Would you ever lease a vehicle?

[Frügal]

I often fantasize about vehicles and use the online custom builders to feed my hunger. Haha. Sometimes I glance at the leasing option, but never really look at them seriously.

Well, now I sort of am.

I do not modify my vehicles, really. The only non-OEM parts on our current vehicle are the battery and the wiper blades. So the strict terms of the lease should not bother me, except for - possibly - the oil change intervals. However, I know that many dealerships do a lot of maintenance for free and discounted rates for lease contract customers.

What do you guys think? Not really looking to get into a new vehicle. Just tinkering.

[kork13]

Not a chance -- it's a long-term car rental. If that was a reasonable option, Thrifty and Dollar would be far more successful businesses. I much prefer to own my car. After the 3-4 year lease is up, the car goes away and you have nothing but a hole in your bank account. If you own a car, you still have a lighter account balance, but you can make that car last for as long as you like.

[disneysteve]

Absolutely not. Leasing is by far the most expensive way to obtain a car. It is a horrible idea. If you can't afford to buy the car you can't afford the car.

[Frügal]

Great views/opinions I am seeing on this one.

Here is a Kiplinger author's viewpoint: Five Myths on Leasing a Car - Kiplinger

My father has leased his 2009 (or '08?) Saturn VUE Redline since it was brand new. He has only put 5,000 miles on it total, and they offered him a decent buyout option for when his lease is over, even though they are going through bankruptcy with Wells Fargo.

I am still on the fence with it. It can be good sometimes, and worse other times. I know that insurance is higher on leased vehicles.

[thekid]

The problem with leasing is that you get stuck paying the high depreciating years in a loop. Makes car "ownership" much more expensive. You need to own a car considerably longer if bought new to make the average depreciation per year reasonable.

Leasing a new vehicle is the same as buying a considerably more expensive new car, if you keep the bought car much longer.

That said, I recently leased a vehicle ...simply because it was a car that I wanted to buy and hold for at least 8 years, but the lease rate was at 0.25%. So I leased to take advantage of the rate and will exercice the purchase option at end of the lease (the option price + lease payments is the same as the upfront purchase price + 0.25% interest). I would have otherwise paid cash, but it made no sense with that sort of rate available. Only saying this to mention that lease can make sense when you can buy the car (can afford it), but lower leasing rates make financing cheaper. To take advantage of this, you have to ensure that you can pay the purchase option cash at lease end (otherwise higher financing costs will likely offset any advantage).

I mentionned this in another thread, but I find it astonishing. The car I leased/will buy costs about 15k$ more than a civic, but, if I hold it for 8 years, the average yearly depreciation is roughly the same as the yearly lease payments on a Civic. Both are Honda products (one is an Acura) with similar reliability. Paying the high depreciation years on a continuous loop (which is what leasing does) is a killer.

[LivingAlmostLarge]

Yes if it makes sense. People in the US get the tax break from leasing a car for a business expense. Others get their car lease expensed or paid for by the company. So it can and does make sense depending on the situation.

A small business owner explained he leases cars for his employees to drive to sites they need to work. You write off the entire lease because you are paying for the use of the vehicle? I didn't quite get it but apparently legit tax break.

Another friend leases because her company perk is $400/month to lease a car, not buy. I'd lease to if my company was paying for it. Sure i wouldn't own a car, but it is free money.

[bjl584]

No. I would not lease a vehicle. It's a bad way to obtain an auto. It makes better sense to buy in 99.9% of cases.

Not to mention the mileage restrictions on leases. And the fact that they can often nit pick damage that may occur and make you pay out of pocket for repairs when the lease is up.

[BuckyBadger]

For some people, having a shiny new car every few years is very important. If those people are capable of ALWAYS having a car payment and decide that having a new car all the time is that important to them, it makes sense for them to lease.

But I'm guessing that there aren't many people like that on this board.

But I do acknowledge that some people get a lot of enjoyment out of driving the latest thing. In that case, it's more like a hobby to them, and if they want to spend a bunch of money a month on a hobby and they can afford it, who am I to tell them that they shouldn't? I spend plenty of money every month on MY hobby...

But I personally wouldn't lease a car.

[feh]

The conventional wisdom used to be (and maybe it still is) that leasing makes sense if and only if you're one of those people that buys new and then replaces the car w/ another new car every 3 years or less.

Depreciation those first 2 or 3 years are a killer. Of course, the real solution to this situation is to not get a new car every 3 years.

[2bfrugal]

No. We have always paid ourselves the car payment, then paid cash when it came time to trade and get another. We never buy new, but do buy "near new"

[NuggetBrain]

The conventional wisdom used to be (and maybe it still is) that leasing makes sense if and only if you're one of those people that buys new and then replaces the car w/ another new car every 3 years or less.

Depreciation those first 2 or 3 years are a killer. Of course, the real solution to this situation is to not get a new car every 3 years.

My uncle-in-law is very well off and leases for that exact reason. He wants the newest model every year or two so leasing for him is a much better option than buying and trading in. The payments are about the same (or less) than a 5 year loan would be.

Don't lease options have stipulations in regards to milage and such? Like, you can only put 50,000 on a year without having to incur some kind of fee per mile?

[Frügal]

Don't lease options have stipulations in regards to milage and such? Like, you can only put 50,000 on a year without having to incur some kind of fee per mile?

I am pretty sure all lease agreements have this, yes.

That said, I have never heard of a lease agreement with as high mileage as 50,000. Usually, it is around 12,500 annual mileage, as that is the average - or so they say.

[nalidixic]

It really depends. I write software for a leasing company in Canada for a living.

Our company provides two basic kinds of leases. Closed and opened ended.

A closed end lease puts all the risk on the leasing company. This is the type of lease with KM restrictions and such. When you return the vehicle if you are under the KM agreement and the car is worth less then your residual then the leasing company looses money and not you.

The other type of lease is open end. In this type you take all the risk but typically don't have restrictions. If you return the vehicle after your term and the vehicle is worth less then your residual then you either buy out the lease or cut a check for the difference.

All in all I doubt leasing will save you money in the long run. What it will do however is allow you to get a more expensive vehicle in the short term. The question to ask though is do you really want to extend yourself that much? :P