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IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1
Reviews:
·Verizon Broadban..
·Comcast

Lease vs Buy

I am thinking of kicking that lemon piece of junk Dodge Stratus to the curb as it has too many issues. It's not only having exhaust issues with the Catcon but is also developing engine trouble as well. I am thinking at the end of October (when the sticker runs out) I am going to trade it. I am thinking of leasing a car because of the short lifespan of cars in New England or I may buy a brand new car now that my budget allows it. I have had credit problems in the past and my credit is shot but my mother has agreed to co-sign the loan or lease (mom does not have a driver's license nor does she know how to drive but she had fairly good credit and pays her bills on time). The credit problems date back to times where we were in dire straits but we are in much better situation today. I don't know about leasing but if we go the buy route, we are going to get financing through a bank (preferably TD Bank or Berkshire Bank).

I am wondering about the ups and downs of leasing (such as who is responsible for repairs and maintenance and what happens at the end of a lease). I would also like some tips on dealing with car dealers and how to avoid getting ripped off.

Some of the cars I am considering are the Chevy Sonic and Chevy Cruze. I have own all three of the Detroit automakers (GM, Ford, and Chrysler) and I've had the best luck with GM followed by Ford. I was not impressed by Chrysler as the Dodge stratus I have is a lemon (or I just got ripped off by the used car lot).


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
»www.smartmoney.com/calculator/au···3645461/

»www.cars.com/go/advice/Story.jsp···buyLease

»www.edmunds.com/car-loan/leasing···ces.html

»www.clarkhoward.com/categories/cars/leasing/

Lots and lots of info on the web on Lease vs Buy. The above links should provide a plethora of information and calculators.

I personally hate leasing. I would much rather buy a good used car than lease. Leasing can be very confusing and very expensive.

Leasing allows you to have a smaller down payment and conserve some cash BUT:

1) You are usually locked into a set mileage per year and going over that can be 10 cents per mile. Add a couple thousand miles over per year and suddenly you owe a lot of money.

2) You are responsible for maintenance - just like if you own the car. Some leases have maintenance added in (higher end cars) but I find the maintenance is not really passable as real maintenance. As an example - manufacturers will want to change the fluids far less often then they should - imho. Oil, diff, radiator, tranny fluid are not life time fluids as some claim.

3) At the end you either buy the car for a set amount OR you turn it in. They will inspect it when turned in and anything they deem more than normal wear and tear means you owe more money.

Read up and read well - leases can be contract nightmares - be VERY wary...
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain


nunya
LXI 483
Premium,MVM
join:2000-12-23
O Fallon, MO
kudos:12
Reviews:
·Charter
·voip.ms
reply to IowaCowboy
You almost always take a beating on leases. You also take a beating on new cars.
I would buy a 2-3 year old used car.
I've owned quite a few vehicles. Probably over 50 (both personal and business). I always purchase the vehicles myself. I don't trust anyone else to do it. I've never once encountered a situation where a lease made sense.
Back in the days when I was rolling in fat stacks of cash, I would get a new truck every 2 years. It was still cheaper to buy than lease.

Go into a dealership and mention lease to the salesman. Watch how fast he gets a hard-on. Salesmen push them because of the higher commission on leases. The dealership likes them because they get a bigger kickback from the manufacturer and some sweet options at the end of the lease if you return the car. The finance company likes them because they make more money in a shorter period of time.
--
...because I care.


The Pig
I know you want to be me
Premium
join:2009-09-11
reply to IowaCowboy
When all's said and done,
Leasing you own nothing!
If leasing was benefiting the consumer the car dealers would never push leasing like they do!


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
reply to IowaCowboy
If you usually drive a car till it falls apart - then buying new makes a lot of sense. You don't take the depreciation hit and if it is a quality car - then the maintenance cost can be quite low.
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain

Bob4
Account deleted

join:2012-07-22
New Jersey
Reviews:
·Optimum Online
reply to IowaCowboy
The problem with leasing is that after you spend all that money, you end up with nothing! At least if you buy a car, you end up with the car.

Leasing also has mileage limitations that might not work for you if you drive even an average amount.

I don't know why anyone would finance with a bank when the auto manufacturers are offering 0.9% (Honda) or even 0% (VW) APR loans.


