Leasing Vs. Buying

[MarkS]

My first car I bought was a used car, I paid $8000 for the car, put in ~$4000-5000 in repairs, sold it a year and a half later for $5000. So basically I lost $7000+ in the short time I had it, besides for the aggravation I went thru, and the major hassle of not having a car for weeks (at the time when it was at the mechanic) ect.

If I would've leased I would have done much better.

I know this case is a little of a fluke, and not the typical, but I'm just trying to bring out a point.

As you said yourself,  that was a fluke.  I bought a used car 5 years ago for 7K, drove it 75K miles (so far) and spent just 1K in repairs and it still drives fine and could definitely sell for a few thousand dollars.  In the end it's costing me under $1000 a year vs a $200 a month lease payment which costs $2,400 a year (with the obvious benefit of a newer car and switching every 2 years).

[Name Changed]

As you said yourself,  that was a fluke.  I bought a used car 5 years ago for 7K, drove it 75K miles (so far) and spent just 1K in repairs and it still drives fine and could definitely sell for a few thousand dollars.  In the end it's costing me under $1000 a year vs a $200 a month lease payment which costs $2,400 a year (with the obvious benefit of a newer car and switching every 2 years).

As I said my case was a fluke, but if you would understand what I went threw, what aggravation it is, when you have a car that should be good, but is just a bundle of issues.

In your case you did very well, not everyone ends up having the same mazel.

With a lease you are paying for the menuchas hanefesh of no worries.

Also - there is the actual depreciation that the car goes down per mile. For a lease, if you end up driving the 12k miles a year, it comes out (if its $200 a month) the about $.25 a mile.

There is no way to project your cost when you buy a car, as you will have to factor in repairs, and resale for when you are done with the car which all this is unknown.

I don't think anyone would argue that when there is a deal with a lease that is an amazing price - like in the past there was the Nissan Sentra for $99 a month - then you are paying around $.13 per mile in depreciation when really the car depreciated more than that, so it comes out you are paying for the car less then the actual cost   

[moko]

Anyone who leases a new car is getting screwed whether it sounds like a great deal or not.

Be smart. Don't get screwed.

I think I see a pattern, you're not by any chance a new DR listener 
more power to you 

I think its a pretty tough call.
The OP isn't very clear if he is referring to Leasing vs. Buying a new car or a used car.
 

I think it's pretty obvious that the op is referring to leasing vs. buying used (even 2-3 yrs old). I asked a few leasing co. how much the dealer sells the car for after the lease is up and they all told me that they put it on the market for the remainder of the sticker price. I then asked him if the price will be different if the lease was a special deal and was told yes. Obviously, unless you get a great deal on a new vehicle (which i'm not sure is possible under normal circumstances) it makes sense to lease vs. buy a new vehicle but if your fiscally responsible (which apparently most of the population isn't) then it probably makes more sense to buy a good used car

[yehuda S]

I think I see a pattern, you're not by any chance a new DR listener 
more power to you

More of a DR reader. I hate the fact that bc every one around us thinks a certain way ('Oh, leasing is a great idea') , people make bad financial decisions when they could have done better otherwise.

[Name Changed]

More of a DR reader. I hate the fact that bc every one around us thinks a certain way ('Oh, leasing is a great idea') , people make bad financial decisions when they could have done better otherwise.

Being able to do better doesn't mean you are getting screwed. (At least IMHO)

[yehuda S]

I think its a pretty tough call.

The OP isn't very clear if he is referring to Leasing vs. Buying a new car or a used car.

I recommend buying used. For the record I  did not start this thread. It was broken off a different one.

[Ergel]

More of a DR reader. I hate the fact that bc every one around us thinks a certain way ('Oh, leasing is a great idea') , people make bad financial decisions when they could have done better otherwise.

I think I have mentioned this before but from your posts (and this may not actually be true) that you are very bothered by other people's (financial) decisions. IME you will lead a happily life if you don't concentrate on that and concentrate on your own decisions (obviously you should help people out when you can, but if they don't listen, don't take it personally)

[judahk88]

Anyone who leases a new car is getting screwed whether it sounds like a great deal or not.

Be smart. Don't get screwed.

Anyone who makes a blanket statement that leasing is “getting screwed” clearly does not know his math.
So let’s start this off as basic as possible so everyone can understand this.
There are 3 ways that you can purchase a car.
1^st you can purchase a car for cash
The 2^nd way you can purchase the vehicle is by taking a loan & paying interest. So if the going rate is about 3% and you ended paying about $1000 worth of interest after five years would you say you got ripped off?
Now the 3^rd way you can purchase the car is by leasing it and then purchasing it at lease end for a pre determined price at the end of the lease, which is about 1000 more than financing.
So let’s explain how we come to these numbers
Now when you lease a car there are 2 parts to the payment. 1 part is interest and 1 part is depreciation you put the two together you have a monthly payment.
Now once you take the sum of your total monthly payments & add the bank fee & add the buyback you will be within $200 of the total of payments of the finance amount. The only extra cost would be the finance charge if you decide to purchase the vehicle at the end of the lease and finance it, which would typically add $800 to your cost. So if you’re total cost of ownership after all the financing is about $1000 more there are a lot of advantages
1.       More affordable monthly transaction.
2.       A 3 year test drive that gives you the option to just walk away if you don’t want the car and not have to deal with the dealers taking advantage of you at trade in time.
3.       No risk of accelerated depreciation which can happen if the car gets a bad rep. (Anyone remembers Toyota gas pedal issues? Those cars lost $2500 per car)
4.       No risk of accelerated depreciation which can happen if the car was in an accident
5.       No risk of accelerated depreciation which can happen if the car looks like a real Brooklyn car J
6.       No risk of accelerated depreciation which can happen if you’re an EMT doing chesed

The biggest misconception stems from people leasing an apartment. You have this landlord who bought this house for $500,000 and rents you an apartment for $2000 per month now in 10 years this landlord goes ahead and sells this apartment for $500k or more and all the while the lessee has been helping the landlord pay his mortgage.

