Leasing Cars; got advice?

“Yeah well, w/ my sister home for a whole 2 days and we are sharing the pink tercle, I have gon mad. My freedom has been stripped of me. As my mother has no problem w/ her situation since she has her car.

I'm thinking of leasing my own car, do you have any advice?”

“Leasing can be ok for certain people in certain situations, Tea. I leased one back in 1985 for 4 years and for 60,000 mile. I lived in the Poconos at the time and wound up putting 113,000 miles on in 3 years. It would have cost a lot to pay for the extra miles so I had to pay the buyout figure after the lease was up. Be careful of the terms AND of the mileage...”

“At the time, it was the only way I could get a new car and my brother had to co sign for me. But, in the long run, it cost me a lot of money. So, make extra sure leasing will work for your purposes...”

“Many leases state only 12,000 miles/year. Any miles over that cost megabucks. Also, I think you have to be 21, if not 25 years of age for some companies to sign a lease.”

“I was just reading at motortrend, and they where saying that in the long run buying is better.”

“You're right, Stump. I managed to get 15k per year, but still exceeded that in half the time, so it wasn't a wise investment for me. Examine alternatives if finances permit, Tea..”

“Well I got my car in august. I think it had 58k on it. I'm now up to 75k. Thats 17k in less than a year. And I don't think I drive much at all. School is like a block away, and the only trip i did w/ it was Catskilss, 200 miles round trip. My sister did take that car to middle of PA, Albany and West Virginia.”

“Economically, buying is better than leasing. The lease will suck you in with a lower payment, but you can really get burned in the end.

Leasing makes sense for some situations, but not for most people.”

“Well I was in the car business for 6 years and from my experience here is my opinion.

There is this thing out there where people think that buying is better than leasing. Sometimes true but most times it is not true.

Question for you:

Does a house appreciate or depreciate in value? Of course it gains value and therefore you want to buy a house and not lease oe rent it.

Does a car appreciate or depreciate in value? It of course loses value. So, Why would you want to own something that loses value? You wouldn't.

Example car costs $15,000

LEASE:
In most cases, if you take your payments over a 3 or 4 year period and multiply them out over the course of that time then you come up with what you have paid into that car.
Example: $219 lease paymentx36months=$7,884 total for 3 years

BUYING:
Then take buying that same car and your payments over 60 months will be approximately $375 a month.

$350 monthly purchase payments X 36 months=$12,600 total for 3 years

So, TOTAL CASH OUT OF POCKET OVER 3 YEARS TIME IS:

$219 lease paymentx36months=$7,884 total for 3 years

$350 monthly purchase payments X 36 months=$12,600 total for 3 years

AT THE END OF 3 YEARS:

LEASE: TURN IT IN GET ANOTHER ONE WITH A NEW WARRANTY Only cost you $2628 per year to drive it.
PURCHASE: Car is worth approximately $7200 and payoff would be close to the same at that point. Cost you $4200 a year to drive it.

CONCLUSION: At the end of the 3 year period on a purchase you are at about a break even point and it cost you more to drive it versus lease where it cost you less to drive it and you just turn it in

Lease CONS: You need to get a 15,000 mile a year lease which is pretty standard these days. YOU MUST STAY UNDER YOUR MILEAGE.

You really only want to purchase a car if you drive a TON of miles or plan on keeping it for 7 years or more. But on most leases, you are under warranty the whole time you drive it and you need to factor in all the repairs on a purchase after the warranty runs out.

In my Opinion, I would lease if you could stay under the mileage.”

“I leased a maxima for my wife. We live in the catskills so the distance to most places is high. We PRE-bought miles at a lesser rate but the company wouldn't reimburse us for miles not used. They charged us (at lease end) for bumps they say were underneath the car & a scratch that wasn't there the day before. Not likely will I do that again.”

“If you know you'll stay under the mileage, and are one of those people who gets bored with cars easily and is always wanting a new one, then lease. A friend of mine fits that bill perfectly.

I leased my Saturn, but ended up putting lots of miles on it. You'd probably do the same if you continue to go up to the Catskills and 'Dacks. I just bought it, but it would have been cheaper if I had bought from the get go. But the advantage was I got to try the car out, and I knew I was buying a reliable car that I liked and was comfortable with. :-)”

“I leased a car once and will never do it again. Unless you have money to burn getting a new car every 3 years is not cost effective. Buy a car with a solid reputation for longevity and run it for a long time, but to get even more for your money buy that same car used say about a year old from a place that will give a warranty on it and than run that for a long time. Come on bbinkley we all know that $219.00 lease is what’s advertised, but when you show up looking for it , it’s no where to be found.”

“Seriously that is what a lease on that type of car should run. But I hear what your saying.

