Leasing a car

Signed-In Members Don't See This Ad
H

Haynie

Member
Joined
May 20, 2011
Messages
3,516
Location
Page Arizona
We have been contemplating a new car, and the thread about how long you have had your car got me thinking again.

Where I grew up and spent the majority of my adult life until 6 years ago leasing was a very stupid thing to do. It was an hour drive to the grocery store. The miles piled up super quick. Now that we live in a small town we put very few miles on our cars.

So, never having experienced a car lease can someone, who has, educate me? It seems like a smart thing to do right now but as with all things I know there has to be something I am missing.

What are the benefits and the drawbacks. Our current van has 165,000 miles.
 
Last edited:
Signed-In Members Don't See This Ad
Haynie
It depends on how may miles/year you drive.
Benefit
For most leases is most major repairs are paid by the company you lease from.
Tires, Battery, oil changes are on you.
At the end of the lease you turn in the car and have the option of keeping it based on the contract.
You do have to put some money up front again depends on the company you lease from.
If you plan to keep the car for just a short period of time a lease is good except if you put many miles on the car.
Drawback
If you drive more than 12,000 miles per year and the end of the contract you will have to pay a surcharge for excessive wear and tear. This could cost you thousands of dollars.

For one I never have leased a car only because of the number of miles I drive. I had and still do put on about 20k to 30k miles per year.

Alan
 
Back in the '70s and '80s when I was selling real estate, leasing was the right business decision. I can't see it as the smart thing to do for a personal vehicle. When you look at the costs for leasing and compare it with the interest you would pay for a new or used vehicle I think you'll soon realize the advantage of buying.

I agree with Alan.
 
Last edited:
ashaw said:
Haynie
It depends on how may miles/year you drive.
Benefit
For most leases is most major repairs are paid by the company you lease from.
Tires, Battery, oil changes are on you.
At the end of the lease you turn in the car and have the option of keeping it based on the contract.
You do have to put some money up front again depends on the company you lease from.
If you plan to keep the car for just a short period of time a lease is good except if you put many miles on the car.
Drawback
If you drive more than 12,000 miles per year and the end of the contract you will have to pay a surcharge for excessive wear and tear. This could cost you thousands of dollars.

For one I never have leased a car only because of the number of miles I drive. I had and still do put on about 20k to 30k miles per year.

Alan
Click to expand...
I've never seen this....the leases I've had allrepairs were on your nickel.
 
When I was looking into leasing one of the perks they were selling was free maintenance other than the normal items. This was back in the 90's. But the lease amount was 500/month. :o The big reason for not leasing was the mileage charge. At the end of the lease I would have to shell out and extra $ 5,000.00. Even today I still be 20k + miles per year. At least now 60% of that mileage is a right off.
 
Haynie said:
We have been contemplating a new car, and the thread about how long you have had your car got me thinking again.

Where I grew up and spent the majority of my adult life until 6 years ago leasing was a very stupid thing to do. It was an hour drive to the grocery store. The miles piled up super quick. Now that we live in a small town we put very few miles on our cars.

So, never having experienced a car lease can someone, who has, educate me? It seems like a smart thing to do right now but as with all things I know there has to be something I am missing.

What are the benefits and the drawbacks. Our current van has 165,000 miles.
Click to expand...
It depends on a couple of things. What you can get in a 'lease' is one. I have found "smart buy" to be a better deal most of the time where you actually buy the car with nothing down, reasonable payments and a balloon payment due at the end of the low payment period. Say you sign up for 5 years - you drive the car with low payments
for 5 years. Then you have the option of buying the vehicle for the residual value or walking away owing nothing. I have had several cars with this type of financing and it always worked well for me - I have both bought the vehicle (when it was low mileage, in excellent shape and worth more than the residual value) and let it go back (when it was worth less than the residual value). Now I have not done it recently - last time was 7 years ago so I don't know if they still offer them.

Leases usually require a couple of thousand dollars up front but offer low payments. They can be pickey about miles though and if you run over the miles allowed they can charge you through the nose. A typical lease allows 12,000 miles a year, if you are going to be ok with that they might be worth thinking about. Your payments will be lower because the company owns the residual.

