OT: lease verse buy auto

[ElmerJFudd]

Where are you guys at with lease vs. buy on your automobile transportation?

 

I'm 45. I've never leased or rented anything. My pop raised me with that mentalality I've owned 3 cars since I was 17. First one cost me a grand, second $10k (had to pay off about $6k). The one I drive now cost me $25k in 2000 - took a $15k loan for that one. Long paid off. But now my car is 16 years old. I just replaced the timing belt and distributor (+ cap, plugs, etc.) for about $2.5k and the compressor is shot.

 

I guess I'm asking, how cheap does a lease have to be for you to say it makes no difference wether you lease or buy? Or are you still better of buying new? Or is it better to buy 3 years old back from lease with like 35k miles on it. I'm not talking luxury here. That's a thread for a different day. To from work/gigs and doesn't look or run like shit.

 

 

Just curious where y'all are at on this topic. Would you lease an electric or hybrid? Is it possible to come out ahead with lower fuel costs?

 

Thanks.

 

 

 

[Michael Wright]

Leased once. Mileage was going to kill me at the end of the lease, so I bought it out.

[Threadslayer]

Unless you have a business where you can deduct it, I would advise against leasing. Been there, done that.

[timwat]

Never leased either, but have considered it. As far as my thoughts:

 

1) Leasing has advantages for certain types of consumers.

 

You want a new car, avoid any maintenance issues, have a regular set driving usage habit and patterns that fit within mileage limits, like paying less monthly (sometimes half the amount of a car loan), don't mind never building equity or owning a car - then leasing is a possible option.

 

2) Leasing has disadvantages for a lot of people.

 

You gotta watch your mileage. The car's gotta be turned in with pretty much pristine condition. You'll never build equity. You're paying for usage at the highest depreciation point of the car's life. You'll be on the treadmill of leasing indefinitely.

 

But it does delay the purchase decision for 36 months, and there are some killer lease deals out there. Little to no money out of pocket, less than $200 a month and a brand new Honda, for example.

 

Me, I've typically purchased 3-4 years old (after someone else has eaten the front-end depreciation), and kept the car until the wheels come off (or a deer totals the car...my most recent story).

 

I've never run the numbers to see if that's the smartest financial way to drive, but that's the example I saw with my father and so habits are what they are...

 

Tim

[Daniel Wade]

Investment wise I have always done best with a 1 to 3 year old vehicle with low miles, and ran a carfax to check for accidents. I also check it out mechanically and buy from a new car dealership, not a small car lot, also there is usually some warranty left on the vehicle year wise and mileage wise.

 

I don't get the wow factor of a new car, but It saves me enough money I'm good with it.

[slowtraveler]

To from work/gigs and doesn't look or run like shit.

What Tim and Daniel said. Buy a quality used car (mileage <20k, strong reputation for reliability); maintain it diligently; and run that puppy until the wheels come off. Your pop was right.

[Song80s]

Where are you guys at with lease vs. buy on your automobile transportation?

 

I'm 45. I've never leased or rented anything. My pop raised me with that mentalality I've owned 3 cars since I was 17. First one cost me a grand, second $10k (had to pay off about $6k). The one I drive now cost me $25k in 2000 - took a $15k loan for that one. Long paid off. But now my car is 16 years old. I just replaced the timing belt and distributor (+ cap, plugs, etc.) for about $2.5k and the compressor is shot.

 

I guess I'm asking, how cheap does a lease have to be for you to say it makes no difference wether you lease or buy? Or are you still better of buying new? Or is it better to buy 3 years old back from lease with like 35k miles on it. I'm not talking luxury here. That's a thread for a different day. To from work/gigs and doesn't look or run like shit.

 

 

Just curious where y'all are at on this topic. Would you lease an electric or hybrid? Is it possible to come out ahead with lower fuel costs?

 

Thanks.

 

 

 

Its an expensive monthly rental. You will end up with a huge buy out at the end of term.

 

and you will have no car to show for it.

 

The car lease/finance cos are too clever and know to legally obfuscate the terms.

