Leasing 101: Should you lease a car?

Discussion in 'The Garage and Car Talk' started by Philpug, Jun 26, 2017.

  1. tch

    tch What do I know; I'm just some guy on the internet. Skier

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    Leasing is GREAT!
    ...for other people.

    Then I can afford to buy a decent used car with reasonable miles on it for a lot less than new. :golfclap:
     
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  2. Muleski

    Muleski Skiing the powder Industry Insider

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    I've leased cars in two situations. One, when I could run the entire cost of the car through a business, and my accountant recommended that we lease them rather than buy them. Two, when I wanted to get into a new to market car, intending to own it for the long haul IF IT PROVED TO BE A GOOD CAR. I have done that twice. Once with a 1989 BMW 325ix, and once with a 1998 Volvo V70R. I bought both cars when the lease term was up, at what I think were good prices. I was able to work out a CPO warranty on the BMW, and ended up selling it at about 90K miles before it expired. We drove the Volvo to close to 150K miles. 30K/year or more. Worked out well.

    One of the vehicles that we have come to have as a "regular" in our garage is a Toyota Land Cruiser. I bought two of them, a 1995, and a 2000, when both came off lease {somebody else's lease}. They were required to maintain them at a dealer, and Toyota could print out every service record. Both came form rust free parts of the country, sourced by a local dealer friend. Both through in CPO warranties to 100K miles, back when they were really underpriced for that vehicle. My first repair, a headlight and relay cost the full price of the warranty!

    Our son is thinking about a new truck, and he may lease one, as there are some outrageous deals out there, and some negotiation to be had. His plan would be to buy it at the end of the lease term, if it proves to be a good one. But, he's also looking at used, off lease, booked up, with a CPO warranty. He can deduct some of the use of his vehicle.

    I think a lot of it depends on the vehicle, the deal, and the terms. My brother went through a time period when they were leasing Audi's, which included free maintenance for the full three year term. Made a lot of sense for him at the time. He had an Audi 5000 V8 that he bought after the lease and immediately flipped for a $7K profit.

    Yeah, not all the same. Agree with that point for sure. The gap risk on any new car is a real one, too. You never know.
     
  3. bbinder

    bbinder Out on the slopes Skier

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    We have leased twice. One was a Saab, and at the end of the lease, we realized that we really like owning these cars for a lot longer period of time. The second lease we had (actually at the same time as the first), was a Saturn we got for one of our daughters. At the end of the Saturn's lease, the blue book value was higher than the pre-negotiated purchase price, so we bought it. We got our money's worth on that one before the car was totaled. But I'm with Chuck here: we usually buy used CPO cars and keep them for ten years.
     
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    Philpug

    Philpug Notorious P.U.G. Admin Pugski Ski Tester

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    LOL...yeah...not so well. I actually cannot remember when I wrote this...might have been two years ago..so only half right...for a half ass statement..:cool:
     
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  5. crgildart

    crgildart Gravity Slave Skier

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    I'll gladly pay DOUBLE for the satisfaction and peace of mind knowing I can carelessly beat the living crap out of MY CAR without worrying about potential penalties for incidental scratches, dings, torn upholstery, etc at the end if said lease. My cars are full contact players. Sure, I won't put other people's vehicles at risk, but I'll happily blast through the prickly bushes along the side of the really rough and rocky trial or toss my skis/bike on the roof sideways before securing them on the box/tray.
     
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  6. fatbob

    fatbob Making fresh tracks Skier

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    I don't think you can simplify it like that because the auto business model in the future might well make it that there isn't really economic sense in buying a new car compared to lease deals. Sure they'll still sell you one but it might end up a niche market. Everyone else is trying to sell you a service rather than an asset why should autos be any different? Plus the more stock their finance arms own the more of the total secondary auto market they own.
     
