Leasing a Car?

Cars depreciate 40% in the first approx two years. Yes a,lease is an enticing way to rent a car you otherwise can't afford. I leased once and don't judge cause I've been there done that but it is a very bad financial decision. So is buying a new car every three years. We now buy two year old cars and drive them for 6-7 years.

I wouldn't lease a car, but I did buy a car that someone else had leased for a year. I got a pretty good deal on what was basically a new car.

Dave Ramsey calls it "fleasing" because it's a really expensive way to finance a car. If you do purchase the car in the end, you end up paying a great deal more for it than you would have if you had purchased the car in the beginning, even if you take out a loan. If you do not purchase the car in the end, you have made all those payments and own nothing.

Leasing a car is typically a big waste of money. It only makes sense if you work at a job where you're putting a lot of wear on the car because you're constantly on the road and racking up thousands of miles every month.

Leasing then buying is also usually a poor financial deal because you're losing 3 years of payments. They don't count that towards your purchase price.

Buy a car outright and take very good care of it. Drive it until it dies.
We bought our current car 15 years ago!

Getting a new car every three years is nice but unless you're well off enough to afford to buy cars cash that often, it is almost certainly a poor financial choice for your household.

Usually, leasing is just a REALLY bad idea. It is a way of getting a car that you really cannot afford. A lease usually only gives you so many miles a year...after which you must pay a fee for any additional miles at the end of a lease. You also have to return it in pristine condition. They will nickel and dime you on little dings/dents until you pretty much have to buy the car anyway. If you have children, it is highly unlikely that you will be able to return the car in pristine condition. When you lease, your monthly payment is less than if you buy it outright. At the end of the lease, you will be given a residual price at which you can purchase the car...extending the payment terms well beyond if you had just financed the damn thing for 5 years. It is just a really bad idea for most people. Your DH is absolutely right on this one.

I would never lease a car. Usually, for not that much more you can buy it. Think about it this way, there's a reason dealerships push leases -- because they make more money on them, which means it's a worse deal for the consumer.

Yes, you have the option of buying at the end -- for a lot of money. If you buy after leasing, it will cost you much more than if you had simply purchased the car initially.

I never understood why people like to throw money away when it comes to cars.

Leasing is stupid and buying/renting a car every 3 years is just not smart. A lot of people think they will "always" have a car payment. But why? If you do regular maintenance on your cars, you can have them well beyond the 5 year term and SAVE that money. Who wouldn't like to have a paid off car and an "extra" $400+- every month??????

An honest car salesman will be honest that leasing is not a good option unless you are a salesman who's company pays for your car.

We looked at leasing instead of buying recently. Everything we read said leasing is definitely not for us since we wanted a family car (which will get more wear and you have to pay extra for at the end of a lease), and the fees at the end and mileage restriction would be awful. Yeah, you get a new car, but once you're locked into a lease, you can't break it without huge fees, and the pressure to renew is high.

Boiled down for us, leases are more for career singles with money to spend drive to and from work every day and just want a nice ride. Looking for s family car or something that you want to take trips in and actually use? Buy it.

Leases generally don't work out differently than buying. It just shifts the costs around. Like the comment about repairs, oh they may not make them, what? Most cars have at least the three year full coverage warranty, of course they fix the car.

The benefit to a lease is it reduces your payment amount. If you are only going to keep a car three years and would have gone with the now popular six year loan, yikes!, you would have a higher payment and then be upside down when you trade it. I am amazed how many people don't understand they were upside down when they traded. Noooo, my car was worth my loan balance, it said so on the paperwork. Really? worth your balance you say, exactly the balance. I have a bridge to sell you.

There is about a 2k to 10k difference between sticker and what they will actually sell you the car for. This is where they hide the difference between the actual value of your car and the loan balance. They don't care, it gets rolled into the new loan. I remember trading my car and my dad kept going on about he didn't think I was getting enough for my car. I asked the dealer can you add 1,000 to the trade in value and I will pay 500 more for the car. Confused the dealer. Um, you need to come down 500 or we won't have a deal anyway. Oh, well hold on. Sure. There, happy dad?

I love watching how dealers play with numbers, can you tell?

Here is lease vs buy in a nutshell. Your lease numbers are just as negotiable as if you buy. You do not escape haggling by leasing. In three years time you will pay the same as if you buy. The big difference is you start at zero at the end of a lease where you could still have a balance if you buy.

I just did the numbers with my oldest a year ago. Since he was going to double up his payments and pay it off in two years of course he bought the car.

Yeah no sales tax because you don't buy the car but you will lose that in the cost of the lease anyway. You can buy the car at the end of the lease and it is actually a fair price for the car. Personally I prefer cash. If you are always paying cash you are not making a car payment so that replenishes your savings to buy the next car.

Every lease I have seen the cost to buy the car at the end of the lease is already spelled out. I suppose there are other kinds of leases but I wouldn't sign one. All the numbers should be there or they are being shifty.

I would not but that's just how we plan. We don't lease anything. For instance, when daughter went to college, we purchased a condo. I'd rather own something outright than throw that money away. BUT, that is just our way of thinking... I am not saying either way is right or wrong.