 

forget it

[Gatorjohn50]

I've never leased, always bought used or new. The 2 times I bought used I had nothing but problems and kicked myself while listening to my dads words echo in my ears "never buy somebody else's problem". That being said if you are buying from family AND you know the maintenance has been kept up it's ok.

 

Ever since my used car woes I've bought new and have been extremely happy with that decision. These days you can buy a good quality car for the same or less than a lease.

[Marzzz]

Leasing works if you have a business to write it off from, and can stay within the mileage limits. Otherwise, the best move is to buy a well-maintained 2 year old car, and run it into the ground.

[Shamanczarek]

Leasing can allow you to drive more car than you could afford if you were to purchase. Up to 60-70% of some luxury models on the road are leased. I have a wealthy bandmate who could easily afford to pay cash but leases a top-of-the line BMW and gets a new one every three years. Many people don't want to own a luxury car after the warranty is up due to the high repair and maintenance costs.

[GDP]

The lease is a great way for financiers to make maximum bucks on a long-term basis. When you turn the vehicle in, you must do it again. Or end the cycle and purchase your own vehicle.

 

My jeep is 12 years old and looks and runs excellent. It was paid off in 3 years so 9 years have passed since I have made any payments.

 

Imagine the total of payments over a 9 year period on leases.....no brainer.

[J. Dan]

If you're the kind of guy who buys a new car every few years and does low mileage, leasing may be better in that you have a fixed budgeted amount without the worry of unexpected repair expenses. If you're just looking for the most cost effective option, buy a car 1-3 yrs old (many times still including a warranty), and take good care of it. Once it's paid off, put that payment into savings.

[OB Dave]

Leasing works if you have a business to write it off from, and can stay within the mileage limits. Otherwise, the best move is to buy a well-maintained 2 year old car, and run it into the ground.

 

This is the best answer, IMHO.

 

You can run some payment comparisons (lease vs buy) and you will see that the lease payment is usually lower. You can rest assured that difference is not coming out of the dealer's pocket, it's coming out of yours when you sign the lease and when you return the car. As others have noted, the only time it might make sense to lease is if you have a business where you're able to write off the cost of the lease rather than take the 54 cents/mile, and also for which you need to always have a new-ish car to impress clients (attorney, realtor, etc).

[ElmerJFudd]

Alright, that's what I thought. Nothing much has changed despite the $190 a month 0 down ads I get hammered with everyday.

 

I'm going to drive my 2000 Nissan into the ground. Winter is coming. I'll skip fixing the compressor for another 6 months and replace it myself when the weather starts to warm up again.

 

Thanks everyone. Next one will be a 3 year old Toyota back from lease. And I'll drive it into the ground again. I'm coming up on my mid life crises hard. Good thing I like synths more than cars!

[Outkaster]

Don't do it if you are a musician and travel. Not worth it at all.

[MoodyBluesKeys]

I'm going to deal with your hybrid question. First, I never have leased - back when my business involved a lot of travel, I drove way too much for a lease to work out. Buying the right kind of vehicle (2002 Kia van in 2006) let me expense it during the first year for my company. Now, my mileage is a lot less per year, but I still bought the last vehicle. 2012 Chevy Volt hybrid in March, 2015.

I am pleased with the hybrid. It is one of the few hybrids which can be driven totally on electric until the battery pack goes down - 42 miles summer, about 36 winter (neither of these figures shows the substantial drop if heat or AC is used, and I am in NC rather than NY, where the winters are more severe).

 

Since most of my business driving is for service calls within a 15 mi (1 way) range, it runs on electric most of the time. I've only used a total of about 24 gallons of gas since I got it, and my mileage since purchase at the moment is around 190 mpg. I would NOT consider an electric only vehicle - don't want to run out of juice somewhere besides home, but I am liking this particular hybrid.