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
Remember - not all can get those cheap APRs - people in the top few % for FICO scores can but the others will not qualify. Also note that those APRs are not for all vehicles most of the time but the ones Honda wants to move. If you don't want\need the vehicle they want to get rid of....
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain

Bob4
Account deleted

join:2012-07-22
New Jersey
Reviews:
·Optimum Online
Looks like 0.9% on everything except CR-Vs:

• Accord Coupe APR 0.9% APR for 24-60 months or 1.9% APR for 61-72 months
• Accord Sedan APR 0.9% APR for 24-60 months or 1.9% APR for 61-72 months
• Civic Coupe APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months
• Civic Hybrid APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months
• Civic Natural Gas APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months
• Civic Sedan APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months
• Civic Si Coupe APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months
• Civic Si Sedan APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months
• Crosstour APR 0.9% APR for 24-60 months
• Odyssey APR 0.9% APR for 24-60 months
• Pilot APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months
• Ridgeline APR 0.9% APR for 24-36 months or 1.9% APR for 37-60 months

You can't go wrong with financing like that. TD Bank is 4.13%. You'd be nuts to borrow from a bank.


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
Unless you have to borrow from a bank - not a ton of people have credit scores that qualify (there is a reason for that)...

Just pointing out that folks have to be careful about what models are getting the discounted APR. Many, many, many times I see advertisements for low interest rates only to find it is one model. In fact - that is exactly what happened when we bought our Honda van last December. They advertised a lot of special interest rates on new and used cars but none covered the vans.
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain


IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1
Reviews:
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reply to IowaCowboy
One of the reasons I was considering leasing is the relatively short lifespans of vehicles in the New England area (where I do 99 percent of my driving) because of the fact they use salt on the roads here. I don't know how other parts of the country de-ice their roads but because of the salt, cars last about 7 or 8 years (10 years if you're lucky) because they rust out pretty quickly and end up not passing state inspection because of rust and end up in the salvage yard (unless you want to spend four or five thousand dollars on body work).

Another thing I am wondering about is the fact I have bad credit (due to issues in the past and I got two years before the Fair Credit Reporting Act require deletion of the derogatory listing under the 7 year limit and the state statute of limitations has run out on most of the debt, mass it is 6 years which has passed) so I am going to need a co-signer on my loan or lease (which my mother, who has fairly good credit has volunteered to do).


DeltaElite
We Dont Dial 911

join:2002-03-29
Tucker, GA
kudos:1
reply to IowaCowboy
Ok, payment on a 5 year loan for a new Escape is about 500 bucks with a couple of grand down.,,,

3 year lease is 299 a month with 36 thousand miles included.

At the end of the lease you get to go find another vehicle or buy the lease at a greatly inflated price.....

I would BUY a Ford or Honda but my wife is looking at and wants a Hyundia Crossover. I told her if she's serious about that, FORGET traiding in the mini van, we'll front the 2800 bucks to get the cheap lease and she'll be on the road for 229 a month for 3 years in a new vehicle. (And we'll be rid of the bloody thing before the top end of the motor grenades at around 80k miles).

by then the credit cards and house should be paid for and I might talk her into buying something that isn't disposable!

IMHO YMMV
--
Protect your right to keep and arm bears!


nunya
LXI 483
Premium,MVM
join:2000-12-23
O Fallon, MO
kudos:12
Reviews:
·Charter
·voip.ms
reply to IowaCowboy
Excepting down South and the far North, I think they use salt pretty much everywhere.
It's definitely not good for the cars (or the roads), but it's been less of an issue in the last few decades.
In the 80's every car I had got rust after only 3-4 years. Now, they rarely get it unless there is a damaged spot (scrape, scratch, pit).

The leases you see advertised on TV (promo leases) are usually only for people with exceptional credit. When you get tot he table, they are usually going to offer you something not nearly as attractive.
--
...because I care.


CylonRed
Premium,MVM
join:2000-07-06
Bloom County
reply to IowaCowboy
I live in Ohio - salt is used heavily in the winter along with sand. Newer cars have very good rustproofing if the car is well taken care of (washing the underside at least at the beginning of fall and when spring comes with a power washer and plenty of water.

My 89 Civic HB I had for 13 of its 18 years (before I sold it) had a minimum of rust and I kept the car outside 99% of the time. Its entire life was in Ohio.

My wife has friends in NH - they all owned cars that were 5-7+ years old and not rusted out.
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain

Bob4
Account deleted

join:2012-07-22
New Jersey
reply to IowaCowboy
How many miles do you drive each year?


IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1
I drive about 14000 to 15000 per year. Most of my driving is in the Western Massachusetts area, the Biddeford, Maine area, and between Springfield MA and Biddeford Maine (169 miles each way) and I occasionally drive from Western Mass to Boston.

