Anyone go from always buying their cars to leasing?

[smiths02]

Insurance is not higher for a lease vehicle. I have people asking me that all the time and it is not true. What is true, is depending on the lease (and state), you may be required to carry higher liability limits. In Florida, Hyundai requires 100,000/300,000 for bodily injury and 50,000 for property damage. Of course any financed (loan or lease) needs comprehensive and collision. A lease can dictate you can not carry a high deductible. Some will say a deductible no higher than $500.

I would never recommend anyone carry lower than that even if they didn't lease. I have had several people tell me they leased a vehicle and need to get it insured, when I ask what the company liability limit requirement is, they get confused, because most of the sales folks do not disclose this up front. It IS in the paperwork the customer signs, IF they are paying attention.

You are not paying more for insurance for a leased vehicle. You might be paying more for higher liability limits, but you probably should have had higher liability limits anyways.

I don't need higher liability limits for property if my car is worth $10,000 because it is a 10 year old vehicle that I have no payments on. If I am not leasing, I just need property limits to cover what the vehicle is worth/financed for...not some arbitrary number.

And higher insurance IS another expense because of constantly having a vehicle that is worth a lot.

But others have pointed out situations where it might work.

 

[smiths02]

If you have extra disposable income and always have to have a new car, then leasing may make sense. But financially, leasing a car and buying a brand new car are gigantic money burns.

The only car I'd consider leasing are German cars, only because they are such poor quality that you want no part of them once the warranty expires.

The money you lose "driving off the lot" with a brand new car can be slightly offset by financing deals (if you are financing anyhow), especially if you buy a car with a high resale value. I think we did better buying a brand new Honda Odyssey last year (bought one of the last 2016 models the dealership had when they were getting ready to launch the 2018 models) than buying a used 2016 that had been driven two years and financing at a higher rate.

 

[DLgal]

I don't need higher liability limits for property if my car is worth $10,000 because it is a 10 year old vehicle that I have no payments on. If I am not leasing, I just need property limits to cover what the vehicle is worth/financed for...not some arbitrary number.

And higher insurance IS another expense because of constantly having a vehicle that is worth a lot.

But others have pointed out situations where it might work.

The property damage coverage on car insurance doesn't cover YOUR car, it covers anything else YOU may damage in an accident (another car, a building, a fence, a mailbox post, a mtorcycle, etc). Our property damage limit is $500,000 per accident. We live in an area where people routinely drive cars worth well over $100,000.

 

[smiths02]

The property damage coverage on car insurance doesn't cover YOUR car, it covers anything else YOU may damage in an accident (another car, a building, a fence, a mailbox post, a mtorcycle, etc). Our property damage limit is $500,000 per accident. We live in an area where people routinely drive cars worth well over $100,000.

You are right, I was thinking of comprehensive, which is greatly reduced by owning a car worth less and will always be high for a leased vehicle.
Bottom line, if your car is worth more, you pay more in insurance.

 

[TheSouthernBelle]

We have always bought new cars, pay them off within 3 years, and drive them until they have at least 110K. We are know considering leasing. The idea of having a new car every 3 years is appealing since you’d eliminate any costly repairs that come with maintaining an older car.

It is a bit foreign to us though, since you have nothing after you’ve made payments.

Any advice or experience?

Nope, we leased years and years ago but have since discovered Dave Ramsey (about 9 years ago) and would NEVER EVER be F-LEASED again! Reliable cars are out there, they don't have to be brand new (which is never a guarantee that the car will be reliable, been down that road with a brand new car that ended up being lemon lawed). But at any rate, you can buy a used reliable car that you will then OWN at the end of the paying it off or buy it cash and never have a car payment again.

 

[TheSouthernBelle]

Also depending on where you live and your state/county tax laws, you'll either be paying new property taxes on the car each year or they roll that into the cost of the lease which is insane to do that on a new car every 3 years. In our area, a $40K car is about $800/year for property tax. This of course will vary by area but it's not a cost I'd want to repeat paying just to have a new car every 3 years, new car smell and excitement wears off, the sting of the car payment never goes away!!