 

The last NEW vehicle I purchased was a demo GMC van back in 1994. Since then, all purchases have been used. Generally run them till they are ready to die - Nissan diesel truck 194,000 miles, GMC Van I don't remember, but well up there. I do maintain them well. Presently, we have my wife's 2002 GMC truck with 54K, my 1996 BMW 328 Convertible (with hardtop also) that I bought in 2000 with about 24K then, now just under 75K, and the Volt which had 39K and now has 42K. Real reason I traded the Kia van is that I had spent $1300 the previous year on front end stuff to pass NC inspection, and the 90K teardown to replace the timing belt was less than 5K away - would have cost as much as it was worth.

 

When I was doing Computer Consulting, I did need an impressive vehicle (and the nice suits, etc - people really do consider how you look when deciding to do business) - I bought a 10 year old Mercedes S-class top of the line - and they change body styles so little that it still looked new.

 

I have a friend who owns a Real Estate business, he and his wife usually lease vehicles, because it is important in that field to look successful. He did own a 15 year old Lincoln Town Car. Well, a little over 3 years ago, he leased a (already used) BMW 740, and has been smart enough to buy it at the end of the lease. They also had a Caddy SUV on lease, and just replaced it with a AWD 4 door Ford truck on lease. But they are keeping the BMW. My BMW is now old enough to be an adult (21) but I still love driving it, and it still works.

 

Elmer, I think you have the right idea - fix the AC next spring if you haven't sold it to buy the 3 (or so) year old replacement, and run it until the repair costs start skyrocketing.

 

[ElmerJFudd]

Hey, thanks for touching on the hybrid question. Would you say what you've saved in gas has made any dent in the cost of leasing the Volt?

 

Google says, "According to the LeaseHackr, a 2016 Chevrolet Volt LT could be leased regionally from $168 a month at $0 down (after deducting the $1,500 rebate in California) for 36 months and 1,000 miles cap. That's considerably less than the $299 per month reported by CarsDirect, and also less than a Toyota Prius.". I know we're not in Cali but there are other states that support eco vehicles.

 

Thoughts on buying a 2013 Volt or Prius back from lease for around $15k?

[DanL]

The key is the mileage limit. If you KNOW you will stay under then it can be a viable option. I had a friend who had leased and the car sat for the last 6 months because they had hit the limit, and it was very expensive to go over.

 

We bought a 2014 Toyota Sienna van earlier this year to replace my aging Caravan gear hauler. It was a lease return- had just under 24k on the clock. It is a dealer certified used car so it came with a 100k warranty on engine/drivetrain that we upgraded to a bumper to bumper for under $1000 (with all of the electrical stuff in it it was worth the risk). It looks and drives like a brand new car. We paid fair market price for it and couldn't be happier with the purchase. If you can find an option like this, I'd recommend checking it out.

 

[Musicale]

Never leased, but have a 2006 Sienna, extremely diligent maintenance and when purchased I got lifetime free brake jobs. Thus far every 5K oil and tire rotation. Change out wiper blades about 2X / year. Replaced timing belt twice and had a throttle body clean out - Not sure that is critical. But with 160K miles it runs like a clock. On the highway, in summer with AC on I burn premium and it makes a noticeable increase in power. Also have a CRV same maintenance program and it's perfect as well. So buy a known reliable car, I think Honda and Toyota are the best and maintain it like crazy, don't get behind. The Honda was bought new and the Toyota had 3000 miles on it (dealer loaner). These will probably last 20+ years at low cost, or longer.

[MoodyBluesKeys]

I did not lease the used 2012 Volt. Purchased it - traded in the 2002 Kia van and $16K difference. Spent another K buying a 3 year warranty.

 

The amount I currently drive, there is not that much $$ saving in gas (electricity also costs). I was also considering trading for a newer Kia van (with timing chain instead of belt), which would have been about the same price, and probably the same 16mpg.

 

It was an experiment. I also considered a Prius, but the Volt drives like a real car instead of feeling like Fred Flintstone. My cost for electricity is a bit lower per mile than gas even with gas at about $2.60 per gallon for premium (which is required).