My best advice is - if you don't plan on changing cars very often (keeping them 5 years or more) - buy it and buy a one or two year old used one and still keep it 5 years or more.

My truck is 7 years old and other than regular oil changes and tires, it does not know what the inside of a repair shop looks like. It has suffered a little body damage, but that isn't the fault of the truck. Also it is driven only about 5000 miles a year. My neighbor, have two cars, one is 11 years old and the other is 12 years old, both are in great condition and I wouldn't hesitate to start on a 5000 mile trip in either. They are low mileage with neither of them likely to have much over 100,000 and one of them is well under that.
 
Let me add my $ .02 in here also since I both lease and own several cars. My wife has two cars and I have two cars. I have always collected cars so the number is not unusual. Of the two cars and one van we own, the two cars are collectables, convertables, and only driven in the summers. My winter driver is an all wheel drive custom van. 2001 with 64,000 miles on it. My wife's daily driver is a 2013 Toyota Rav 4 that we lease. By running all four cars in the summer, we can keep the mileage down on all of them. The three cars we own, we paid cash for. If you are in a position to do this, this is your best way to go. No interest, no payments, but, you should try to put aside that payment money every month so when you next need a car or some other large expence comes up, you will have money to meet it. The Toyoto we lease has a 3 year 36,000 mile bumper to bumper warrenty that covers everything from lightbulbs to engine. It also has a 24 month/20,000 mile free service agreement. I bring it in,they change the oil, filter, fluids, rotate the tires, and anything else a full service shop would do. Also includes 24 hour road service. No more changing a flat. A lease car payment is usualy less than the payment on a new car, which means you can step up and drive a better car with no money down, for the same price of buying a new one, have no repair worries for the length of the lease, and not have to trade it in or sell it yourself when the lease is up. If the car is a good model, with low mileage and in good condition, you can sell it for more than the pay off is and pocket the rest. If you are buying a new or used car, see if you can get an extended warrenty. It may sound a little pricy, but once that warrenty runs out and you need to replace that $3000 black box in your car, it's downright cheep. As the folks above have said it comes down to the amount of miles a year you put on your car and the cost per mile you want to spend. When we drive around town, do errends, or drive longer distances, we use the lease car because I am paying for that car every day if it moves or not, and I know I will never go over the mileage .

Smitty; I think when most people see the word repair they think of damage caused by some type of accident, and you are correct in saying it's on your dime or in the Friendly Hands People. If you lease a new, or even some certified used cars they have the manufactures warrenty to cover the repair of faulty parts for a time of 12, 24, or 36 months, (extended warrentys) and as much as 10 years and 100,000 miles. Always read the fine, fine, fine print on any warrenty !!!!!! Also you can get much better deals if you have a high credit rateing no matter what type of loan or lease you are getting. Jim S
 
Last edited:
I have always leased my cars. Not sure where some of the info is coming from, unless they are referring to the old way (and not good way) of leasing through companies like GE Capitol. I have always leased from the manufacturer, dealership in other words. I'm always in warranty, never put money down, it's not required, and usually get contacted before the lease is up to replace it early. I always purchase extra miles upfront I case I would go over. You get it back if you don't go over. I do 15,000 mile leases (15,000 miles a year) and buy an extra 5,000 per year to protect myself. The best thing about a factory lease, is you don't pay for the part of the car you don't use. I have worked the numbers, and it is less expensive to lease than buy. IMHO.
 
I am a CPA and have many with the economic and psychology side of the equations. As other noted, it depends on many things. If you want me to help you decide by asking you the "right" questions, please send me a PM.

At the most basic and rudimentary level, it can be compared to eating-at-home vs. eating out.
 
I haven't leased a car in several years and the last one I did lease wasn't a good deal... when I was approaching the end of the lease, discovered the residual owed was waaaaay over what the vehicle was worth... it just didn't hold it's value. But back in the '70's when I was living in California and married to my first wife, we leased all of our cars... she worked for Chrysler Credit and knew several leasing agencies so we were able to get pretty good deals... We would lease a new car and drive it until the car got dirty and the wife wanted a clean one :wink: then change cars.... we had in pretty quick succession, a '76 280Z, a '72 Mercedes and a '67 Mercedes (at the same time), a '76 Toyota Corolla and finally a '76 Alfetta.... we had the Mercedes's first and the '72 we drove almost 2 years and at the end I sold it for about $500 more than the original lease price... I commuted in the '67 and only drove it about a year... the clutch started feeling funky so I sold it for about the same as the original lease price.... she took the 280Z in the divorce.... the Alfetta I got after the divorce and drove it for 13 years...

