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24HourForums.com > Supported Forums > Shimmy's Things On Wheels > Buying a new vehicle outright or to lease, which is better? |
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shimmy Original500© Member 
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Hopefully someone will step in and fill in all the unanswered ?'s
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Britt Forum-Blogger© Original500© Member  Learning Contentment
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Hi, Shimmy! I do not sell or lease vehicles to others, he-he, but I have leased a vehicle myself. In my opinion, leasing is only a good option if you don't drive more than 12,000 miles a year and are meticulous about keeping your vehicle clean and in good repair. If you are someone whom drives more than 12,000 miles a year and has pets, I would strongly urge you NOT to lease as you will be penalized for extra mileage and for pet stains on the upholstery. I leased a cute little Nissan truck when I was finishing college and it proved to be a great bargain. My mileage was low, I kept the vehicle meticulously clean, I had a perfectly clean driving record, and I invested the money I saved on monthly payments. When I turned the car in at the close of the lease, I payed no penalties and was actually thanked by the dealership for my excellent service record and care of the vehicle. It was a sweet deal for a struggling college student! Having said all that, I consider buying a vehicle outright the better choice. Now that I am no longer a university student, purchasing a car is far preferable to leasing. Leases appear very attractive on the surface, as you are only paying for the depreciation of the vehicle during its first few years of life. But when you purchase a vehicle outright, you keep the vehicle equity to apply as a down-payment on your next vehicle purchase - something you cannot do with a lease. Over the course of 10, 20 or 30 years, the accumulative cost of leasing is much higher than that of purchasing. Some people like having a new car every few years and choose a lease for this purpose. In my opinion, this is wasteful as you are left with nothing at the close of the lease but the option of starting a new lease. I would rather own than lease. Here are some guidelines I found on the 'Net. They make sense: Consider buying if you:
Consider leasing if you:
 "All that you have is your soul." --Tracy Chapman |
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CARLA Original500© Member  Aloha San Diego is Paradise.!!
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 This is why I will lease when I want a new car. They reality is I can lease much cheaper than I can buy period and I just turn it in very 2 to 3 years for a newer model works for me.Ownership is great if you have a huge down payment and can afford the up keep on your own. At my age I will let someone else to do that.
Life should NOT be a journey to the grave with the intention of arriving safely in an attractive well preserved body, but rather to skid in sideways, chocolate in one hand, martini in the other, body thoroughly used up worn out screaming what a ride.. |
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shirohniichan Original500© Member  Obscurius per obscurum
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The biggest factor in making the decision is figuring how long you will keep the car. If you change cars less than every 3 to 4 years, leasing can be better. The second biggest factor is how good the lease programs are. Cars with high residual values (BMW, Infiniti, Lexus, etc.) will lease for much better than those with low residual values (Ford, G..., er Suzuki, etc.). The reason for this is that much of the lease payment is tied to depreciation. If I can find a killer program that pegs the residual at 60% after 3 years, that means I'm paying only 40% pus interest over the term. If the residual is 30%, I have to ask myself if I want to pay for 70% of the car's depreciation in such a short time. I had one customer who traded in his cars religiously every two years. He was losing so much on his trade-ins that I convinced him to lease. He saved a bundle. On the other hand, I've seen people lease a car for a long time, and then turn around and buy it out at the end. They would have saved a lot by buying it in the first place. I saw an ad for a Subaru Impreza lease for $0 due at lease signing (excluding license and fees) and only $259 per month plus tax. That's a great deal on an AWD car, even if it's a strippy model. Most lease ads say you need a huge down payment PLUS bank fee, sales tax, license, doc fee, and other stuff. One last thing. It doesn't make sense to lease in certain states because they require sales tax on the entire purchase price up front on a lease. So if you lease a car with a capitalized cost (sale price) of $40,000 for only two years, you have to pay the entire sales tax amount on the $40k in only 24 months. That makes no sense. In California and most states, you only pay sales tax on your monthly payments. I missed out on an amazing lease deal on an Infiniti M45 back in October of 2003. With less than $1,000 out of pocket to start, my payments would have been under $400 including tax for 36 months. That's less than $15,400 over the whole 3 years on a $45,000 car. Since I missed out on the lease special I ended up buying a 3-year old used one. 
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Britt Forum-Blogger© Original500© Member Learning Contentment
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You sure know your stuff, Shiro! Thanks for the information! You raised some excellent points.
"All that you have is your soul." --Tracy Chapman |
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shimmy Original500© Member
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Thanks Shiro... I knew that you would come thru... Thanks Britt and Carla.. for all the info 
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shirohniichan Original500© Member Obscurius per obscurum
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The basic question to ask is, "How much is it going to cost me to use it for the term I want to have it?" Here's an example: Compare the cost to buy it and the anticipated resale value after two years (not what the book value is, mind you, but what you can actually sell it for) with the cost of leasing it. Say I buy a $20,000 car. After tax and license it costs me $22,000 "out the door." I put no money down and make payments of about $425 per month on a 60-month term. After two years I want to sell it, and two year old models are selling at auction (not listed at retail) for $15,000. I've already paid $10,200 and owe the bank about $16,500. That means I have to come up with $1,500 to get out of the loan. If I can lease the car for $425 per month (including tax) for 24 months with $0 drive offs, I'll be $1,500 ahead of the purchasing option. Last edited on 05:20 am by shirohniichan |
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shimmy Original500© Member
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Just want to add, if it is from a small lot, get a CARFAX check done...
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24HourForums.com > Supported Forums > Shimmy's Things On Wheels > Buying a new vehicle outright or to lease, which is better? | ||||||||||||||||||||||||||||||||||||||||
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