Leasing a car... pros/cons?

English Open Chat
#1

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

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

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.

#4

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

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

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.

#7

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

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

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

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.

#11

We have a service in Canada called leasebusters (http://www.leasebusters.com) but I’d be surprised if there aren’t equivalents in other countries.

Basically, it’s an “eBay” type service for people on leases that need to break their leases, which creates an incredible opportunity for buyers. The nature of the deals differ, but in many cases you can take over the lease on a vehicle less than one year into the lease, simply absorb the payments (without having to make the down-payment), and in some cases the buyer will even throw cash in.

It’s a legitimate business, I know a couple of people that have taken over leases through leasebusters. The website is just a service, but the the contracts are handled through the actual auto financing companies, so it’s not a scam or anything along those lines. It’s basically a service for people that need to get out of a lease and are trying to avoid the penalties by finding someone to take over the lease commitment.

Anyways, just throwing it out there for consideration. Like I said, leasebusters.com is Canadian, but I’d be amazed if there weren’t similar services offered outside of Canada.

Just my 2c…

Cheers,
KV

#12

booboo wrote:
> 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.
>
Downside of a VW is that some parts have to be shipped from Germany.
I’ve seen this happen to a few people.

> 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).
>
Not sure why the civic’s engine isn’t enough with what you have stated.
I can understand the space issue though…why not check out the Honda
Fit? It also starts less then the civic iirc.

#13

I currently own a 2000 VW Jetta, which has the same engine/running gear as the Golf of that year. I bought the Jetta brand-new. The few times it has needed repairs, the parts were readily available. My sister tore up the sunroof somehow - she said it just “broke,” but my niece said she was snatching on it. Anyway, the A/C needed service one time, but that has been it.

I have the 2.0 engine, which with automatic transmission gets me 28 MPG average around town, and I get 33 MPG on the Interstate. Pretty decent for how heavy the car is.

Not sure how it is today, but when I was comparison shopping back then, I was considering Honda, Toyota, and VW. When I ran the numbers, in comparison to what came standard on the VW and were options on the Honda and Toyota, the VW was the best buy.

I had driven a 1989 Honda CRX previously to the Jetta, and really liked the Honda products. I have never owned a Toyota, but they seem to be good cars.

Good luck in your search. The new VW Rabbits are very nice (hint, hint).

#14

I would check to see what your payments would be buying a used car.

  1. You don’t take the big appreciation hit like when buying a new car.

2.You can get a couple year old, low mileage car with a warranty still on it.

I bought a 2 year old car with 8,100 miles on it.And saved about $8000.00 off of what a new one would have cost.

Also my son has a Honda Civic 5spd. And he gets 42mpg on the highway with it.
But they are at a premium right now.

#15

As a surfer, have you looked at crossover vehicles like the Toyota Matrix? You can lift the back hatch, put the back seat down, and the front passenger seat down as well. I’ve seen a surf board fit inside a Matrix like that.

The engine, frame, transmission, etc. are the same as the Corolla.

I haven’t priced them recently, but Toyota also sells the Matrix to Pontiac who resells it as the Vibe. They come from the same factory, but have slightly different body panels. GM/Pontiac is offering a slightly better warranty these days (5 years/100k miles as opposed to 5 years/60k miles) and they generally offer better finance rates than foreign companies.

It might be something to consider.

#16

Here I like to suggest you a Lease Take Over Search Engine & Marketplace specializing in car lease transfer, lease assumption,and car lease takeover.

There you can actually type in your state or city into the search box(nobody else has this) and then see the results.
Car Lease Depot is totally free of charge. Also right now you can post your ad for free.

For more information, feel free to brows the
Car Lease

#17

wow, for about that I got a Pontiac Sunfire Convertible (GT) that was 1 year old and had 10,000 miles on it. Regular price was $21-24,000 and I got it for 15 (16?)k and change!

That was in '99 and I’m still driving it. So if you take $17,000 / 9 years means it’s cost me about $1,888 per year average (or $157 per month).

It has 216,000 miles and I’m hoping to read 250,000 (estimated by next Christmas) ($17,000 / 216,000 miles = $0.0787 per mile). Luckily it goes between 28 and 30 mpg depending on if I can ease off on the gas pedal between fill-ups.

I can never do a lease because I put on over 22,000 miles per year. Right now it’s 17,000 miles per year to work and back alone!

My next car has to be more utility since now I have 3 kids and and good gas mileage as I am driving 35 miles (one way) to work.