Leasing cars

[shecky]

I'm looking for opinions from those who do and do not lease cars. I suspect I may be replacing the family truckster soon on the belief (I'll find out today) that I have a blown gasket in a 2000 Nissan Quest with 160,00 miles. Obviously not worth replacing the gasket on that vehicle.

I have never leased before and was formerly dead-set against it. But given the economy, I'm considering whether leasing is the better option. I do a lot of driving for work, but most of the time I am able to snag a company vehicle. We also live about 7 miles from our respective officies. However, we usually put 12-15,000 miles yearly on our cars. I think we can juggle it so as not to do so much on the leased car.

Opinions, thoughts would be appreciated.

 

[Soulive]

I have done it and I don't think I will again. I don't like not having anything to show at the end of the lease and I don't like constantly having that payment. I'm currently buying out my lease which means another 4 years, after 3 already, of paying payments on my truck. Obviously the payments have dropped to very little, but I'd rather be near paid off. Regarding mileage, I averaged 8k per year with this vehicle. I've never been over 11k/yr with any vehicle...

 

[JustDave]

Leasing never made sense to me, so I buy. If you're making lease payments (even though they are often lower than financing) and then have to give the car back after 3 years, you're basically renting it.

Some people like leasing because they get a new car every 3 years, but it's not for me. I don't have a problem driving a car that's 10+ years old ... and based on the 160K you have on your Nissan, you seem like the kind who drives a vehicle for as long as possible before replacing it.

I also don't like the mileage restrictions. If I want to drive cross-country a few times, I'm gonna do it.

 

[Mustangj]

Buy somthing you can pay off ASAP.

I have a 2004 SRT4 that I payed 24k for and I payed it off in just over 2 years. I have 130k miles on the car now and it's worth nothing. I could have bought several used cars for that if I had to.

For me a car is somthing I drive the **** out of and next time I will not spend all that money on a brand new car.

My next car will be used and cheap.

 

[VatorMan]

Doubt if you can even find a lease now. Car manufactures do not want a car back that is worth less than the payoff.

 

[HBHoss]

I used to only lease cars but kept getting killed by the mileage penalties. Now they are at 10k/year. Used to be 15k then 12k. With leasing you end up getting a better deal on the more expensive vehicle because the payment is based mainly on the residual value at the end of the lease. So a vehicle that holds it's value is worth more at the end of the lease so your payment is lower.

 

[jezter6]

I was listening on the radio a week or two ago where a guy was talking about getting great deals on long term rental cars. Basically getting a new car every month or two. Apparently it can be cheaper than leasing - ie: no huge $4k downpayment.

I can't find much on the internet about the story -- but it sounded somewhat convincing.

 

[Homercidal]

How much does the gasket cost? If they've already got the head off, then it's not much more work to clean up the surfaces and put a new gasket on. Chances are, someone will pay for the gasket and put the car up for sale on a wholesale lot.

I've never leased, and never saw the value in it. I buy used cars and drive them until it's too expensive to fix them. 115,000 on 1999 Cherokee, and 175,000 on Dodge Durango. Got the Durango with 108,000 on it. Hardly any rust yet, and I do all the work (which has been very little except for stuff I just want to do, knock on wood).

Buying a car gives you some equity at the end. Leasing means you keep paying nonstop. Both of our cars are paid for and that is NICE!

 

[blacklab]

Shecky;

On a lease you are essentially paying the estimated depreciation of the new car. I'm sure you are aware that as soon as you drive a new car off the lot, it loses a % of it's value. Obviously this continues year after year. So in a 3 year lease you are paying 3 years of car depreciation + an up front down payment, with a compounding interest rate included by the dealer/mfg to represent their profit, inflation, whatever.

A simple way to determine if a lease is a good deal is to add up all of the payments, subtract them from the sales price, and then look for the same car that is about the age of the length of the lease and see if the two figures are close.

Ex: 2009 Lexus ES. 3 year lease for 300/mo., 3000 due at signing. 45,000 sale price for the car.

So, in payments, you have 10,800(36x300) + 3000=13,800
Less sale price of 45k= 31,200.

