Finance vs Lease?

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  #1  
Old 06-27-06, 01:30 PM
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Finance vs Lease?

My head is spinning over this matter. So I would like some opinions, personal experiences, etc., etc. We are trying to decide between financing and leasing a new vehicle. My wife does very little driving(to work, and pick-up at daycare, and of course grocery shopping) Occassional road trip. Though her whole life she has never owned a vehicle outside of it's warranty. She likes the reassurance, that if something happens it's free. She wants an SUV now and a mini-van later in life when we have more children. So I pretty much have decided that I will be making payments for the rest of my days. But, I am concerned with loosing my arse with financing and depreciation. Also with young children I worry about stains in a lease vehicle. So what to do, what to do. I am easy though, I drive them till their dead, got a 91' lumina with 132000 miles fairly low mileage considering the age. So I have no payment which helps but, I have to consider, what happens when my car goes out, there's another payment.
 
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Old 06-27-06, 01:45 PM
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A lease is a tricky thing, stiff penalties for going over mileage or 'wear and tear', which is open for interpretation and always in the dealers favor. Insurance is also higher.

Nothing is free, you pay for that warranty in the price of the car, it's just less visible. Manufacturers spout there 'long' warranties, which only cover the powertrain (ie the transmission), because the powertrain is the least likely thing to go wrong.

If you really want to see if a warranty is worth anything, find out if it covers likely breakdowns. Things like water pumps, oil pumps, fuel pumps, distributors (and their electronics), timing belts (and damage caused when one breaks), etc.
 
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Old 06-27-06, 04:20 PM
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Let someone else take the hit on depreciation and buy something a year or two old but still under factory warranty. I think your wife could also use some economics lessons - the cost of payments on a new car almost always exceeds the cost of repairs on a later model used car.
 
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Old 06-27-06, 05:04 PM
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A "new" car depriciates the moment you drive it off the lot. A lease, you pay it up front. If you cannot write off the leased vehicle, buy one. As stated, go with a couple year old car or van. Your wife will drive you to the poor house with her logic.
 
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Old 06-27-06, 06:14 PM
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Originally Posted by majakdragon
A "new" car depriciates the moment you drive it off the lot. A lease, you pay it up front. If you cannot write off the leased vehicle, buy one. As stated, go with a couple year old car or van. Your wife will drive you to the poor house with her logic.
But it will be in a nice new car!! At least the ride will be nice.

I agree with the others. Leases are very risky when you look at the turn in situation. Excess mileage, minor dents that you were unaware of, the dirty carpeting. All these things add up real fast in terms of damages (dollars).

Unless you are rich, turn in time can be devastating. Many folks end up purchasing the vehicle to avoid the charges. It ends up costing more than if they had just purchased it to begin with.
 
  #6  
Old 07-01-06, 11:06 PM
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Well some people say that with good credit you have to be crazy not to lease but then again the feeling of not being your own car it's kinda weird I think...
Anyways after a number of years I finally bought a brand new Truck last year ( 4 miles on it when I drove off lot ) and let me tell you the smell of new is definetely worth it
 
  #7  
Old 07-02-06, 04:33 AM
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I'm with magic; you would be amazed how many vehicles only a few years old and in prime condition can be had for a lot less than new. If you buy the right car (Toyota!) chances of needing the warranty are a lot less. My younger brother recently bought a used Lexus (a '98!) for under $10,000 that is in mint condition and will likely outlive a lot of the cars you see on the showroom floor today. My wife drives an '01 Camry that we bought two years ago with 25k miles on it also for under $10k. Like the Lexus it will still be running when I'm towing a lot of '06's to the boneyard.

Oh, and I agree on leasing; dealerships must have discovered the idea - major profit center.
 
  #8  
Old 07-03-06, 11:12 AM
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I am on my fourth lease. Never had any problems when turning the vehicle in (GM's). Interior was dirty (two kids) some marks on the paint. No questions or bill's. Just turned in the last car, took it to a different dealership, they never even came out to make sure it was in the lot! I have switched to Ford now so we will see if they are any different. With leasing you get that new car feeling without any worring about anything breaking down. By that time the lease is up. If you don't go over the mileage and you like a new vehicle every three or four years then leasing is for you.
 
