Car Lease v. Buying

[notanonymous]

AFAIK, listed in b... tolls, can be counted on both sides so it would be: a) standard mileage (e.g $.55/mile) + tolls and parking vs. b)actual expenses of lease, repairs, tolls and parking...

Now that you remind me, I think you are correct.

[SamKey]

Just FTR You can get monthly rentals for about $550 a month

[Lou Bob]

Just FTR You can get monthly rentals for about $550 a month

it's much cheaper to lease

[george]

it's much cheaper to lease

I'm not arguing, but just remember that when renting with the right CC you don't need to buy insurance.

[Lou Bob]

I'm not arguing, but just remember that when renting with the right CC you don't need to buy insurance.

that's only for cdw...liability doesn't have a high coverage if u just want the state minimum

[SamKey]

If you know how to rent you can get fully covered for the same price

[Super Speed]

If you know how to rent you can get fully covered for the same price

Mind sharing some tips?

[Frostboot]

Has anyone mentioned the idea that people may not have 30K lying around to buy a new car but may have the money to enter into a lease? I know there is the idea of financing a purchase but does that change the equation (Is it more worth it to finance a purchase or lease). I look at the question similarly to the buy a house vs. rent a house question. Some people just don't have the money to put down to buy a house and are therefore forced to rent.

[skyguy918]

Has anyone mentioned the idea that people may not have 30K lying around to buy a new car but may have the money to enter into a lease? I know there is the idea of financing a purchase but does that change the equation (Is it more worth it to finance a purchase or lease). I look at the question similarly to the buy a house vs. rent a house question. Some people just don't have the money to put down to buy a house and are therefore forced to rent.

This is a very good point, but with only limited relevance. If you only have enough money for the cheapest lease within the category you require (based on utility - so cheapest compact if you just need to get from A to B, cheapest minivan if you need the extra seats and space, etc.), and can't afford more upfront or more in the monthly payment, then that's absolutely a reason to lease over any other arrangement. You can gamble on a dirt cheap used car instead, but unless you really know what you're looking at when you shop around, you may end up spending more money on the used car overall.

If however, you can afford the $300 lease on a luxury car, but not the full cost or financing payments on said luxury car, then you're just using the lease to live beyond your means. If that's your goal, then go for it, but understand that you're not doing it because it's cheaper, you're doing it because that's the only way you can get a hold of that luxury car.

[cozmohoot]

This is a very good point, but with only limited relevance. If you only have enough money for the cheapest lease within the category you require (based on utility - so cheapest compact if you just need to get from A to B, cheapest minivan if you need the extra seats and space, etc.), and can't afford more upfront or more in the monthly payment, then that's absolutely a reason to lease over any other arrangement. You can gamble on a dirt cheap used car instead, but unless you really know what you're looking at when you shop around, you may end up spending more money on the used car overall.

If however, you can afford the $300 lease on a luxury car, but not the full cost or financing payments on said luxury car, then you're just using the lease to live beyond your means. If that's your goal, then go for it, but understand that you're not doing it because it's cheaper, you're doing it because that's the only way you can get a hold of that luxury car.

Well said

[zale]

This is a very good point, but with only limited relevance. If you only have enough money for the cheapest lease within the category you require (based on utility - so cheapest compact if you just need to get from A to B, cheapest minivan if you need the extra seats and space, etc.), and can't afford more upfront or more in the monthly payment, then that's absolutely a reason to lease over any other arrangement. You can gamble on a dirt cheap used car instead, but unless you really know what you're looking at when you shop around, you may end up spending more money on the used car overall.

If however, you can afford the $300 lease on a luxury car, but not the full cost or financing payments on said luxury car, then you're just using the lease to live beyond your means. If that's your goal, then go for it, but understand that you're not doing it because it's cheaper, you're doing it because that's the only way you can get a hold of that luxury car.

+1

I lease the cheapest car I can find that gets me from point A to B. I just need a reliable car and don't want to take the risk of buying used.

I have never understood those people who lease what they can't afford to buy.

[cozmohoot]

+1

I lease the cheapest car I can find that gets me from point A to B. I just need a reliable car and don't want to take the risk of buying used.

I have never understood those people who lease what they can't afford to buy.

maybe buy out your own lease? Especially if it's a Honda which is usually reliable

[JustaHocker]

This is a very good point, but with only limited relevance.

+1
The difference between the monthly lease payment vs the finance payment is not as great as you might think.

I like to categorize those who lease into three categories.
1. The Rich. Those who can afford to spend the extra it will cost them to lease vs buying the same car and selling it a few years down the road, thereby avoiding the hassle of selling/trading in the car later.
2. The Poor. If you have little or no money to put down, and can only come up with a small monthly payment, leasing is for you.
3. The Foolish. Who think that leasing is really a good way to save money vs buying a reliable used car.

[cozmohoot]

What about people who get a tax write off for their lease if they own their business?

[Dan]

4. Those are bad at negotiating the price for a new car.

[Frostboot]

5. Those that are very "hard" on their cars and would kill their car if they had it for 6 years but not 3.

[alpicone]

I have never understood those people who lease what they can't afford to buy.

I feel like most people fall into the category of leasing BECAUSE they can't afford to buy (based on conversations with people who  lease).

I just need a reliable car and don't want to take the risk of buying used.

