The pros and cons of leasing a vehicle.

[KennyG]

There may be a financial advantage for an individual to lease in some situation, but I can't see it. At any point, a car is worth a certain amount. If you save money by leasing, someone else involved in the deal must lose money. I can't imagine the dealer or the leasing company losing money.

 

[Poopdeck Pappy]

I think several other posters have summed it up correctly. Leasing can be a good choice in some situations. But the vast majority use it to drive a car that they couldn't afford to buy.

When you lease, you should (at least in theory) pay the difference between the lease payment and your normal car payment (if you had bought it) into a savings fund so you'll have a nest egg built up at the end of the lease.

But what most people do is lease a more expensive car that has a lease payment the same as the less expensive car they could buy. So when their lease is up on the car, they've got nothing and now they are locked into leasing again and again.

 

[HCJtractor]

I think several other posters have summed it up correctly. Leasing can be a good choice in some situations. But the vast majority use it to drive a car that they couldn't afford to buy. When you lease, you should (at least in theory) pay the difference between the lease payment and your normal car payment (if you had bought it) into a savings fund so you'll have a nest egg built up at the end of the lease. But what most people do is lease a more expensive car that has a lease payment the same as the less expensive car they could buy. So when their lease is up on the car, they've got nothing and now they are locked into leasing again and again.

All very true. Leased several for my wife. Now ex wife. Definitely leased a nicer vehicle than I wanted to buy. Most worked out well. Several Audis, a Toyota , and lastly a BMW. BMW screwed me. Turned the 3 year old car in with just minor wear and tear. A few small door dings, worn tires with 30,000 miles, a curb scuff on a wheel, but generally looked in great shape. They presented me with a $3500 bill for excessive wear. But they said they would waive this if I bought or leased another BMW, which tells me it was rather arbitrary. I appealed it and they were nasty. Never again.

 

[KiotiKowboy]

My only lease was a L E M O N. They had me by the B___s. I had to pay for that piece of junk for 4 years. The dealer was absolutely horrible and wouldn't help me at all. When I returned that pile of trash at the end of the lease, I had hidden 6 notes in the vehicle describing everything that was wrong with it, how the dealer had refused to fix it and how whomever was reading the note had just purchased a nightmare. I can only hope the dealer got a nasty surprise

 

[timswi]

Wow -- two opportunities for shameless self-promotion in one thread in one day!!!!!!!

Here's a link to an Agricultural Finance Review article that I wrote back in 2001 that deals with the lease versus purchase decision for business situations -- http://www.emeraldinsight.com/doi/pdfplus/10.1108/00214830180001124.

Steve

:drink:

 

[DuckSlayer1017]

I ALWAYS buy my vehicles and pay in cash. I save whatever I can manage to squirrel away into a savings account, and when it's big enough I know that I can buy a new vehicle if I want. Generally, I keep mine 5-6 years or more, so this works really well for me. If I need to do a big maintenance or repair, the money comes out of my new-car savings account, and it just adds a little time to my buying timeline. I figure, I'd rather pay myself each month instead of the bank.

BUT, my wife is a chronic "new car syndrome" buyer and usually wants to trade her car in every 3 years for the "next coolest mom-mobile on the planet." Honestly, I'm fine with that -- we're comfortable enough that I don't lose sleep over it, even though I wouldn't do it this way myself, and it makes her happy. Anything that makes her happy works for me, in general.

IN HER PARTICULAR SITUATION, we have found that leasing makes sense. GENERALLY, if you are always trading in at 3 years or so, you never pay the balance down to $0 on your note, so you always have a car payment, and you are absorbing the worst 3 years of depreciation -- the worst of both worlds. IF that's the case, then the economics of leasing can make sense so long as you don't get suckered into one of those "$399 lease (then in very fine print) with $5K initial down payment" deals. If the lease is one of the "first-month plus tax and title down" structures, it really isn't that bad so long as you are doing it for a particular purpose.

We do the same thing. I like to buy and have no problems driving an older car. The wife likes a new car every few years with all the bells and whistles. Leasing makes sense for her. Plus we all know the old saying happy wife, happy life.

 

[dave1949]

My only lease was a L E M O N. They had me by the B___s. I had to pay for that piece of junk for 4 years. The dealer was absolutely horrible and wouldn't help me at all. When I returned that pile of trash at the end of the lease, I had hidden 6 notes in the vehicle describing everything that was wrong with it, how the dealer had refused to fix it and how whomever was reading the note had just purchased a nightmare. I can only hope the dealer got a nasty surprise

Are leased autos exempt from Lemon Laws?

Lemon Law Summaries for each of the 50 States

 

[Alan L.]

There is a reason there are so many competing leasing companies. It is because they get another level of profit over an above the dealer profit, betting that so many people just care about the payment and not the underlying numbers. Advertisements on the radio are incredibly misleading and should be illegal the way they present leases as "saving money" because "you only pay for what you use". They talk about saving 40 or 50% on your payment but never remind listeners that at the end of the lease they own nothing.

The other problem is that the mileage is limited and if you go over they will nail you. Plus what you consider normal wear and tear and what the leasing company considers normal wear and tear sometimes differ.

It is more or less like one of those ARM mortgages where they get you in a house you that you can't afford after the payment goes up. You can get in to a car at a lower payment, but own nothing and the leasing company gets your equity.

 

[bcp]

I don't know if it still applies, but an article in the late 50's or early 60's said the most economical way to always have a newer, reliable car was to buy one that was two years old and keep it two years. Then do it again.

Bruce

 

[calman93611]

I tend to keep my cars/trucks high 200,000-low 300,000 miles. I have always compared leasing a vehicle to rent a home. Of course it helps to be able to write off a vehicle.