Also, The average car buyer trades every 36 months. So, if you don't want any car problems leasing is another good way to go.

Like I said earlier if you drive it for many many years then do a purchase.

And an older used car would be best. I recommend a Toyota or Honda...you could even get a GEO prizm as it is the same thing as a toyota corolla. JMO”

“Bbinleys post shows how car manufactures and dealers have manipulated the public into thinking that if you have a car for more that three years you’re taking a chance. It’s amazing how people have willingly accepted this. Think about any other big ticket item you purchase, if you went to buy a refrigerator, dishwasher, washer and drier and the salesman told you that you should come back every three years and buy a new one because any longer and you would be taking a chance, you’d laugh in his or her face and walk out, but people making their largest purchase after their house, willing accept this and sign on the dotted line with a smile on there face. When I was a kid if some car salesman had tried to sell this to my father he would have walked out, but today people just sign the papers and actually believe there getting a good deal.

Sorry to get off subject Tea, but don’t zoom in on a three year period of payments, zoom out to take in the larger picture. Where are you going to be in three years when the lease runs out? Probably a starving college student, with car lease that just expired, your mileage is way over and you are going to owe big bucks as a result and in a worse position to try and get a car than you are now.”

“Once you get rid of the hype and status symbol bs and realise that its just a machine to move you from point a to point b things improve a lot. Its an expense not an asset.

Leasing is a complete waste for most people. in a 3 year deal you end up paying for over half the car and then hand it back to a dealer who sells it to recover the remainder.

BTW - ex-leased cars are usually good buys...”

“I lease my car, but I live 6 miles from work. Turned in my last lease car with about 2000 miles under contract. I think I'm going to be over on this lease, but not by too much.

Must Hike, I pay only $194 a month for my car, on a 3 year, 15,000 mile lease of a CHEVY (not Geo binks!) Prism. I love my car. The deals are out there, especially now with the incentives that are out there.

But Tea, check out all the incentives for purchasing right now. There are a LOT of good deals, and if I could get out of my lease, I'd be purchasing soemthing right now. Must Hike has a great point about thinking where you'll be in 3 years, and not having a car payment would be a good thing.

Pros and cons to both ways, so make your own list of the pros and cons for yourself to decide which way is best for you.”

“Unless you own yer own business for use with it, or have lots of money to throw out...DON'T DO IT!”

“If all you need is transportation, just buy a cheap used car. Pay for it in cash, and you won't have to worry about depreciation or payments, because of the low amount of money involved. New cars are money pits.”

“Now, is it more cost effective to buy a new car every 3 years and sell the other?

-----

Honestly, I want a BMW 3 series. They run around 30K, I cant pay that now. If I get a second job this summer, which I know I will, whether I show up in a pink tercel or a blue beemer.

I look at it like this, if in the first week of the month I can pay for the lease and the second week pay insurance then I'm fine. Since I'll be living at home I wont really have an expences other than books and college. College I'll have to take loans anyway.

Right now I am dreaming and collecting info to see if it is possable. I wouldn't do anything until I have that second job secured.

BTW, how much do you think a lease on a 3 serious would be? over 400 a month? I'll go buy a paper tomorrow and check it out?

Oh yeah, would buying a BMW just off a lease be a good idea? I know Mbenze makes cars like the bible, they wont ever die. Same applies to any asian cars.”

“for any car:

down payment + total payments made + insurance cost + repairs + gasoline - resale value”

“Ok, I just checked the paper.

Honda civic- 89 a month
BMW 325i at 259 a month
Honda Accord EX V6- 219per month, but than below it they has in small print "4dr. $2,658 cap, 2rd. 2,594 cap...whats this cap business?

Oh an whats the deal with pre leased vehicals. Audi, has a car that has 60k miles on it that they are leasing for near 300/m. What do you all think about that?”

“BTW, as I was in the shower I found the wrench in the deal...If I can make 400 a week during the summer, thats great. But I wont be making jack sheeet during the school year. Yes thats a megga wrench, but keep posting so I gain more knowledge on the process.”

“Tea, you really should take a course on personal finance. It will cover this and a number of other topics. If you don't want to take a class on it, pick up a book on it. Personal finance for dummies is a good one, actually, if you can get past the title.

here's a link for more information on leasing, buying and such.”

“Thanks, class on personal finance? Will they have that in college for me?”

“Go drive a Hyundai with a stick. Try the Elantra. Just take it out for a whirl. Granted that it's not a "status" car but the engine & handling will probably surprise you without the sticker shock.”

“Tea the smart thing to do would be to NOT lease OR buy anything at this point that requires a long term commitment. Your financial situation is tenuous at best and the possibility of making a large financial mistake is very high. And yes, financial mistakes WILL haunt you forever.

