Edmunds.com | Inside Line | Auto Observer Your Account | Help | Directory
You are here:
![[F]](http://a332.g.akamai.net/f/332/936/12h/www.edmunds.com/media/townhall/webxicons/site.gif){kind=small}
Forums
Smart Shopper Leasing vs. Purchasing
519 messages, Last post on Dec 31, 2009 at 7:42 AM
You are in the Smart Shopper Forum. Your Hosts are kirstie_h & tidester
|
|
|---|---|
|
Replying to: steine13 (Nov 24, 2004 8:37 am) My issue (and why I advise many against leasing) is that like most financial transactions, if you don't understand what you are doing, you will get taken every time. You better understand the concept of the capitalized cost, the imputed interest rate, how to terminate the lease, and the costs that will be incurred at the termination of the lease. The people who get killed only seem to know one thing - the monthly payment. They sign up for 12k mileage leases when they commute 15k miles a year. |
|
|
You are right that leasing is much more confusing to the average buyer, and that traditionally it has been much easier to pull what my be considered "sleight of hand" tricks to pad the bottom line (what was referred to above as fleecing). Yes, people have to know what they are siging, but it is really easy to lose $$ on a lease contract, although maybe it got better with the regulations regarding disclosure (probably not if people still don't read). That low payment really does suck you in, but at least with a lease, if the payment is comfortable and you can walk away at the end, you can't be too bad off (assuming you aren't way the heck over the mileage limit).
|
|
|
But we pulled the trigger on the 36 month lease on the wife's Explorer. Reasons: 1. The depreciation on Explorers makes buying them suicide. 2. Wife wasn't in love with it, but we needed something big and reliable. Babies (more specifically, the items that must accompany babies) take up ridiculous amounts of space. 3. Ford was running a ridiculously cheap lease deal. Plus we got A-plan through her dad. She is in love with the new Freestyles, so we *may* buy one of those instead of lease next time. The goal, really, is to find a car you love enough to drive until after it's long paid off. I'm 2 years into a 5 year Maxima loan, and unless financial hardship hits I plan on driving that car for the remainder of the decade (the downside to Maximas is they're somewhat expensive to insure). It was a 1.9% loan so the money's cheap, and what a great car. I really can't see how I'd be happier with anything else. I ride in friends' Camries, Accords, Impalas, SUVs, etc., and they all pale in comparison to the Nissan. I think I'm going to be one of those people who, in 30 years, has owned 3-4 Maximas. |
|
|
|
|
Replying to: stickguy (Nov 24, 2004 10:19 am) For tightwads like myself, there is little UPSIDE in a lease. If it is a great vehicle and is extremely reliable, you have to turn it in (or pay the contract amount which could be more than the vehicle is worth on the current market). Of course, I am making several assumptions: 1) the individual can afford to make the payment throughout the term of ownership. 2) that the deal does not include a bunch of added mop & glo stuff etc. I make a dozen buy vs. lease decisions on vehicles, office equipment, etc. each year. I have set up a couple of forms to help me evaluate which is a better deal. That tends to put off a lot of the salesmen who are pushing the leases. I tell them that without all of the information, they don't get the business. PERIOD. |
|
|
|
|
That isn't exactly a newsflash. The same can be said for people who finance! Volkswagen is currently offering lease deals with a money factor of nearly 0. In other words, the only thing you pay for is the car's depreciation, not interest. But unlike a 0% financing deal, the person who leases the VW won't be "buried" in 3 years time. If you like your car, exercise the purchase option. If you don't like it, dump it. If you're nervous about owning a German car with a turbo engine off warranty, exchange it for a new one. All seems pretty straightforward to me. In truth, if the issue is about what makes the most financial sense, everyone would be buying 3 to 4 year-old used Buick, and would drive it until the wheels fell off. |
|
|
|
| I think some of the people who are anti-leasing probably had a sour experience with it in the past. All you need to do is your homework. With the money factor and residual number at your fingertips, you can quickly strip away all leasing "hocus pocus" and negotiate a good vehicle selling price in the same way as if you were paying cash. | |
|
|
|
Replying to: audifreak21 (Nov 23, 2004 12:12 pm) In other words, the residual should be at or below the car's projected WHOLESALE value therefore making it a great value should the person leasing it decide to buy it at lease end. Now, having said that, some car companies have made some horrible mistakes in the past. For today's sales, they have mortaged tomorrow by setting residuals that are too high in order to have attractive payments. When the people leasing them walked away at lease end, those cars brought THOUSANDS less at auction! Jeep did this and so did Audi and a couple of others. Hopefully these car companies learned their lesson!
|
|
| Hopefully, those companies have not learned their lesson. They the consumers can keep leasing cars for an unrealistic low price. | |
|
|
|
Replying to: isellhondas (Nov 29, 2004 7:32 am) Also, since you sell Hondas, hasn't Honda been a tad high on their residual values in the past? Those two year $260 month Odyssey leases quickly comes to mind. |
|
|
|
|
Make Honda a good car company to lease from. High residuals equate to lower payments. And, yes, a couple of times I can think of, Honda went a bit overboard and took some hits. I've never heard of any type of "insurance" against this. |
|
You are here:
Forums
Smart Shopper Leasing vs. Purchasing
New? Join Now!
Forum Tools
Search Forums
Browse by Vehicle
Browse by Board
Browse by Topic
Today's Chats