There are so many negatives to outweigh any positives you can gleam out of leasing, it's bad news don't go down that road. Unless you have a lot of money to throw away, I can't see making financial sense out of leasing.

 

[DLgal]

Nope, we leased years and years ago but have since discovered Dave Ramsey (about 9 years ago) and would NEVER EVER be F-LEASED again! Reliable cars are out there, they don't have to be brand new (which is never a guarantee that the car will be reliable, been down that road with a brand new car that ended up being lemon lawed). But at any rate, you can buy a used reliable car that you will then OWN at the end of the paying it off or buy it cash and never have a car payment again.

Yes, but there will always be repair and maintenance costs. I always shake my head when people say "never have a car payment again." Ok, maybe not a LOAN payment, but if you think about repairs and maintenance as part of the expense of ownership, and average out those costs into a monthly amount, it can be similar to a lease payment.

I have a very reliable Honda CR-V. It's a 2007. It has just shy of 75,000 miles on it, at almost 11 years old. I haven't had a car payment in many, many years. However, I've had ongoing maintenance and repair costs that at this point, have probably well exceeded $5000. Stuff breaks. You have to buy new tires. New brakes. I needed a new Power Steering pump to the tune of $1500 recently, etc. The costs definitely add up. With a lease, you pay a couple hundred a month for 2 or 3 years, and that's IT. You don't have to buy new tires, new brakes, pay for maintenance, etc.

 

[TheSouthernBelle]

Yes, but there will always be repair and maintenance costs. I always shake my head when people say "never have a car payment again." Ok, maybe not a LOAN payment, but if you think about repairs and maintenance as part of the expense of ownership, and average out those costs into a monthly amount, it can be similar to a lease payment.

I have a very reliable Honda CR-V. It's a 2007. It has just shy of 75,000 miles on it, at almost 11 years old. I haven't had a car payment in many, many years. However, I've had ongoing maintenance and repair costs that at this point, have probably well exceeded $5000. Stuff breaks. You have to buy new tires. New brakes. I needed a new Power Steering pump to the tune of $1500 recently, etc. The costs definitely add up. With a lease, you pay a couple hundred a month for 2 or 3 years, and that's IT. You don't have to buy new tires, new brakes, pay for maintenance, etc.

Of course there's maintenance, no car will ever be cost free however the money that you would use to make your lease payments, once you truly own your car outright, you set aside regular maintenance and upcoming potential wear/tear based on mileage. There comes a point when repairs will at some point outweigh what our car's resale value is and then you choose fish or cut bait at that point. When repairs really start adding up BUT it is not true that about having 0 costs for lease maintenance. You still pay for oil changes, and when your lease is over, you have to turn in car with a certain amount of tire tread left otherwise they ding you hard on cost. So we bought used tires before we turned it in. No matter which way you slice it, it will never make financial sense to lease. It might make lifestyle sense but never financial sense. I'm sure your CRV costs to repair are still less than if you stepped into a lease, even at $250/month for a 36 month lease that's $9K for the life of the lease plus fees that aren't even included.

 

[YawningDodo]

Leasing is an expensive way to have a car. Remember, renting is another word for leasing. Would you really want to rent a car all the time?

Leasing a car is a way to make sure you ALWAYS have a car payment.

The cheapest way to have a car is to "get yourself a car ahead"; that is, save 'til you have money to pay for a new car (let the bank pay interest to you instead of you paying interest to a car payment) ... and keep it in the bank 'til you actually NEED a new vehicle. Pay cash for a modest car, treat it like a baby, and drive it 'til the wheels fall off. My current car is eleven years old and has roughly 130,000 miles on it. Aside from oil changes and new tires, it needed essentially nothing 'til about the nine-year mark ... at that point, I put about $4,000 into it, and it's running like a new car now. My expectation is that I'll give it to my daughter next year, and I'll get a new car.

