Is leasing a good idea?

Let's use your # for quick math.
Honda is $21k, take a 3 yr loan at 6% APR, your monthly payment is ~$640.
You said yourself you lease it for $225. So each month you are saving $415 by leasing it.
Put those $415 in a shoe box under your bed every month.
By end of 3 yrs, if you leased, you would return the car to dealer, and have $14940 in that shoe box under your bed. If you financed, you will have a 3 yrs old Honda that's worth $14k as you stated yourself.

So, tell me, why is leased a bad choice again??

 

Are the numbers I used way out of this world, or is leasing that good of a deal??

I have used cash to buy my cars so far and my bikes, now I feel like a fool, looking at your numbers!

So is buying ever a good deal, if leasing is so much better as you have just proven?

Going to go bang my head into the wall

 

ok back with another thought.

Say one keeps their cars for 10 years. Well after the 3 year finance, you can drive the car for 7 years with liability insurance and no montly payments.

So on a 10 year scale, if you leased you would always have the montly payments and the comprehensive insurance.

So in a 10 year time frame, would you be ahead buying one car and driving it, or leasing 3 cars for like 36 months a piece?

 

IMO, leasing is not the thing to do if 1) you are getting an already depreciated car or 2) you kep a car for 10 years.

Remember, leasing a car, in essence, allows you to only pay for the depreciation of a car. This is a great way to go if you buy new cars and keep them for 3 to 4 years.

 

Yeah I guess for people who flip cars every 3-4 years leasing is the better option.

 

if you have to ask whether leasing is a good idea or a bad idea THEN IT'S A BAD IDEA.

leasing has virtually nothing to do with how often you flip cars or how fast various cars depreciate.

leasing is all about maximizing the time-value of money. 99% of the people who lease cars do it for the WRONG reasons. the only people i've ever met who do leasing right are wildly wealthy types; so there's no question about them investing the delta. other than that, i have NEVER met a person who leased their car who invested the delta.

do some research. you can find some great analysis and data on how leasing is SUPPOSED to work. information the car dealers aren't interested in sharing.

doody.

 

I leased a brand new 2003 SAAB 9-3 with all options except digital climate control with 15k mi/yr allowance, free maintenance, bumper to bumper warranty and free OnStar service for $399 per month at 32mo with $2500 down.

I got it for my lovely lady to ensure her and my son's safety. Never have to worry about breaking down in the middle of nowhere (OnStar) or what the breakdown will cost me. (free maintenance/warranty).

The only variables I pay for is gas and insurance. (both VERY cheap).

In this situation you cannot BEAT a lease.

Nick

 

No, leasing is good for people who buy NEW cars and sell them after three or four years and buy NEW cars again.

Because instead of having all your money tied up the car that you're not going to use all of, it's being invested instead.

 

Saab has okay lease programs. You have to negotiate, though. I have the same lease, except I negotiated it hard. 36 months, 299 mo, $700 down. I have a loaded 2003 Saab 9-3 Arc, which is their standard model.

 

MAN! Was that with sales tax or without?!?!? Plus, mine is a linear not an ARC.

No matter how sweet you think your deal is... someone ALWAYS gets a better one. damn!

oh well, good for you.

Nick

 

100% disagree.
Lease has EVERYTHING to do with how often you flip a car and how fast it depreciates.

I am not wealthy, let alone widely weathy, I am average intelligent with decent math skills. The whole lease/finance issue is pure a math question in my eyes, it has nothing to do with your wealth. Excpet for the weahthy ppl they don't need to care about math, they can pay $2000/mo for a Benz S class lease knowing it is a rip-off lease term but do it anyway since money is no object.

When you compare to equal fiance or lease terms, you always pay less for lease, and the difference is USUALLY about the same as the 3yrs old used car's market value. So difference is minimal.

 

Remember the shoe box under your bed with $14xxx cash in there?
You can use that money to buy a 3yrs old Honda, just like the one you would have if you did a 3yrs finance, you buy it, you own it, no payment,s you drive it for 7 more yrs or until the wheels falls off.

Thus, same thing again.