Bob4
Account deleted

join:2012-07-22
New Jersey
Reviews:
·Optimum Online
Most leases limit your mileage to less than that. Assuming the lease is for 3 years, limits you to 12,000 miles per year and charges 15 c/mile over that, you're looking at an additional payment of $1,350 at the end of the lease.

My opinion is that a lease would be a bad move for you.


Jackarino
YacCity
Premium
join:2006-12-28
Allendale, NJ
kudos:1
reply to IowaCowboy
I like leasing because you get a new car every 3 years


Mospaw
My socks don't match.
Hawaiian Jellyfish
join:2001-01-08
Mile-High
kudos:1

2 recommendations

reply to IowaCowboy
Leases are very rarely a good move. New cars are also quite expensive, especially that very first time you take a drive in them.

I purchased a car yesterday. It's a 2010 model (so roughly 2 years old) and has 26,000 miles. I paid a little over half what it's original sticker price was. I was also looking at a "new" 2012 at another dealership (it was a demo with 1700 miles). My first drive in that 2012 model would have cost roughly $10,000. My first drive in my 2010 model (which is pretty much the same car) will only be a fraction of that. And the depreciation curve for my 2010 is a lot flatter than the 2012.

I got 3.4% financing with a 72 month loan (!!) on my used car. My payment is also half of what the 2012 car's payment would have been for the same term with 1.9% financing. I also have an extended bumper to bumper warranty for 5 years or 80,000 miles.

I admit I'm cheap, but you're almost always better off (financially) buying used than buying new or leasing. I got 90% of what the new car has for 50% of the price. That's a good deal. Oh and a lease would have gotten me 0% for 100% of the money...


Jackarino
YacCity
Premium
join:2006-12-28
Allendale, NJ
kudos:1
reply to IowaCowboy
For me, after 2 years I want a new car. Thats why I always lease

Bob4
Account deleted

join:2012-07-22
New Jersey
Leasing isn't cost-effective for me. I put on 22,000+ miles per year.

itguy05

join:2005-06-17
Carlisle, PA

1 recommendation

reply to Mospaw
said by Mospaw:

Leases are very rarely a good move. New cars are also quite expensive, especially that very first time you take a drive in them.

That only comes into play if you sell it. If you keep it around for a long time depreciation is not a factor. After 5-7+ years its still worth the same no matter what. Depreciation is only something that you should take into account if you get new cars often. If you "drive them till the wheels fall off" it makes no sense to worry about it.

A car is not an asset - it will be worthless no matter what at the end of its life (it's not like real estate that theoretically appreciates) and all depreciation does is try to make a guess as to what value has been "used up".

So, yes that first drive off the lot "cost" you $10k (or whatever) but only if you turned back to the dealer and got something else.

quote:
I got 3.4% financing with a 72 month loan (!!) on my used car.
OUCH! 6 years on a car that's already 2 years old. You must not drive much. Typically if you shorten the loan the rate goes down. When I bought my new car in 2009 it was actually cheaper for a 60-month than a 72 month because of the rate.

quote:
I admit I'm cheap, but you're almost always better off (financially) buying used than buying new or leasing.
It all depends on the car. If they are doing 0% or other low rate financing + cash back you may well do better with new. If you keep your car for long periods of time (we do - at least 6 years) depreciation is not an issue at all.

If I buy a new car, keep it for 6 years and sell it at the end with 100-150k depreciation really has no affect. Case in point. Bought my last car in 2004, paid $32,500 for it. Traded it almost 6 years later for $7k. For 6 years I paid $25,500 for it.

If I bought it used in 2006 I would have paid right around $25,000 and in 2009 it would have still been worth $7k. In 2011 after 6 years of ownership of that used car would probably have been worth just as much as it would be older and have more miles.

Also you never pay sticker price so comparisons from sticker price are useless. Yes, your used car was 50% off sticker but you can usually start at invoice which is around 10% off sticker price. And if you get money off that reduces the cost even further.

It's all a game and you have to run the $'s and see what makes sense for you and your driving patterns.


Mospaw
My socks don't match.
Hawaiian Jellyfish
join:2001-01-08
Mile-High
kudos:1
Lots of good points, especially about you only lose $10k if you turn right around and trade it. I don't think anybody does that, so you point is very valid. As time goes one, the amount of depreciation gets split over more days and is effectively lessened.

I keep my cars a good long time. I had the last one for 7 1/2 years. I got about 23% of what I paid for it when I got it used as trade, which I think is pretty good.

My sweet spot is to buy something around 2-3 years old. They're usually new enough to have a little factory warranty left, but have taken the biggest hit in depreciation. I like depreciation because it makes the cars cheaper for me to buy!