Guys, can you give me the short course of the pros and cons?
Thank you for your help
Thank you for your help
Lease or Buy?
- Thread starter bobbob
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lots of questions first:
how long do you keep your cars? do you want a new car every 2-3 years? Is your company paying for it or do you own your own business? (tax advantages)
Sales tax laws vary by state - but I was told that in my state that the sales tax for the entire purchase price of the car is included into the lease price (in IL) not just the portion of the car that you will use. then, if you decide to purchase the car at the end of the lease - you are charged tax again for the residual value of the car. I'm sure this does not apply in every state.
compare the purchase price of the car you want to buy. figure out the value of the car at the end of the time you want to own it. compare the purchase cost vs. the lease cost.
If you keep your cars a long time -it probably makes sense to buy. you can also lease used cars.
how long do you keep your cars? do you want a new car every 2-3 years? Is your company paying for it or do you own your own business? (tax advantages)
Sales tax laws vary by state - but I was told that in my state that the sales tax for the entire purchase price of the car is included into the lease price (in IL) not just the portion of the car that you will use. then, if you decide to purchase the car at the end of the lease - you are charged tax again for the residual value of the car. I'm sure this does not apply in every state.
compare the purchase price of the car you want to buy. figure out the value of the car at the end of the time you want to own it. compare the purchase cost vs. the lease cost.
If you keep your cars a long time -it probably makes sense to buy. you can also lease used cars.
You will have two schools of thought but on this forum, you are most likely to see advice against leasing. In reality, it depends on what your plans are. Leasing is another form of debt and all else being equal (ceteris paribus), leasing or buying through a car loan should be the same thing.
Depends on your personal feelings about car ownership and driving pleasure.If you prefer to drive a new car every few years,lease,i think it is the more prudent option in this case,if you wish to drive the same car for several years,buy,though it is in my opinion you need to keep a vehicle for at least 10 years to recover your investment not that a vehicle is an investment in any form. A necessary evil is a better term.I personally for the most part enjoy maintaining and getting the most out of a vehicle although there comes a time when it becomes a futile effort and a must to move on.
I don't think you can find a reputable financial advisor that will recommend leasing over buying anymore, unless you perpetually buy new cars, which is also not financially sound.
A good accountant can pretty much get you the same tax advantages buying as you can get leasing. And buying the car after the lease is up is the ultimate no-no.
Higher mandatory insurance on the lease. High payoff on the lease should there be a total, can leave you holding the bag for the difference in payoff vs value of the vehicle, or worse yet have your insurance company repairing a vehicle that should have been totalled.
A good accountant can pretty much get you the same tax advantages buying as you can get leasing. And buying the car after the lease is up is the ultimate no-no.
Higher mandatory insurance on the lease. High payoff on the lease should there be a total, can leave you holding the bag for the difference in payoff vs value of the vehicle, or worse yet have your insurance company repairing a vehicle that should have been totalled.
Some people will lease a car if what they want is the first year of a new generation vehicle. Like a new Cruze for example. Leasing removes the long-term risk you have with a new generation vehicle (bugs, glitches, etc). After the 3 years are out, you can then decide if you want to keep the car long term (and buy it), or not. The obvious flip side of the coin is if you DO decide to buy it, you often pay more in total for the car than you would have if you had bought it in the first place. You're essentially paying to defer the risk to the auto maker.
I've never leased a car, but would if I felt like the risk was too high on a brand new car that I just HAD to have. Like when Toyota/Subaru's new FT-86 comes out.
I've never leased a car, but would if I felt like the risk was too high on a brand new car that I just HAD to have. Like when Toyota/Subaru's new FT-86 comes out.
Leasing is rarely a financially smart move. It does allow you to drive a car that you otherwise probably couldn't afford, but you're locked into a perpetual car payment.
I read one story here of a guy who was bragging about being close to paying off his vehicle. He leased, and then purchased it at the end of the lease. He had been making payments on the same vehicle for more than a decade.
I also used to work with a guy who leased a pickup for 3 years. At the 2-1/2 year mark he was at his mileage limit, so he bought an old beater to drive and let the pickup sit for 6 months before turning it in at lease end.
He then leased another vehicle.
I read one story here of a guy who was bragging about being close to paying off his vehicle. He leased, and then purchased it at the end of the lease. He had been making payments on the same vehicle for more than a decade.
I also used to work with a guy who leased a pickup for 3 years. At the 2-1/2 year mark he was at his mileage limit, so he bought an old beater to drive and let the pickup sit for 6 months before turning it in at lease end.
He then leased another vehicle.
I've done both. I personally like leasing, if it's a factory program. On my Toyota Sienna back in 05, I leased because the money factor was so low, that the 'interest' cost was approx $900 for 3 years, which was less than financing. I ended up buying the van off lease after 3 years and still have it. Factory leases are the ONLY way to go in my opinion if you have great credit. They generally have more wiggle room with little imperfections when you return it and they have more interest in keeping you happy so you buy/lease another one. If you keep your cars in good shape, leasing is a good way to go. If you have the ability to keep under the mileage as well. I have also leased a Honda thru their factory lease program that was a good experience. My current 2010 Mazda, I chose not to lease for a number of reasons.
Originally Posted By: bobbob
Guys, can you give me the short course of the pros and cons?
Thank you for your help
There really is no short course on Leasing vs Buying!
