Buying vs Leasing new vehicle

[minniemousememories]

Buying vs Leasing new vehicle?
I've never leased before and wanted to know some pros and cons of both..

 

[goofyredraider]

My husband's civilian job is in car sales (Ford).

It really depends on certain variables...
are you trading in something you owe on? If so, if you are "upside down" you could potentially walk away from the negative equity when you walk away or trade in a lease.

Are you looking to putting $$ down? If you do, any $$ you put down you walk away from in a lease.

Also, your credit is going to matter. Sometimes it can be harder to lease...but it depends on the deals going on with the companies, the economy, etc.

I leased my Ford Flex for a few reasons. I owed more on the van I was driving was worth, and when my lease is up, that negative equity goes away. Also, in 3 years, I know I will be getting a new car. We aren't pay-off-and-drive-til-they-die people.

That being said, we did pay off our Ford Explorer SportTrac. We had about $6k in equity when we traded it in on my husband's new truck, but we paid $30 k for the vehicle. In today's day and age, you put thousands into a depreciating vehicle. It is very sad.

 

[trip]

I was always told that the 3 main reasons to lease were -

If your company was paying
If you wanted to drive a more expensive car than you can afford to buy.
If you need to have a new car every three years.

 

[Darcy03231]

I was always told that the 3 main reasons to lease were -

If your company was paying
If you wanted to drive a more expensive car than you can afford to buy.
If you need to have a new car every three years.

This is what I've always heard as well as you don't put a lot a miles on a car. Car leases ususally have a mileage cap and if you're over that cap when you turn the car in you have to pay so much per mile over.

 

[TomD]

I spent 10 years selling cars.

Here is my take on the age old question of buying versus leasing

Do you keep your cars a long time?....if so you want to own

If you take out a 5 year loan and try trading out in 3- 4 years you want to lease.

Remember this about leasing

Set it up for the amount of miles you drive. Do not get sucked into the low payments and mileage set up for 10,500 if you really drive 15,000. Otherwise you will be getting a nice bill when you turn in your lease.


goofyredraider and trip words are pretty much spot on.

 

[DawnM]

I personally would only lease for the first reason.

There is no better car than a paid for car that runs well!

I never want another car payment or lease payment (I have never leased) again.

Dawn

I was always told that the 3 main reasons to lease were -

If your company was paying
If you wanted to drive a more expensive car than you can afford to buy.
If you need to have a new car every three years.

 

[My_3_Mi_Princesses]

A few more details about leasing...

1) You have the option to buy the car when your lease is up. However I think most people would rather get the latest and greatest new car at that time so not sure how popular that option is, I know I have never taken it.

2)The way leasing works is your finance the difference between the price of the car and the residual value of the car when your lease is up. So cars with higher residual values are better deals than cars with low residual values. I also believe another bonus of leasing is that only this amount that is financed goes on your credit report instead of the full amount of the car if you were to buy.

3) When you turn your lease in and assuming you are going to get another lease from the same dealer/car company sometimes times they offer 'Renewal Cash'. I have seen deals up to $1000 to put towards your next lease, but average I have seen is $500.

4) Miles. The more miles you want, the more expensive the lease is (because more miles equals less of a residual value). To me this is the biggest drawback of leasing. When I have leased I was always worried about going over miles for the week/month/year, and I have enough stress in my life that I don't need another. If you plan to use this car to drive to Orlando, or run the kids around, or for very long commutes to work leasing is probablly not a good option.

 

[MrsPete]

I was always told that the 3 main reasons to lease were -

If your company was paying
If you wanted to drive a more expensive car than you can afford to buy.
If you need to have a new car every three years.

Yes, people who lease accept the idea that they will ALWAYS have a car payment, and if that's so, then they ought to be able to drive something new every few years. I cannot accept this point of view.

Why to buy a car:

When you're done making payments, the car'll be yours. You can drive "for free" at that point. We drive our cars 'til they just won't go anymore, and each one seems to last about two years past the point that we say, "It could be any day now." In the long run, owning your car will be cheaper for most people.

 

[mjkacmom]

Yes, people who lease accept the idea that they will ALWAYS have a car payment, and if that's so, then they ought to be able to drive something new every few years. I cannot accept this point of view.

Why to buy a car:

When you're done making payments, the car'll be yours. You can drive "for free" at that point. We drive our cars 'til they just won't go anymore, and each one seems to last about two years past the point that we say, "It could be any day now." In the long run, owning your car will be cheaper for most people.

I pay nothing each month for my almost 9 year old van, and haven't for so many years. It has 65,000 miles on it, so I'm expecting many more years out of it (Honda Odyssey). It is scraped up quite a bit, so I don't have to worry about dings.

 

[WheelCEO]

I would NEVER buy a "new" car.. the depreciation on anything new is horrible. If you are looking at buying a car it pays to look at something 1-2 years old that is certified and carries an extended warranty, you will save a bundle.

For me, I always lease. I write it off under my business, I always have a "new" car and my service is usually always included because they want to make sure you are taking care of it.

