What are your experiences with leasing a vehicle?

I was wondering if anyone can tell me about their experiences with leasing a vehicle?

My wife and I were thinking of doing it. We are half way through financing a 2013 Hyundai Elantra, our payments are $150 every two weeks.

We have a 2004 Ford F150 that the engine just went out on. It will be anywhere from $2,000-$8,000 to fix depending on what we do (minor rebuild, major rebuild, used engine or crate engine). I don’t want to put that kind of money into this truck and still end up with a 11 year old truck.

My last two used vehicles have ended with significant engine issues (timing belt and the above issue) so I’m getting tired of being burned by used vehicles (And yes, I do all schedule maintenance and oil changes, I just have really bad luck it seems).

We need a second vehicle (due to our jobs, and where we live) and it kind of has to be a truck (we like to camp and have a tent trailer and are hoping to upgrade to a larger travel trailer).

So I don’t want a used truck, but I can’t really afford to finance a new truck (Payments would be $300+ every two weeks). GMC has a great lease option right now for a really nice truck. It’s 0% lease for two years, payments are $155 every two weeks (with $2,600 due at signing).

Now I understand the differences between leasing and buying. With leasing, I’m basically “renting” this vehicle and will need to return it at the end of the lease period. I will have the option to finance the remainder owing if I’m interested or leave that vehicle and lease another new one (or just walk away).

Has anyone here regretted leasing a vehicle? Has anyone had any issues when the lease was up with any crazy charges from the dealer? I’ve heard rumors about needing to replace the brakes and tires before the dealership will take back the vehicle. Is there an assumption that I’d be on the hook to cover any usual wear and tear on this vehicle? Obviously if I put a big dent in the side I would need to fix that before returning the vehicle. But what about the breaks and tires?

Any insight would be helpful.

Thanks!

MtM

Some things to consider are the cost of going over on mileage and whether you will be able to maintain the interior to the standard you agree to. I have yet to see this work out well for anyone. Generally they end up buying the car to avoid paying the penalties and it would have been a better deal for them if they just financed the car for purchase in the first place.

But maybe you aren’t a careless slob with an unrealistic idea of how much you will use your vehicle and it will be to your advantage to lease.

Purchasing a lightly used vehicle with a reasonable amount of remaining warranty time is probably your best bet financially.

I have never leased a vehicle personally. However, here are the basics: (1) it can make a lot of sense if you frequently switch vehicles; and (2) it probably makes absolutely no sense if you plan to keep your next vehicle beyond the lease term.

Edmunds has a useful illustration here: if you lease a Honda Accord for six years (the average length of ownership), you save about four grand over that period, but you don’t own a car at the end. So a buyer comes out $7000 ahead. Now, if you cut the ownership period to the common three-year lease term, the buyer and lessee come out about even because that’s where the major depreciation occurs.

Leasing will also bump your insurance cost slightly in some states.

If you want the protection of a warranty without the high cost of buying new, look for certified used vehicles. You pay perhaps a 5-10% premium over equivalent non-certified used vehicles but you get a manufacturer’s warranty that covers the same stuff as the original bumper-to-bumper warranty, and save 10-20% over buying new.

I leased a vehicle once and had a ridiculous problem when I returned it. The original radio had only been a radio; I replaced it with a better radio that had a cassette player (this was obviously a while ago). When I returned the vehicle the dealer said I’d have to pay the cost for the original radio because it was now “missing”. We’d argued back and forth on it until I finally said that if I had to pay for the original radio, I would remove the replacement radio and take it with me. Faced with losing a free upgrade, the dealer relented.

Another factor you’ll want to check is mileage. A lot of lease contracts limit you to a certain amount of miles on the car. Drive it more than the contracted miles and you have to pay a surcharge.

If you do lease and plan to tow, make sure that is allowed.

First vehicle lease was fantastic! It was also 35 years ago, the buyback price was fixed up front, and by the end of the lease I was paying it off with inflated dollars. They don’t do that anymore. I did it again some years later because I write off a lot of the cost as a business expense, but it was still expensive in the end. It seems like a good option for someone who wants a brand new car every 3 or 4 years, but it’s a rotten deal if you want to buy back that car at the end of the lease.

There’s reasons that dealerships advertize leases. (1) It makes the payments look cheap, and (2) they make a bigger profit.

We leased a car for a year before going to our credit union to get a loan so we could buy it outright. Leasing has never been a good option for us because we’ve always put a lot of miles on our vehicles between commuting and pleasure driving. In the grand scheme of things, the savings between lease payments and purchase payments were offset by increased insurance costs and the looming penalty for going of 10K miles a year (or whatever the ridiculous limit was.)

