Why lease a car? | Imamother

supty

Fri, Jul 24 2015, 4:14 pm

Because old cars have so many problems, and you end up putting so much money and time into them. Cars usually don't have many issues in the first 2-3 years. It may come out cheaper in the long run to buy, but for people who don't have the time or patience to be dealing with an old or used car, leasing is really convenient. It's also pretty affordable- some cars go for under $200/month. As an added bonus, it's definitely nice to be able to have a brand new car every few years Smile

MMCH

Fri, Jul 24 2015, 5:34 pm

heres how we looked at it
we were only able to afford to buy a used car, which from personal experience, and seeing from my parents, we definitely would have to put money into it, old and used cars could possibly have a lot of problems that need a lot of tending to, and with two busy parents, plus kids, plus carpool, who has time to to bring cars into the mechanic? (we certainly dont)

so we figured now, we will lease, its a little over $200 a month, theres a damage waiver/warranty, you get a brand new car with no issues.
Im sure financially speaking, in the long run, its cheaper to own, but we felt for now leasing was a good option for us.

amother

Mint

Fri, Jul 24 2015, 5:57 pm

Guys... I'm actually a sales woman in a local leasing company. My pitch that I give to people that want to buy a used car is as follows (I'm a TRUE believer to what I say) here goes.
I tell everyone that inquiries about a used car/off lease that unfortunately people don't take care of their leased cars as much as someone that owns their car. My recommendation is that you lease the car and after 3 year of the lease you have an option of buying it. You know that you did your oil changes all the time. You know that there was/wasn't an accident on the car. You j now what spilled in the car. You know what broke in your car... list can go on and on. And I did the math with many customers and it comes out almost the same amount. Now let's say if during the 3 years of leasing (having in mind that you will buy it) ch"v there was an accident and the car doesn't drive the same... you say it's a good thing you didn't buy it and give it back and take a new one... punch line- I followed up on some customers that told me 3 years ago that they want to buy (maturity date was coming up) and they were so thankful they didn't buy because of numerous reasons.

So before you think of buying listen to my advise. I am anonymous because lots of people know me and what I believe. Good luck with your decision.

cfriedman2

Fri, Jul 24 2015, 6:01 pm

No reason to lease unless you enjoy throwing money down the drain. When you own a car you can finance it and payments can be similar to a lease and then when you sell it you will have a downpyment on a new car. Cars are made pretty well now and a used newer car should not have any major issues for awhile. And if you think ull have issue then when ur done paying off the car set aside the same amount u were paying for your payment into an account for repairs or a downpyment on a future car.

amother

Peach

Fri, Jul 24 2015, 7:14 pm

amother wrote:

When you buy a used car you also find out if it's been in any accidents. You can see if there are any yucky spills. My current car is 9 years old. (Husband bought it new before we were married) We have never had any major repairs needed. Our other car is used. We've been driving it for 3 years no issues.
Cfriedman gave very good advice. It's not worth throwing away your money.

amother

Gray

Sun, Jul 26 2015, 8:55 am

We need our finances to be more or less predictable. We started off buying a used car and every often we were hit with repairs that were 600-800$ that we had no way of covering. It is easier for us to set aside 180 each month for a lease with no headaches or additional payments than to have unexpected big bills. Yes in the long run we are paying more but we don't have that stress having a car at the mechanic with no money to cover the repairs

Amarante

Sun, Jul 26 2015, 11:02 am

Except in rare situations, there is no financial benefit to leasing.

People lease because it is cheaper in the SHORT TERM to lease than to buy and/or they lease because they want a new car every few years.

Cars are made much better than they were years ago and if you select wisely, you will own a reliable means of transportation for many years with relatively minimal expenses - as compared to the *real* costs of leasing a car.

