# Another car lease vs. buy question **URL:** \ **Category:** In My Humble Opinion\ **Created:** [January 29, 2020, 12:46am UTC](https://boards.straightdope.com/t/another-car-lease-vs-buy-question/847141 "2020-01-29T00:46:59Z")\ **Posts on this page:** 5\ **Page:** 2
**Author:** ![control-z](https://avatars.discourse-cdn.com/v4/letter/c/eada6e/32.png) [@control-z](https://boards.straightdope.com/u/control-z)\ **Post date:** [January 29, 2020, 8:40pm UTC](https://boards.straightdope.com/t/another-car-lease-vs-buy-question/847141/21 "2020-01-29T20:40:59Z")
It all comes down to how long you want to keep the car. If you only want the car for 3 years, leasing _may_ be the way to go. The large down payment always kept me from seriously considering leasing though. If you want to keep the car for say 10 years, I don’t think a lease would be a good deal at all. It’s nice to have a new car with new car warranty, but to me the sweet spot in value is buying a 2-4 year old car with low mileage. You can easily save 30-50% off the price of a new car and still get a car with 10+ years of reliability. Plus taxes and insurance are lower. ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [January 29, 2020, 8:49pm UTC](https://boards.straightdope.com/t/another-car-lease-vs-buy-question/847141/22 "2020-01-29T20:49:27Z")
> [@FoieGrasIsEvil](#): > > People of means will often lease high-end luxury cars (like say, a BMW 7-series) because owning one causes you to absorb breathtaking levels of depreciation relative to the price of the car. But the basic lease payment will assume the expected depreciation, ie the lessee is also absorbing that depreciation, just a little each month on the lease payment. You don’t basically get around rapid initial depreciation on new cars by leasing them. Depreciation uncertainty might still make leasing more attractive indirectly in two ways. As I mentioned above a purchase option has real value if not set far above what the car is really expected to be worth at the end of the lease. If set fairly and depreciation is less than expected, it’s a bargain price. If depreciation is more than expected, you don’t have to buy it at that price. Also with lease you only have to negotiate one deal as it relates to that car. With buy/trade in for the same period you have to do OK against the dealer on the initial purchase negotiation, then they have another chance to get the better of you on the trade in price. ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [January 29, 2020, 8:54pm UTC](https://boards.straightdope.com/t/another-car-lease-vs-buy-question/847141/23 "2020-01-29T20:54:30Z")
> [@control-z](#): > > It all comes down to how long you want to keep the car. If you only want the car for 3 years, leasing _may_ be the way to go. The large down payment always kept me from seriously considering leasing though. If you want to keep the car for say 10 years, I don’t think a lease would be a good deal at all. > > It’s nice to have a new car with new car warranty, but to me the sweet spot in value is buying a 2-4 year old car with low mileage. You can easily save 30-50% off the price of a new car and still get a car with 10+ years of reliability. Plus taxes and insurance are lower. But the specific numbers in this case it’s slightly less money to own the car outright in 5 yrs with lease than purchase. It can be true. If people want to buy only used cars then obviously lease isn’t (generally, some expensive used cars are leased) the way to go. But as to ‘sweet spot’ some people would argue it’s to buy 5 yr old or even older cars and keep them till 15-20+ yrs old. That depends on the person (what car satisfies them, their risk to car trouble, their skill DIY’ing cars, etc), and car. You have to hold something constant to analyze, and if what you’re going to hold constant is ‘buy a new car and keep a long time’, it’s not actually always more expensive to do that by leasing then exercising the purchase option on the lease. Depends on the deals you’re actually offered, as in this case lease apparently better. ---
**Author:** ![Spiderman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spiderman/32/230_2.png) [@Spiderman](https://boards.straightdope.com/u/Spiderman)\ **Post date:** [January 29, 2020, 9:19pm UTC](https://boards.straightdope.com/t/another-car-lease-vs-buy-question/847141/24 "2020-01-29T21:19:36Z")
> [@Disheavel](#): > > You said it in many more words than I would but the point stands to my mind. For a first significant car, I would not put down $30,000. The bigger question to the buyer is where does he want to be in 5 (or 10?) years as this car purchase now is going to thwart any home purchase plan or attempt significantly. We purchased the cheapest Toyota (Matrix) 16 years ago. We purchased it new for $14k and have put $1200 in tires into it, $1000 for a new clutch, $450 in oil and filters and head light bulbs (I do my own maintainence. We purchased an 8 year old third-hand Prius for $3000 3 years ago. So we are right at $21,000 + gas for two cars in 16 years. Our neighbors purchase new every 5 years with trade in. They are now on cars 8 & 9. We are good friends, similar economic standing, and quite open about discussing some things. We did a $150,000 remodel on our house due to the money we have saved relative to their car buying habit. Note that the $150k creates additional value on an appreciating asset! > > So recognizing that I am on a soap box, I highly recommend you due the same for your off-spring. Buy used or buy cheap for something on the first go round. Take a bank loan, if necessary, to build legitimate good credit. And then look to be in a better place in a few years to go bigger then! Your off-topic comment about “other recent large purchases” suggests that the situation has already ballooned beyond his true means. Help him reign it in with some good advice! Your concept is right but your details are wrong. The car is $27m, after financing, or about $25m retail. That is not that far off from your $14m car 16 years ago. It may not be the absolute cheapest car out there but it’s far from a luxury car with all the bells and whistles. Further, OP states junior has made some recent large purchases (house?) yet should be able to save the $15m in 3 years, which indicates he’s not living up to / over his means. ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [January 29, 2020, 11:45pm UTC](https://boards.straightdope.com/t/another-car-lease-vs-buy-question/847141/25 "2020-01-29T23:45:52Z")
> [@markn\_1](#): > > Yes, you’re understanding correctly. I thought of another way of looking at the costs though – suppose we assume he’s saving a constant amount each month over the next 36 months towards the $15K balloon. That would be about $415/month and if we add that to the monthly lease then the lease loses its low monthly cost advantage. He’d want to save the _difference_, not the entire 415 a month - let’s call it 180/month. At the end of the 3 years, if he can discilplne himself to put that money away, he’s saved 183 a month (412 - 229) times 36 months, or 6588 dollars. So now he’s got to make up the difference between that and the 14,900 - or about 8300 dollars. Let’s assume he wants to finance the balance. If my Excel formula is right, at 2.9% that would be a payment of about 350/month for 2 months. At 6%, the payment would be 368 or so per month. A total of around 8800 dollars. So he’s spent 229 \* 36, + 6588 + 8800 + the down payment brings the total to just over 27000. Still lower than the finance cost, somehow. If he _can’t_ discipline himself to save the 180 a month, then at the end he’s got to come up with nearly 15,000 - with a much larger payment. Are there any hidden fees associated with the end of the lease? Supposedly there’s often a turn-it-in fee (unless my in-laws got rooked, which is quite possible). If he surpasses the mileage, or the car is damaged, can they charge anything even if he buys the car at the end of the 3 years? What are the tax laws near you? My state charges a “personal property tax” which is based on the value of your vehicle(s), and I don’t know how lease vs own affects that. [Previous page](https://boards.straightdope.com/t/another-car-lease-vs-buy-question/847141.md?page=1)