Leasing or buying a car

[this guy]

Which do you think is better?

[IggyWH]

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Which do you think is better?

[/ QUOTE ]

Leasing is just plain retarded...

It's like buying implants for a girlfriend, you spend all that money but when you break up in 2 years, someone else is going to be playing with them titties while you're left with your cock in your hand.

[tdarko]

i bought my car in full, cash. best way to go.

[joda mas]

Buying and it's not even close. You usually get ripped off pretty bad when you lease. The only time it may be right is if it's for your business and you'll write off the lease payments.

[DoubleClutch]

Don't be so quick to write off leasing. In the metro Detroit area, you can lease a Dodge Dakota (just an example) for $1300 for 2 years. Granted, this isn't an awesome car, but you can't beat that deal.

Generally, however, i'm pro buying.

[DasLeben]

Buying makes better financial sense in the long run, and you don't have to deal with keeping below a certain yearly mileage like you do on a lease.

However, leasing does have perks. Because of the lower monthly payment compared to financing, you can get into a car that you might not have been able to get into if you'd financed. If you can deal with the yearly mileage limit, this might be an option.

But if you're intending on financing the car after your lease runs out, you'd be MUCH better off served by financing from the very beginning. Leasing and then financing is a very effective way of wasting money.

[JinX11]

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Which do you think is better?

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Easy - I just went through this experience.....

Last Friday, I bought a new Infiniti G35. Not to be screwed over by the salesperson, I had already done my research on the invoice price of the exact car I wanted...ended up getting it at about $100 over the Edmunds.com invoice price. Additionally, I came in with laptop and handy loan amortization spreadsheet (one of the other dealers I had visited had given me a good bottom line price, but attempted to hose me on the financing, so I was better prepared this time).

Anyhow, if you buy a car, the amount that you finance works just like a normal loan - take your loan principle, APR, yadayadayada. You would think that a lease would work similarly: you could take the new car price, subtract the end-of-lease residual value (generally, 55-60% of the new car MSRP), and the difference would be the amount you are responsible for paying over the course of the lease. If this amount is financed, it should act just like a normal loan - again, loan principle, APR, yadayadayada.

However, if you lease the car, it does NOT work quite the same way: they tack on a "lease charge" and it can be very costly. In my situation, the "lease charge" was about an extra $85 / month (and, yes, a "lease charge" is standard for all leases). I figured this out when the salesperson showed me his screen - the monthly lease payment amount I had calculated in my loan amortization spreadsheet was a subtotal on his screen; right below it was an added "lease charge", which explained the difference.

When I ran the numbers, I made the startling discovery that by buying the car, over the course of my loan (60 months) I would pay less in loan interest than if I would pay in the "lease charge" plus loan interest over the course of my lease (36 months). Scary.

You would think that the amount you would pay if buying a car outright would equal the amount you would pay over the course of the lease plus the residual value at the end of the lease. This is very much not the case. You pay a very hefty toll for the right to walk away from the car at the end of the lease....

Anyhow, hope this helps...don't lease, if you value money.

[JinX11]

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Leasing is just plain retarded...


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Yes.

[siccjay]

Higher insurance on leases as well.

[ChipWrecked]

Read that paperwork before you sign it. It's not unheard of for a dealer to agree to sell the car, then stick lease paperwork in front of you.

There should be a special circle of hell for car dealers.

[DasLeben]

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There should be a special circle of hell for car dealers.

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Well if you're referring to salespeople, then you should know that they're not the evil ones. The evil masters of the dealerships are the sales managers, who crack the whip on their sales staff.

Trust me, salespeople are often forced to do things that they may not feel right about, simply for the fear of losing their job. I quit my job in car sales due to ethical reasons.

[DasLeben]

[ QUOTE ]
However, if you lease the car, it does NOT work quite the same way: they tack on a "lease charge" and it can be very costly. In my situation, the "lease charge" was about an extra $85 / month (and, yes, a "lease charge" is standard for all leases). I figured this out when the salesperson showed me his screen - the monthly lease payment amount I had calculated in my loan amortization spreadsheet was a subtotal on his screen; right below it was an added "lease charge", which explained the difference.

[/ QUOTE ]

This "lease charge" is simply sales tax. When financing, tax on the vehicle is included in your monthly payments for your car loan. For example:

-If your agreed-upon lease payment is $500/month for a $30,000 car, you'll pay an extra ~$40/month in tax. Bingo, your real lease payment is $540/month.

-When financing a $30,000 car, you'll expect to pay $600/month based on that price. But, don't forget to add tax and other applicable fees! You'll probably end up getting out the door with the car financing $33,000, which is more like $660/month. You will come out of the dealership knowing that $660/month is what you'll be paying, with no tax added on top of it.

Basically, the tax is paid in your monthly payments either way. The sales tax on a lease is just more surprising to a consumer, since what you're actually writing a check for each month is a bit higher than what you discussed at the dealership.

[ChipWrecked]

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[ QUOTE ]
There should be a special circle of hell for car dealers.