We take very good care of our vehicles and get many years out of them beyond the payment period. I always figured a lease was for someone who had a short commute and liked having a new car every few years, and didn’t mind having a car payment. Me, I’d rather get past the payments and enjoy the years when the vehicle is MINE!!

Well, neither of those things necessarily mean bad news for you. If the dealer makes money on the financing or manufacturer incentives they don’t need to make as much off the customer.

I leased a car once. Three year lease, fixed buy-out price. The lease payments were about the same as the loan payments would have been if I’d purchased it. The only real differences were, no down payment, and no used car to trade in at the end.

(I ended up buying it at the end of the lease, because the buy-out price was lower than I would have had to spend on a three-year old used car of similar value.)

My wife and I were both leasing vehicles simultaneously; my least ran out about 6 months before hers. (For me, this was my first experience with leasing after being a car owner/buyer for 30 years).

It was a generally good experience. All maintenance was built into my lease; it’s nice just to bring it in every 10,000 miles and get it back all serviced up, totally free.

But I went way over on miles. I tried to sell the car (yes, you can do that) as the lease was running out, but got no takers at a price that would have made financial sense. So I wound up turning it in and paying around $1500 for excess miles. Still, in the long run, a good financial bargain.

If your F-150 is in otherwise good shape and doesn’t have insane mileage on it, I think you’d be crazy not to at least throw a used engine in for $2000. Even if you turn around and immediately sell it, that truck is worth much more running than non running.

IMO, the real key with leasing is reading the depreciation curve. Part of why leasing is so popular with BMWs and Mercedes and such is that those cars depreciate really fast, so losing out on the residual value is a lot less of an issue compared to simply paying less up front.

These days, full size pickup trucks are actually pretty similar in terms of high purchase price and really steep depreciation, at least initially. The difference is that they hold their value a lot better long-term. What’s weird about pickups is that there’s basically two markets for them; people who buy them new are often buying them as quasi-status symbols but there’s also a huge market for people who actually need them for utilitarian purposes*. So they depreciate really fast in the first few years (losing maybe half their value) but unlike BMW et al after that the curve flattens out considerably.

So, basically, I think the advice everyone else has given is good. If you want to get a new truck every 3 years, leasing isn’t a bad way to do it. If you would otherwise keep a truck longer, leasing is going to be a vastly more expensive vehicle ownership strategy.

*It was once the case that some utilitarian buyers would just buy a new stripped-down truck, but these days at least full size trucks don’t really come in poverty trim anymore.

I guess I should have added, the truck I’d like to replace with this leased vehicle was our second vehicle and wasn’t driven that much. In 2.5 years, I only put about 20,000km (12,000 miles) on it.

MtM

I never leased but have had a number of friends who leased trucks. Since you specifically relate using it for truck like purposes (towing and camping) be very careful about what’s allowed. Towing was mentioned above. I’ve known had limitations on driving it off road as well. Things that count as character for a truck being used as a truck (scratches from branches getting to the camp site, dings in the bed, etc) are considered damage you’ll have to pay for at turn in.

Random thoughts -

One thing to keep in mind in the US - the advertised price does not include taxes. So, if the advertisement says $239 per month, you are actually looking at about $300 a month payment.

Many leases do not include regular maintenance, so you still have to pay for the usual up-keep.

The philosophy some people employ is that, since they are leasing a new car, there will be less maintenance cost. They will turn it in after 3 years and pick out a new one. Whereas with a purchase, after the initial 3 years, you eventually get to a maintenance phase that costs more. So, continually leasing new cars eliminates that cost phase. Dubious, but something to consider.

If you can keep up on the maintenance, keep the car clean, and stay within your mileage limit, it’s easy to turn in at the end of the lease and walk away. If these are not your style, then you will incur the extra costs at the end.

Back in the day, if you didn’t know “the money factor” (interest rate charged for the money put forth by the leasing company for the purchase of the vehicle you chose)…
you couldn’t fully reverse engineer the ACTUAL selling price of the vehicle through the numbers printed on the lease contract.

Salesmen back in the day preferred this, as it was harder to see just how much they were screwing each customer for.
That was years ago… I’m sure that full disclosure has long been required by law since then…

My experience was terrible but it was also ages ago. At the end of the lease, the dealer tacked on so many charges for chips in the paint, a small scuff by the footpedals and stuff like that that I was almost paying him half the value of the car to take it back. I believe there may be laws against stuff like that now; if there isn’t there should be.