This is the most common reason for people not wanting to buy used... The risk of paying for repairs on a used car. There is a huge premium that you are paying to avoid that risk. You probably paid 10X what they repairs/maintenance would have been had you bought used.

Now granted there are some really cheap leases out there like Civic's for $200 a month but that is still $7,200 for a 3 year lease which is half the cost of a new car. After two leases you would have paid for a full Civic and still have no car. I am pretty sure that a 3 year old Civic and a 6 year old Civic have similar reliability records.

Bottom line is if you can't pay CASH for the car you cant afford it. As with everything in life borrowing to purchase a depreciating "asset" is usually a bad financial decision. Unless you are willing to pay a few thousand dollars to avoid "the risk of buying used."

[zale]

I feel like most people fall into the category of leasing BECAUSE they can't afford to buy (based on conversations with people who  lease).

This is the most common reason for people not wanting to buy used... The risk of paying for repairs on a used car. There is a huge premium that you are paying to avoid that risk. You probably paid 10X what they repairs/maintenance would have been had you bought used.

Now granted there are some really cheap leases out there like Civic's for $200 a month but that is still $7,200 for a 3 year lease which is half the cost of a new car. After two leases you would have paid for a full Civic and still have no car. I am pretty sure that a 3 year old Civic and a 6 year old Civic have similar reliability records.

Bottom line is if you can't pay CASH for the car you cant afford it. As with everything in life borrowing to purchase a depreciating "asset" is usually a bad financial decision. Unless you are willing to pay a few thousand dollars to avoid "the risk of buying used."

From my own experience, you are completely off the mark.

Before I leased my first car, I spent around 6 months researching new and used options. Every single dealer I called or went to was a sleazy slimebag. It's all the same story: the dealers polish the outside of the car nicely to give off the impression that the car is in good condition, while under the hood the engine is taped together with duct tape...

Also, it doesn't all boil down to money. A lot of it is about hassle. I can't afford to wake up on a winter morning and be late for work because my used car won't start. I can't afford to get stuck on the side of the freeway because my used car starts overheating. These hassles are things that people of the last generation used to live with (including my dad), but I am not interested in putting up with it.

I have a friend who has been a mechanic for over 30 years. He told me that a car getting into an accident is very similar to a person getting into an accident. A person who suffers a fall etc may have all kinds of trouble for the rest of their life, a lot of which the doctors can't foresee. Similarly, when a car gets into an accident or suffers flooding, even if a mechanic gets it running again, it may have all kinds of unforseen trouble, and you never know when it will happen.

Places like Carfax will only tell you incidents that were reported. Many, many accidents go unreported.

Bottom line, with a used car, you don't know what you are getting. You could get lucky, but you can also blow 10k on a lemon.

MOST people that I know choose to lease to avoid this problem and to have peace of mind.

[zale]

There is another factor:

A car is a depreciating, deteriorating asset. The moment you drive it off the lot it's already worth less than what you paid for it, and as time goes by, it is worth less and less.

You expect a brand new vehicle, especially a good make such as Honda to last you for 10 years, but in reality, a lot of factors can contribute to express deterioration, and after 4-5 years you may find yourself going to the mechanic and spending more money than you would like, ultimately wishing to sell it and get a new one.

For example, if you live in NYC and park your car on the street, the salt the city uses in the winter to melt the snow kills your tires and wheels. It also rusts the underside of the body and can cause untold trouble. This is besides having people crash into you from the front and back during parallel parking.

Repairs cost far more today than they used to, especially significant repairs. Even replacing the tires has gone up like crazy.

There are a lot of good reasons to buy, but there are also a lot of good reasons to lease and not have to deal with the trouble.

[Mikeoracle]

From my own experience, you are completely off the mark.

Before I leased my first car, I spent around 6 months researching new and used options. Every single dealer I called or went to was a sleazy slimebag. It's all the same story: the dealers polish the outside of the car nicely to give off the impression that the car is in good condition, while under the hood the engine is taped together with duct tape...

Also, it doesn't all boil down to money. A lot of it is about hassle. I can't afford to wake up on a winter morning and be late for work because my used car won't start. I can't afford to get stuck on the side of the freeway because my used car starts overheating. These hassles are things that people of the last generation used to live with (including my dad), but I am not interested in putting up with it.

I have a friend who has been a mechanic for over 30 years. He told me that a car getting into an accident is very similar to a person getting into an accident. A person who suffers a fall etc may have all kinds of trouble for the rest of their life, a lot of which the doctors can't foresee. Similarly, when a car gets into an accident or suffers flooding, even if a mechanic gets it running again, it may have all kinds of unforseen trouble, and you never know when it will happen.

Places like Carfax will only tell you incidents that were reported. Many, many accidents go unreported.

Bottom line, with a used car, you don't know what you are getting. You could get lucky, but you can also blow 10k on a lemon.

MOST people that I know choose to lease to avoid this problem and to have peace of mind.

My feelings exactly. I had some bad experiences with buying used cars that had a clean carfax but then later found out that they were definitely in accidents before and had to deal with the costant issues.
I cant look at it as the cost of the maintanence/fixes vs the premium cost of a lease, because I cant afford the time to have my car in the shop.
If I dont have a car I cant get to work and I have a carpool relying on me.
My primary reason for leasing is to avoid the hassle that comes with buying used and I cant afford new.