1/17/19 at 12:00 pm to baldona
quote:
How much is a lease downpaymen? $2000 at least right? I used $2200 because that's the quick glance lease downpayment on a honda civic.
refer to my first post. not all leases are created equal. some cars, and some manufacturers lease better than others. there's no universal lease program. further, as with purchases, lease deals are negotiable as you can haggle on the selling price of the car. a lease downpayment can be anything- zero, $1000, $5000, etc. the rest just goes into the monthly payment.
I've already advised the OP that the car he mentioned leasing, a new CRV, won't lease well, and he should research where the lease deals are. if he finds a deal on a vehicle he likes, he can weigh that deal against the purchase of a used car. A 2012 accord isn't leasable, therefor there's no direct comparison. My point was that he could look around at new vehicles in that segment to see if there's any subsidized leases (ie. deals due to artificially inflated residual values or huge incentives).
we can both agree he's not in a position to splurge, and he needs to be smart with his money. My argument is that (while definitely not the norm) there are some smart leases out there if he's willing to look.
Posted on 1/17/19 at 12:29 pm to 632627
quote:
refer to my first post. not all leases are created equal. some cars, and some manufacturers lease better than others.
Certainly and I agree with almost everything you said.
Except, one often advertised point for leasing is "low monthly payments". Which can be true, but can also be bullshite. In order to get those low monthly payments, you often times have to put down a large down payment which is not advertised.
Posted on 1/17/19 at 1:33 pm to 632627
Mom and Dad, let’s not fight in front of the kids. 
By the way, I really appreciate both of your help. But speaking of kids, I have 2, and they are a factor. Not only do I want them to be safe in case of accident, I don’t want anything that is more likely to have us on the side of the road. Especially since they live and go to school in an area with very bad to no cell service.
Also, and this is going to automatically make me seem like a bad lease candidate, I am considering driving for Uber/Lyft to try to make some extra income. My last vehicle wasn’t new enough to qualify.
I live in a relatively small town, so the rides shouldn’t ever be far. There’s not many drivers here, so it shouldn’t be hard to make a few extra bucks. And I’m just talking a few hours a week. Again, I can either borrow a family member’s vehicle or rent one for farther trips or if I’m getting close to the limit.
Thanks again.
By the way, I really appreciate both of your help. But speaking of kids, I have 2, and they are a factor. Not only do I want them to be safe in case of accident, I don’t want anything that is more likely to have us on the side of the road. Especially since they live and go to school in an area with very bad to no cell service.
Also, and this is going to automatically make me seem like a bad lease candidate, I am considering driving for Uber/Lyft to try to make some extra income. My last vehicle wasn’t new enough to qualify.
I live in a relatively small town, so the rides shouldn’t ever be far. There’s not many drivers here, so it shouldn’t be hard to make a few extra bucks. And I’m just talking a few hours a week. Again, I can either borrow a family member’s vehicle or rent one for farther trips or if I’m getting close to the limit.
Thanks again.
Posted on 1/17/19 at 1:46 pm to Hot Carl
Don't die. I knew someone who leased a nice car and then got cancer and died. The leasing company told the surviving spouse: tough shite; pay the note.
Some leases say death is a cause for early termination, but even that can come with thousands in fees that are not spelled out in the lease.
Here is an article about Toyota going after an 81 year old widow for $2,352.72 after her husband died during the lease term of his Prius. LINK
Some leases say death is a cause for early termination, but even that can come with thousands in fees that are not spelled out in the lease.
Here is an article about Toyota going after an 81 year old widow for $2,352.72 after her husband died during the lease term of his Prius. LINK
Posted on 1/17/19 at 4:26 pm to Hot Carl
quote:
Also, and this is going to automatically make me seem like a bad lease candidate, I am considering driving for Uber/Lyft to try to make some extra income. My last vehicle wasn’t new enough to qualify.
You should contact Uber or Lyft- I was chatting up a driver one day and he told me they had an agreement with one of the rental car companies and they basically let u rent (or maybe even lease longer term) a car for really cheap as long you also use it for Uber.
This post was edited on 1/17/19 at 4:31 pm
Posted on 1/17/19 at 4:47 pm to Twenty 49
quote:
Don't die. I knew someone who leased a nice car and then got cancer and died. The leasing company told the surviving spouse: tough shite; pay the note.
You are not stuck with the car, there are options. You can buyout a lease at anytime if you have the cash, and sell the car to a private party recouping your cash. If you don't have the cash and their is enough margin between the buyout amount and the value of the car there are companies that will buyout your lease, and sell the car keeping the difference as their fee. Someone I know had their spouse die suddenly after leasing a car, and the dealer where it was leased worked with them to sell the car, and buy out the lease.
This post was edited on 1/17/19 at 5:15 pm
Posted on 1/17/19 at 4:51 pm to baldona
quote:
The cheapest option is to buy a 2-3 year old vehicle and drive it as long as you can.
This is the correct answer, of course.
Even if lease payments are lower than a loan payment, the reality is that at some point the loan payment ends and then you get to drive the car with no payment at all. For example, I drove my last vehicle for just over nine years payment-free.
The only time for an individual to even consider a lease is if you decide you must have a newish car at all times. If you own a business then capital leases may work out but that is a whole 'nother subject that includes tax considerations.
Posted on 1/17/19 at 6:26 pm to foshizzle
Someone asked what a great lease looks like, I'll share mine:
2018 Lexus IS F-Sport
MSRP: 45k
Negotiated Price: 39k
Lexus Lease Cash (July Event): 4k
MF to percentage: 1%
Residual Value: 59% or ending value of 20,650
Payment: 398.11 / 36month 10k miles
I bought the wheel and tire thing (which I already used once) which includes unlimited tire/wheel change and hail dmg.
I leased this car the last day of the month if that means anything.
2018 Lexus IS F-Sport
MSRP: 45k
Negotiated Price: 39k
Lexus Lease Cash (July Event): 4k
MF to percentage: 1%
Residual Value: 59% or ending value of 20,650
Payment: 398.11 / 36month 10k miles
I bought the wheel and tire thing (which I already used once) which includes unlimited tire/wheel change and hail dmg.
I leased this car the last day of the month if that means anything.
This post was edited on 1/17/19 at 6:27 pm
Posted on 1/18/19 at 1:35 am to 50_Tiger
How much cash down, and was the Lexus Lease Cash applicable to the cap cost reduction or applied to the down?
Posted on 1/18/19 at 7:09 am to 50_Tiger
Do you have to pay for oil changes and the like with a lease?
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