  #9  
Old 07-03-06, 02:13 PM
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Originally Posted by deluxe10469
I am on my fourth lease. Never had any problems when turning the vehicle in (GM's). Interior was dirty (two kids) some marks on the paint. No questions or bill's. Just turned in the last car, took it to a different dealership, they never even came out to make sure it was in the lot! I have switched to Ford now so we will see if they are any different. With leasing you get that new car feeling without any worring about anything breaking down. By that time the lease is up. If you don't go over the mileage and you like a new vehicle every three or four years then leasing is for you.
But after three leases and all those payments, what do you own? That's right nothing. Mean while, I will buy a two or three year old car, pay it off early and save. Will something go wrong? Maybe, but I will plenty of leftover funds to care of it. I would much rather put money toward things that appreciate in value (real estate, house) than leasing a brand new car.

 
  #10  
Old 07-04-06, 04:20 AM
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The only advantage for leasing a vehicle in this type of situation, is it allows one to drive a vehicle that would normally be beyond one's means
Which doesn't sound like that's a priority for you or your wife
So there's no advantage to leasing

If you want a new vehicle, finance it


I'm with the buy a year or two old car...or a new leftover
Let someone else take the big depreciation hit, or get a few K off the sticker
Most important components are still under warranty on the used
A quality dealer will provide a warranty on a previously owned vehicle
You can also buy a warranty
Leftovers are still considered new
 
  #11  
Old 07-04-06, 05:23 AM
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There can be savings with a lease if the company you own can pay for the lease, that way you pay with pre-tax dollars. My boss did that on a 96 Explorer and we figure he saved a few thousand in taxes that way. Otherwise, I think leasing is only good for the leasing company. I don't believe in financing anything that depreciates, I still stick with buying something a couple years old and paying cash.
 
  #12  
Old 07-04-06, 06:27 PM
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Originally Posted by bigk6161
But after three leases and all those payments, what do you own? That's right nothing. Mean while, I will buy a two or three year old car, pay it off early and save. Will something go wrong? Maybe, but I will plenty of leftover funds to care of it. I would much rather put money toward things that appreciate in value (real estate, house) than leasing a brand new car.


So what car can you buy that appreciate's in value? Maybe some cars hold their value longer but I'd like to know one that will go up in value! Unless your going to park it for twenty years in a garage! At the end of the lease you can sell it if you like. I prefer to drop the keys on the desk and say I'll take that one over there.

Buy the way I own another vehicle. I think I have repaired almost everything on it and now the body is starting to wear. If I pay for a body job I've pretty much paid the same over the years. So what now, go buy another? Hey theres more money out the window. I think I will go lease another one.
 
  #13  
Old 07-04-06, 09:54 PM
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Agree with deluxe why do you want to own a piece of junk ?
it's better to lease and have low payments, a couple years later you get another new car and that's that.
Even if you buy ,later on your car's worth nothing and you're driving around in an old car maybe owing more than the car's worth and after a couple years you want to get a new one again just like anybody else., you see ? it happens to all of us, out with the old in with the new. The same goes for clothes, tv's, even your house.
I bought a new 2005 K1500 Silverado a year ago and Im already thinking about getting a new 2007 K2500 HD I know it may sound crazy to some people but hey you only live once
If you have good credit , Leasing is the way to go.
 
  #14  
Old 07-06-06, 08:36 AM
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go to google type car buying tips, you will find everything you need to know there.
 
  #15  
Old 07-09-06, 09:42 AM
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Understanding leasing

The advice in this thread is great. But here is what most people don't understand about leasing.

Leasing IS financing. It's just that you're essentially financing MORE with leasing, which is why, in almost all cases, leasing is a mostly expensive option compared to taking out a loan with the same terms.

Here's the reason. The moment you drive a $40,000 leased car off the lot, you're essentially taking a $40,000 loan, just like if you bought it. And you'll pay a monthly finance charge on the entire amount MINUS ANYTHING YOU PAY BACK.
Over a 36 month loan, you'd pay back the entire amount ($40,000), so that you'd be maintaining an average monthly balance (subject to a finance charge) of around $20,000.
With a lease, you'll be paying back only the depreciation - maybe about $20,000 over the same three years. So on average, you'd be maintaining a monthly balance (subject to the same finance charge) of around $30,000.
Here is the detail (assuming $20,000 depreciation):

Loan: First day = $40,000
Last day = $0
Average = $20,000 * monthly finance rate (not exactly, but close enough)

Lease depreciation:
First day = $20,000
Last day = $0
Average = $10,000

Lease residual:
First day = $20,000
Last day = $20,000 (Since you didn't pay back any of that residual)
Average = $20,000

Lease depreciation and residual = $30,000 * monthly finance rate.

