Leasing or buying a car - Page 2

DasLeben · #1 07-21-2005, 04:16 AM

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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.

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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. 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.

Fred G Sanford · #2 07-21-2005, 11:50 AM

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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.

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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

siccjay · #3 07-21-2005, 02:24 AM

Higher insurance on leases as well.

ChipWrecked · #4 07-21-2005, 02:55 AM

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 · #5 07-21-2005, 04:11 AM

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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.

ChipWrecked · #6 07-21-2005, 04:21 AM

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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.

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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 · #7 07-21-2005, 11:46 AM

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

savman · #8 09-26-2005, 06:58 AM

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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

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agreed.

Jimbo · #9 09-27-2005, 12:34 AM

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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.

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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.

RacersEdge · #10 07-21-2005, 11:51 AM

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.