If you really must have different wheels then buy an older used car from the owner, buy a repair manual too, and learn to work on it yourself. If you must buy from a dealer then spend the bucks on a used car warranty.

The myth of brand longevity has a dark side and that is that when something does go wrong it costs an arm and a leg to fix.

Oh, put the BMW out of your mind for now and make it a long term goal and prepare for it. Say, like saving up and getting yourself one when you land that great big job after you graduate college.”

“hpm,

we probably shouldn't encourage ice tea to try to repair a car.

tea,

get a used corolla, civic, or some similar reliable little car. get it paid off a.s.a.p. and then keep putting aside some money for future repairs. keep it until you get out of college and have a good job for about a year.”

“Didn't you complete this Merit Badge? Go back to it again, apply your car-lease/buy situation & you'll have the answers.

PERSONAL MANAGEMENT
Do the following:
Lead a discussion with your family to identify one family financial goal that must be saved for out of family income. Choose a goal that has strong personal interest for both you and your family (a family trip or vacation, a new VCR, or a family car, for instance).
Discuss the goal in detail (where to go on vacation, for example, or what kind of car to buy), the cost of the goal, and when you want to reach the goal.
Discuss how your family could accumulate funds to reach this goal, how the goal will affect the rest of the family budget, and how you could help your family achieve the goal.
Do the following:
Prepare a personal budget or spending plan for three months, including a "pay yourself first" savings plan. Keep track of everything you buy. Balance all income with expenses and savings at the end of each month.
Share your three month budget with your merit badge counselor. Explain how you determined discretionary income (income not spent to meet fixed expenses), how much you saved, and what you spent money on. Did you spend more or less than you budgeted?
Do ONE of the following:
Identify a personal financial goal and make a plan to achieve that goal.
Write down the goal you want to achieve. (This may be a small, short term goal such as buying clothes, or it may be a major, long-term goal such as saving for college.)
Develop a financial plan to accomplish the goal. Determine how much the goal will cost, how much time you have to reach the goal, how you will earn money to pay for the goal, and what adjustments you could make if you cannot reach the goal in the desired time with the income you can earn.
Discuss your plan with your counselor.
OR:

Determine a spending/savings plan for living on your own.
Choose a realistic job based on your age, skills, education, and experience (working at a fast-food restaurant, movie theater, or college library, for example). Determine how much you would probably make per hour and how many hours you would work each week. Determine your spendable income (after taxes and other deductions are taken out) for a month.
Make a list of all basic monthly living expenses: rent, food, transportation, clothing, telephone, etc. Ask family or friends, or call sources to help determine costs.
Compare projected income with projected expenses. Would you have enough income to live on? Would any be left over for fun? For savings?
If expenses exceed income, determine what options you would have for bringing the two into balance. Could you reduce or eliminate expenses? Work more hours a week? Get a higher-paying job?
Discuss you final plan with your counselor.
Do the following:
Choose an item you would like to buy. Be specific. (For example, identify the brand name of a pair of shoes you want, or the title of a CD.)
Comparison shop for the item. Find out where you can buy the item for the best price. Call around; study ads. Look for a sale or a discount coupon.
Consider alternatives. Could you buy the item used? Should you wait for a sale?
Discuss your shopping strategy with your counselor.
Do ONE of the following:
Visit a bank. Ask a bank representative to explain checking accounts, savings accounts, loans, and automated teller machines (ATMs). Explain to your counselor the difference between a checking account and a savings account. Discuss with your counselor the minimum requirements to open and maintain the accounts or to take out a loan.
OR:
Visit another type of financial institution, such as a stock brokerage firm or an insurance company. Ask a representative what the firm does and how it works with consumers. Explain to your counselor the differences in services offered by the following types of financial professionals: financial planner, stockbroker, insurance agent, accountant, tax preparer, banker, estate planning attorney.
Do the following:
Explain the difference between saving for a goal and investing for a goal.
Explain the two basic methods of investing: loaned and owned.
Explain the concepts of simple and compound interest and how compound interest can be used to increase your savings and investments more rapidly.
Explain the concepts of yield, profit, and total return, and how they are used to evaluate investment performance.
Explain the basic features of the following types of investments, including risks and rewards and whether they involve lending or owning: bank savings accounts, certificates of deposit, U.S. Savings Bonds, shares of stock, shares in a mutual fund, real estate.
Do the following:
Explain what a loan is, what interest is, and how the "annual percentage rate" measures the true cost of a loan.
Choose something you want to buy or do, but currently cannot afford. Set up an imaginary loan so you can "achieve" that goal. Identify the "principal" amount, interest rate, and repayment schedule. Determine the total cost of the loan (principal plus interest). Determine how it would affect your total cost if you paid back the same amount every two weeks instead of once a month.
Explain the differences between a charge card, a debit card, and a credit card.
Identify the factors that affect the costs of credit. Tell which factors can be controlled.
Explain credit reports and how personal responsibility can affect your credit record.
Describe ways to reduce or eliminate debt.
Do the following:
Explain the five ways to manage risk.
Explain the six basic types of insurance and why someday you might need one or more of them.
Define the two major types of life insurance (term and permanent) and compare their advantages and disadvantages.
Do the following:
Identify a job or career that interests you and do basic research about it at your library or through other information sources. Make a presentation to your troop or counselor about the job or career. Your report should include:
An explanation of your interest in the job or career (how you learned of it, what about it that interests you, what its job prospects are, and how you think the job or career will change in the future)
Any qualifications required (education, skills, experiences) and how you might become qualified for the job
The job's functions and responsibilities (the duties of the job or career)
The organizations, trade associations, professional associations, governmental regulations, or licenses involved in the career field
Do ONE of the following:
Prepare a personal résumé for the job.
OR:
Interview someone in the job or career field and prepare a summary of the interview.
Discuss with your counselor your personal goals and ambitions in life. Relate these to your intellectual, physical, spiritual, and moral development. How has Scouting helped you in accomplishing your goals and ambitions? Share your thoughts with your family.”