This is me--I'm still on my first car, but it's fifteen-year-old Subaru I've owned for about half its life. And yeah, the comment about hitting a point where you have to decide whether to put up more for repairs than you could get for the car has come true already. Just shy of the 100K mark it ended up costing me about $2500...which was more than I'd paid when I bought it as a family hand-me-down. It's such a tenacious little thing, though, and knowing that that was the big repair it was likely to need for the next half decade, I decided to go for it and buy myself more time to save up for the next vehicle. As a bonus, older cars in Montana can get permanent registration, so I don't even have to pay annual registration fees.

I think it does come down to lifestyle, if you can afford to go either way. For myself, I'd go nuts if I were leasing a car and had to track my mileage, obsess over dents and dings, and keep the interior pristine. It's the same issue as renting or owning a home. Renting may mean that the landlord's the one on the hook for major repairs, but it also means you're answerable to the landlord. Even at a higher cost, I'm always going to prefer owning my things outright so I can do with them whatever I want.

 

[DLgal]

Of course there's maintenance, no car will ever be cost free however the money that you would use to make your lease payments, once you truly own your car outright, you set aside regular maintenance and upcoming potential wear/tear based on mileage. There comes a point when repairs will at some point outweigh what our car's resale value is and then you choose fish or cut bait at that point. When repairs really start adding up BUT it is not true that about having 0 costs for lease maintenance. You still pay for oil changes, and when your lease is over, you have to turn in car with a certain amount of tire tread left otherwise they ding you hard on cost. So we bought used tires before we turned it in. No matter which way you slice it, it will never make financial sense to lease. It might make lifestyle sense but never financial sense. I'm sure your CRV costs to repair are still less than if you stepped into a lease, even at $250/month for a 36 month lease that's $9K for the life of the lease plus fees that aren't even included.

My total cost of ownership of my CR-V has averaged about $250/month (excluding gas and insurance) for the 11 years I've had it. That's not significantly less than what a lease would cost. My first lease was $199/month for 4 years, ZERO due at lease signing. It was a Honda Civic Coupe EX. At the end of the lease, I purchased the car for about $9k. It was worth more than that at the point of sale... I drove it for 3 more years, then sold it for $5000. I feel like I came out way ahead by leasing that car, rather than buying it at the time. I couldn't afford a $400/month car payment (I was a college student).

 

[Klayfish]

Yes, but there will always be repair and maintenance costs. I always shake my head when people say "never have a car payment again." Ok, maybe not a LOAN payment, but if you think about repairs and maintenance as part of the expense of ownership, and average out those costs into a monthly amount, it can be similar to a lease payment.

I have a very reliable Honda CR-V. It's a 2007. It has just shy of 75,000 miles on it, at almost 11 years old. I haven't had a car payment in many, many years. However, I've had ongoing maintenance and repair costs that at this point, have probably well exceeded $5000. Stuff breaks. You have to buy new tires. New brakes. I needed a new Power Steering pump to the tune of $1500 recently, etc. The costs definitely add up. With a lease, you pay a couple hundred a month for 2 or 3 years, and that's IT. You don't have to buy new tires, new brakes, pay for maintenance, etc.

Yes, all cars...leased or not...need maintenance. They're machines. So you're right, it's never "free". But unless you're driving a Fiat or VW, you shouldn't be spending the monthly equivalent of your lease payment. That's not even to mention the big wad of cash you put down at lease inception and at lease return (there's always a "restocking" fee built in). A leased car will likely need tires during the life of the lease (or you'll be charged for them because the lease will require it to have a certain tread amount left). It may need brakes, it'll need oil changes.

No offense, but if you paid $1500 for a power steering pump on an '07 CR-V, I'd suggest finding a new mechanic. That should be a dirt cheap repair. In the $5000 you said you've spent, are you including tires, oil changes and other routine maintenance? To me, that's not repair, that's just normal upkeep.