I hate car payments...we bought the car we have now, it's been paid off for about 7 years now and still running strong with over 285K miles on it.
 
Lease makes absolutely no sense. You buy a car depending on how much cash you have. Then you drive the car until it cost more to keep it alive than it is valued. You pay no interest. I so dont understand car payments, and then theres the lease, so payments are the devil and a lease must be the devil and his entire family. At least if your paying the devil, eventually he is paid and you have the car for another 4-8 yrs after with no payments. You get into bed with his family and your paying until death do you part.

No matter what income level you are in, there is a car out there you can buy right now for cash. If its $500, so be it...but of course that car might only live 6 months. Yet...thats 6 months, $200/month pay to yourself and now you buy $1200 car. That gets you a year and now a $$2400 car. Over 10 yrs like this you are driving a brand new car your paying cash for and then every car after that is a better model of a new car. I dont just preach this, i live it. After 15 yrs living like this i have a brand new car, a show car worth more than a typical new car, and 2 cheap beater cars and zero debt. I love the beater cars the most too, they are like disposable assets you dont need to care much about.
 
Growing up in Ohio I had a neighbor that would have a new car every couple months. He leased them when he was in the market to buy a new car and "test drive" it to see if he liked it. If not turned it in an got another. Not saying that is right, but better than being stuck with something.
 
So does the mile overage charge come into effect if you buy the car at the end of the lease or does it go away since you are buying the car. I think this is the area I am stuck on.

Good info folks. Thanks.
 
If you buy the car at the end of your lease there is no overage charge. There probably is no warrenty left on it also. You can now buy an extended warrenty to protect yourself. Another thing you may have to do at the end of a lease is replace the tires if they are bad (not always, depends on the dealer), repair any damage to the car, and pay a destination fee to return the car to whomever is taking it back. Usualy amounts to one months payment. Shuold be noted in the lease contract. I had one dealer tell me I had to keep insurance and licence on a car I turned in until it was sold. A telephone call to the leagal department quickly setteled that joke. Before you sit down with a salesman, write down every question you have about leasing or buying a car. Ask those questions and make sure any concerns are explained and in writing on the contract. Most dealers are honest and upright. Others can't even stand, they just slither in the grass. Jim S
 
Last edited:
I like new cars, so I lease, I don't like $500 cars that constantly need repairs. It all depends on what you want. I need reliable transportation, not a money pit. It is not advisable to buy our your lease at the end. Consider that you probably have a 39 month lease, at the end, your residual value is around 55%. To buy it, you would probably need to finance it, 60 months is the average to keep your payment lower. That equates to making 99 months of payments, plus needing to get an extended warranty, and you are over the price of a new lease. I never put any money down on my lease so I am using their (manufacturer) money. It's worked for me for over 15 years and 11 vehicles (multiple leases) My position may be different than yours, so you need to weigh out the differences and the miles you drive. I drive between 15,000 and 18,000 miles a year so it works. If you drive more, purchasing would be a better option. Just be careful and if you buy used, make sure you are not buying someone else's problems!
 