  7. Muleski

    Muleski Skiing the powder Industry Insider

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    I know it's not a new versus used discussion, but the used car market in this country is literally "all over the place." There is not a lot of logic to many prices. And some of these cars, particularly high end ones, are ticking time bombs. So many electric modules. etc. An awful lot that can go wrong at great expense, regardless of methodical maintenance. Things that just degrade over time.

    I have a friend who has done a lot of car tech work for me, and I had occasion to catch up with him on a couple of potential used car questions. He's primarily a German car tech. Had a number of cars that he thought were grossly overvalued on the used market, and may that he thought were just being given away. Pretty interesting discussion. A friend of mine just bought an older BMW 740i {the shorter wheelbase} with about 125K miles, in perfect condition, for much less than $10K. Timeless design.

    My son is about to sell his GF's car, a Subie with a salvage title, and with more mileage, and he might get more for it. Nuts. I'm looking at a car right now that I think might need a new engine, and the number of people who are blindly thinking it's a "unicorn" blows me away.

    Interesting car times......
     
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  8. Sibhusky

    Sibhusky Making fresh tracks Skier

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    I've never leased. The last three cars I paid cash. And the last two I kept for well over 100,000 miles. But after hearing about all these leaking sunroofs in the Alltrack, I'm beginning to think I should have leased the car. I'd planned to keep this car until they refused to renew my license.
     
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    Philpug

    Philpug Notorious P.U.G. Admin Pugski Ski Tester

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    Actually the Alltrack had an awful lease, you would have been better leasing so many other cars first.
     
  10. JeffB

    JeffB Refilling the flask Skier

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    True - needed a new passenger turn signal at 20k service last weekend. Thought it would be an easy fix. Wrong. Signal light is Integrated into LED headlight assembly. Whole thing must be replaced. Just over $1k installed. Fortunately a warranty item, but if that happens in another 16k miles?

    I'll be just a tad bit irritated.
     
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    Philpug

    Philpug Notorious P.U.G. Admin Pugski Ski Tester

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    I got involved in a leasing conversation on another site so thought I would resurrect this one again.
     
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  12. BC.

    BC. NEPA ShopRat/Skier Skier

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    Great thread..thank you for the bump.

    I have leased a new vehicle every 3 years since 1995. My standard lease is a 3 year/15,000 mile a year. I have switched back between Toyota and Ford....(4Runners, Sequioas, F150’s and Tundras)...I am currently in a 2017 Tundra. Waiting to switch back to a 2020 F150.

    I typically turn my lease in a couple months early with just under the 45,000 miles. I usually just step right into the new vehicle with basically the same payment and never any money out of pocket. Leases have worked for me because of the low miles I drive.....I know I am basically renting the vehicle, but the lower price is what we need.

    On the other hand, my wife and daughter bought their vehicles (‘17 RAV, ‘17 Forester) because they drive a lot more than me and could never stay within the mileage. So, as a family I see firsthand the positives and negatives of both leases and buying. The 3 car payments right now are a killer, but for a family of teachers we are used to living “on the edge”. (why we both have 2-3 jobs..)

    Looking forward to hearing other people’s tips and tricks of the business of leasing/buying vehicles.
     
  13. David Chaus

    David Chaus Epic & Ikon because I’m indecisive. Or am I? Skier

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    My 2005 Forester needed a new exhaust system, so after almost 260K it was time for a replacement. I looked at buying a late model used Subaru, also looked at VW’s and others. When I calculated what a car loan would look like for the type of car I wanted with the features that are important to me, I realized that I could lease a new 2019 Forester for less than I could finance a 3 year old Forester/Legacy/Outback. Keep in mind I was also committing to a year office lease for my therapy practice, while still leasing office space with the therapy group where I work, so I was going to be paying rent on two offices for an overlap period. So I decided on the new Forester lease in part to better manage my monthly budget for now, with the trade-off of losing equity on a new vehicle acquisition.