 

[DLgal]

Yes, all cars...leased or not...need maintenance. They're machines. So you're right, it's never "free". But unless you're driving a Fiat or VW, you shouldn't be spending the monthly equivalent of your lease payment. That's not even to mention the big wad of cash you put down at lease inception and at lease return (there's always a "restocking" fee built in). A leased car will likely need tires during the life of the lease (or you'll be charged for them because the lease will require it to have a certain tread amount left). It may need brakes, it'll need oil changes.

No offense, but if you paid $1500 for a power steering pump on an '07 CR-V, I'd suggest finding a new mechanic. That should be a dirt cheap repair. In the $5000 you said you've spent, are you including tires, oil changes and other routine maintenance? To me, that's not repair, that's just normal upkeep.

The entire power steering system had to be repaired ...not just the pump. The faulty pump caused the entire system to be damaged. So, originally they thought it was just the pump, so they replaced that. Then, the problem came back a week later, and it turned out the whole system had been damaged by the first faulty pump, and the original pump replacement was deemed defective. I esssentially had to pay for a an entirely new power steering system. They replaced the pump for free as a defective part after the initial replacement did not fix the problem.

Anyway, my leased car never needed new tires. I kept the car well under the allotted mileage. I also didn't have any fees, like I said. It was a zero down lease. When I got to the end of the lease, I was given the opportunity to purchase the car for around $9k or return it. I chose to purchase it and did so with cash on hand. I didn't have to replace the tires until I hit close to 60,000 miles, which happened about a year before I sold it.

 

[TheSouthernBelle]

My total cost of ownership of my CR-V has averaged about $250/month (excluding gas and insurance) for the 11 years I've had it. That's not significantly less than what a lease would cost. My first lease was $199/month for 4 years, ZERO due at lease signing. It was a Honda Civic Coupe EX. At the end of the lease, I purchased the car for about $9k. It was worth more than that at the point of sale... I drove it for 3 more years, then sold it for $5000. I feel like I came out way ahead by leasing that car, rather than buying it at the time. I couldn't afford a $400/month car payment (I was a college student).

The difference in your statement above is that you wrote "total cost of ownership" (you own your car, you don't own anything with a lease and have nothing to show at the end of it). It's not a financial investment, cars never are (outside of collectors). One can go back and forth all day long about which is better and all the reasons why but it's not a smart choice financially ever. It certainly can be a choice of convenience when it comes to affording payments but it's not the way I look at cars now. I don't need a brand new car and it's not financially wise to own a brand new car for me and my family. While I get the season of life you were in, I do, we were there too and we leased a car we could not afford to buy outright or finance for that matter, that's the bottom line. If I can't afford it now, I don't buy it. That's where my mindset has changed. I will not rent a car.

 

[DLgal]

The difference in your statement above is that you wrote "total cost of ownership" (you own your car, you don't own anything with a lease and have nothing to show at the end of it). It's not a financial investment, cars never are (outside of collectors). One can go back and forth all day long about which is better and all the reasons why but it's not a smart choice financially ever. It certainly can be a choice of convenience when it comes to affording payments but it's not the way I look at cars now. I don't need a brand new car and it's not financially wise to own a brand new car for me and my family. While I get the season of life you were in, I do, we were there too and we leased a car we could not afford to buy outright or finance for that matter, that's the bottom line. If I can't afford it now, I don't buy it. That's where my mindset has changed. I will not rent a car.

That's your opinion, and that's fine. I agree with you that a car is never an investment. It's a depreciating asset. I have only ever rented that one car. The rest, I have purchased. However, at this point in our lives, we can afford to lease a car without significant impact to our finances, so when it comes time to get the next car, for ME (my husband drives way too much to ever lease a car), we might consider a lease. I want a nicer car without the huge cash outlay. I can invest that money instead and probably come out ahead by leasing. I won't buy a used car...just not my thing. Everyone is different in their assessment of what is a "good" financial decision for them. Like, renting a home is a FAR better deal for us, right now, than buying here. It's not even close. It's like 65% cheaper to rent vs. buy in our city. Sometimes the numbers do work out in your favor.