plantman said:
Let me add my $ .02 in here also since I both lease and own several cars. My wife has two cars and I have two cars. I have always collected cars so the number is not unusual. Of the two cars and one van we own, the two cars are collectables, convertables, and only driven in the summers. My winter driver is an all wheel drive custom van. 2001 with 64,000 miles on it. My wife's daily driver is a 2013 Toyota Rav 4 that we lease. By running all four cars in the summer, we can keep the mileage down on all of them. The three cars we own, we paid cash for. If you are in a position to do this, this is your best way to go. No interest, no payments, but, you should try to put aside that payment money every month so when you next need a car or some other large expence comes up, you will have money to meet it. The Toyoto we lease has a 3 year 36,000 mile bumper to bumper warrenty that covers everything from lightbulbs to engine. It also has a 24 month/20,000 mile free service agreement. I bring it in,they change the oil, filter, fluids, rotate the tires, and anything else a full service shop would do. Also includes 24 hour road service. No more changing a flat. A lease car payment is usualy less than the payment on a new car, which means you can step up and drive a better car with no money down, for the same price of buying a new one, have no repair worries for the length of the lease, and not have to trade it in or sell it yourself when the lease is up. If the car is a good model, with low mileage and in good condition, you can sell it for more than the pay off is and pocket the rest. If you are buying a new or used car, see if you can get an extended warrenty. It may sound a little pricy, but once that warrenty runs out and you need to replace that $3000 black box in your car, it's downright cheep. As the folks above have said it comes down to the amount of miles a year you put on your car and the cost per mile you want to spend. When we drive around town, do errends, or drive longer distances, we use the lease car because I am paying for that car every day if it moves or not, and I know I will never go over the mileage .

Smitty; I think when most people see the word repair they think of damage caused by some type of accident, and you are correct in saying it's on your dime or in the Friendly Hands People. If you lease a new, or even some certified used cars they have the manufactures warrenty to cover the repair of faulty parts for a time of 12, 24, or 36 months, (extended warrentys) and as much as 10 years and 100,000 miles. Always read the fine, fine, fine print on any warrenty !!!!!! Also you can get much better deals if you have a high credit rateing no matter what type of loan or lease you are getting. Jim S
Click to expand...
I agree leased cars are covered under the manufacturers warranty, I didn't intend to imply they weren't. The wording in the post I replied to made me think he was implying you got some coverage with a leased car that you don't get buying.

I think a typical driver probably drives more than the covered mileage - I don't, it would probably "time out" on me with lots of miles left.
 
keandkafu said:
I like new cars, so I lease, I don't like $500 cars that constantly need repairs. It all depends on what you want. I need reliable transportation, not a money pit. It is not advisable to buy our your lease at the end. Consider that you probably have a 39 month lease, at the end, your residual value is around 55%. To buy it, you would probably need to finance it, 60 months is the average to keep your payment lower. That equates to making 99 months of payments, plus needing to get an extended warranty, and you are over the price of a new lease. I never put any money down on my lease so I am using their (manufacturer) money. It's worked for me for over 15 years and 11 vehicles (multiple leases) My position may be different than yours, so you need to weigh out the differences and the miles you drive. I drive between 15,000 and 18,000 miles a year so it works. If you drive more, purchasing would be a better option. Just be careful and if you buy used, make sure you are not buying someone else's problems!
Click to expand...

Where do you lease a new car with no money down? I don't see that offered by dealers anywhere around here. A typical lease here requires about 2000 down.
 
Smitty37 said:
keandkafu said:
I like new cars, so I lease, I don't like $500 cars that constantly need repairs. It all depends on what you want. I need reliable transportation, not a money pit. It is not advisable to buy our your lease at the end. Consider that you probably have a 39 month lease, at the end, your residual value is around 55%. To buy it, you would probably need to finance it, 60 months is the average to keep your payment lower. That equates to making 99 months of payments, plus needing to get an extended warranty, and you are over the price of a new lease. I never put any money down on my lease so I am using their (manufacturer) money. It's worked for me for over 15 years and 11 vehicles (multiple leases) My position may be different than yours, so you need to weigh out the differences and the miles you drive. I drive between 15,000 and 18,000 miles a year so it works. If you drive more, purchasing would be a better option. Just be careful and if you buy used, make sure you are not buying someone else's problems!
Click to expand...



Where do you lease a new car with no money down? I don't see that offered by dealers anywhere around here. A typical lease here requires about 2000 down.
Click to expand...