And just for the kick:
Let's say somehow Honda resale value went skyrock or something, you can buy out the leased car and sell it for a profit.
Or let's say somehow Honda resale value goes down hard, you can spend maybe only $10k from the shoe box cash, buy that 3yrs old Honda, and keep the rest.

 

With sales tax it's 320/mo. Everything else stays the same. Getting a good deal is always very important to me. That's how I saved enough money to buy my 355!

But of course, I'm sure someone got an even better deal than that.

 

just to clarify, i never said you had to be wealthy to get the benefits of leasing nor that nobody leased cars intelligently. i'm just pointing out that the vast majority of people mis-use leasing. vast. and the car manufacturers have worked very hard to make this so. because of these efforts, most people no longer understand whether leasing is good or bad for them. and if you have to ask, you haven't done your research.

doody.

 

Are lease rates/residual negotiable? does anybody have some good tactics? I am signing on the dotted line on a 2004 360 Spider Tuesday. I have ran a zillion loan models and amortization schedules and have determined the lease is best for me.

 

Folks, leasing got popular about 20 years ago with traveling salesmen. I used to have clients who would put 75,000 miles on a car within 14 months. (Note to the file, if offered the territory of Eastern Texas, Oklahoma,and Arkansas, think about Southwest Airlines first.)

To these guys, repairs cost more than money. It was lost sales.

Thus, they liked to go into a, say, Ford dealership, turn in the keys to the old car, and then pick up the keys to the new car.

Since then, more car for the same money has become the mantra of the day.

All this is fine if you are talking about cars that have a residual of maybe 36% after five years.

But for vintage cars, well....

I have left a message with Putnam Leasing. I'm just curious as to how their program works. They advertise a lot in various pubs. I do have my eye on this silve/blue 365 GTC. Man oh man, is dat one prutdey car!

Dr "You can never have too many cars" Tax

 

In semi socialist countries like Canada you pay 8% provincial sales tax and 7% goods and services tax (federal tax). Thats 15% on a new car, or a used car from a dealer. On a $250,000 Ferrari, that's $37,500 in tax! If you know you will not keep the car for more than 2 or three years, it sometime pays to lease, cause you only pay the 15% tax on the lease payment, and you can make a few lease payments for $37,500. This was explained to me by a guy who just leased an Enzo, where the tax alone would buy a slightly used Modena.

 

Usually, the car maker's own fiancing bank sets their residual and money factor(which is like APR interest rate), that you most likely can't negociate, at least not on the residual value, money factor obviously depends on your credit rating. Also another bank like Chase auto finance will have its' own program too, and it can be better than than manufacture's bank.

You can try to shoot for the best Money factor with high credit score, but that's about it. They aren't gonna make a customized lease term just for you.

 

Woodear,

Spent some time thinking about this yesterday. Well at the end of the 3 year run, if you leased you have $14K cash according to you, and if you bought you have a $14K car that you could sell for cash.

So in this example isn't leasing and buying the same thing?

 

That is what I meant. When I said flip every few years, I meant buying new cars, and selling them in 3-4 years time

 

Got it..didn't see this post. Makes sense now.

 

Why would you buy unless you intended on keeping the car? Like others have said, with a lease you are paying only for the depreciation over the life of the lease. The good thing about the 348 is they are nearing rock bottom, some say. Thus the depreciation over the next three years will be very little. Which in turn makes your payments lower. Why would you buy and pay for the whole car over 3 or 5 years if you plan on selling it? You will have to sell to get your money back, that you already paid the bank. If you lease, the leasing company has to sell it, not you. Does not make sense to buy if you are not going to race it, modify it or keep it. Plus you get some sort of tax break if I remember right. Something like only paying taxes on the lease amount which will be probably half the purchase amount.

Example

40K car. lease Lets say 20k in dpreciation. You pay taxes on 20K. Finance company finances 20k over three years and then sells the car for you at the end of the lease.

40K car Buy. You pay taxes on all 40K. You finance 40K over three years(much more expensive). Then you have to sell the car to get your money back that you paid the bank, so that you can buy your next car.

This is how it has been relayed to me. I am no finacial expert. I am sure their are plenty on this site. Just my 2 pents.