Wanted: Stories of your leased vehicles

[disneysteve]

you always have the option to buy and come out the same way as if you bought it our right.

That may or may not be true and can be nearly impossible to figure out because of the way the lease agreements are written. Chances are, in most cases, that it would be cheaper to buy the car new than to lease it for a few years and then buy it at the end of the lease. That is particularly true if you will be financing the purchase at the end of the lease since new car loan rates are typically lower than used car loan rates. Also, buying new, you are eligible for dealer/factory incentives that you don't get buying off lease.

[tzsgti]

That may or may not be true and can be nearly impossible to figure out because of the way the lease agreements are written. Chances are, in most cases, that it would be cheaper to buy the car new than to lease it for a few years and then buy it at the end of the lease. That is particularly true if you will be financing the purchase at the end of the lease since new car loan rates are typically lower than used car loan rates. Also, buying new, you are eligible for dealer/factory incentives that you don't get buying off lease.

Its not that hard to figure out. The lease agreement has a set residual buy out price that you can pay at the end of the lease. In states that you don't have to pay taxes on the whole value of the car from the beginning you will have to add tax. You just have to read into if there are any fees that they charge when doing this. I know my dads Honda and Subaru did not have any.

I don't know why everyone thinks leases are complicated. If you know what you are doing you can see exactly how it goes.

You have the Residual value which you pay taxes on and based on the money factor (which is usually higher then a new car loan hence the reason that it cost the extra 500-1000 and sometime when they have promotional rates they are actually lowering that rate which helps but are also over evaluating the residual amount) is what you pay. There really is nothing tricky and everything is written out on your agreement/contract. Its looks just like a finance its just that they put a residual down as a 37th payment for lets say a 36 month lease.

And i agree if you have to refinance that purchase amount then it comes out to be a lot more.

[rizzmo]

I hate to beat a dead horse, but it is annoying when people use anecdotal evidence to support bad financial decisions. I also don't want other posters to be misled ... so here goes.

It seems the point you are trying to make is "For your lifestyle, leasing is the lesser of two evils". This may be true , however just because your lifestyle causes you to eliminate the only financially smart decision (reference Steve's ealier post), does not make either of the remaining poor decisions (Purchasing a new car to keep for only a few years or leasing) a good one.

Mathematically, leasing never makes sense for a personal or a business vehicle. People sometimes argue that leasing makes sense for business, but this is rarely the case. Occasionally, a business will lease a vehicle(s) that it provides to employee's simply because the money lost by leasing pales in comparison to the money lost by their represenatives not showing up due to car problems. (Statistically new cars break down less often than used)

Look a lease is a bad decision 99.9% of the time. There are basically three reasons people arrive at the conclusion that a lease is better financially.

1. They only look at the factors that seem to justify their decision, and not their overall financial health.

2. They own a business and don't understand tax law, but then use it to justify leasing.

3. They can't do math.

[tzsgti]

I agree but talking about the lesser of the two. Take this example. Someone lease thier last three cars over the past 9 years. Yes they made a bad decision to lease three diffrent cars when they could have bought one car for those 9 years. But if they had bough three diffrent cars over he past 9 years it would end up costing alot more then if they had leased those cars instead.

Now i agree three wrongs dont make a right but if a gun was put to your head that you would have to pick either scenario. It would be stupid to pick the one that cost the most.

Listen it is what it is. I personally see the benifits in leasing but they are not financial at all. I take it that most members on this forum are not hardcore car finatics. I guess you can compare it to a hobby that one can say its a waste of money yet people spend soo much money on various hobbys. If you can afford it then i say live your life. My friends father is as frugal as anyone can be here even the people here who can barley afford food. Yet he is a multi millionare and he bought his two kids who got married a house with cash. Like he said i might as well give my money to my kids now rather then save it till i die. There is only so much you can save and they just take the money to your grave.

[disneysteve]

tzsgti, I think you are absolutely right, but the key is "if you can afford it."

A great many people who lease their cars, including many people on this site, can't afford it. They lease to get themselves into a car they've got no business owning. They lease to have a lower payment, but end up with eternal car payments. They would be far better off to buy a nice used car, pay it off over a few years and then keep it for years after that with no payments, using that money instead to build up savings, get rid of other debt, etc. That's all we're trying to say. So yes, leasing new is better than buying new if you are only going to keep the car for 3 years, but financially speaking neither is a good idea.

[tzsgti]

tzsgti, I think you are absolutely right, but the key is "if you can afford it."

A great many people who lease their cars, including many people on this site, can't afford it. They lease to get themselves into a car they've got no business owning. They lease to have a lower payment, but end up with eternal car payments. They would be far better off to buy a nice used car, pay it off over a few years and then keep it for years after that with no payments, using that money instead to build up savings, get rid of other debt, etc. That's all we're trying to say. So yes, leasing new is better than buying new if you are only going to keep the car for 3 years, but financially speaking neither is a good idea.

I totaly disagree on the point that i underlined in bold. A payment is a payment. It should not make a diffrence if the car is worth 10k dollars or wortg 100k dollars. When it comes to leasing its what payment you can afford. Just because the person is not able to afford the car if he was buying it does not mean he has no business since he can get it for a fraction of what it would cost a month if he bought it. You are looking at the price tag when some one is leasing they are looking at a monthly payment. So you are telling me that if someone leased a 40k bimmer for 200 dollars a month and they can afford it that they have no business? Its like saying if you can get a car for half price on a left over car but you would never been able to afford the price that it was going for 6 or 8 months ago but now you can. Now that guy is wrong? A price tag is only a price tag. what you actually pay for something is how it should be looked at.

[disneysteve]

A payment is a payment.

That's not really true. There is a big difference between a $200/month payment that results in you owning the car in 4 or 5 years and a $200/month payment that leaves you right back where you started in 3 years.

Generally, leasing is a short-term solution to a long-term need. I prefer to take the long-term view and choose the option that will cost me less over time.

[tzsgti]

That's not really true. There is a big difference between a $200/month payment that results in you owning the car in 4 or 5 years and a $200/month payment that leaves you right back where you started in 3 years.

Generally, leasing is a short-term solution to a long-term need. I prefer to take the long-term view and choose the option that will cost me less over time.

I am not arguing that the fact that leasing is not financialy feesible. What i am saying is if they are leasing, what does it matter if they have no business being in that car. What does it matter if they can afford the purchase price or not? To me it has nothing to do with the reasons why you shouldnt lease. I guess its the wording What you should say is he has no business leasing a car and nothing to do with weather he can afford to buy it or not.

[disneysteve]

I am not arguing that the fact that leasing is not financialy feesible. What i am saying is if they are leasing, what does it matter if they have no business being in that car. What does it matter if they can afford the purchase price or not? To me it has nothing to do with the reasons why you shouldnt lease. I guess its the wording What you should say is he has no business leasing a car and nothing to do with weather he can afford to buy it or not.

Gotcha. I'd agree with you there.