Look at the 2006 Lexus ES' on their lot. Are they selling for 31,200? Look in the paper - what are '06's selling for? Sometimes you can sell the leased vehicle to a private party at the end of the three years and make money. Sometimes not. Lots of economic conditions at play.

One typical guideline is that a lease is generally only a good deal on a semi-luxury or luxury brand. Those are going to scream downward in value quickly as the initial SP is very high. A typical value car like a ford focus or a minivan, you generally might as well purchase.

Another aspect is that, just a like purchase, it's all negotiable. The monthly, the down payment are both malleable and you may be able to grab a good deal in today's economy. Luxury dealers are no doubt getting nervous.

I could go on and on with present and future value calculations but I think those are the basics. Hope this helps!

 

[shecky]

Thanks for the replies folks. Fortunately, I am always an informed consumer. My stance on being dead-set against leasing has been solidified here.

Luckily, the gasket was merely loose and the cost is nominal, as in I can pay for it with what's in my pocket. But we are looking the replace the thing in the summer. It's been one thing after another lately, the bulk of the work being things I can do myself. It just becomes a time drain.

I like to drive cars into the ground just because of the depreciation factor. If I'm buying it, I'm going to make sure I get at least close to my money's worth. I put 320K miles on a 1994 Cherokee in no time flat and would still have it if the frame hadn't rusted out on me.

 

[Homercidal]

+1 on teh Cherokee. A friend gave his 1996 to his folks when it rolled over 300,000 and it's still going. Not a terrible ride either for an older Jeep. (not a carlike ride either...)

 

[bad coffee]

If you can, buy in either feb or early march. Dealers are just looking to make a sale, and you can find some killer deals.

B

 

[StunnedMonkey]

Yeah, I think leasing is for suckers. And yes, I was a sucker once. But never again.

Actually, leasing might make good sense for someone who constantly needs a newer vehicle for business purposes (think realtor) and who can expense the thing off to their business. But for the average Joe Plumber buying a car, it's usually a bad move.

 

[Bob]

Why on earth would you buy something that has no possibility of ever appreciating in value? Do you enjoy pissing money away?

Let's see. You buy a car for $30,000. Immediately you drive it off the lot, it's worth $22,500. Three years later, it's worth $15,000. But wait! There's more! You had to sign a six-year note to get the payment to where you can afford it!

In other words, you've just paid someone 7%+ of $30,000 in order to lose money worse than a sailor on shore leave.

If the value of a thing stands to appreciate - i.e., if you stand to make money on selling it someday - purchase makes sense. If not, let somebody else take the hit. Simple as that. Would you buy a house if you knew it'd be worth at least 50% less at the end of your mortgage? Of course not!

Mileage? No brainer. Say you put 20,000 miles on your car per year. You can't afford to buy the car at that point - the value at the end of your six-year note will be less than a pile of poo. And you'll have done so much repair and maintenance work on the car, you'll be even more in the hole. But if you buy more miles in your lease, you just turn it in at the end and pick out a new car. Where's the flaw?

As for not owning anything, would you rather not own the car for three years or not own it for six? Because until the note is paid off, you own nothing. Yeah, at the end of the note you own something - a dinged-up, high-mileage sh!tbasket that'll get you laughed at when you try to trade it in.

Anyway, that's my opinion. I realize it's unpopular, after reading the thread. But leasing is not just for someone who needs a car every three years (though that's true) - it's also for people who just like cars, or people who put lots of mileage on cars, or people who don't like pissing money away.

Cheers,

Bob

 

[StunnedMonkey]

You had to sign a six-year note to get the payment to where you can afford it!

Six years? I will say this without hesitation...if the only way one can afford a certain vehicle is to sign a 6 year note, then they can't afford that vehicle. That's nuts.

Even with a 4 year loan (the max I'd recommend to anyone who asked) you're probably in the black after 2.5 years...meaning you can sell and break even or even pocket some cash towards your next vehicle. And keep it for 6 and you're free and clear for the last 2. You're never free of a lease.

 

[shecky]

I hate buying new cars. Will be going used. I may not understand much, but the money pit that is a new car, I understand that.