Which is better - leasing or owning a car?
For me, I cannot think of any reason to do a lease since #1. you still pay for everything #2. you have to hand it back after 3 years and #3 when handing it back you cannot have over 30,000 miles on it or any scratches or dents because they will charge thru the nose for those.
The good reasons to lease? #1 it is cheaper so one can then afford a more expensive car and #2 its good if one has a business and needs a car for that.
Any other thoughts?
Only advantage I can see of a lease is that you can get to drive a new car every 2 or 3 years, and you can deduct it as a legitimate business expense. You end up paying more for the car, but you don’t have the hassle of selling it later.
One advantage of a lease is that you don’t need a down payment. In return for that advantage, you don’t have any trade-in value at the end of the lease to use as a down-payment on your next vehicle, so it’s kind of a wash.
The one time I leased a car, I bought it at the end of the three-year lease period and kept it for another five years!
I don’t know how it works, but while reading up on it there was an argument that leasing an electric vehicle was better than buying it. I don’t know if leasing an EV for 2-3 years means you get the $7500 federal tax credit and whatever state credits, but only have to pay for the car for 2-3 years or what. If that is true, it could be a good idea. Lease a car and get the rebates for yourself. Problem is you lose the car at the end of the lease, which sucks.
Other than that, I can’t see how a lease could be better. Buy a car that is 3-4 years old and 30% cheaper than a new model, but not old enough to have major damage yet. With the bad economy used cars are holding more value though, it isn’t like it was 10 years ago when you could get a 5 year old car for less than half the price of a new one.
I’ve never leased a car, but aren’t those $199 figures that are put out for 25-30k cars misleading? I thought the true cost of leasing a vehicle was far higher than that.
I guess a major plus with leases (but not enough to justify the expense) is not really worrying about a car breakdown like you do with a used car.
The other advantage of leasing is zero maintenance costs, and that includes wearable parts like brakes, tires, clutch, etc. Depending on the terms of your lease (and the kind of car you get, like say a hot sports car) this can be significant. You can literally beat the shit out of the car and as long as you don’t go over your mileage or damage it cosmetically you don’t ever have to worry about any of that stuff.
Probably not.
Unless you buy a maintenance package as part of the lease you are still on the hook for routine maintenance.
In my experience some people will buy a maintenance package, but I have never seen a standard lease that includes it.
Things may be different where you live, but in California maintenance is not included.
Car dealerships around here advertise leases in big bold print and the actual buying price in smaller print. This helps them two ways: (1) they can show a smaller monthly cost, and (2) them make more money on leases.
They are probably advertising the Cap cost of the lease which includes any down payment (called a cap cost reduction on the paperwork)
Therefore this would not necessarily be the cash selling price.
I have bought three new vehicles since 2008. Paid cash for all of them, no trade-ins. Leasing is for people who want to always make car payments. Maintenance isn’t that expensive on run-of-the-mill cars these days- just oil changes and air filters for the first 100k miles. I’ve only had to replace one serpentine belt (preventive maintenance) and one axle seal (it was leaking) on the '08.
You can also run liability insurance only on paid-for cars and save a bundle there, too.
All the ads about leases around here state an amount due at signing, sometimes as much as 3k. Is that not a down payment?
I personally would never lease a car. My commute’s too far for that, and I put 350 miles on my car every week. At $25/mile over 30,000 I think I’d owe them more than half a million dollars in extra mileage. Or maybe I mis-read the last lease I saw and it’s $0.25, but still, that’s over 6k in extra miles.
I am always wanting a new car. Two months after buying a car I want a different one (not that I actually succumb to this urge, but the urge is undeniably there). So I have spent a lot of time doing the math and trying to convince myself that leasing makes sense and would allow me to get a new car more often without wasting a bunch of money. But I’ve never been able to make the numbers work out to my satisfaction. I always pay cash for my cars, so coming up with a down payment is not an issue. It also means that I can sell the car and buy a new one at any moment without having to worry about being upside down, etc. And every way I’ve run the numbers, even if I want a new car every two or three years, leasing doesn’t compare favorably. Maybe I’m missing something, or doing it wrong, but so far I haven’t figured it out.
It’s $0.25/ mile. Higher mileage leases are available ( for additional cost)
A rather unscrupulous (IMHO) practice is to advertise very low lease rates for relatively nice models, only to show the ridiculously-low mileage limit for a brief moment, in tiny print at the bottom of the screen. Yeah, it’s only $199/month to drive that brand new Camaro, but you can only drive 10,000 miles per year!
Had a teacher in high school who explained that leases are great… if you’re a company and need to have a supply of vehicles in good repair (company cars, basically). The idea is that you’d lease a vehicle for a few years, then when it started to show its age, you’d give it back and lease another one. I’m assuming leases also help you avoid the many associated costs and hassles with actually changing ownership of a vehicle (transferring titles, new tags, etc.), but I could be wrong.
But for a private owner, not really any long term benefits. If you can’t afford to buy it, just buy a cheaper one.
Leases aren’t necessarily all bad. Depends on your situation and priorities.
Some people like to have a new car every 3-5 years. Leasing is cheaper than buying (short term) and taking a loss in depreciation/reselling. And you avoid the hassle of reselling all the time.
Leasing also allows someone to be able to afford a higher priced car because the lease payments tend to be much lower than monthly loan payments, even a 72 month loan. Some people want to squeeze every penny out of a car, buy used - drive it until it falls apart. For some others, it’s more important to drive a nice, new fancy car all the time.
Leases vary on mileage limits, down payments, etc. Some leases have a zero down payment - ever seen an ad for a “sign and drive” lease? That’s a $0 down payment lease. You can also often negotiate the mileage allowance. The advertised price might be $X for XXX miles per month, but there are often options to pay a higher monthly payment for a larger mileage allowance.
When it comes to maintenance costs, there shouldn’t be any save oil changes, wiper blades, and maybe an air filter here and there, especially with a low mileage lease - no matter what your driving style. You’re not going to need tires, brakes, or whatever in the first 30,000 miles. And leased cars come with the same factory warranty as a purchased car. That’s another bonus of leasing, the car is always “new” and doesn’t have maintenance costs an older, higher mileage car would.
One way to calculate the value of a lease (whether it’s a good deal or not) is to figure the depreciation difference of the purchase price against what you could reasonably except to sell the car for at the end of a certain period - say 3 years old with 30,000 miles.
Factor that against your total out of pocket lease costs - down payment, fees, whatever, plus the lease payments over the entire lease. Depreciation vs. total lease price. If the two are comparable, the lease is a better value than one with a greater difference (total lease price > depreciation).
Lease terms are usually written in such a way that the total cost of the lease ends up being about the same as if you’d bought the car new and then traded it in three years (or whatever the terms are) down the line. If you’re the kind of person who simply must have a new car every three years, being able to just turn in the lease and get another one is a bit easier than going through all the horsetrading of trading it in.
There’s certainly cheaper car ownership strategies, but most people who complain about leasing being rip-offs are comparing it to buying and then selling the car at a private party price after three years. Selling a three year old car privately is doable, but is usually a long drawn-out affair that most people don’t want to deal with.
If you’re a business owner, there’s various tax perks to frequently replacing your vehicles with new ones. It’s the same sort of deal where if a company knows they’re going to be replacing a vehicle in about 3 years anyways, leasing costs about the same as buying and trading but is a little bit less of a hassle.
Oh, and at least in the states I’m familiar with, the lessee still has to pay all the title and registration fees and all that.
This. Along with rental cars, you can drive leases just a teensy bit harder than a car you own.