Now take a car you purchase it for $20,000 the very next day with only one extra mile on it you lost money. So why would paying interest which is acceptable & depreciation which is inevitable mean that you are getting ripped off?

By the way there are some cases where leasing is actually cheaper. When a manufacturer will sometime give extra rebates towards a lease that would not be available towards a purchase such as the current town & country deal Chrysler is actually giving 3000 extra in rebates which means a net 2000 in savings.

[Name Changed]

+1

Very much agree with what you wrote

Just add a point that you could negotiate the buyout price on a lease, and you likely could end up paying less that if you would buy it in full (e.g. As per your case where the buyout comes out $1000 more, if you get negotiate to $1000 less - you coume out equal)

[yehuda S]

Here is my personal experience:

My first car was a leased Accord which I got with a tiny upgrade, 18k miles for 28 months. total cost? $9000.

The new car feeling disappeared three weeks later when it was majorly rear ended by a hit a run driver on Shabbos.

My current car is a used spotless V6 '04 Accord with every conceivable upgrade, 84k miles. Cost $8500. If I make a $300 payment for 28 months, the car is mine free and clear for however long it lasts.

[yehuda S]

I think I have mentioned this before but from your posts (and this may not actually be true) that you are very bothered by other people's (financial) decisions. IME you will lead a happily life if you don't concentrate on that and concentrate on your own decisions (obviously you should help people out when you can, but if they don't listen, don't take it personally)

We don't live life in a bubble. The reason I've made foolish financial decisions is because I never stopped to challenge the status quo. Our decisions affect other people too. If someone had stopped and told me what a bad decision I was making I could possibly have saved myself some grief.

[Name Changed]

Here is my personal experience:

My first car was a leased Accord which I got with a tiny upgrade, 18k miles for 28 months. total cost? $9000.

The new car feeling disappeared three weeks later when it was majorly rear ended by a hit a run driver on Shabbos.

My current car is a used spotless V6 '04 Accord with every conceivable upgrade, 84k miles. Cost $8500. If I make a $300 payment for 28 months, the car is mine free and clear for however long it lasts.

Buying a used car is Mazel, sometimes you will do good, other times not.

What would you say if you haven't even finished paying off your car and need to replace the transmission ($2000) besides that you need to come up with the money, at this point you are hesitant if its worth to fix it, but on the other side you didn't even finish paying off the car, so if would be a great loss to just sell it as is.

I'm just trying to figure out what you are exactly trying to bring out. There is a big difference in new vrs used, which one are you trying to compare to a lease?

As I posted earlier, I myself bought. I think it makes more sense. (In most cases) but I don't think you are being screwed by leasing.

My car is 2 years old, has 30k miles, and still feels new.

Sorry for your loss

[sky121]

I don't believe its 100% a bad idea to lease I just think a lot of people are leasing shouldn't be, since they can't afford it. If you have money and you want to, go for it. But when I say have money, I mean paying full tuition.

[Ergel]

We don't live life in a bubble. The reason I've made foolish financial decisions is because I never stopped to challenge the status quo. Our decisions affect other people too. If someone had stopped and told me what a bad decision I was making I could possibly have saved myself some grief.

And you can live life blaming your poor decisions on others or yourself

[wierdal832]

I don't believe its 100% a bad idea to lease I just think a lot of people are leasing shouldn't be, since they can't afford it. If you have money and you want to, go for it. But when I say have money, I mean paying full tuition.

i agree only if you can afford it, but you dont have to be paying full tuition to lease

[sky121]

i agree only if you can afford it, but you dont have to be paying full tuition to lease

Listen, at the end of the day everyone has to look at their own financial situation and decide what is best.
But, in General I don't think most people should be leasing.


             Also, everyone picks and chooses what they spend money on. That's just how the world runs.

[yehuda S]

And you can live life blaming your poor decisions on others or yourself

Or we can all make smart decisions together!

I have friends and relatives who struggle daily and it's not bc they are stupid. It's because we grew up in a society that makes poor financial decisions as a whole. How can you argue that it doesn't affect us all?!

If you want me to just make my own good decisions and be happy you must also think I should just ignore others misery and struggles right?

[moko]

And you can live life blaming your poor decisions on others or yourself

spreading the word about your own foolish decisions and how you arrived at them can be very helpful to others. They wont have to learn from their mistakes they can learn from yours

Listen, at the end of the day everyone has to look at their own financial situation and decide what is best.
But, in General I don't think most people should be leasing.
 Also, everyone picks and chooses what they spend money on. That's just how the world runs.

most people dont seem to be able to do that
http://www.statisticbrain.com/credit-card-debt-statistics/

[judahk88]

Listen, at the end of the day everyone has to look at their own financial situation and decide what is best.
But, in General I don't think most people should be leasing.


             Also, everyone picks and chooses what they spend money on. That's just how the world runs.

But if a person cant afford a lease why would they be able to afford a finance or cash purchase?

[sky121]

But if a person cant afford a lease why would they be able to afford a finance or cash purchase?

It's not necessarily about being able to afford the monthly payment on a lease. It's about not being able to afford to put out all that money and have nothing to show for it at the end of 3 years. If I had leased my car 7+ years ago I'd still be putting out the money each month and would have already spent more than what I paid for my car.