So you'd pay higher interest with a lease than with an equivalent loan. (True, you'd pay more in principal with the loan, but you'd have the value of that extra amount in the equity you put into the vehicle when you keep the vehicle at the end).

Also remember, you'd be paying for the high early depreciation whether you lease or loan. Generally, all things being equal, you'd do better leasing than buying only if:
A) You can take the extra monthly amount you'd otherwise be paying on a loan and invest it at a higher rate of return than you're paying on the lease (taking into account income taxes, risk, etc.) Good luck. (If it were that easy, the leasing company would simply invest the money itself rather than tie it up leasing a vehicle to you in the first place)
B) You choose A) leasing for, say, 24 months instead of B) taking out a loan for, say, five years and trading in the car early during the loan. (Some people take out a really long term loan to get low payments. That's fine unless they trade in early. In that cases, they would have paid back so little toward the loan principal, that leasing woud have made better financial sense.)
One advanatage to leasing is that, in many states, you pay sales tax only on the monthly payment, instead of on the entire car, as with a loan. But unlike with a loan, you are taxed on the finance charges as well as the principal. And in some states ,leasees pay sales tax on the entire value of the vehicle up front just like they bought it, making leasing a really bad deal.

Good luck.

Anthony Giorgianni
 
  #16  
Old 07-09-06, 01:45 PM
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Originally Posted by deluxe10469

So what car can you buy that appreciate's in value? Maybe some cars hold their value longer but I'd like to know one that will go up in value! Unless your going to park it for twenty years in a garage! At the end of the lease you can sell it if you like. I prefer to drop the keys on the desk and say I'll take that one over there.

Buy the way I own another vehicle. I think I have repaired almost everything on it and now the body is starting to wear. If I pay for a body job I've pretty much paid the same over the years. So what now, go buy another? Hey theres more money out the window. I think I will go lease another one.
As you can see in my previous post, I never said cars go up in value. I would rather use my money and invest in things that do increase. I do think we agree that we want to drive something that is dependable, that being your reason for leasing. My belief is: you should buy a car that is a couple of years old and drive it until it gets too expensive to keep. This will happen at different times depending on the car. So what if the body is wearing?! That's called character

But LouBazooka, I see no need to put myself into debt buying or leasing new cars when they go down in value. I will find myself a two year old Honda and drive it until it dies (or too expensive to up keep) knowing I am pocketing the difference. Yes, I will not have a brand new car and have those warm and fuzzies that some people in this thread look for. And yes, you will laugh at me at the store because you will notice how much more newer your 07 truck compares to my Honda.
Maybe it is in income issue. Maybe you have so much money that you can afford to put toward things you will not get a return for other than social status. If that's the case...
 
  #17  
Old 07-11-06, 08:55 AM
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Lease v. Buy

Originally Posted by lamerem
My head is spinning over this matter.
Here's a link to a free article from Consumer Reports that discusses some of the pitfalls of leasing.

http://www.consumerreports.org/cro/c...ehicle%20lease

I personally have never leased because my gut instinct- and I could be totally wrong- tells me I want to own something I pay for (I'm a drive 'til it dies type too). Leasing usually requires a fairly substantial downpayment, and while the monthly payments are lower, there are back-end penalties to consider, such as going over the mileage limit.

Best of luck with it!
Dave O
 
  #18  
Old 07-12-06, 11:59 AM
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Wow

I am amazed to see this thread blown up like this, I love great conversation. Though here are my two cents.

I drive it until it dies, thats just the way I was raised, I can fix'em like the best of them. But, when my wife and 10 month old daughter are concerned, High mileage, can equal huge headaches especially on the highway/interstate. Though I realize things can happen to new cars aswell there are perks, such as road side assistance(included), and rental vehicles if neccesary to get her on her way. The security of these things is important when it concerns my family, I can walk in the snow from the interstate, I don't want them to have to. This is a sick, sick world and some of the people in it are to, if you know what I mean. What do you think?
 
