New car: Buy or lease?

I’m in the mood to get a new car. I drive about 6K miles a year, have a garage, want something like a Honda Civic LX, green with tan interior. Nothing fancy, as long as it has a/c, remote entry and a cassette player. Do I buy or lease? My feeling is that a car is worth about half as soon as you drive it off the lot. I don’t get attached to cars; they merely get me from point A to point B. What are the pros and cons of leasing?

We leased once but we put WAY too many miles on a vehicle annually to make that worthwhile. As for me, once I find a vehicle I like, I want to hold on to it. My husband would rather have a new one every few years, but I’ve brought him around to MY way of thinking! Anyway, sounds like a lease could work well for you.

One thing that caught us off-guard - the lease required us to carry more insurance than we would have had we financed thru our credit union. Just something you’ll want to check out.

IMHO leases are a bad, bad thing. Years ago before my husband and I got married, he leased a car. I don’t remember what exactly happened, but when the lease was up, he had a choice, pay a lot of cash to buy the car outright or upgrade to a more expensive car. He couldn’t afford either option, so he just gave the car back and said “whatever”. Many years later, a collection agency began to garnish his wages to a point that we could not pay anything else and feed our family at the same time. Long story, short, we had to declare bankruptcy.

Again, I’m not sure what he signed at the time, but this whole expierence left a bad taste in my mouth about leasing a car. IMO It’s better to just buy a car and not have to worry about mileage or anything else.

http://www.edmunds.com/finance/leasing/articles/48958/article.html
You might find some stuff on this page and elsewhere on this site that might help you make up your mind.

I have always thought of leasing a car as renting. Personally if I’m going to be paying for something for 2 or 3 years I want to own it. I’m not into car’s as status symbols so a five year old car that looks good and runs well doesn’t bother me. I just finished paying off my truck. It’s five years old since I was able to garage it for most of it’s life it looks great, runs great and I’m going to drive it till the wheels fall off.

If you need the payments to be lower use a longer loan, like five years.

Most car dealerships now offer a Smart Buy (thats what GM calls it, I’m sure it differs with each manufacturer). Lets Say you want a 30,000 dollar car, with smart buy you would finance say 20,000 for 4 years. Then at the end of the 4 years you can either refinance the remaining balance or trade the car in for something else. It works paritcularly well for me since I get the new car itch every 3 or 4 years.

Does it have to be “brand new” or just new to you?

That said, consider buying a low milage, nearly new used car.
[ul]The former owner would have eaten the loss in value from driving it off the lot.

Your insurance can be less than what is required in a lease.

Often you can get something that is still within it’s initial warranty periods.

When you done paying, it’s yours to keep. No worries about excess milage, it’s cheaper than a brand new car, etc.
[/ul]

Indeed, you have to do some leg work to find a car that fits the bill but it is really, really worth considering.

I know several people who leased a car thinking that the mileage limits would not be a problem, but they all blew the limits and paid over-mileage penalties. I think it’s Murphy’s Law; if you only drive 6k a year and lease a car, you’ll get a new job that’s three times as far from home, or you’ll start dating someone that lives 200 miles away, or - something. You get the picture.

I leased once & will not do that again. I didn’t read the very fine print about having to buy the highest liability insurance, so was stuck with that for the duration of the lease. :frowning:

Leasing can make sense for a business, but for an individual I’ve never understood the rational. Go with Icarus’ proposition and buy a car you know to be a good model (research) that has already had the initial owner eat the upfront devaluation.

For an individual, leasing a car does not make economic sense unless the need to just have the latest and greatest version of the new whatever outweighs one’s inability to just buy one of same.

I suppose there may be a rare situation where an option/configuration just fits your needs so well that an out of realistic budget acquisition is called for, but generally leasing for the individual does not make sense.

You can use leasing to your advantage, if you buy a car from a place like CarMax, or AutoMax, or whatever they’re called nowadays, which disposes of fleets of once-leased cars. We bought our '92 plymouth voyager from them. Best of all, their salesmen don’t work on commission, so there’s no pressure involved.

::: twitch :::

i would never lease a car.

but i also would never buy a previously-leased car, unless i either knew the previous “owner” or my dad (a mechanic) was allowed to thoroughly inspect everything in the general vicinity of the vehicle.

working at a gas station for 3 years had me see so many people who never changed the oil or had any routine maintenance performed upon their car. why? “eh, it’s just a lease.” many, many people came in with, “yeah, i gotta turn in my car soon because the lease is up, so i need an oil change and whatever.” the car was generally at least two quarts low and the oil chunked and glopped out of the drain. :eek:

i know that not all of the people who lease cars do this, but i’ve seen enough of that behaviour to determine that i don’t want to chance something as important as a car to irresponsible people.

Violet makes a good point about liability insurance. You have to buy the max, and if the car should be totalled, the insurance company pays the owner, which is not you. The car is covered, but you may have to pay off the lease, and you are left without a car.

Leasing is only a good deal if you’re a corporation, so you can write it off. Leasing by a private party is a bad deal. If you can’t afford to buy, save for a while and buy when you can afford it. It may be hard to postpone something you want, but “easy payment” plans of whatever type are only easy on the dealer.

The only benefit to leasing is usually a much lower monthly payment, and generally a lower initial cash layout. I have a Honda Civic (EX), I purchased it 4 years ago, my last payment is this month, woo hoo! Anyway, my payment was $271/mo for 4 years, I could have probably leased it for half that monthly price, give or take. Downside to that is I would need to select a new car this month and my payments would continue, rather than go completely away. As it is, I now have a car that is worth many thousands of dollars, and I don’t have any monthly payments whatsoever.

If you cannot afford the monthly payments on a purchase, leasing is probably ok. I think buying is better overall, because you are gaining equity with each payment, and own something at the end. Leasing is ok if you are unable to buy. Watch the mileage, though, I put on about 20K per year, and would owe a fortune if I had leased. Also, you have to watch for damage, if the bumper is scratched and so on, you can have some trouble.

As has been said before, leasing is like renting, you don’t own the car, and if you mess it up, you will pay for it.

My ex-husband leased a truck, and IIRC, his combined insurance/lease payments were at least as high as my insurance/car payments. The only real difference was that at the end of two years I owned a vehicle I could sell, and he had nothing.

My best friend has been in the service department of a car dealership for several years now, and she says that leasing a vehicle only makes sense for a business. It tends to be a rip-off for the average individual.

Not that it makes any difference…

…but that would be MY best friend and MY ex-husband, not Feynn’s. Sheesh. All this time sharing a computer, and I still forget to check who is logged in when I start posting. :rolleyes:

I’m getting ready to lease a car, because I think it makes sense in my particular situation: the difference in the monthly payments on the car I want is significant, and since I’ll be making quite a bit more money a few years from now than I do right now, I’d rather have the extra money now than then.

I haven’t looked into the difference in insurance, though.

Dr. J

Buy if you can, preferably a used car with a warranty or one from someone you know and trust.

If you own a home you can take out a home equity loan and you can write the interest off on your taxes. Leasing offers no tax advantages, plus the obvious: you’ll be paying a lot of dough and end up with nothing.