    Another big factor to me is the CVT. While some people don’t like them, the one of the 2019 Subie has been fine, no complaints about power or noise. That said, I have been advised by my mechanic to make sure the drive train including the CVT is always under warranty, as they need to be replaced rather than repaired (unless you have the rare mechanic with a clean room who is willing to work on them). I calculated the cost of extending the warranty on a used car with CVT, and it made more sense to me to obtain a new vehicle.

    So far things have worked out. I’ve been super busy at both offices the past 3-4 months, so with my current income I’m less worried about monthly expenses. I’m reducing my days in the group practice and will be done with them sometime between September and December, saving me some office expenses. I’m paying about the same every month for my 2019 Forester (which I love) as I did when I purchased my 2005 Forester. In Feb 2022 I can decide whether to get a new lease on a new vehicle, or pay the disposition fee and start over looking for a car, or buy the Forester, which is what I’m inclined to do. I know most people would advise that if you keep a car a long time it’s better to purchase, and I kept my last Subie for almost 13 years. I might be being optimistic, but I expect I could also keep this vehicle for 10 after a 3 year lease.

    Looking at what I would pay to purchase my leased Forester, I think it would be less than what it normally cost for a used Subaru. I don’t yet know if I’ll exceed the 12,000 annual miles on the lease. The first 3 months I drove it I was heading to the mountains a lot for skiing, and not doing as much driving around now other than 23 miles to work (46 round trip). I’ll have to see how I do for a full year. If I do exceed the miles and I decide to buy it after 3 years, I won’t have pay for the excess mileage.
     
  14. crgildart

    crgildart Gravity Slave Skier

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    Just heard a friend bellyaching about getting screwed with a much of additional fees at the end of his lease... that Honda "would gladly waive" if he decided to lease another vehicle through them. So, I guess leasing is actually an even LONGER term decision if you really want to calculate the total cost and get the best value because once you light that candle you have to keep burning it over and over to avoid those end of term switching costs.
     
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    Philpug

    Philpug Notorious P.U.G. Admin Pugski Ski Tester

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    All lease and fees are clearly documented when you sign a lease, this is by law. Now if there was damage or overage incured then there should be charges bit I also covet this in the initial post.
     
  16. François Pugh

    François Pugh Making fresh tracks Skier

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    Maybe it's the mileage that I put on, but it's always worked out cheaper for me to buy and keep the car for 10 years or more than to lease for 2 or 3 years. Of course it's nice to be driving a new car every 2 years, but you pay dearly for that privilege. Currently driving a well equipped 2015 Mazda 3 Sport for under 138 CAD every two weeks with 4000 CAD down the rest at 0.99% for 7 years (better rate than my house mortgage).

    The only way I would lease is if the buy-out at the end of the lease made it financially better to lease and then buy out; I don't want to worry about "excess" charges.
     
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  17. crgildart

    crgildart Gravity Slave Skier

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    Which is why folks should really consider a lease as a decade(s) long commitment rather than a decision only involving about 3 years of dedication to said dealer/
     
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    Philpug

    Philpug Notorious P.U.G. Admin Pugski Ski Tester

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    Another misconception, it is the manufacturer/leasing co. that is waving the fees, not the dealer. Plus lets keep this to first hand information verses heresya or second/third hand, this is how rumors start. ;)
     
  19. Scrundy

    Scrundy I like beer Skier

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    The price of cars now a days are insane, think about it ..... you pay between 30k-70k for something is garbage in 10 years. Me I am hard on vehicles and the only way I win is to finance for 3 to 4 years tops and run um till they die. That 4-6 years without a payment let’s me spend more money on skis. To lease a vehicle is crazy to me, I put to many miles and I don’t have to worry about keeping vehicle in pristine shape for the turn in. Not to mention just constantly be paying out indefinitely.
     
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    Philpug

    Philpug Notorious P.U.G. Admin Pugski Ski Tester

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    This is the only place I have ever seen anyone else talk about high mileage leases. TTAC
     
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