 

I don't think I would like it as much if I lived in an area where the weather was a lot colder. Much of the electrical on the vehicle (as much as a 75% added load) can go to heating. It does have front seats with heaters which helps. I am also used to wearing a coat while winter driving. (this became apparent after purchase, the A/C uses an electric drive for the compressor, and the heater has to use electric means when the gas engine is not running).

 

It gets around 42 mpg if run strictly on gas. The previous owner apparently ran just on gas for a good bit of time (there is a computer indicator of mileage since the car was new).

 

It has been interesting in another way. Some of my more progressive friends are amazed at seeing me with a Volt, because I don't fit the pattern (I think the cure for "global warming" is planting a LOT more trees and other plants, which absorb carbon dioxide and produce oxygen, as opposed to the steps being taken for carbon reduction).

 

It does make a nice little business vehicle. I'll still keep my personal vehicle (1996 BMW convertible). I decided decades ago that two used cars were better than one new car - when a car was being repaired, still can drive the second one.

 

Both Volt and Prius have a factory eight year warranty on the big battery. I think both are limited to 100K mile, but not sure. If the big battery gets weak on the Volt, best I know it can still be driven with gasoline (not absolutely sure), but Prius MUST have the big battery as well as the gas engine. However, a LOT more Prius have been sold than Volt.

 

Lease again depends on how much you drive, it gets REAL pricy if you run over. About 15K for a 2013 Volt I personally consider worthwhile.

[DanL]

My drummer bought a Volt for his wife. They have had it for several months and he's used about a gallon of gas. The charge is just enough for her to make it to work and back, then they put it on the charger over night.

[Stokely]

We tend to keep our cars for 10+ years, so buying makes way more sense (I think). That's traditional wisdom. If you like changing things up every couple/three years, and you meet the other restrictions of a lease (mileage, gentle on cars, etc) then perhaps a lease makes sense.

[cphollis]

Same advice as others here: steer clear of a "fleece" unless it's deductible and your mileage is modest.

 

Like others, I'm buying better used cars that are being turned in at the end of a lease (2-4 years old), and then racking up the mileage to 100K and far beyond.

 

The original owner eats up all the depreciation, and the dealer is on the hook for any issues if you get even a minimum warranty. Besides, by then there's plenty of online evidence if the car has any problems or not.

 

This applies equally to daily drivers as well as -- ahem -- indulgent toys. When they start to fall apart, they go on Craigslist and someone picks them up before long.

 

I've been very happy with this approach for decades.

[burningbusch]

I've leased three or four vehicles in the past. Not really a big thing one way or the other. If you really plan on keeping the vehicle, then buy it. But many people have the attitude I can afford $xxx/monthly payment and I just expect to always have that payment, like your cellphone service or cable TV. With that attitude you can keep yourself in new cars, always under warranty. Leases are more common with high-end luxury cars as 1) it brings the price down to something "affordable" (they can drive something beyond their means) and 2) you probably don't want the expense of keeping those things alive outside of warranty. With a lease, if you have an accident that hits the CarFax on that vehicle you can just walk away at the end of the lease, provided it was properly repaired. So too if it's a lemon, just walk away and it's now someone else's problem. You can view a lease as a 2/3 year test drive. If you still love it after that length of time, buy it otherwise walk away. When you take out a loan on a car you're paying back principal and interest, with people often ignoring the hidden expense of depreciation. With a lease you're paying interest and depreciation.

 

Anyhow, the most frugal approach is to buy a used vehicle with the a low overall cost of ownership, maintain it and hope for the best.

 

Busch.

[Polkahero]

I've always purchased used cars and paid for them in full (no interest), but used cars prices are relatively higher now than several years ago. I'll probably be in the market for a newer vehicle in the next couple of years and have been looking at lease options as I rarely drive over 10,000 miles per year. I've never leased before and was wondering. . .

 

What happens at the end of your lease? Can you turn in your current vehicle and get the latest model at about the same monthly payment without any additional expenses?

[Dave Bryce]

Just had to deal with this. Bought....a new car (2017 Subaru Outback). Historically I go used, but my last one was new and I found I liked the whole warranty thing.