“Humm I didn think of consultign the meritbadge book. If I remeber correctly it didn't explain all this stuff too well.”

“bbinkley - Your analysis of the situation is flawed. You have made the assumption that at the end of three years the purchased car will be traded in for a new car. Why would someone trade in a perfectly good car with only 45,000 miles on it? What if you drive it for two more years (still under warranty!) AND DON'T HAVE TO MAKE ANY PAYMENTS! You still have a very good trade in value since it only has 75,000 miles on it. That is far less expensive than two more years of lease payments.

The real question should not be "What is better: purchasing new or leasing new?" The real question should be, "What is the most economical plan for car ownership?". Some studies have shown that most economical way to own a car is to purchase a 1-2 year old "good used car" and kept it for 3-4 years. That way you are not paying for the first year's depreciation and can still be covered by a warranty.

I have purchased "like new" used cars from Enterprise Sales for much less than what a comparable new car would cost. I always get the extended warranty. So far I feel like it has worked out well.”

“Phil makes an excellent point.

My primary vehicle is paid for, I paid more for it up-front than many would (Toyota Landcruiser), but I did it because of its' reputation for logevity. So now 8 years later (it's a 1994), it's completely paid for and has been for quite some time, I have an excellent running vehicle, I've spent nothing on it except tires, fluids, etc., and it's re-sale value is still about $13,500.

If I had leased it & turned it in at the end of the lease period, I would have kissed those paymenst goodbye & had nothing to show for them. As it is, I now own something of value.”

“Tea, I don't know the financial situation in your family, but if you're like some of us, you won't be able to afford a BMW as a first car. My first car was a 12 year old Subaru wagon, poop brown, no A/C, slow, etc. But it ran like a champ, never a problem, was still running when we got rid of it. I wish I still had it, honestly. Get an affordable, cheap car to get through college, and then buy something nicer when you graduate/get a career. It will seem like a long time, but that's what my psych professor called delay of gratification.
I've been saddled with two car payments, and it sucks. I'll drive my jeep until it falls apart underneath me, then go back and try to find one just like it.”

“Besides, Tea, a BMW will just get scratched up and dinged at college. Plan to buy one after you graduate.”

“Don't buy the BMW and and try not to buy anything with over 50k on the OD. Get a 4X4 pickup(Yota or Nissian) with xtra cab preferably a V6. It will be the most versatile auto you will every own. ALmost have a 130k on mine that I bought new in '94. My greatest out of pocket expense($1500) came when it hit 100k. (new T-belt and H2O pump) It's easy to work on and has paid for itself thru the years.”

“I agree with BR. I had a Toy 4X4 with the V6 and xtra cab back in 95. With the right tires on it, it can't be stopped in bad weather. We had a big (for KY) snow in 97, about 20 inches, and I went everywhere. A kid got hurt sledding and the ambulance couldn't get to him. I was lucky enough to drive by, so we just loaded him in the back of the truck, the paramedics walked along side, and we drove him out to the main road where the ambulance was parked.”

“Dittos for me. I buy used at about 3 years old. Just got the OL a top of the line Town and Country off lease three years old, Looks and drives new. All the bells, etc. Sticker 35,000, I pay 13,000 and will drive it another 100K mi and not loose my but like the first guy did. Dealrers make a lot more off a lease than a sale. Unless you have $$ to burn its not worth it. A car looses like 40% avg of its value in 3 years.My Z-71 is a 97 with 90Kmi”

“IMHO, vehicle leases tend to make more sence when they are business related and result in a straight line write off as opposed to capital depreciation.”