But I'll try.
If you always want to stay in a new car every 2-3 years and you don't excede the mileage limit...Lease! But remember, you have to insure the vehicle the same as if you own it and maintain it the same way. All repairs should be under warranty. If the engine fails for example, you better have reciepts for oil/filter changes and they better be done as per owners manual. Best is to do all maintenance at the dealer where you Leased the vehicle so they have all records.
When you turn in your leased vehicle on another leased vehicle, remember too, that you are responsible for all the dings, dents and scratches that the dealership is going to have to repair in order to prep the vehicle for resale. And if the tires are in need of replacing at the time you turn in the vehicle, you will/may be HIT on that to.
Now, do all dealers charge for all of these things when turning in a leased vehicle? No, but they can! If you lease again from the same dealer, and again and again on new vehicles, most likely they will wave all of those things issues.
One nice thing about leasing is that you get to try new vehicles every couple of years and you can always choose to buy it should you choose to.
One of the things that I don't like about leasing is...
You always have a car payment even though it may be less than if buying the same vehicle. And you never have the luxury of being with out payments(paying off the vehicle).
Another thing I don't like is, should you turn in early your leased vehicle and want to walk away, the dealer has the right to charge a large fee for terminating the lease early.
There is so much more to leasing vs buying. I haven't even touched the topic of buying yet!
Guys, can you give me the short course of the pros and cons?
Thank you for your help
There really is no short course on Leasing vs Buying!
But I'll try.
If you always want to stay in a new car every 2-3 years and you don't excede the mileage limit...Lease! But remember, you have to insure the vehicle the same as if you own it and maintain it the same way. All repairs should be under warranty. If the engine fails for example, you better have reciepts for oil/filter changes and they better be done as per owners manual. Best is to do all maintenance at the dealer where you Leased the vehicle so they have all records.
When you turn in your leased vehicle on another leased vehicle, remember too, that you are responsible for all the dings, dents and scratches that the dealership is going to have to repair in order to prep the vehicle for resale. And if the tires are in need of replacing at the time you turn in the vehicle, you will/may be HIT on that to.
Now, do all dealers charge for all of these things when turning in a leased vehicle? No, but they can! If you lease again from the same dealer, and again and again on new vehicles, most likely they will wave all of those things issues.
One nice thing about leasing is that you get to try new vehicles every couple of years and you can always choose to buy it should you choose to.
One of the things that I don't like about leasing is...
You always have a car payment even though it may be less than if buying the same vehicle. And you never have the luxury of being with out payments(paying off the vehicle).
Another thing I don't like is, should you turn in early your leased vehicle and want to walk away, the dealer has the right to charge a large fee for terminating the lease early.
There is so much more to leasing vs buying. I haven't even touched the topic of buying yet!
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JTK
$100 Site Donor 2025
Originally Posted By: JDD
..On my Toyota Sienna back in 05, I leased because the money factor was so low, that the 'interest' cost was approx $900 for 3 years, which was less than financing. I ended up buying the van off lease after 3 years and still have it.
Same exact situation for me with our 2008 Honda Odyssey LX. I leased it for 3yrs/36 and recently bought (financed) it outright.
The initial outlay of cash was low, as was the monthly lease payment. The buy-out price was also reasonable (~$15K).
It basically stretches your payments way out. Obviously it's not the most efficient financial move, but if the numbers are manageable for YOU, that's all that matters.
I personally would never drop a large sum of cash for the purpose of purchasing or paying-off a vehicle (newer one). I've done it in the past, but would rather save and use my cash elsewhere, with leasing and financing so readily available and reasonable.
Joel
..On my Toyota Sienna back in 05, I leased because the money factor was so low, that the 'interest' cost was approx $900 for 3 years, which was less than financing. I ended up buying the van off lease after 3 years and still have it.
Same exact situation for me with our 2008 Honda Odyssey LX. I leased it for 3yrs/36 and recently bought (financed) it outright.
The initial outlay of cash was low, as was the monthly lease payment. The buy-out price was also reasonable (~$15K).
It basically stretches your payments way out. Obviously it's not the most efficient financial move, but if the numbers are manageable for YOU, that's all that matters.
I personally would never drop a large sum of cash for the purpose of purchasing or paying-off a vehicle (newer one). I've done it in the past, but would rather save and use my cash elsewhere, with leasing and financing so readily available and reasonable.
Joel
With super low interest rates I would rather buy new than lease a new car every 3 years.
Superbuick96
Site Donor 2025
Id say leasing is probably better for someone with expendable income. If money is no object, then renting a car will be of no concern. Sure the average Joe can get a cheaper monthly payment leasing, but its like renting a house, you'll always have that monthly payment.
Leasing is just a loan against the expected depreciation of the car plus some profit for the lender. If you can get a favorable interest rate and you live in a place where you only pay sales tax on the leased portion, then leasing can make sense.
When analyzing the lease, disregard the monthly payment. All you care about is the depreciation, fees, interest rate and sales tax. That's your cost to lease the car for N years. Compare this to financing the vehicle, including any difference in sales tax, then make your decision.
When analyzing the lease, disregard the monthly payment. All you care about is the depreciation, fees, interest rate and sales tax. That's your cost to lease the car for N years. Compare this to financing the vehicle, including any difference in sales tax, then make your decision.
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