A woman my son works with was leasing a 2011 Volkswagen CC when her husband died. I think the lease was in his name. She wants to turn the car in but will face substantial penalty.
Her offer to my son was; I'll put up $100/month for the remainder of the lease, you pay the difference. At the end of the lease you buy it or turn it in.
There is ~30 months left on the lease.
a.) If Ian had $20,000 +, a CC would not be his first choice.
b.) His wife has a history of gnawing wheels on curbs.
c.) If through no fault of your own, you die; how can you be held to a lease?
Dan
C: co-signing
Don't touch it. (Your son, the car. Er, you get the point.)
Don't do leases. Ever.
Yeah she'll face a substantial penalty, and it's sad that her husband has passed, but you can't feel pity for someone, and join in on their mistake.
Fleecing a car is the absolute worst way to approach buying one. Yes, your son is helping take on the payments and so forth, but I wouldn't even touch that thing.
Leases are a biiiiig no no.
And yes, I listen to Dave Ramsey. Bite me.
Run away, do not pass Go, do not collect $200. You don't want any part of a lease on your own, let alone through somebody else. No way, no how, not gonna happen.
I have no problem with leases as long as you approach them the same as a purchase. It is merely a different way to pay for a car. That being said, don't get involved in someone else's mess. That kind of thing rarely works out well enough to justify the trouble.
I recommend leasing any European car. That way you only "own" it while it's under factory warranty and most likely a service contract. Then you dump that euro trash as soon as the maintenance and repairs become an issue. Lease payments are just covering depreciation, which you would lose if you bought it outright anyway.
Picking up a lease that is subsidized by another person (that also made the security deposit/down payment) doesn't really sound that bad to me.
But if the new leasee isn't even interested in that type of vehicle, it doesn't make much sense.
People who are afraid of leases generally don't understand them. I don't know if this particular situation is a good idea, but in some cases you'd have to be an idiot not to lease. For a typical new car shopper, both options should be carefully analyzed. Of course if you don't understand how leases work, I suggest you stay far away from them.
Otto Maddox wrote:
...but in all cases you'd have to be an idiot to lease...
Fixed it again.
<<< Sold cars for 2.5 years, understands leases.
I would stay away from this for a couple of reasons:
- Taking over a lease or buying a vehicle from a coworker might cause unnecessary grief if/when something goes wrong, and that would be with someone that your son might have to work with on a daily basis.
- If it's not a car he'd buy, why lease it?
There's also the part in me that says if I like a car well enough to lease it, I should probably buy it and drive it until the wheels fall off.
I am not going to get into an argument on leasing as it is really stupid to do so on a general scale, and down right retarded on a internet message board. I can tell you however that when I leased my 04 RX-8 I had a two year lease on it. I was able to one year into it have someone assume it from me,and it only cost me $50 through Mazda to do so.
It was really painless as well,and I used a website called swap a lease or something to that affect. i forget the exact site, because it was 7 years ago, but it was really easy,and didn't hurt my credit at all. I wanted to keep the car, but we were moving to our nicer house, and I didn't need the car so I had someone else take it off of my hands. If it is a good deal, and he likes the car I don't see any problem with it, but under the circumstances you provided I wouldn't do it.
Javelin wrote:
Otto Maddox wrote:
...but in all cases you'd have to be an idiot to lease...
Fixed it again.
<<< Sold cars for 2.5 years, understands leases.
Wrong, but not worth arguing about. There are plenty of places on the internet others can read up on it and make up their own minds. Others tend to not take advice from those who get in "Fixed it for ya" pissing contests anyway.
In reply to Mazdax605:
TBH properly assuming the lease is most likely the only way I can see this to work at all, simply because it would at least remove the coworker/money situation.
Leasing is a great deal, for the owner of the car.
If the car isn't 100% perfect, he would be on the hook for the cost to repair damage that the previous driver caused. And that work would be priced at full book hours at full dealership rates with full priced parts. I knew someone that got dinged for $10,000 in repairs returning a New Beetle at lease end. OUCH!!
@Javelin: It's not helpful to throw stuff around like "idiot" and editing other people's words. I would never lease a car, but there are people for whom it makes sense. Just because you're not in that situation doesn't mean it's not possible.
dculberson wrote:
@Javelin: It's not helpful to throw stuff around like "idiot" and editing other people's words. I would never lease a car, but there are people for whom it makes sense. Just because you're not in that situation doesn't mean it's not possible.
The person I was quoting said idiot. My changes are in bold.
I try not to get into edit fights, but bad financial advice is bad financial advice, period. 99% of websites proclaiming leases are great deals are owned by or advertised on by major lenders. Follow the money.
Leasing only makes sense if you go into a transaction knowing you are going to lose your @$$ on it anyways (depreciation) and you have a way to write it off as expenses. Works great for companies, works extremely rarely for individuals.
In reply to dculberson:
In Javelin's defense, I had the word idiot included in a post he later fixed for me.
And I agree with what you said about leasing. I've bought 10 or so new cars. Only once did it make more financial sense to lease.
In reply to Javelin:
Do you want me to explain when a lease would make more sense? I don't want to waste my time if your mind is already made up.
Javelin wrote:
The person I was quoting said idiot. My changes are in bold.
Shoot! My bad, you're right. Sorry about that.
Otto Maddox wrote:
And I agree with what you said about leasing. I've bought 10 or so new cars. Only once did it make more financial sense to lease.
How much money have you lost on depreciation over those 10 purchases? I understand that owning a "new" car is an extremely pleasing idea, but the financials just don't work for us normal folks (ie - not buying cars that could appreciate) unless we get super lucky (Miata, new Mini).
In reply to Javelin:
I've lost a good bit in depreciation. I am not a fan of buying new cars, but my wife sure is. I've just tried to minimize the damage.
In reply to Otto Maddox:
As I alluded to in an earlier post, usually only if you have the ability to write it off and the need for the write-off. For corporate taxes, leases can be really beneficial. They don't have to worry about maintenance, depreciation accounting, or liquidating the assets. They can also negotiate much better rates as fleet managers.
For a single individual it usually does not make sense to lease at all, especially if you plan to purchase the car at termination. For somebody who has zero mechanical aptitude and will actually care for the vehicle (thereby not accruing wear & tear damages, mileage overages, etc), rolling one over perpetually every 3-5 turns out to be "okay", but if you really crunch the numbers you still find it's a financial loss. If you are prepared to burden that loss no matter what (by choosing to only buy new, for example) it can look like a "savings".
Javelin wrote:
In reply to Otto Maddox:
As I alluded to in an earlier post, usually only if you have the ability to write it off and the need for the write-off. For corporate taxes, leases can be really beneficial. They don't have to worry about maintenance, depreciation accounting, or liquidating the assets. They can also negotiate much better rates as fleet managers.
For a single individual it usually does not make sense to lease at all, especially if you plan to purchase the car at termination. For somebody who has zero mechanical aptitude and will actually care for the vehicle (thereby not accruing wear & tear damages, mileage overages, etc), rolling one over perpetually every 3-5 turns out to be "okay", but if you *really* crunch the numbers you still find it's a financial loss. If you are prepared to burden that loss no matter what (by choosing to only buy new, for example) it can look like a "savings".
I agreee with every word you just said.
In reply to Otto Maddox:
Just approaching the same conclusion from two ends of the stick then? 
You never did start that thread on mutual funds...
In reply to Javelin:
Ugh. I do this stuff for a living, so I have to know what makes sense in about a million different situations. Your general advice probably is more applicable to everyone here. It is just when I hear something "never" makes sense and I know it makes sense in certain situations where I've carefully crunched the numbers...
