Money Forum World

Amado · Joined: 08 Nov 2007 Posts: 2098

As a new car customer, what are the pros and cons of leasing a car rather than purchasing it?
Im close to making my 1st car buy but Im still deciding on am I supposed to purchase or lease. For the most part I know that through a lease that there are mile limitations and you cant customize the car which are things that I can change to. Honestly Im leaning more towards leasing because majority of people dont really keep their cars these days and trade them in after a several years anyway. With that said what are the the big pros and cons that someone should know before entering into a lease.

H2wood · Joined: 08 Nov 2007 Posts: 2081

leasing is a big waste of money.You put down 1000 or 2000. pay for many years. .if you go over milage you pay big..when you turn it in you pay again and they charge you for each scratch,worn tires.any needed work., then you don’t have car..

Lorene B. · Joined: 08 Nov 2007 Posts: 2039

Unless your a corporate exec. that's going to trade up every year then leases arent for you. Shop around for the best deal to buy a returned lease and you may be able to save some bucks off the new car price, other than that, dont think about the lease choice it'll cost you more in the long run.

Rob Nixon · Joined: 08 Nov 2007 Posts: 2145

a lease generally cost more in trhe long run. Yes there are milage limitations but other hidden costs also. ..minor dent/dings.scraped/scratched paint. you have NOTHING in equity when trading it in EVER.. so when you lease again youll have to create more money down..leasing isn't good except for business holders that can write off costs.

VeraM · Joined: 08 Nov 2007 Posts: 2081

Financially speaking, leasing is the way to go because of how badly vehicles keep their value. With a lease you're just only paying for time you use the car.

The only read downside is that leases have mileage limitations that you have to make sure you may be able to meet, because the penalty for going over is pretty steep, typically $.10 to $.15 cents a mile .

The upsides are that leases are usually cheaper to get into upfront, have lower monthly deposits, and give you the biggest alternatives of what to do with the car. If you love the car you may be able to refinance the remainder balance and own it, if you dislike it you may be able to bail and get something else.

Owning a car these days is a financially defeating prospect, usually speaking.

Erick Hurst · Joined: 08 Nov 2007 Posts: 2140

Leasing works well for some people and isn't a dealer scam. Its simply an alternative technique of financing that offers lower monthly deposits, but its not like renting. Unfortunately, lots of people lease when they dont understand leasing. They get in trouble or are disappointed, then declare that leasing is bad and is a scam.

A good leasing candidate has a stable lifestyle and earning to finish the lease, drives no more than 15,000 miles a year, takes care of their vehicles, doesnt have an emotional need for ownership, doesnt change their vehicles, and likes to trade cars every three years or so.

The following website gives lots more info about how leasing works:
LeaseGuide.com/index2.htm

Denver · Joined: 08 Nov 2007 Posts: 2173

if you fined a private party that got a good lease and not a liar they're shred business people it was over 15 years I heard about a good lease

Aisha Rush · Joined: 08 Nov 2007 Posts: 2158

Personally Im fed up with purchasing new cars. Been there, done that, no point. purchase a silghtly used one and youll save a ton of money. Add a warranty to the silghtly used one and still save money AND you may be able to take the car nearly anywhere to get it repaired.

But if youre dead set on a new car.

Dont lease unless you know, beyond a shadow of a doubt, that youre not going to:

Modify the car
Sell the car early
Go over the stated mileage at all
Want to keep the car

To be just, most leases are for two three years, and after that point unless you got a four year loan, you wouldnt have built any equity anyway. But mileage is killer. If you go over the agreed upon mileage, youre screwed. And if you choose to keep the car youll have to pay for it as if you havent put a dime into it.

Nadia Ochoa · Joined: 08 Nov 2007 Posts: 2140

The three big benefits to leasing a car are:
1 you may be able to drive a better car for less money
2 you may be able to trade in a car every three years or so there's no lasting commitment
3 You dont have to negotiate a trade in at the end of a lease.

I have both bought and leased vehicles for me and family members, based on how we're going to use the car
I use these rules of thumb:

You should certainly lease a car if you meet all of the following:
1 Your credit score is 700 or above
2 you're going to drive the car 12K miles or less annually
3 you're the type that likes to get a new car every three four years.

