silverbull271

What are the pros and cons to BUYING and LEASING

I know there are no residuals out yet for the 2011 im just looking for generel info

Thanks in advance

Flagstang

I leased my dodge caliber. It was the worst thing I have ever did. Its like renting a house instead of buying one.

In the end the turn in fee and payments were more then just buying the car.

Adam

In certain situations leasing is better. For most people, buying is the way to go.

YSUsteven

I consider leasing only an option if you keep the car less than three years. Otherwise, its just a waste of money. Buying the car is always the better deal.

todd03blown

visit www.leaseguide.com

David Young

I would buy. If your looking at V-6 Mustangs and want to save a lot of money, wait for the 'rentals' and 'program' cars to hit the lots in a year or so.

Ltngdrvr

Leasing is okay if you only want the car for a specific short amount of time and you don't want to mod the car.

Not the way to go if you like to play.

I would never do it, I tend to get my cars with long term plans for them with lots of mods.

todd03blown

I just leased my first vehicle in 2008 which was a fully loaded Nissan Maxima SE that stickered for 38k+ including factory chrome 19" wheels. My payment is about 500 a month with 15k miles a year. The car is 2.5years old an only has 17k miles on it since I work from home.

My point of this is I leased this car because nothing else on was on the market that I wanted and I waited. Well the waiting paid off as the 2011 GT will be ordered to replace this car at the end of this year. In this case for me leasing worked out perfectly. I will likely just sell the car outright and end up pocketing some cash. Only time will tell however.

FordBlueHeart

The reason to look at leasing is because it puts you in a short term trade period. If you keep your vehicles less than 5 years it may be better to lease. Most people replace their cars every 3.5 years. If you fall within these parameters, you should look into it further. If you plan on modding it, don't lease.

AWESOMO 4000

I leased my 2004 GTO and 2007 Mustang GT. I will never lease another vehicle again. Ever.

If you are in a pinch or a certain situation and you NEED a car to get you through a period of time, and it's a screaming deal and a short term, then sure. But in most other cases, long term, colossal waste of time and money.

I got a good deal on my GT and considered buying it when the lease was up. However, I am glad I did not. I would have felt stupid having just took out a $17k loan on a car with 50,000 miles and down 100+hp to a new GT. Granted, the payment would be less, but I would be kicking myself for having bought it in the first place.

When I originally got my GT, I lost my job three weeks after taking delivery. Awesome.

The scary thing with leasing and buying, you can play all the calculator games you want to con yourself into doing something ill-advised. Having been there and done it before, if you can't afford to buy it NOW....then just WAIT. They churn a bazillion of these things out of a gigantic factory, and they aren't going away anytime soon. Even GT500s aren't low volume vehicles. Take a look at how many are out there now with low miles for low 30's....even high 20's in some cases.

There are deals to be found. Being the first on your block with a new toy might make you feel cool for a couple of weeks, but after about the second or third car payment, you might find yourself looking for a chair and a length of rope that will reach the rafters in the garage.

coffeejolts

I've leased cars in the past, but only ones that I didn't want to keep. If you don't drive much, it can be a good deal. You get low payments (if you work the deal right) and you don't have to worry about repair bills. Leasing is best for car-as-an-appliance situations where all you need is something cheap that has a warranty.

As 4000 said, never lease long term.

Big Poppa

Leased is the industry term for "fleeced", "jacked", "hood-winked", etc etc etc

corvettedreamin

In a nutshell, a lease is a long-term rental. You give away money for the privilege of driving it for a fixed period of time.

If that's all you need or want, it makes sense. If you WANT the car or want to mod it, it is absolutely insane to lease a car. The kicker on a lot of leases is the down payment. It can be THOUSANDS just to get that payment to be reasonable. if you can find a car with a high residual value, you'll get a better deal on the lease payments. On the other hand, if it has a high residual value, you'll be just as good buying it and selling it later because resale will be higher as well.

Remember, the first letter and last two letters of lease are "l" and "se" -- same as "lose". Just sayin'

denlem

I think people are just uneducated on leases. The first thing that comes to mind is people think they are paying for a car they are not going to keep. This is not true. You are paying for the part of the car you are going to use.

I leased a 2008 GT/CS which cost me for $34855. I put $3K down, and my payments for 2 years were $328 per month which included all taxes. Total out of pocket cost: 10,872

At the end of the 2 year lease, I had the option to purchase for $25,500.

Now, If I purchased that car and put the same $3K down, added in 5% sales tax, and financed at 5% for 5 years, my payment would have been $634. At the end of 2 years my out of pocket would have been 15,216 plus a yearly excise tax that would roughly be about $1200 for those 2 year. So now out of pocket totals $17,216. My loan balance at that time would also be around $21,000.