  #19  
Old 07-12-06, 12:05 PM
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I hear you on that one - my wife, who usually has our daughter, always gets the newest vehicle. I just lost a 92 Olds with 252,000 miles when the brakes failed. My car, no daughter inside.
 
  #20  
Old 07-12-06, 12:34 PM
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Originally Posted by lamerem
I am amazed to see this thread blown up like this, I love great conversation. Though here are my two cents.

I drive it until it dies, thats just the way I was raised, I can fix'em like the best of them. But, when my wife and 10 month old daughter are concerned, High mileage, can equal huge headaches especially on the highway/interstate. Though I realize things can happen to new cars aswell there are perks, such as road side assistance(included), and rental vehicles if neccesary to get her on her way. The security of these things is important when it concerns my family, I can walk in the snow from the interstate, I don't want them to have to. This is a sick, sick world and some of the people in it are to, if you know what I mean. What do you think?
Exactly

My wife drives the leased vehicle and I drive my 13 year old hunk of junk.
 
  #21  
Old 07-12-06, 06:45 PM
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Originally Posted by deluxe10469
Exactly

My wife drives the leased vehicle and I drive my 13 year old hunk of junk.
If Momma ain't happy, nobody happy.
 
  #22  
Old 07-14-06, 12:45 PM
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Originally Posted by bigk6161
If Momma ain't happy, nobody happy.

And if Momma ain't happy I can't park my car in her garage!
 
  #23  
Old 07-14-06, 02:23 PM
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I'm on my 3rd lease with Ford and honestly I don't ever see myself not leasing. I deal with one dealership and have always received an "early bird offer" 4-6 months early. I take it in, they inspect it....but not with a magnifying glass...and I drive home a new one. It's that simple. I've personally never had an issue staying under the mileage.

I think if you're always wanting to stay in a newer vehicle (2-3 years) then leasing is the way to go. If you want to own and keep a vehicle beyond the payments then regular financing is the way to go.

J
 
  #24  
Old 07-15-06, 07:47 PM
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It is definitely a matter off personal opinion. I prefer to buy my vehicles and keep them for awhile. Then I'm able to allocate my extra money to other things I like. I bought my car when it was 5 yrs old, paid it off in 2 yrs and have gone 5 yrs without a car payment. I gotta say I like that part of the deal!
 
  #25  
Old 07-19-06, 09:17 AM
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do it, if you're sure

If you've followed any of the links some people posted, you'll see the original poster is in the one situation where a lease makes sense: getting a new car every few years anyway and not driving many miles. If you can't/won't change that, then the only risk is needing an early termination, but that's probably not much different than trying to get out of a financed vehicle early (either way depreciation starts faster than you are paying in).

We had a similar situation. When we got married I wanted to make sure my wife and children (planned, at the time) were always in a new, nice car. Since her commute was 3 miles, leasing seemed like the way to go. Her car is leased but mine is bought and driven into the ground (for the best value).

However, this is also a cautionary tale about leasing. We didn't expect many miles but we are several thousand over. We didn't expect to want out, but after upgrading to a much more expensive house, having children, and frequent flights to out of town relatives, we would have liked to trade down. It happens, life changes, and we're stuck.

We can afford it only because there are no payments on my car. We'll probably do it again when her lease is up (assuming we can afford the mileage overages), but with a less expensive car and lots of prepaid miles.
 
  #26  
Old 07-19-06, 08:05 PM
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A good rule of thumb is do what I do buy a car a few years old like stated above.

But when it comes to high performance cars like vettes and g35's etc etc lease them. becuase when you lease them you have to have full coverage. And if you beat the hell out of the sports cars, your going to screw up eventually. Currently the G35 my buddy has leased, he has had $15k in repairs insuranced covered. He changes the oil twice a year, and has thrown a huge turbo kit on it because they are so slow stock. When lease come close to an end turno kit comes off.

$15k in repairs to an infiniti g35 is nothing. 1 headlight is $1k, 1 rim is $1k, 1 windshield is $1500. There has been other damage to but it shakes now at high speeds infiniti mechanics can't figure out why and will just get turned in at the end of the lease as the rest have. Thats what leases are for. So you can neglest and screw up cars, have fun with the car and then turn it in so someone else buy's it. Plus the vehicle has depreciated $10k since he first got it a few years ago.

We do it all the time with high end sports cars.

