Vehicle Leasing

[deerefan]

Any members lease their vehicles? Pros/Cons? My wife drives 10k miles a year max and we may be able to lease a new tahoe/suburban for much less than financing a used one. Looking for some guidance as we have never leased.

 

[sdkubota]

Basically, when you lease you pay the vehicle loan interest plus the depreciation that will occur during the lease agreement period. Yes it is a little cheaper then buying the vehicle but you are held to low mileage and you will never own a vehicle that is pais off or any vehicle equity. I purchase my vehicles new and generally keep them for 8 years or so. After 4 years I have zero payments and after 8 years I have something of value to trade in. I don't think any economist would say leasing is a smart money move.

 

[Bird]

I have one brother-in-law who used to lease a new vehicle, then when the lease was up, he would buy it. And I have a daughter now driving a lease car. But I've checked into it several times and there's no way I'd do it; it just costs too much in the long run, even if you do have lower payments to start with. Like sdkubota saie, you'll never own anything or have any equity in it.

 

[deerefan]

I have one brother-in-law who used to lease a new vehicle, then when the lease was up, he would buy it. And I have a daughter now driving a lease car. But I've checked into it several times and there's no way I'd do it; it just costs too much in the long run, even if you do have lower payments to start with. Like sdkubota saie, you'll never own anything or have any equity in it.

In researching, equity was my concern also. We usually keep vehicles 8+ years also. We are very budget driven and refuse to exceed a certain amount. We are also new parents so making sure the little one is in a safe vehicle, preferably a suv/truck, is crucial.

 

[nirion]

We lease a car now. Leasing makes sense for some people. You need to be someone that can
1) be comfortable with always having that payment, which will usually be lower than buying. Some people buy and trade every few years anyway, but pay a larger payment.
2) stay under the mileage allowance, they will ding you for extra if you turn it in
3) keep the car in good condition (mostly body wise since you will be under warranty for most if not all of lease), again they will ding you for extra if you turn it in
4) like to get a new car often (every 2-3 years usually)
5) May be a business write off if you have a business

We leased a 2012 Venza. The interest rate ended up at 0.02%, so almost 0%. I like to get different cars often, and this one was for my wife. We may buy it at the end of 3 years or trade for something else. Be careful of the rate, in leases they refer to them as money factors and they can be confusing and something people pay more than they think. Also watch for fees (some unavoidable, others not so much). With a lease, you can pick different mileage options (usually 10k, 12k, 15k and something 18k) and different lengths (usually between 2 and 4 years).

To me, leases make sense when the manufacturer is offering a good deal/special on what you want. Certain cars lease better than others. I looked at leasing a new Ram Cummins. They don't lease well because Ram doesn't have any specials and the banks don't take into consideration the diesel holding value so much better than the gas engine. The Venza we got, leases well. Cars that hold their value better will usually lease out better than those that don't.

Good luck

 

[sdkubota]

In researching, equity was my concern also. We usually keep vehicles 8+ years also. We are very budget driven and refuse to exceed a certain amount. We are also new parents so making sure the little one is in a safe vehicle, preferably a suv/truck, is crucial.

Find one she likes 2 years old and let someone else take the original "drive off the lot" beating. I always buy new but know I would be better off buying one a few years old. I take care of them and drive them until I feel they are nolonger dependable or drop in book price is too much. I only buy Toyota and if you look at resale values you will soon know why (Honda is as good). Problem with buying Toyota, Hona, etc. is they really don't have to deal. If they don't sell to you they will sell it to the next one through the door. Great vehicles...

 

[Bird]

My Dad always said to let someone else take the first 2 or 3 year's depreciation. I used to buy new, and traded too often; poor money management. But now I have a 2001 Ranger, yep, 11 years old with 93k miles on it, but in excellent condition and runs as good as a new one. It was 3 years old with 36k miles on it when I bought it. Our 2002 Crown Vic was 6 years old with 41k miles on it and now 71k miles. I don't have any car payments at all, but if any little thing goes wrong, it goes straight to the dealer to be fixed, so everything works well on both.

Now I know you really can't compare vehicles used as police vehicles or taxicabs, but many years ago when fleet management was part of my job, our city owned police sedans were costing a total of 51 cents a mile and some young officers thought the city would be better off leasing police cars (yep, there actually are some companies that will do that and some small town politicians who think it would be better). Well, I spent some time checking, and the best deal I could find would have cost $1.50 a mile; almost 3 times as much as owning.

If you use a vehicle strictly for a business, leasing may be a good deal because you can simply deduct the total cost which is considerably more than the mileage rate you have to use on your income tax return. But obviously, a lot of people want that low payment for their personal vehicles, so they lease even if it does cost a lot more in the long run.

When my brother was a car and RV salesman for a Chevrolet/Buick/RV dealership, he talked of the "git' R done" customers who would buy any new car on the lot as long as the payment didn't exceed a certain amount. Now the dealer normally starts with a price, adds the extras, adds the tax, title, & license, etc. then with the interest rate, calculates a payment. But I set up a spreadsheet for my brother to do it backwards; start with a total payment amount and work backwards to determine the highest priced car the customer could afford, and then he could show them what fit in that category.:laughing:

 

[Diamondpilot]

Any members lease their vehicles? Pros/Cons? My wife drives 10k miles a year max and we may be able to lease a new tahoe/suburban for much less than financing a used one. Looking for some guidance as we have never leased.

I have leased 8 of the 25 some I have owned. Most Fords but also a Honda and a Lexus. My company leases dozens of cars and trucks each year. I really like it. For example I had a F150 leased and gas jumped to $4.25 per gallon. Most guys who owned were instantly $10, 000 in the hole and I walked away.

Chris

 

[Katahdin]

I did it once, don't think I'll do it again. I found myself always counting the miles. Your insurance costs may be higher due to increased coverage requirements. If you pay an excise tax to the state every year that's going add up when its always a new-er vehicle you register every year. Then, there's the return policy. 2 months before I had to turn in my blazer some clown backed into it in a parking garage and drove off. I had to pay to fix the damages before turning in the vehicle.

 

[Diamondpilot]

Any members lease their vehicles? Pros/Cons? My wife drives 10k miles a year max and we may be able to lease a new tahoe/suburban for much less than financing a used one. Looking for some guidance as we have never leased.

I have leased 8 of the 25 some I have owned. Most Fords but also a Honda and a Lexus. My company leases dozens of cars and trucks each year. I really like it. For example I had a F150 leased and gas jumped to $4.25 per gallon. Most guys who owned were instantly $10,000 in the hole and I walked away.

Chris