Leasing vs. Buying a car

In My Humble Opinion
1

This could be GQ, but maybe here is best…

I am soon going to need a new car. I have traditionally bought new and then run the car until it is dead. My car now has 204K on it and may go at any time. (but who knows, eh?)

I am thinking about leasing instead of buying. But I have never leased and I want to find out the pros and cons of leasing vs buying.

I am pretty secure financially. HOWEVER, my current cash flow is erratic. I am in a start-up and we could conceivably go under at any time. I have no other debt other than my monthly food/electric/gas. My house is paid for.

OTOH, I have had two unsolicited job offers in the last 6 weeks and am pretty sure if things go south, I have a few options - even if they aren’t my *preferred *options.

My thoughts on leasing are below - but my assumptions may be wrong and that is why I’m asking for advice from those who have leased.

My thoughts on why leasing might work for now:

[ol]
[li]I see good monthly deals on leases - so if I were to be out of work for a few months, I could still probably get by without worries.[/li][li]I work from home, so I don’t drive a lot of miles. Probably less than 50 a week and then a few hundred on holiday weekends.[/li][li](down side) I am not good at keeping the interior of a car. This will have big repercussions at the end of the lease.[/li][li]I would likely want to buy the car at the end of the lease, I’m hoping to trade higher payments later, for cheaper now.[/li][li](down side) If things went south, a new job may make me travel more - forcing me to exceed the mileage maximums.[/li][li]There are likely things I haven’t taken into account.[/li][/ol]
So, experienced leasers, will you lend me your insight?

2

if you drive that little, you’d probably be better off buying a newer used car instead.

3

I’m not a leasor, but many of my family members are. In my experience, #3 and #5 are dealbreakers. My dad literally paid an extra $5k in mileage; it was close to a buck a mile. That’s insane. #3, he keeps it immaculate and still there are charges for “scuffs” and such. He’s leased a range of cars, from Acuras to Infinitis to Audis and BMW’s. Even if you’re not looking at a luxury brand, #3 and #5 are super important on a lease, unless you’ve got money to burn, which brings me to my next thing…

Also, if your cash flow is erratic, you’re much better off getting a used car you can afford so it’s THERE even if you couldn’t afford a car payment. You wouldn’t want to lose your source of transportation just because you can’t make the lease payment. If you have bad cashflow then, have to give up your lease, you’ll have a hell of a time getting a used car and then you’d really be screwed.

Leases are excellent for two sets of people: people whose work pays for the car and people (like my father) with cash to burn who tire of cars in 2-3 years. Who are non smokers, non eaters in the car (he has a vacuum sealed coffee mug, that’s IT), and overall take excellent care of the car. It’s also helpful to have a spouse that can drive their car long distances (eg, if my parents visit me 75 miles away for a weekend, they drive her car, not his).

ETA: #4 is a horrible financial choice no matter how you slice it. You didn’t put much money “into” the car by leasing; not all of your lease payments count towards the car, only a fraction do.

4

Get a second hand car and pay for it over 3-5 years.

Seriously.

If you drive that little you don’t need to pay the premium for a new car, and leasing isn’t a winner either because it’ll cost you in the long run.

Find a car you like, and get a 2-3 year old one on a payment plan.

5

Ask yourself what the dealer is “pushing”, Leasing, Buying new or Buying used.

This will tell you which transaction is making him the most money.

Most dealers seem to push leasing so that’s the one to stay away from.

Buy a newer used car.

6

I am a Car NUT. Absolute Bonkers for cars. We have Five. All but one has less than 60,000 miles…and a motorcycle. Our car payments are currently less than a reasonable lease on a luxury car (about $500 a month, and that’ll be paid off in 18 months or so)

You may NOT be a car nut, but I got where I’m at by NOT SELLING OR GIVING AWAY A CAR.

When you lease, you have nothing to show for it at the end of the lease. If you lease, and your start-up goes south, you may end up WITHOUT A CAR.

Yes, we have a lot of money tied up in depreciating items, but if the fit hit the shan, so to speak, we could pretty easily sell all but two and gather $20k, selling the other cars at a pretty hefty loss.

The point I’m trying to make is: EVERY time you turn in a car, for whatever reason, you take it in the shorts. Such is the way of the depreciating item.

Believe it or not, you’re better off KEEPING the old and busted car, and buying a two or three year old lease return.

Think about the fear you have “I have to sell this old car because it can STRAND me, and I NEED a car for my LIVELYHOOD!”

But if you have two cars, one of them paid off, then it’s no big deal, you have a spare for the cost of the additional insurance (which isn’t much, because you only have one butt and two cars)

My daily driver is the best Impreza Subaru makes (the STi), it was three years old when I bought it, and a third cheaper than if I’d bought it new. ($20k vs $35 k)…I can make $250 car payments with next to no income.