Plug and play, and bolt on no modification kits are the shizznit. easy to put on and take off.
 
  #27  
Old 07-22-06, 11:50 PM
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In my opinion lease a car if it's a Mercedes or something that will not go down in value much when you will return it, with a high residual value. Also If you aren't going to go over the mileage.
Buy one if you are going to have a car with a weak residual value such as a Kia. If you can afford to buy a nice car, buy it 2-3 years old, unless you are into all the option things.
 
  #28  
Old 08-01-06, 08:16 AM
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No way I'd ever lease a vehicle. You own nothing at the end, and the only thing you got during the lease was the smell of a new car. Big deal.

Be smart with your money. Buy a quality USED vehicle for a fraction of the cost. Many exist for under $10k with only 20-30k miles on them.

You will be MUCH better off in the future.
 
  #29  
Old 09-08-06, 11:20 AM
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finance vs lease

This is my third leased vehicle, I usually get extended miles, this time I got 15000 per year. I will not buy another vehicle, we like the idea of everything being covered under the warranty. The payments are cheaper, by the 3rd year I am ready for a new car. When you buy and then if you trade it in before it's paid you are upside down on the car and usually have to add the rest of what you owe onto your new car, when you lease you just turn it in and get new. I have never had any problems with "wear and tear", just have to be careful that's all.
With my new truck, if I would have bought, my payment would have been about $600.00 but with the lease it is $365.00. My husband and I both lease.
 
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Old 09-09-06, 09:57 PM
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HMMM have kids and car payments. Leasing will be your worse nightmare. Buy a new car and let her run it into the ground. you will need the most expensive insurance, you return the vehicle after the lease and there is no breaks in early payout. Buy new and keep it for 10 years. get the extended warranty and you should be good to go. The car should be paid off in 4 years and you should have 4 more years of NO PAYMENTS!!!! repairs after the warrantee will not be a big problem and you can except it as a car payment big deal.
 
  #31  
Old 09-22-06, 09:27 AM
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Thumbs up ***update***

I am grinning ear to ear about this thread, holy cow. So much useful information, I hope it helped out a few people. So anyway here is what we decided to do.

My wife wanted to trade in her '03 Grand Am, well on a lease I loose that money, it's gone bye, bye forever. She wanted a '06 Trailblazer EXT so we looked around she wanted Blue, Sunroof etc. etc. We found an absolutely beautiful Charcoal Gray Trailblazer '06 used 18,000 miles on it perfect condition not a scratch or stain at a fraction of the price. With my trade in (mind you I had quite a bit of equity) and the 70,000 mile ext. warranty my payments are now sitting $100 less than the grand am and only a 5 year loan, low interest rate through my credit union, and most of all I own it.

So to make a long story short with the lower car payment and ext. warranty. She has approved me getting a new/used car. Everyone wins, though the trailblazer wasn't her favorite color and no sunroof, she understands the substantial payment difference. One little happy family. Oh by the way the trailblazer is by far the nicest most comfortable SUV I have ever owned or road in. Super nice, I recommend this vehicle to anyone
 
  #32  
Old 09-22-06, 01:29 PM
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But it's a Chevy ...you might need to program "the tow guy"'s phone number in your wife's cell phone (ha). Sorry but I gave up American built cars awhile ago, although my wife is still a Jeep fan. We traded in her 00' Jeep Cherokee (boxy style) last Aug. for a new 05' Grand Cherokee Limited w/ 5.7 L Hemi engine and the thing has been in the shop probably 6 times for non-routine service. It completely died on her in heavy traffic probably 3 weeks after we got it and had to be towed by Road Side Assistance. After a few more trips to the service dept. due to the engine lights coming on, they replaced the entire computer and has been OK since with the exception of a few smaller things but we agreed that this is our last American built piece of crap. I drive a 99' Toyota Land Cruiser that has nearly 109K on it and it drives like new. It has never failed me ...it brakes as smooth as a new car and has absolutely no rattles or noises and rides like it is new. Toyotas are unbelievable ...my Lexus was even better but the dealer 'routine service' bills were more expensive than Toyotas. My only single drawback to Toyotas, Hondas, Nissans are they are not as stylish as American cars. The Lexus and Infinitis are but they are much more $$, too.

Good luck w/ the Trail Blazer.

Steve
 
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