Have you ever leased a vehicle? Which one(s)?

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Originally Posted By: JeffKeryk
"A heavily subsidized lease, usually achieved by imputing an absurdly high residual value, may end up at a lower capital cost per mile than a purchase, but this isn't typical."

A high residual value is a key reason leasing our RX 450h made sense. A lease is simply paying depreciation on the vehicle. The depreciation of these cars is lower than most.


Your friend is a high residual value which carries from lease carrier to lease carrier. Most times the manufacturer has the best deal because they are the easiest on the vehicle inspection at the end of the lease for damages and excess wear and tear.

What people don't fully comprehend, you have the same residual value and the same depreciation whether lease, finance, or cash especially on the sticking point of confusion, mileage! Whether lease, finance, or cash, mileage lowers the end value of the car whether sale or lease residual value. The car does not know the difference. It's been mentioned here that posters don't want to pay for excess mileage so they refuse to lease because it's going to cost them more in the end. What? That's stupid. If you put more mileage on a vehicle than average, isn't your car with less when you sell it? In a lease you are just paying for that excess depreciation by paying a per mile charge. It's all the same. Whether a per mile charge for the excess mileage or selling the vehicle for less money because it had more miles on it.

A lease is completely negotiable. You first want to negotiate the cash price of the only a new car! as if you are paying cash. Than you ask them to give you a price on a no money down lease 3 year lease. Most times they want money up front to pay the State sales tax as in a lease you pay the sales tax monthly but the dealer pays it all upfront!
 
Lexus models do typically have good three year residuals, as do most Toyota products.
This does bring lower leasing costs without much subsidy and you're right in stating that an expensive three year old car is not an easy thing to sell yourself.
You're also right in stating that you pay only for depreciation plus cost of capital when leasing, but you're also paying the most costly years of depreciation on a three year lease.
I have no idea how seriously you hunted for a bottom dollar retail on your car and I also have no idea what you'll get hit for in excess mileage charges, or if that even applies in your case.
I do know that excess mileages charges on leases run from quite reasonable to truly extortionate, but I'm sure that your knew what your were looking at going in.
I get a lower capital outlay per mile by buying, but we typically have our cars for a number of years and miles.
It's also always cheaper, doing the math, to put a bunch of miles on a car you own rather than paying the excess mileage charges a lease requires.
I did write in a post above that leasing probably makes sense for some. You are apparently one such person. It doesn't make sense for all.
 
Originally Posted By: bubbatime
I pay cash for cars now. And keep them 10 years. Leasing doesn't work for us.... too many miles, and Id rather not have car payments.


Very few folks in the USA can buy a new vehicle and pay cash.
 
Originally Posted By: JLawrence08648
Originally Posted By: JeffKeryk
"A heavily subsidized lease, usually achieved by imputing an absurdly high residual value, may end up at a lower capital cost per mile than a purchase, but this isn't typical."

A high residual value is a key reason leasing our RX 450h made sense. A lease is simply paying depreciation on the vehicle. The depreciation of these cars is lower than most.


Your friend is a high residual value which carries from lease carrier to lease carrier. Most times the manufacturer has the best deal because they are the easiest on the vehicle inspection at the end of the lease for damages and excess wear and tear.

What people don't fully comprehend, you have the same residual value and the same depreciation whether lease, finance, or cash especially on the sticking point of confusion, mileage! Whether lease, finance, or cash, mileage lowers the end value of the car whether sale or lease residual value. The car does not know the difference. It's been mentioned here that posters don't want to pay for excess mileage so they refuse to lease because it's going to cost them more in the end. What? That's stupid. If you put more mileage on a vehicle than average, isn't your car with less when you sell it? In a lease you are just paying for that excess depreciation by paying a per mile charge. It's all the same. Whether a per mile charge for the excess mileage or selling the vehicle for less money because it had more miles on it.

A lease is completely negotiable. You first want to negotiate the cash price of the only a new car! as if you are paying cash. Than you ask them to give you a price on a no money down lease 3 year lease. Most times they want money up front to pay the State sales tax as in a lease you pay the sales tax monthly but the dealer pays it all upfront!



It's clear that you don't really understand how leases work and you're focusing on the wrong aspects of it. Check out leasehackr.com. The real key to why a lease can be a great deal is due to the manufacturer incentives that they may not offer on a purchase. Some of the best deals are actually the short term ones where you can apply a rebate over a 24 month lease vs a 36 month lease. That's much better than financing. Leasehackr use to do a score where a good score was one where the lease payments took a long time to add up to the purchase price. For instance, if there'a 3k rebate, you reduce your monthly payment by $83.33, but if you apply it to a 2 year lease, it's a $125 savings. The effect is much more watered down over a purchase. The incentives in the lease is hidden in the residual and the discounts the manufacturer offers, the more discounts you can stack, the better the lease deal over a purchase. If you're dealing with a bank on a purchase, they have to make money, with a manufacturer, they don't have to make money on the lease deal, they're making them to move metal. If someone is giving away the store on a lease, but not on a purchase, then you take the lease. Every deal needs to be analyzed on its own.
 