[/ QUOTE ]

Well if you're referring to salespeople, then you should know that they're not the evil ones. The evil masters of the dealerships are the sales managers, who crack the whip on their sales staff.

Trust me, salespeople are often forced to do things that they may not feel right about, simply for the fear of losing their job. I quit my job in car sales due to ethical reasons.

[/ QUOTE ]

Same page here. We both posted much the same to the guy who got canned. That's why I said 'dealers' meaning owners and management.

[Fred G Sanford]

So far there are 12 responses to this thread and not one is even remotely close to accurate.

To those of you who responded that leasing is retarded, please explain how an option that works for many people is retarded. If retarded means it doesn't work for you and you don't completely understand how it might work for someone else, then you are correct.

For the average person who is not self employed, leasing is not a great option. It is an option for that person if he/she does not have the necessary downpayment required to finance a car.

I don't know where the idea that insurance is more expensive on a lease comes from. Maybe it is different in other states but I doubt it.

There are also other types of leases that are different from the ones you see advertised that can be written specifically to an individuals needs such as high mileage.

To answer your question someone would have to know more about your situation. Things like can you claim use of a car on your income tax? How many miles do you drive per year? How hard are you on a car? How much money do you want to lay out initially?

I am pretty sure that I am qualified to speak about these things since I have been in the leasing business since 1989.

FGS

[Fred G Sanford]

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This "lease charge" is simply sales tax. When financing, tax on the vehicle is included in your monthly payments for your car loan.

[/ QUOTE ]

This is just wrong. You are perfectly entitled to pay your sales tax in advance and if you did so there would still be "lease charges".

FGS

[RacersEdge]

I love leasing. It's not optimal for reducing your car expenses over a long period, but if you like gettnig a new car every 3 years and basically never having to worry about maintenance issues since your cars are continually under warranty, leases are great. Plus, you can get a lot "more car" through a lease than through buying.

[KidPokerX]

LEASE!

[Ass Master]

Unless you've got a lot of money I recommend buying a used car.

[Roy Munson]

This is the classic "it depends" question.

There are many factors to consider when leasing. They include:
term, money factor, residual, lease fee, security deposit, mileage limitations, excess mileage charges, disposition fees, early termination fees and excess wear and tear charges.

For many vehicles the captive finance companies (manufacturers lending) will either offer a money factor that is significantly lower than the market rate and/or enhance the residual to unrealistic levels. Both of these can make a payment on a 36 month lease significantly lower than the payment on a 60 month installment loan.

For people that will keep their vehicle for less than 60 months(the industry average is that a typical 60 month loan pays off in 28 months usually via trade-in) leasing is a viable option under these conditions.

Paying cash for a car is fine but a cash buyer is sinking money into a depreciating asset. For a used car this is not as big of a problem since the largest depreciation hit on a car occurs during the first 2 years. So, if you insist on paying cash, strongly consider buying a late model used vehicle. There is one statement about cars that is always true: "Everybody drives a used car". This goes for whether you purchased it new or used.

If you know that you are only going to keep your new vehicle for 36 months leasing can be a viable option.

If you enter into a 60 month conventional finance contract you do not "own" the car until the contract has been satisfied. At that point you usually don't own very much.

[savman]

[ QUOTE ]
So far there are 12 responses to this thread and not one is even remotely close to accurate.

To those of you who responded that leasing is retarded, please explain how an option that works for many people is retarded. If retarded means it doesn't work for you and you don't completely understand how it might work for someone else, then you are correct.

For the average person who is not self employed, leasing is not a great option. It is an option for that person if he/she does not have the necessary downpayment required to finance a car.

I don't know where the idea that insurance is more expensive on a lease comes from. Maybe it is different in other states but I doubt it.

There are also other types of leases that are different from the ones you see advertised that can be written specifically to an individuals needs such as high mileage.

To answer your question someone would have to know more about your situation. Things like can you claim use of a car on your income tax? How many miles do you drive per year? How hard are you on a car? How much money do you want to lay out initially?

I am pretty sure that I am qualified to speak about these things since I have been in the leasing business since 1989.

FGS

[/ QUOTE ]

agreed.

[savman]

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i bought my car in full, cash. best way to go.

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if u hate money. automobile financing is so favorable right now i would question nearly anyone who doenst finance the entire amount of their automobile; that is, assuming one has adequate credit. someone asked me why i dont pay off my student loans (which i have locked in at like 3 percent) to which i replied, "or i could just light some money on fire." Leasing can be optimal in some situations, but if you are young, male, and do not use your automobile for your main source of income, i would suggest keeping what you have, or financing a new/used vehicle and plan on driving it until the wheels fall off. then put new wheels on it. generally speaking, automobiles are an enormous waste of money.

[Jimbo]

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I don't know where the idea that insurance is more expensive on a lease comes from. Maybe it is different in other states but I doubt it.

[/ QUOTE ]

All leasing companies require a minimum deductible and a higher than normal Liability requirement. These requirements are often higher than those that are the minimums acceptble prescribed by law in that particular state.

[Dave Mac]

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i bought my car in full, cash. best way to go.

[/ QUOTE ]
unless you want a decent credit history