Buying a car V.S. Leasing

oldopelguy wrote: How does anyone drive under 10k miles a year? We have two cars that average 25-40k/yr and still put 15k on my truck last year.

The 2004 TSX in my example just rolled over 59,000 miles last weekend. I changed the oil and it's due for its second set of brake pads… sometime this year. And it's the car we take on weekend errands as well as longer trips, in order to balance out the mileage.

My E46 has about 115,000 on it. I've put 90,000 on it in the last 9 years or so.

ProDarwin wrote: ^ That guy was obviously way overextended and would've been equally berkeleyed if he had financed new his truck instead of leasing it.

Yeah, I'll go along with that. The difference was that 1) he was much more upside down in the lease because of the artificially low down payment those have and 2) the truck basically wasn't his to sell. Many leases have clauses where if you sell the vehicle and pay off the lease you have to pay an early termination fee which can be substantial, even worse than being upside down in a loan.

No two people's situations are alike. If someone is willing to take the risks, go for it. What concerns me is I have seen far too many people who are overleveraged in a leased car, rented house etc and at the end of the day have nothing to show for their efforts.

The only reason I can see to lease is if, you have plenty of disposable income, you have a business and can write the car off as an expense, and if you need to keep up appearances by always having a new car.

You are paying too many players, the dealer gets his nut when you make the deal, the bank gets theirs from the payments, the dealer wins again performing repairs fixing your dings and dings you for mileage, the dealer wins again when he sells a 40K mile car that has had 2 oil changes for near sticker price.

Datsun1500 wrote: The dealer gets his on a regular deal. The bank gets theirs if you finance it. Maintenance is usually covered, and you don't need to give it back to the dealer. The process for selling it is the same as a car with a loan on it. Leasing can work if you know what you're doing. If you're only leasing it because you can't afford payments on a regular loan, then you're dumb. There's a huge difference between leasing it because you understand it and leasing it because it's the only way you can afford it.

Exactly. But most people never read the fine print, for example the 'early termination' fee. Basics of early lease termination:

http://autos.jdpower.com/content/buying-tip/u5xpbCz/how-to-end-your-lease-early.htm Notice there's not much in the way of options to just walk away from the car, actually there's zero. It's my personal opinion that there's a fair number of cars which get totaled because the lessee is in a bad way financially and it's the only way they can see to get out of it.

Here's what generally happens: car worth $30k, leased for 3 years. The moment the car is titled, depreciation hits, typically around 20-25%. So now $30k car is worth only $22500. But the lease is still based on the new sales amount less the down payment, typically artificially low, we will say $2000. So lessee is on the hook for $28k, car is worth $22500. I will SWAG the lease payments as $299 a month.

The leasing company is counting on a profit from our protagonist making 36 equal lease payments, $10764.00. Okay, that's understandable. They are also counting on reselling the car at the end of the lease, the depreciation etc is already figured in. But if the lessee winds up having to turn the car in before the lease is up, the leasing company is going to take a hit on that 36 months they count on. So, many leases have a early termination fee built in, on top of the lessee owing the balance of payments.

So our lessee loses his jerb 1 year in, he throws the keys to the leasing company. They say 'not so quick'; then present him with a bill consisting of the remaining 24 payments PLUS that 'early termination fee'. So to turn in the car could easily be $7176.00 (24 remaining payments) PLUS the termination fee, I will SWAG that at $1k. So to hand them the keys he better have $8176.00 ready along with the car, PLUS be reaady to be hit with 'reconditioning fees' and overmileage charges, etc. Tuna just mentioned on his leased Leaf he has to have 4 matched brand tires with at least X amount of tread left.

I just don't see how the average person can take that kind of risk. That's why I long ago quit with car payments and crap like that; I could not possibly care less what the neighbors think of what I drive and I pick my daily drivers based on reliability, not styling etc.

wlkelley3 wrote: All that is mentioned is financial and while certainly the major factor, it is not the only factor. I know people that lease so they will always have a newer car and don't have to worry about services as that is usually included in the lease. For some that is the major factor. Those people don't work on cars, actually all they know is where to put the gas. Works for them.

You bring up a very good point that needs to be considered for most purchases and activities that seem financially irresponsible. It's called the "Value Proposition". What is the person getting beyond the obvious item that has value to them? In this case, they are paying for automotive peace of mind, and happy to do so.

I am not sure I follow the difference between trying to get out of a Lease or a Loan, within a 3-year period. If you have, a two seater and your family gets bigger and you need to unload a new car you are going to lose money, regardless of a lease or a loan. So far, the cars that I have leased I have had no problems of unloading them early and carrying over equity or just recently selling to a dealership and receiving a check. My Sister and Mother leased a VW Passat in 2001, in the 3 year period, they both spent most of their time at the dealership because of the constant engine issues, not only was it terrible in reliability it was horrible in the snow and an all-around bad vehicle. When it did break down the dealership refused to give a loaner. It was a lemon and if they had purchased that vehicle, unless they ran into a VW guru, would have great difficult on unloading the vehicle. Although I think there are some good responses, I do not think overall, there is one basic route for everybody. Vehicle choice can also play a factor, I had a leased vehicle that started rusting year 2, and I would wager that it does not last to year 10, and would require constant maintenance, in PA. Again, if I lived in Ohio I could run rustbuckets in the ground, just not as easy in Pa. I live right next to work I ride my bike or walk and we use my wife’s car on the weekend, I have thought about going with no vehicle, but I needed a truck, and having a Tacoma is just temporary before I start a family, isn’t something that I want long term. I did have a used truck that I owned, but PA requires inspection and it needed more work then what it was worth and was only going to continue to decline and rust into the ground. It does not help that, I live in one of the snowiest cities with the worst roads, cars just are destroyed.