Financially, you buy a car and drive it until it no longer is reliable. For most people I know who have bought well reviewed cars (I.e. Honda, Toyota, Lexus) their cars last for 10 years or more under normal conditions. Yes, there are things that need to be fixed as time goes on but the cost is nothing as compared to what the costs would be to keep buying or leasing cars and getting rid of them after three years. If it costs me $2000 to do normal repairs on my 10 year old car and those repairs get me through at least another year - if not more - it is still significantly cheaper than monthly lease or car payments; increased insurance premiums for a new car plus the very high sales tax one must pay. In other words, divide the cost of repair by the number of months of use you will get.

The very best way to achieve financial stability in this area is to buy a car you can afford with payments. When the payments are ended, put those payments into a bank account and then you will be able to either pay cash for your next car or have a very significant down payment.

If you lease a car, you have NOTHING at the end of the lease and so you are going to be harnessed to a yoke of perpetual car payments.

Again, cars manufactured today, if chosen wisely are reliable for many years. I have driven all of my cars for more than a decade so I buy new even though I know that I lose depreciation for the first year but it doesn't matter to me since I am not planning to sell anyway after 3 or even 4 years. However, another way to go is to get a good used car - certified from the dealer costs a bit more but it gives one peace of mind.

Obviously people should spend their money however they like. If you have read anything about the "millionaires next door", most of them pay cash for cars and drive them for long periods of time. :-)

Last edited by Amarante on Sun, Jul 26 2015, 12:31 pm; edited 1 time in total

SRD

Sun, Jul 26 2015, 11:58 am

Amarante is spot on. All personal financial advice says you should not lease a car unless you have some special circumstance that makes it worthwhile.

There are two reasons to lease a car: Tax benefits (if you own a business and can deduct most of the cost), and if you like getting a new car every three years. Most people don't get the tax benefit, and most people can't afford a new car every three years.

Before you decide, you should work out the total cost of the lease and a purchase over time - keeping in mind how long you would keep a car you owned. For example, if the lease is $300 a month, and a purchase is $400 a month - each for 3 years, in 3 years you either own a car and have $0 in payments, or own nothing and get a new car with $300 lease payments again. Given that most cars can easily last 10-15 years (more if you maintain it well) - buying is far cheaper in the long run. But, if you want a new car every 3 years, it's cheaper to lease.

We own a 15 year old Nissan that has never needed more than $1500 in repairs in a year, and a 7 year old Honda that has not needed more than $700 in repairs. We keep money saved for those expenses - knowing every so often you need new tires, or breaks, or whatever. We also maintain them and get oil changes every 3 months, and fix things when they break.

Good luck!

Amarante

Sun, Jul 26 2015, 12:17 pm

Optione wrote:

Thank you all for your help.

In general, how thorough is the warranty? Like what if I do damage to it?

If you are in an accident, your personal insurance would cover it just as if you "owned" a car. That is another reason why leasing a car is more expensive since insurance on any new car is more expensive than on an older car.

All new cars have warranties so there is no extra warranty when leasing a car. If one selects wisely, nothing needs to be done under the warranty anyway.

One point people haven't mentioned about leasing is that generally you will get penalized if you return a car that is not in *perfect* physical condition. This means every little ding or scrape that would be considered normal in a car is charged against you as well as any wear and tear that might occur normally especially if one has children.

You are also charged if one goes above the mileage that one purchases. This may or may not be an issue depending on your use of the car.

Amarante

Sun, Jul 26 2015, 12:23 pm

amother wrote:

This doesn't really make sense financially. You are committing to $2200 per year plus increased costs for insurance and the upfront costs of leasing which generally include down payment and other costs.

Instead of paying the lease company, why don't you pay yourself by accumulating savings. You will never be able to dig yourself out of a financial hole by pouring money down the drain like this.

I apologize as I am not trying to disparage you personally but there is no way that leasing a car makes financial sense - especially for people like you who don't have even a minimal emergency fund to cover normal costs of car ownership.

As others have posted, with a good car, the costs of repair don't occur until the car is relatively old and by that time, you own the car with no payments so the repairs would be coming out of the amount you have saved by NOT having loan or lease payments. And the cost of repairs would ALWAYS be less than what you would have spent on payments.