I've heard horror stories about leased cars and I know some people who wouldn't do it another way.

I don't need or want a new car every 3 years. I don't put a lot of mileage on my car.

We buy new and if we don't pay cash, it's paid for in less than one year. We drive them several years. My daughter's 07 CLK 350 has a little over 51,000 miles right now. I drive an 08 SL550 and I have almost 48,000 miles. Hubby drives an 2010 E 350 sedan and he puts a lot of miles on his car..which currently has about 122,000.

We buy good cars from the start and do not replace until we have to. hubby will probably replace his car in the next 18 months. His next one will be the larger SUV I think that's the M series, not sure.

All I know for sure is to understand every detail in the fine print because there are some loopholes that can end up with you paying more in the long run. Good luck

This is what I know, and it's not really much. It may also be specific to my state of NH. A lease is typically for 3 years and you do have the option to purchase or trade at the end of the lease. You also have limited mileage with a lease and if you go over that mileage you have to pay a fee for each additional mile. The monthly payments on a lease are lower than an initial purchase, but I'm not sure what they will end up being if you decide to purchase after the lease ends. In NH we have no sales tax, but my guess is you don't have to pay tax on a car your leasing, because you are not purchasing it, but I would assume, and you should check to make sure, that if you decide to purchase at the end of the lease, at that point the sales tax will be added on to the original value of the car. That's all I know, and I can assure you it is not all of the information there is. I would also be reluctant to get that info from the dealer because they are trying to make money. I would suggest utilizing Google and doing as much research on your own before you go to any dealership, and shop several dealerships to compare prices. Another thing that may or may not be related to my state or possibly just the dealership that I purchased my car at, but they would not even consider a lease unless the customer had a minimum credit score of I think 680. So that is something else to consider.

NEVER. I wouldn't lease a car if that was my only way to get a new car at all. I actually looked at the odometer of my 2012 vehicle that we bought brand new when I put the car in park at work this morning. It was sitting at 83,000 miles. We drive a LOT. Our 2013 vehicle has 48,000 and we are driving a long distance starting Friday for a week, so I'm sure it will be over 50,000 when we get back. So for us, it would never work.

A lot depends on how much you drive, how often you purchase a new vehicle, and how well you take care of your cars. Leases will have limitations of the mileage at the end of the term of the lease as well as the condition that the car is in when it is returned. Depending on the lease, you could be hit with hefty fee for going over the mileage or for minor dings and scratches. I would also talk to your insurer to determine what kind of insurance you will be required to have.

But if you like to change cars more often then every 4 years, or if you think your needs may change in that amount of time (more kids, fewer kids at home, moving long distance), you use relatively few miles, and take good care of your cars, it would be worth looking into.

You don't have sales tax, because you are not buying the car (unless you do purchase it in the end).

From what my friend went through there are a couple of ways to look at this.

Rent. Use for a while and another person profits from the lease. YOU drive it and use it and they might even fix it if it breaks down, some don't. You have a perpetual car payment with nothing what so ever to ever show for it.

IF you want to pay a few hundred per month forever and have nice newer vehicles to drive then a lease might be an option for you. If you want to have zero car payment at some point then buying might be better.

If you do buy a new car consider a program car. They are often low low mileage and might even be half of the original price.

We bought a Mercury Sable with every single upgrade. It was snazzy. Plush supple leather seats, bucket seats with a gear shift in the middle, sun roof, gorgeous rims and super expensive tires. It was $14K and only had 17.3K miles on it. Full factory warranty to 100K, every bonus.

Hubby's credit union paid full for it since it was under 20K miles. Super super low interest since it was credit union. I got a Ford Taurus 2 years old that had 25K miles on it and it also had full factory warranty on it to 70K miles and hubby got 95% loan on it. We paid $7K for it. Seriously good deals on both.

So if you want to have a very minimal responsibility on your vehicle and want to change every few years and understand you are renting a car, not making payments of any sort, then that might be the best option for you.

If you want a limited payment time and to have a car that you are actually buying then go find a vehicle you like but look in the program vehicles first.

IMO, leasing a car is basically a long term rental and not an investment. We have preferred to buy our cars (used/outright when possible) and keep them for many years. What is your motivation for getting a new car every 3 years? I personally prefer to pay it off and have no car payment for a number of years vs perpetually shelling out several hundred for a car. All of our cars are paid off. We've never been left stranded.

I saw your SWH and I agree that you are unlikely to just walk away from a lease without penalty with a family. The only people I knew who actually enjoyed leasing cars were single men without families.

I have leased cars for many years now. I don't think it's "stupid". I have a very reliable car with minimal maintenance costs, no down payment and no "turn-in" costs. When I "bought" cars in the past, I often had expensive maintenance costs well before the car was actually paid for (with monthly payments much higher than my current lease payment). Only one out of the five cars I purchased, new or used, actually ran reliably past the payoff time. That was a great, but not typical in my experience.

I need/want a car that will run when I want to drive it, won't need to be in the shop repeatedly, or leave me stranded on the side of the road.

Leasing a car? Yeah....pretty much always a bad idea.