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Thread: Leasing a car... pros/cons?

  1. #1

    Default Leasing a car... pros/cons?

    Well I am in the market for a new car as I'm tired of the 13 mpg i get out of my '95 Blazer. I have been looking at all sorts of options and am considering leasing a new car. I only want to keep the car for about 3 years anyway because of how the automobile market is changing and I think a lot will change in these next few years.

    However, I am pretty new to car buying and completely new to leasing.

    So I wanted to ask those of you with some experience in this... What are the pros and cons of leasing and do you have any tips on leasing a car?

    Thanks,
    Brandon

  2. #2

    Default Re: Leasing a car... pros/cons?

    From what friends and family have said, it's a matter of personal wealth. If you've got the money go for buying it. You won't be concerned with a lot of the expenses of buying. But then again if your like most people, you might find leasing better. Lower payments, and you don't have to worry about maintaining a car thats 11 years old because you can't afford to buy another (and by then the car has lost any resale value). Here's two rather good articles on it. Seems to be complete with good arguments.

    Buying vs. leasing

    Pros and cons of leasing

    Hope that helps you in your decision.

  3. #3
    Join Date
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    Default Re: Leasing a car... pros/cons?

    IME leasing is a way for small businesspeople to get a tax advantage. If I lease a car it can be classed as an expense of the business that comes off the profit/loss statement before profits are calculated at the bottom line. Thos bottom-line profits, being lessened by the cost of the car, imply a lessened tax obligation.

    Apart fom that the reason I can see to lease -vs- buy on a 3-year cycle would be if you compared 3 years depreciation (i.e. purchasing) against the 3-year cost of leasing (i.e. renting) and see whether you come out ahead. But you have to factor in things like residual purchase price, resale and trade in values for both styles. Not too difficult. Mostly you'd find better value to go for the buy and trade-in cycle than to lease, unless it's for business.
    Leap 42.3 & 15.1 &KDE
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  4. #4
    Tony Sperling NNTP User

    Default Re: Leasing a car... pros/cons?

    This has to be a personal thing, and personally - for a relatively short
    period - I would buy a second-hand - a vehicle that somebody depended on to
    drive all day long for many years and that had proved it's durability. A car
    that has rolled for more miles than usual and over a longer time than usual
    are often really hard to sell and can be had for small sums - and whatever
    you pay it is your property.

    If you lease (which may not be a bad option) whatever you have payed doesn't
    buy you any bit of the car as property, but you know today what your cost
    will end up being when the lease-period ends.

    If you don't drive more miles than the average person, I think leasing will
    end up being expensive. And the less you drive the less your savings from
    buying and filling up a modern economic car!

    Really, your Blazer may be a guzzler, but what you expect to save over a
    three year period, I think you may well end up paying in other ways
    whichever one of those options you chose?


    Tony. . .



    "booboo" <booboo@no-mx.forums.opensuse.org> wrote in message
    news:booboo.3axhxz@no-mx.forums.opensuse.org...
    >
    > Well I am in the market for a new car as I'm tired of the 13 mpg i get
    > out of my '95 Blazer. I have been looking at all sorts of options and
    > am considering leasing a new car. I only want to keep the car for
    > about 3 years anyway because of how the automobile market is changing
    > and I think a lot will change in these next few years.
    >
    > However, I am pretty new to car buying and completely new to leasing.
    >
    > So I wanted to ask those of you with some experience in this... What
    > are the pros and cons of leasing and do you have any tips on leasing a
    > car?
    >
    > Thanks,
    > Brandon
    >
    >
    > --
    > booboo
    > ------------------------------------------------------------------------
    > booboo's Profile: http://forums.opensuse.org/member.php?userid=291
    > View this thread: http://forums.opensuse.org/showthread.php?t=385762
    >




  5. #5
    Jim Henderson NNTP User

    Default Re: Leasing a car... pros/cons?

    I have purchased one car, leased one car (and then purchased it at the
    end of the lease).

    A lease is a great way to extend your payments, so it works out really
    nicely for the dealer. Payments will be lower, but if you go over on
    mileage, you'll end up paying a premium for those miles over your lease's
    allowed miles.

    That's why we ended up buying the car - couldn't get a loan on a new car
    at the end of the lease, and owed too much for milage overages.

    I would never lease again unless I had no other option.

    Jim

  6. #6
    Join Date
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    Default Re: Leasing a car... pros/cons?

    BooBoo,

    If you only want to use that new car for three years, you may wish to weigh the options of keeping the Blazer and just putting gas in it along with routine upkeep versus down payment, monthly lease payments, higher insurance, and still having to buy gas. You will probably find that your Blazer will be the better deal.

    Then, the difference you will save, when added up over three years, will give you a better head start on a new vehicle with a potentially sizeable down payment in your pocket. Sadly, you will not get much trade-in value for your Blazer right now. Plus, in future, having the Blazer for winter and weekends, while you have the small car for commuting and summers does make sense.

    Yes, I agree that there will be some upcoming changes in the automotive market over the next three years. You may wish to hold on and see where everything winds up. The choice is yours, and I know a new car is a blast, but there are some harsh economics to consider, as well. I just wanted to share my opinion with you. Please let us know what you eventually decide.
    Last edited by rivenought; 13-Jun-2008 at 13:45. Reason: typos, as usual

  7. #7
    Join Date
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    Default Re: Leasing a car... pros/cons?