 

[undertheradar]

You honestly have to compare the numbers when you find the vehicle you want. My current vehicle is a 5 year lease. My buyout is $15,000. less than what I can purchase a like vehicle for on the used market. I will be buying my lease vehicle and I am 50,000 miles below allowable miles. You do have to compare the numbers.

 

[monkey30]

Buy a lease back vehicle, best of both worlds! they tend to be short in miles, and a great price!

 

[trip]

You honestly have to compare the numbers when you find the vehicle you want. My current vehicle is a 5 year lease. My buyout is $15,000. less than what I can purchase a like vehicle for on the used market. I will be buying my lease vehicle and I am 50,000 miles below allowable miles. You do have to compare the numbers.

Is the amount that you have already paid on your 5 year lease plus the $15,000 buyout more or less than it would have been to purchase it in the first place?

I've never leased and am still trying to figure the "ins and outs".

 

[MrsPete]

I would NEVER buy a "new" car.. the depreciation on anything new is horrible. If you are looking at buying a car it pays to look at something 1-2 years old that is certified and carries an extended warranty, you will save a bundle.

As a general rule of thumb, you're right . . . but exceptions do exist. You should always compare the new vs. late-model-used price:

When we bought my Honda four years ago, very few late-model-used models were available. The price difference between those and brand-new was a little less than $1000. So for that small difference, it made sense to get the new vehicle. We picked exactly the details we wanted, and it cost almost nothing.

On the other hand, when we bought my husband's truck a year ago, he was open to several models, and used models abounded. We saved something like 5-6K by buying a one-year old model. In that case, used made sense.

We made different choices, but I think each was the right choice.

 

[undertheradar]

Is the amount that you have already paid on your 5 year lease plus the $15,000 buyout more or less than it would have been to purchase it in the first place?

I've never leased and am still trying to figure the "ins and outs".

My lease worked out to be less with a $4,000. buyout, than buying the car from day one. Deal was too good to pass up. Current used price on my vehicle is $19,995.00, so my buyout is $15,000.00 less than I can currently purchase the same vehicle used. At the dealer where I have it serviced, the finance manager always asks me if I'm still planning on buying it, as she wants it if I don't.

 

[mrodgers]

Everything has it's pros and cons. With a used car, you may have to wonder about the routine maintenance more with some than others.

With my turbo, running 87 octane would be a huge no-no. Even worse is if you run regular oil instead of synthetic. Regular oil would mean a short life on a turbo, just not short enough for it to be on the used market at 70,000 miles. I wonder on mine. I could run my car to 200,000, but if the first 70,000 was abused by the previous owner with low octane fuel or non-synthetic oil, I'm not going to make it to that 200,000 miles.

For me, leasing is way out of the question. Both of us put well over 20,000 miles a year on each of the cars.

 

[trip]

Is the amount that you have already paid on your 5 year lease plus the $15,000 buyout more or less than it would have been to purchase it in the first place?

I've never leased and am still trying to figure the "ins and outs".

My lease worked out to be less with a $4,000. buyout, than buying the car from day one. Deal was too good to pass up. Current used price on my vehicle is $19,995.00, so my buyout is $15,000.00 less than I can currently purchase the same vehicle used. At the dealer where I have it serviced, the finance manager always asks me if I'm still planning on buying it, as she wants it if I don't.

I'm tired tonight so I still don't follow your figures. Of course I don't know the cost of the original car or payments, so i will make up numbers. If the original cost was 30000 and your monthly payment was 300 for 5 years it would be 30000 - 18000 = 12000 balance.

The buyout offered is 15000. Using my made up numbers isn't it costing 3000 more to go the lease/purchase route than just purchasing it in the first place?

Shouldn't you compare the cost of purchasing the vehicle using the original price of the car and not the current used price?

I'm not trying to be difficult - just trying to learn plus I am tired too many Christmas events!

 

[Pigeon]

As a general rule of thumb, you're right . . . but exceptions do exist. You should always compare the new vs. late-model-used price:

When we bought my Honda four years ago, very few late-model-used models were available. The price difference between those and brand-new was a little less than $1000. So for that small difference, it made sense to get the new vehicle. We picked exactly the details we wanted, and it cost almost nothing.

On the other hand, when we bought my husband's truck a year ago, he was open to several models, and used models abounded. We saved something like 5-6K by buying a one-year old model. In that case, used made sense.

We made different choices, but I think each was the right choice.

I agree. We were just at a couple of dealers today, and for the car we're looking at, the price difference between new and late model used is tiny. It's worth the small difference to get the new car.

 

[manning]

With my turbo, running 87 octane would be a huge no-no. .

May want to look at the Ford Ecoboost engines. Turbo charged, powerful, good mileage and runs on regular.

Economy of a v6, power of a v8. Can even get a 4 cylinder.

 

[Phil'sFrontier]

I just paid off my 2006 Nissan frontier. It is great knowing my vehicle is paid for. Also knowing it was very well maintained, so I can expect lots more km's out of her.

With the build quality of vehicles going up in general, I don't see the great need to upgrade.