Auto leasing

[daves87rs]

Leasing also comes in handy if you are "testing" a car, so you are not stuck with a piece of junk...


My co worker leased a 2011 Avenger a few years ago...wanted to see if Dodge was not as bad as they said..Helps he got a really nice deal out of it too.

Next week, he buys it off the lease...

 

[Pop_Rivit]

For some business purposes it's probably a good alternative.

For the average person to go out and lease a personal vehicle is financially stupid. I once saw a post here where someone was proud of the fact that they had leased their vehicle, then purchased it afterwards and were close to paying it off. They had been a slave to payments for nearly 10 years, and when doing the math it cost them nearly double the original purchase price by doing the lease and then financing the residual at the end of the lease.

Making payments has become normalized, and now leasing for personal use has also become normalized. Leasing a car is the most expensive way to own a car-period. And when it's turned in at the end of the lease, the person leasing has been making payments for 2 or 3 years with absolutely nothing to show for their efforts. All they've done is pay for 2 or 3 years of depreciation.

But if it's someone who values the "experience" of a new car every couple years rather than a sound financial future, then it's an outstanding way to make others wealthy off their money.

 

[SteveSRT8]

Originally Posted By: sciphi
That being said, the odds of getting a decently-treated, low-mileage car coming off-lease are increased for savvy, patient buyers. Especially the custom-ordered cars that get leased...


I was a regular at the Tampa auction for decades. They had one lane just for lease turn ins. Got some fantastic low mileage cars there for very low prices.

 

[Shannow]

My last new car (my first also, and probably my last new car) was a novated lease. 25% Fringe Benefit's tax versus 40% marginal. Lease company got the GST back, 40% payout after 3 years, and lease included all fuels, tyres, maintenance etc. Had me owning a 3 year old 60,000km vehicle that I knew had been looked after.

It worked financially, it made sense at the time, and with the arrangement made 10 years ago this month, and me still owning the vehicle, it still worked.

An all encompassing lease wakes you up to the fact that running cars costs money. A big hit straight out of your pay ($300/wk 10 years ago) wakes a lot of people up on what it costs in real life

 

[KrisZ]

Originally Posted By: Billy007
... Some families can't afford to own a new vehicle. So they turn to leasing to be able to afford a vehicle with all the options they want.


This is exactly the mindset these days. People know they cannot afford stuff, but they still want it and they want it now. They will not compromise on the less expensive purchase because all their neighbors or friends have flashy toys so they have to have all bells and whistles as well.
But turning to lease does not make the car affordable, it just creates lower monthly payments for now, but long term it costs way more than financing and keeping the car years after the loan is paid off.

 

[jeepman3071]

Originally Posted By: KrisZ
Originally Posted By: Billy007
... Some families can't afford to own a new vehicle. So they turn to leasing to be able to afford a vehicle with all the options they want.


This is exactly the mindset these days. People know they cannot afford stuff, but they still want it and they want it now. They will not compromise on the less expensive purchase because all their neighbors or friends have flashy toys so they have to have all bells and whistles as well.
But turning to lease does not make the car affordable, it just creates lower monthly payments for now, but long term it costs way more than financing and keeping the car years after the loan is paid off.



Exactly, and that is why so many are in financial trouble.

 

[Norm Olt]

Close the loopholes in the US Tax System and most leases would die off in a year.

If it made any real SENSE (as in, dollar$ & cent$) there would be leases for washing machines, TV's, etc.

Only thing less attractive is "Rent-to-Own" (with no CREDIT CHECK!) where you cab get a $399 computer for "only 52 ea$y payments of $29.95 + tax".

Look at the newest ad's for cell phones: "NOW, get a new one every year!" vs. a two year contract. It is almost as if they are actually GIVING you something instead of dictating contracts that have substantial penalties for early termination.