    Most people think that leasing is a dirty word, and they insist you never own anything.

    When you buy, you don't own either. The bank owns the car.

    I'm not sure what type of car you're looking at buying or leasing. American cars tend to depreciate in value fairly quickly, where as Japanese cars hold their value better. When you purchase a car, the interest rates between the two may not be all that different. However, because of the rapid depreciation, you may be "upside down" in your loan a few years in.

    If you anticipate owning your car for more than 5 years, then that doesn't matter. You just pay the entire loan off. If you might want to go a different way in 2-3 years, then being upside down hurts. That means you owe more than the car is worth. Being upside down a few years into a loan is fairly common.

    With a lease, you walk away after 2-3 years, and you aren't upside down. You don't own anything, but you don't owe anything either. Again, there is a difference here between American and Japanese cars. The financial terms of a lease are based on how much they think a car will depreciate. You are paying off that depreciation. On an American car, it depreciates more, so a lease isn't as cheap. On a Japanese car, it depreciates less, so leasing is considerably cheaper than buying.

    You also have to factor in how nice of a car you want, and how expensive it is. Leasing is cheaper than buying, and it may allow you to drive a nicer car at a lower monthly payment.

    Typically at the end of a lease, if you like the car, they will offer to sell the car to you. Let's say you're buying a basic Camry for around $20,000 (nice round number). Let's say they think the car will keep 60% of its value in 3 years. So, the car will be worth $12,000 in 3 years, and a 3 year lease needs to buy down $8,000 of value. That's $222 a month. There is also a money factor, which is akin to an interest rate. So you're payments might be $250 a month to lease the car. Maybe they will be $250-$300.

    Depending on your credit, it usually costs $20-$25 per $1,000 you are financing per month. So to purchase a $20,000 Camry, your payments might be $400-$500 per month. That is a pretty big difference.

    At the end of your 3 year lease, you can walk away not being upside down, and still have the option to buy. When you buy, they sell it you like a used car. You finance the $12,000 left on the car at a used car finance rate. You're likely paying $300 a month for 5 years to buy a 3 year old Camry, or you lease another brand new Camry for close to the same money.

  8. #8

    Default Re: Leasing a car... pros/cons?

    Thanks for the info and opinions guys.

    I have been doing the math over and over double checking everything... looking at this car and that car... mpg or practicality... used vs. new.

    I guess I should throw out there that I am a working college student that still lives at home and going to the local JC... And that my parents are the ones paying for my insurance (which I am very grateful for... and they are aware of what I am looking at and what I am thinking about and so on)... so insurance price isn't too much of a concern for me.

    Still not sure what I am gonna do btw.

    Keeping the blazer is not really an option as it's been a maintenance nightmare over the last few years (ie having the engine rebuilt and tranny rebuilt and so on) and I really need a car I can depend on because I can't really afford to not have a car available (even if its for only a few days)

    Which is also making me hesitant about buying a used car... yes you can find a nice and fairly new used car but there is still that lack of knowledge of how well the car was maintained/treated.

    But even then... my parents bought the blazer from our neighbor (for my brother) for a very generous deal and we new the history of the car and that he had absolutely no problems with it what-so-ever... problems only occurred a while after we bought it.

    However I believe most of those problems were caused by how my brother drove the thing (crazy... constantly redlining cuz he thought it was cool... and so on). And then the car was handed down to me (of course) after he bought his own car and I've been riddled with issues since.

    So like I said... keeping the blazer = a big NO

    And doing the math with dealer quotes vs keeping the blazer I am either breaking even (lease+gas vs. blazer gas only) or saving a couple hundred a year


    Just the stuff going through my head... still not sure what to do though

  9. #9
    Join Date
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    Default Re: Leasing a car... pros/cons?

    If money is tight, then leasing is definately the way to go. Your payments are less, and if you're lucky, when you're done with school in a few years you might be able to afford something else. Walk away from your lease after 2-3 years and buy something better.

    What kind of cars are you looking at?

    Normally I'm all about Honda and Toyota because I believe they make the best cars on the road, but I just bought a 2008 Cobalt last fall because I have a bunch of family members who work for dealerships, and I was able to buy one so cheap.

  10. #10

    Default Re: Leasing a car... pros/cons?

    I'm looking at cars in the $17000 range.

    Mostly looking at the VW Rabbit, Honda Civic, and Mazda3. But also looking at the Saturn Astra, Toyota Corolla, and kinda looking into (but not really) the Nissan Versa.

    Leaning towards the Rabbit. Even though the mpg is not as good as the others... the quoted lease rates I've gotten are cheaper by about $30 a month (due to the VW sales event) than what I've gotten for the Civic and Mazda. So doing the math the Rabbit would only cost me $70 - $100 more a year.

    Why am I happy with that? Because it is the most practical for me. I am a surfer, camper, snowboarder, diver, etc and the Civic's engine doesn't provide enough for what I need (or enough space inside) and the Mazda doesn't offer much of anything over the Rabbit for what I'm looking for (except a higher price).

    So I am willing to pay a little extra (and when you think about it... $100 a year while spending few grand a year isn't much) for the practicality of the car.

    Of course an SUV would preferred but I'm sure you can figure out why I can't go that route.

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