Conversely, you may want to purchase a car if:
1 Your credit score is less than 700
2 You drive 12K+ miles annually
3 You want to drive the car into the ground.

There are situations that differ by make/model that will influence your choice.
For example, if the maker is offering 2.9% financing for 60 months on the car you want to purchase, it can be better to purchase over lease.

Also, think about that if you're worried about put a big down payment down on a lease, you may be able to ask the dealer to offshoot the amount by either raising your monthly lease payment or extending the lease time by six twelve months, as an example .
Hopefully you find the below link useful.

Good luck.

Bimmer · Joined: 08 Nov 2007 Posts: 2104

Pros of leasing:

1. No downpayment obliged. But you do have to pay whats called Total Drive Off which are first months payment, DMV fees, bank fees.. totalling around $1500.

2. No have to worry about resale value at the end of the lease. Just turn it in and walk away. But you'll be accountable for any damages beyond normal wear and tear.

3. you may be able to trade it in, sell it or sell your lease anytime you wish.. just like a financed car.

4. you may be able to pay for luxury cars for about the same payments of a Honda Accord. as an example, you may be able to lease an Acura MDX or Lexus RX350 for $499.

5. you may be able to buy extra mileage previous to the lease at a discount. Most will include 15k miles. but I have heard others who were able to get 20k miles included free of charge.

6. You dont have to have FICO 700 to lease.. Lexus will do it if you have 650. Less than that, most likely not. But European makes like MB &amp, BMW do require about FICO 730.

7. GAP insurance is typically included in the payments. be sure you have the in case the car is totalled. It pays the Gap between what you owe and what its worth.

8. Some leasing businesses will include free end of lease coverage covers any damages .

9. Most leasing businesses can offer you a lower buyout price lower than the residual value listed in the contract just before the lease is over. IF you like the car you may be able to then buy it now.

10. you're not trapped in a lease because leasing contracts are easily transferrable unlike finance contracts .. with liked sites like Swapalease.com and Leasetrader.com you may be able to find someone to take over your lease with a click.

Erick Hurst · Joined: 08 Nov 2007 Posts: 2140

Ive generally bought. Felt that leasing cost way to much.

You have to estimate how long you're going to keep your car and what the projected resale vale will be.

Im looking for a new car. Been driveing the van for ten years now.

I paid $26,000. I figure its worth $5,000 now. If I divide the $21,000 Ive spent by the 120 months I paid $175 a month for a car. I accually paid high payments the 1st four years and drive it free of charge the last 6.

When you least your typicaly have a monthly payment and a down payment. Lets say $200 a month for three years and put $3,000. This lease is 200+ 3000/36 = $283 a month for the car.

Leases aret bad they're just a higher cost because you generally have a new car. And you have to follow their rules or it may cost you big when you turn the car in.

My friend never changes oil, breaks, tires, wiper blades. Because he leases and doesnt want out of pocket costs. Its only has to get him until the end of the lease. He generally pays for Detailing before he turns the car in. Dont know if it assists.

Big Inc. · Joined: 08 Nov 2007 Posts: 2120

With the average cost of a new car increasing yearly, it's becoming more important to understand the alternatives available for financing. Leasing became a more extensive choice available to buyers through some different resources as well as independent leasing businesses, car manufacturers, local dealerships and financial institutions.
Because of the range of different leasing plans available, the amount of guideline of the leasing business, and what can on occasion be a high stress situation of negotiating a price for a car, buyers have to be informed so they can make a choice that best fits their specific situation.
The basic principle of leasing is that you pay only for what you use of the car. The most usually cited benefits of leasing are that leasing requires a lower initial cash outlay, the monthly deposits may be lower than a loan, and you may be able to typically get more car for your money. Common disadvantages are that at the end of the lease you don't own the car, and you may get charged for extra miles driven and extra wear and tear on the car.
The basic principle of purchasing your car, either with cash outright or with a finance agreement, is you have or are building equity toward ownership. The major advantage is that you own the car after all the payments are made. The major drawback is that by the time you really own the car, it may have cost you far more than the car is worth.