 

[doitmyself]

Originally Posted By: jeepman3071
Originally Posted By: KrisZ
Originally Posted By: Billy007
... Some families can't afford to own a new vehicle. So they turn to leasing to be able to afford a vehicle with all the options they want.


This is exactly the mindset these days. People know they cannot afford stuff, but they still want it and they want it now. They will not compromise on the less expensive purchase because all their neighbors or friends have flashy toys so they have to have all bells and whistles as well.
But turning to lease does not make the car affordable, it just creates lower monthly payments for now, but long term it costs way more than financing and keeping the car years after the loan is paid off.


Exactly, and that is why so many are in financial trouble.



Except, at BITOG, "where all the women are strong, all the men are good-looking, and all the children are above average." Garrison Keillor

 

[KrisZ]

Originally Posted By: doitmyself



Except, at BITOG, "where all the women are strong, all the men are good-looking, and all the children are above average." Garrison Keillor


BITOG is not an exception. I work with highly trained proffecionals and engineers, read analytical minds, that have similar point of view as I and other members here do. A lot of them buy outright or finance for a shrt period and then they continue to drive a paid off car for years to come. Lots of them own multiple properties, have their houses paid off and are set for the retirement.
I suspect that lots of BITOG members are in fact proffecionals in one form or another (its pretty much the nature of this site to attract this type of people) and that is why we see people frowning upon excessive dept.
It is basic logic and math to avoid debt whenever possible, so I find it as no surprise that people working in fields where analythical thinking is required see the logic behind debt free life style.

 

[otis24]

There are different types of leases. In today's used car market with higher residual values, leasing can make sense. A lot of people are payment buyers and want to trade cars every three years. Some, because they don't budget for repairs. When a car starts to need a little fixing up, they trade because they don't have the money to repair. Under a lease, you have shorter out of warranty exposure. Many people who purchase find themselves in a negative equity situation in three years. Therefore, they don't "own" anything anyway except negative equity. And for many, even if they kept it until it is paid off, it is such a heap that it isn't worth anything anyway. So, they buy something new when it is paid off. Leasing also protects you from depreciation caused by technological changes and/or styling changes. If you purchased a Chevrolet Impala in 2012, the value probably just dropped significantly due to the new 2014 Impala. Same for the Silverado. And for many buyers who find themselves upside down, leasing is a good way get into shorter payment terms, get out of negative equity and "start over".

 

[SevenBizzos]

I just had this discussion last week to a huge pro-lease guy.

His point was you'll always have a car payment, so why wouldn't you just pay on a new car every three years.....and at a lower amount. He backed this up with saying "almost everyone" has car payments and you'll still be "paying" for a car after it's paid off in maintenance.

He leased a Fusion around $300/month after some kind of down payment. So in payments alone he's paying $10,800 to rent a car for three years, which he thinks is fine.

I own 3 cars and haven't had a payment in a year. He still thinks I was dumb to buy them (because I have to replace parts and stuff).

 

[otis24]

If you are able to purchase a car in a reasonable amount of time AND have the funds to maintain it, purchasing makes sense. Leasing can be a good alternative for the financially challenged. If you purchase on a 60 month plan or greater and live paycheck to paycheck, leasing might be a better option.

 

[hattaresguy]

The "will always have a car payment" group are just bad with money and try to justify it.

Buy the Ford Fusion with $10k down and finance the rest over a reasonable period of 24-36 months. Than you can drive it for the next 7 years pretty cheaply, than sell at 10 when it starts to get old for probably around $5k.

The problem with that is most people are so stuck to payments they couldn't come up with $10k if their lives depended on it.

Also they want the loaded to the gills $35k model which they really can't afford instead of the more basic and reasonable $23k model.

 

[eljefino]

Originally Posted By: KrisZ
Originally Posted By: Billy007
... Some families can't afford to own a new vehicle. So they turn to leasing to be able to afford a vehicle with all the options they want.


This is exactly the mindset these days. People know they cannot afford stuff, but they still want it and they want it now.