I lost my job last year, so when my lease expired I had to turn the car in. As stated above, my total out of pocket was $10,872. If I had purchased this car and then needed to get rid of it, I'd already be out $17,216. Selling the car to a private party, i'd get between $21,000 and $25,000 for it. Even if I got $25,000, i'd still have $4,000 left after the loan was paid off. Take that $4K off the $17K I put into it already, my out of pocket was $13K. Since the lease was just under $11K, I would have lost $2K if I had purchased it instead. In this situation, leasing saved me some money.

If a lease is done correctly, the money should work out to being pretty close to being the same as if you purchased the car and then traded it in.

Not all leases are created equal either. Some will work out nicely, while others will cost you. You need to do your homework and watch out for them shady dealers that prey on the customers that don't know any better.

corvettedreamin

So what are you going to do for the 2011? Buy or lease?

denlem

First I need a job, but I will also do a 2 year lease.

My plan for the 08 was to lease for the 2 years then buy it at the end of the lease since the $600+ payment on a purchase was not affordable. $328 was, and that would put me in the car and give me 2 years to save more money for the purchase at the end.

The plan for the '11 is the same next spring. I may pay a little more in interest in the long run doing it this way, but it gets me into what I want.

Ministang

I've leased one out of the 20 cars I've had in the last 23 years, a 2005 Ford Freestyle for 24 months for $297/mo. It went pretty well, although we didn't drive it much the last month and a half due to mileage. We ended up paying something like $12 at the end of the lease due to over mileage. We didn't get nicked for the condition of the car (still very good) even with two toddlers riding in the back seat for two years.

At the time we only had two cars for two drivers, and the mileage issue with a lease was a concern. In the future, I could see us leasing a car again if the terms are ok, but it would be for something that I wouldn't care about keeping long-term, and we'd have several other cars to drive besides the leased car. I'd never lease an only car.

Five Oh Brian

Done correctly, a lease can be better than a conventional loan. It depends on several factors, so you should always ask to see the numbers both ways on a given car that you're considering. I'm in the car biz and have leased when it made sense, and done conventional loans when leasing didn't make sense for a particular car.

As for '11 Mustangs, residuals will likely be very high (great for keeping payments low), but Ford is not offering any low lease rates on '11 Mustangs and the standard lease rate is crazy high (11% or higher). Some vehicles offer a high residual and a low lease rate - that's when the lease is way better than a conventional loan.

Here's the info I send to customers who email us about leasing a vehicle....


What factors affect lease payments?

• Which exact car and trim level you want is key. There is a big swing in price from a basic model with no optional equipment to a loaded up model. Lower selling price = lower payments.
• Number of miles you intend to drive per year (leases can be set up with many different mileage options to match your needs). Fewer miles = lower payments.
• Number of years you want to lease (short term leases are most popular - i.e. 2 year, 3 year, or 4 year). Shorter terms often have better rates, but not always.
• Amount of cash down you have. More cash down = lower payments.
• Trade-in value versus trade-in payoff, if applicable. More equity = lower payments.
• Your credit history and score. Better scores = lower rates and lower payments.

Leasing often results in lower payments than a conventional loan, but the real attraction comes from the options you have at the end of the lease...

• If you like the vehicle, you can buy it at the lease-end for the amount clearly posted in the lease (known as the residual amount). If the market value for that vehicle is higher than your residual, then this makes sense.
• If the residual is higher than the market value for the vehicle at the lease-end, you can simply return the vehicle and avoid the loss of value. The manufacturer gets stuck with the loss, so there is no negative equity as often happens in a convertional loan at trade-in time.
• If you want a different vehicle at lease end and the trade-in value is higher than your residual, then that difference is yours to use as down-payment on the next vehicle.

Can you trade in a leased vehicle?

• As with a conventional loan, you can trade-in a leased vehicle anytime.
• The bank will have a lease payoff quote, just like they would have a loan payoff quote, so you do not have to finish the entire lease if your needs change during the lease.
• You may owe more or less than the lease payoff, just like a conventional loan, so that equity (positive or negative) will affect the next vehicle purchase just like it would with a conventional loan.

Gene K

If you compare a 42 month lease deal to owning you almost always come out better buying. Sometimes on some of the short-term heavily subidized 24 month leases you can make a case for them but not always.

In business I usually prefer buying unlike the usual advice you get. Why you might ask? Because depreciation and interest dueductions are front loaded in comparison to leasing. I will take my savings now instead of later thanks.

The primary use of Leases these days are for owning more car than you can afford.(Lower payment at the expense of no equity on the back end).

My personal opinion has always been if you cant afford to pay for a car in 36 months its to much car.

Five Oh Brian

I learned long ago in business college that you should buy assets that appreciate in value and lease/rent assets that depreciate in value.

Again, we all have stories about whether a lease is or isn't better than a conventional loan, but there is no one correct answer. Each individual car purchase should be looked at on a case by case basis to see if it is better to buy or lease that particular car given its unique circumstances.