If I wasn't retired, I would love to lease a fast car, and constantly drive it like it wasn't mine, and just throw the OE tires back on it when the lease was up. I'm tired of taking care of my own cars for the next owner.
 
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So many good points. In my case:

"I have no idea how seriously you hunted for a bottom dollar retail on your car and I also have no idea what you'll get hit for in excess mileage charges, or if that even applies in your case."
Yes, good points.
I was not gonna lease. Period. Cash. Write a check and be done.
I bought in mid February; early in the year. Lotsa RX350's, 450h's were still trickling in.
I live in Silicon Valley where a ton of these cars are sold. I dealt with Serramonte, Stevens Creek, Magnussesn and Putnam. Putnam is a family owned shop; a friend has worked at Putnam Volvo and is their top mechanic. Given Peter's help, Putnam, on a $56,674 MSRP, discounted the car $4,853 plus a $750 rebate for a Net Discount of $5,603. Selling price was $50, 071. This was a great deal for that car at that time; white RX 450h are in demand.

I have numerous cars; I will not go over the mileage. Let's just say I know better. In addition, I am looking for a used GS as we speak.
I added the damage deal where certain damage is waived upon turn-in. Think curb rash on expensive wheels...

At the last minute I leased because:
Hybrid technology is changing; it will be better in 3 years. I want an electric AWD RX next.
The cost to buy the car, based on residual, was not that much more; I forget exactly but I believe it was around $2,000.
It is worth it to me to be able to turn in the car and walk away versus trying to sell it for $45K or whatever. It ain't what I do.

Sue, my wife, loves the car. Bottom line, that's all I care about.
I am now 65 years old, have saved my $$. Silicon Valley has been very good to me.
I have piece of mind with this deal and am very happy.
 
What kind of a deal did you get on this lease?
I ask because the Forester is pretty moderately priced new and Subaru typically offers cheap or free retail installment financing if you'd rather not write a check.
The Forester also has a three year residual that makes any Lexus look bad, which helps with the monthly on the lease but also means that you could sell a purchased car for a solid buck if you decide you don't like it.
I have to ask, what's not to like?
Our '17 Forester rides and drives pretty much like our '09, which is good. The major difference is that the '17 offers much better fuel economy and that I won't have to shell out eight hundred bucks for timing belt service.
My wife liked the '09 and likes the '17. I like them both as well. The '09 is now on grandchild transport duty, since I'm a nice grandpa, or a fool, and I gave it to son and DIL.
 
Originally Posted By: fdcg27
The Forester also has a three year residual that makes any Lexus look bad, which helps with the monthly on the lease but also means that you could sell a purchased car for a solid buck if you decide you don't like it.


I don't know what you really mean by this. Is the residual too low or too high? If it's too high, that's good because that means the auto maker lost money on the lease and you're better off turning it in. If it's too low, that means you paid too much for the lease. They never really get it right, but a good lease for the consumer is where the residual is too high. Mercedes is really bad, you can save up to 5k turning it into the dealer and buying it back.
 
A lease is simply paying for the depreciation on the vehicle.
A vehicle with high resale will allow the leasing company to offer a cheaper lease, because the depreciation is less.
That's leverage for the dealer, because they want to see you in 3 years and the leasing company is not upside down on the vehicle.

Finally, like everything else, a lease is negotiable.
 
Originally Posted By: JeffKeryk
A lease is simply paying for the depreciation on the vehicle.
A vehicle with high resale will allow the leasing company to offer a cheaper lease, because the depreciation is less.
That's leverage for the dealer, because they want to see you in 3 years and the leasing company is not upside down on the vehicle.

Finally, like everything else, a lease is negotiable.


And what other people don't get is that if they stack a bunch of rebates, the residual is based on MSRP, the discount takes off what you pay between the residual and the negotiated price. That's why leasehackr.com lists some deals where the monthly payment is like $60-$100 a month because of all the rebates and discounts off MSRP that get stacked. The effect is magnified if you do a 2 year lease vs a 3 year lease. There's no way to make a purchase with that kind of monthly payment.
 
Originally Posted By: Wolf359
Originally Posted By: JeffKeryk
A lease is simply paying for the depreciation on the vehicle.
A vehicle with high resale will allow the leasing company to offer a cheaper lease, because the depreciation is less.
That's leverage for the dealer, because they want to see you in 3 years and the leasing company is not upside down on the vehicle.

Finally, like everything else, a lease is negotiable.


And what other people don't get is that if they stack a bunch of rebates, the residual is based on MSRP, the discount takes off what you pay between the residual and the negotiated price. That's why leasehackr.com lists some deals where the monthly payment is like $60-$100 a month because of all the rebates and discounts off MSRP that get stacked. The effect is magnified if you do a 2 year lease vs a 3 year lease. There's no way to make a purchase with that kind of monthly payment.


Excellent point and food for thought.
 