These same people are victims of everything, and can't buy used cars because some invisible unicorn of unknown origin "ruined" the car, and did it so insidiously, no one in the world can detect it... particularly themselves, "experts", you know. These people know you just go to Jiffy Lube for oil and Pep Boys for tires then ignore the rest of the car... as that "maintenance" stuff is just marketing.

The folks who "ruin" used cars somehow drive on roads more pothole-y than you or I do, and buy cheap gas from communists.

 

[jeepman3071]

Originally Posted By: SevenBizzos
I just had this discussion last week to a huge pro-lease guy.

His point was you'll always have a car payment, so why wouldn't you just pay on a new car every three years.....and at a lower amount. He backed this up with saying "almost everyone" has car payments and you'll still be "paying" for a car after it's paid off in maintenance.

He leased a Fusion around $300/month after some kind of down payment. So in payments alone he's paying $10,800 to rent a car for three years, which he thinks is fine.

I own 3 cars and haven't had a payment in a year. He still thinks I was dumb to buy them (because I have to replace parts and stuff).



People like that are so incredibly stupid its scary. New cars require maintenance and repairs too, and last time I checked the dealership doesn't do it for free. As we all know, "warranties" don't cover too much.

So he paid over $10,000 to "own" a car for three years? I paid $5000 in cash for mine and have owned it for almost 5 years. Nobody buys anything anymore, it is all about credit and what your monthly payment on something can be. I'm not rich by any means, I'm a college student with a student job, but I don't buy things that I can't afford. It is all about being smart with money.

 

[kb01]

My employer has been gradually phasing out our vehicle fleet and replacing it with corporate leases, supplemented by rentals. I believe the rationale had more to do with the tax code and directly billing clients than anything else.

For individuals, I've never really understood the point of leases, unless you're independently wealthy and want a new car every three years, have a job where you need to minimize any down time on the road, or need a newer/nicer car to ferry clients around in.

 

[hattaresguy]

As said before, if you can't write it off leasing doesn't make sense. Although I suspect it could be argued to be of marginal tax advantage compared to the generous mileage write off they have these days.

Say a typical lease is 36,000 miles, so at the .55 IRS mileage allowance that's 19,800 in written off mileage assuming the vehicle is 100% for work.

That's equal to a $550 a month lease payment.

So IMHO anything over that your ahead leasing, under that just buy it and write off the mileage.

 

[Huie83]

Originally Posted By: daves87rs
Leasing also comes in handy if you are "testing" a car, so you are not stuck with a piece of junk...


My co worker leased a 2011 Avenger a few years ago...wanted to see if Dodge was not as bad as they said..Helps he got a really nice deal out of it too.

Next week, he buys it off the lease...


This is EXACTLY why I leased my Ford Explorer 6-7 months back. I was in the market for a new SUV as our 3rd child is on the way. I wanted to give the domestic manufacturers a chance and support one of the big 3. I also wanted a way out of the vehicle if it ended up being a POS. The last 15 years all of my vehicles but 1 have been foreign.

The Explorer is a okay vehicle but I am 99% sure I will not be purchasing it at lease end. After spending the last 6 months going through it and having a few "quirks" pop up that a new vehicle should not have, i'm very happy I can just walk away at lease end. This is my First Ford and unfortunately the quality is just not very good, lots of cost saving measures and cut corners in the way the vehicle is assembled. I can elaborate if anyone is interested, just PM me.

 

[jimbrewer]

Better yet, buy a six year old off lease luxury car. Not true now, but before the crash, the woods were full of them. Prices were dirt cheap.

Really, what self-respecting real estate tycoon wants to be seen in a five year old BMW 750? As I recall off-lease Jaguars XJ8s were in the 18K range. Sure you take a chance with repairs, but by then you also know which ones were the clinkers.

 

[hattaresguy]

You can still get a good deal just not that old. 3 year old just off lease big European sedans can be had at around 50% of MSRP and still come with lots of warranty.