 

[Frwinkley]

OP here:

Decided on buying a new car rather than leasing. Just traded in a Mazda 3 with sightly over 100K. First and only problem we've ever had (something transmission related) was probably going to cost over $1K to fix. Car was in need of new tires prior to inspection...that's probably another $400-$500. It just wasn't worth the expense to us on an older car.

Bought a 2018 Mazda 3 and financed it...0% interest. Although we've always paid our cars off quickly (usually within 3 years), I feel less inclined to do that because of the interest rate. I'd much rather take the extra money we'd pay into the car and put it in our 401k (or some other savings vehicle). I am very disciplined, so I don't fear just throwing the money away.

Having never leased before, there were just too many "unknowns" to me. The possibility of expenses at the end of the lease would have me rattled.

 

[pfp258]

Dave Ramsey calls leasing a car “fleasing” or “fleecing”. It does not work in your favor financially. However if you are not looking for a budget way in car ownership, fleece, I mean lease away

 

[DLgal]

Dave Ramsey calls leasing a car “fleasing” or “fleecing”. It does not work in your favor financially. However if you are not looking for a budget way in car ownership, fleece, I mean lease away

Dave Ramsey says a lot of stuff that I fundamentally disagree with. His methods are extreme and, frankly, absurd in many respects.

 

[agavegirl1]

I know some people like the "new car every three year" option. Most financial experts contend that buying a quality used vehicle (previously leased or used as a rental and refurbed), maintaining it well (all it's maintenance appointments) and driving it until it dies is the least expensive option. I don't mind my "old" 2007 Buick Lucerne that I bought new at a huge discount due to being a close out of the previous model year. I have had it 10 years and it has about 99,000 miles on it. At the 90,000 mile maintenance appointment, I needed a new battery. It still had the original battery.

It is still a nice looking car and when just through the car wash, looks really new. I guess I'm just old school. My step dad actually buys a new car every three years for cash. That's his preference as he hates having a car "in the shop". I'd buy his old one in a heartbeat but I've had the same car in the same time he's had three.

 

[Klayfish]

OP here:

Decided on buying a new car rather than leasing. Just traded in a Mazda 3 with sightly over 100K. First and only problem we've ever had (something transmission related) was probably going to cost over $1K to fix. Car was in need of new tires prior to inspection...that's probably another $400-$500. It just wasn't worth the expense to us on an older car.

Bought a 2018 Mazda 3 and financed it...0% interest. Although we've always paid our cars off quickly (usually within 3 years), I feel less inclined to do that because of the interest rate. I'd much rather take the extra money we'd pay into the car and put it in our 401k (or some other savings vehicle). I am very disciplined, so I don't fear just throwing the money away.

Having never leased before, there were just too many "unknowns" to me. The possibility of expenses at the end of the lease would have me rattled.

Sweet. The Mazda3 is a phenomenal car, great choice!!

Who is Dave Ramsey?

 

[TheSouthernBelle]

Sweet. The Mazda3 is a phenomenal car, great choice!!

Who is Dave Ramsey?

Dave Ramsey is a financial guru who is anti debt/anti credit...... CASH is KING!! He's from TN, can come off/appear very tough/abrupt but his motto is "if you can live like no one else today, do it so you can live like no one else later" meaning, be frugal and you will have your future set up for you. He has gone from broke/bankrupt and has come back and has turned his life story into his life work. He has a proven method called the 7 baby steps that helps people get out of debt, stay out of debt and build wealth. He is amazingly helpful and he's completely changed our view on money and our perception of what we can afford. Basically if you're financing it, you can't afford it. He's extreme but he gets the job done.