Originally Posted By: bubbatime
Originally Posted By: pandus13
Bubbatime, have you been able to drive any discounts for cash paying?


Most dealers do not give discounts for cash. They actually want you to finance, as they get money from the finance deals.





An extra discount for cash is a rumor that seems to never die. Yes-they want you to finance. When you finance they make a few dollars and they get their money within 5 working days.
 
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Originally Posted By: CKN
Originally Posted By: bubbatime
Originally Posted By: pandus13
Bubbatime, have you been able to drive any discounts for cash paying?


Most dealers do not give discounts for cash. They actually want you to finance, as they get money from the finance deals.





An extra discount for cash is a rumor that seems to never die. Yes-they want you to finance. When you finance they make a few dollars and they get their money within 5 working days.


It's like mortgage lending. The higher the interest rate, the more the dealer makes. That's why you should always have backup lending set up in advance. They also have claw back provisions where if you pay it off too soon, they don't get their cut. In mortgages, that was typically 3-6 months.
 
Leasing is nearly always a disastrous decision. Leasing almost makes no financial sense.

At the end of a lease, you have no equity. Then to make matters even worse (if that is possible) one buys the car at the end of the lease.

Leasing is really dumb.

The only time it might make it good financial sense is if one can run their leased vehicle through their corporation and get the write-off.

Otherwise you will not find a good financial planner in America that will tell you leasing makes good financial sense.
 
Originally Posted By: ZZman
A lease isn't a bad deal depending on what is important to the owner.
1. Do you usually have a car payment anyway?
2. Do you enjoy driving the newest type vehicle?
3. Do you get bored with vehicles after a few years?
4. Does the possibility of huge repair expenses concern you?
5. Do you normally maintain your vehicles reasonably and drive average to low miles?
6. If you decide you really like the vehicle you can then buy it.


Most of these reason are really silly.

They sounds like the type of "justifications" a teenager would come up with before making a really stupid financial decision.

You will not find a decent financial planner in America that would agree with your reasoning here.

And in fact, its this reasoning that is the explanation as to why so many US households are in deep financial trouble.

A mature grownup would laugh at such a list LOL x 100!!
 
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I know leasing is a good option for some, especially those who like getting a new vehicle every 2 or 3 years, but it's not for my wife and I. We tend to keep our vehicles for long after they're paid off, so buying makes betters sense for us...
 
If a car has low residual value and you can get into the lease at a low price, then you are bucks ahead.
For example, Fiat electrics were offered at a great lease.
At the end of the 3 years, the vehicle was worth like $8K.
If you had purchased the car outright, you would be left holding the bag.
In this case, the leasing company was.

In my case, I got a pretty good lease deal and considered it a hedge against technology advancements in the next 3 years.
A lease is simply paying for depreciation, plus interest.
Depending on the residual, someone wins and someone loses.
 
Originally Posted By: lovcom
Leasing is nearly always a disastrous decision. Leasing almost makes no financial sense.

At the end of a lease, you have no equity. Then to make matters even worse (if that is possible) one buys the car at the end of the lease.

Leasing is really dumb.

The only time it might make it good financial sense is if one can run their leased vehicle through their corporation and get the write-off.

Otherwise you will not find a good financial planner in America that will tell you leasing makes good financial sense.


There are good new car purchase deals, there are bad ones. There are good used car deals, there are also bad ones. There are also good lease deals and there are also bad ones.

A good financial planner will look at the terms of the deals to say whether it's a good deal or not.

Check leasehackr.com. Their latest deal was on a Hyundai Sonata. Residual was 55% and there was a 3k incentive for the lease plus an additional $750. There were also additional incentives of a military bonus and recent grad that some may have qualified for. With just the basic incentives and a negotiated 9% discount off MSRP, you end up paying 75% of MSRP for the car and with a 55% residual, that means on a 3 year lease, you paid 20% of MSRP. The key point is that if they offer discounts on the lease but not the purchase, the lease can be a better deal.

Lots of people are just bad at doing math. Do the MATH! Do not dismiss them out of hand.

Originally Posted By: JeffKeryk
If a car has low residual value and you can get into the lease at a low price, then you are bucks ahead.
For example, Fiat electrics were offered at a great lease.
At the end of the 3 years, the vehicle was worth like $8K.
If you had purchased the car outright, you would be left holding the bag.
In this case, the leasing company was.


I'm not sure you worded this right. It's better to lease a car that has a high residual value relative to market value. For instance in the quote above, if 55% is above market value, the manufacturer is in essence subsidizing the lease by an additional method of having a high residual value. If the lease deal has a car with a low residual value, then in essence you are paying more for the lease.
 
Up until the new tax law went into effect this year a car used in business was a great lease option, you could write the cost off as a misc business expense. Trump did away with this deduction so one of the incentives for leasing and using your car for business went away. (Unless you own the business you can still deduct the lease cost) An employee using the car for business and not getting reimbursed by employer can no longer write the lease cost off.
 
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