 

Between moving gear for work and gigs, I'm way too not nice to cars to lease. I do have an S corp which paid for it - my accountant said it pretty much made no difference if I leased or bought from a write off POV.

 

The car is awesome, BTW. Love it to bits...

 

dB

[Markay]

Like others I stick to used vehicles where 60% of the largest cost of car ownership, depreciation, has been eaten by the previous owner.

 

For family and friends who see a car as an appliance like a fridge, I recommend one brand only as having the lowest ongoing cost of ownership for up to 250,000 miles. Toyota.

 

Buy the cheapest one with between 60 and 80k miles your ego can stand. If you have to finance it get the lowest interest rate personal loan available.

[burningbusch]

What happens at the end of your lease? Can you turn in your current vehicle and get the latest model at about the same monthly payment without any additional expenses?

 

Usually you can get pretty close. Car prices go up a bit. But maybe some of those options you got on the last one are now including in the price. Interest rates can fluctuate but they've been pretty steady (low) for sometime. Most manufacturers provide incentives on leases just like with financing.

 

Busch.

[MoodyBluesKeys]

One extra comment for anyone that goes with a Volt - a few weeks before any state mandated annual emissions inspection - drive the vehicle until it switches to gas, then run only on gas for a couple of weeks, enough to get the tank down to 1/2 or so. Otherwise, the vehicle will not pass inspection because the sensors have not been used recently enough and often enough to calibrate.

Found this out the hard way in March, especially since the first place I carried it had absolutely no clue. The Chevy dealer let me know I needed to drive it on gas for a total of 75 miles or so, not all in one or two trips. This winter, I'll just run on gas during the coldest part of the winter (better for heating the vehicle anyhow) and then do the inspection.

 

Minor nuisance - annoying because otherwise I could get my fuel usage up over 250 mpg (highest the computer will give a reading).

[MathOfInsects]

Does this mean no more cassette player?

 

A friend who is a mechanic is dead-set against anyone carrying a car payment or lease. He says, "if you own a car, just put the $300/month away in a savings account and when you have enough, buy a new car outright. You were willing to pay it anyway, so why not you get the full benefit from that money?" Something to be said for that logic...

 

Anyway, numbers to numbers, you apparently end up out of pocket about the same amount whether you lease or buy new--it's just whether you pay now or later. So others are dead-on in saying: if any part of a lease agreement will result in added cost or decreased value, don't do it.

 

Used can be beneficial, but--this is important--the (financial) trick to buying a good used car is NOT to buy more car than you would have bought new; otherwise you 'negate the negation' of the depreciation. (That is, don't buy a used Lexus for the same price as the new Hyundai you were going to buy. Buy a used Hyundai for CHEAPER than the new model.) That's a tough rule to hold to, for most of us dudes. Lots of us end up being seduced by the nicer wheels, thus defeating the financial purpose of buying them used.

 

Depending on your needs and situation, remember that there is some value-add in buying a new car; that initial depreciation is not just sunk cost. It buys you warrantee, an engine full of new hoses and fluids, the latest safety technology, a much bigger financial head start on future trade-in possibilities, and--most important, if you might be putting kids in the car--piece of mind.

 

But of course, a two-year-old car only driven by a nun in Topeka, will often come "close enough" to make the used version a much better value, particularly if future trade-ins aren't on your radar.

 

FWIW, my last new car before this one--2005--was one of those demos they give to the car company execs to drive around for a month, then dump on the lot to sell. Lots of upside to this: these are always custom, up-featured models, and because you are technically buying a used car--though, same year, so actually new--you will get way more car than you should, for the same or less money.

 

There is some minor downside in that you don't know how the dumbass drove the thing. But my attitude was...it's well worth the gamble. It only had a couple of hundred miles on it.

 

And I'm happy to say that it paid off: I bought it in 2005 and sold it in 2015, and I sold it for nearly 50% of my original purchase price. It's the only reason I was able to buy a new car this most recent go-round. So buying a demo definitely worked out well for me in this case, Maybe worth looking into as a good middle-ground.