Smitty: Many times I have turned in a lease car before the lease was up. Depending on the make, model, and how the car or truck is equiped, it may be worth much more than the payout. Your choise is to sell the car yourself, and pocket the difference (use this for the money due at signing when you pick up your new car), or as I have done many times, have the dealer pay off your lease, sell the car, and use the money to pay any money due at delivery, sales tax, and licence. I walk out of the dealership owing nothing, paying nothing, and with a new car. Jim S
 
Last edited:
I ran out of room on the last answer, so here is the catch to "no money down". You will usualy have to lease the same brand (say Toyota), or sometimes you can lease a used car from that dealer, you will have to have a good or better credit rateing than most, and the difference in payoff will have to be high enough to cover the fees. If it is not enough to cover the fees, you can work the difference into the lease, pay a little more per month and still walk out the door without takng any money out of your pocket. If you plan on doing this over and over as I have done with my wife's cars, you are also going to have to have most of the bells and whistles on that first lease car. Once you have done that, you can turn it in for another fully loaded car, or something less costly and reduce your monthly payment. The other end of the story is, if I want to trade her Rav-4 in on a $50,000 Highlander, the numbers are not going to work out, and I will have make larger lease payments or pay more money due at signing. I will still have the extra money from the Rav-4 because of the higher than payoff value to work into the deal. Jim S
 
Last edited:
plantman said:
I ran out of room on the last answer, so here is the catch to "no money down". You will usualy have to lease the same brand (say Toyota), or sometimes you can lease a used car from that dealer, you will have to have a good or better credit rateing than most, and the difference in payoff will have to be high enough to cover the fees. If it is not enough to cover the fees, you can work the difference into the lease, pay a little more per month and still walk out the door without takng any money out of your pocket. If you plan on doing this over and over as I have done with my wife's cars, you are also going to have to have most of the bells and whistles on that first lease car. Once you have done that, you can turn it in for another fully loaded car, or something less costly and reduce your monthly payment. The other end of the story is, if I want to trade her Rav-4 in on a $50,000 Highlander, the numbers are not going to work out, and I will have make larger lease payments or pay more money due at signing. I will still have the extra money from the Rav-4 because of the higher than payoff value to work into the deal. Jim S
Click to expand...
How do you sell a leased vehicle my experience has been that I don't hold the title if the vehicle is leased the leasing company does.

In addition, in the leases I've had if I terminated the lease early I was still responsible for the remaining monthly lease payments.

Now, I have used what GM used to call "smart buy" which was much like a lease except that I held title to the vehicle and the finance company had a lien against that title. The setup was make payments for a certain number of months, then a balloon payment was due and I could 'walk away' giving up the car (done if the residual was more than the value of the car), I could finance or pay cash equal to the residual value of the car and own it. Or I could trade it in for a new vehicle but that could not be done early without a penalty (similar to terminating a lease early) except in one case where the finance period was 39 months and GM allowed the vehicle to be traded at 36 months with no penalty. But....in the smart buy there was no cash down.
 
Dealers want you to put money down on a lease and they advertise lower payments with the money down, but for the $30-50 a month difference, I keep my money and usually just pay the taxes and first payment. Nissan has programs twice a year where they make up to 3 payments to get you out early, this in combination with the extra incentives at the time make it an easy trade of two to three model years and keep my payment the same or within $10 a month. It appears I am a bit different than most on the thread, as I don't like driving old cars that are running out of time. You might get lucky, or you might be my neighbor who's Dodge Caravan toasted the transmission, for over $2,500 in repairs, two weeks later the head gasket blew and water in the oil cooked the engine. Used one was "only" $2,000. I don't think the van was worth more than $3,000 but he had to put the money into it since he just dumped all the cash in the trans. That's not for me and besides I need to be able to count on my vehicle and not be stranded. Good luck! These comments have to have your head spinning! Turn a couple of pens and sleep on it :-)
 
Smitty: There is always a payout on a leased car. Thats the amount you would have to pay at the end of your lease to buy the car, or the amount you can pay to buy the car at anytime during your lease. If the amount of value is higher than the payout to make it worth the time and effort, and you have somone willing to pay that amount, you can offer the car for sale, have them write out a check for your asking price, pay it off, and have the car title transfered into the new owners name. If you just want to get out of a lease early, find someone that is willing to take over the lease and have the lease company transfer the lease to that person and walk away owing nothing. Or, watch for the manufacture to offer an "early out" program, letting you turn in the car several months early.

GM's "Smart Buy", is basicaly the same program that Toyota and most other makers offer. And as "keandfu" said above, the money you pay at signing is only a way a dealer makes the payments sound lower. By adding the monthly payment to the money due at signing and dividing by the number of months in the lease , you will find out what you are realy paying. It usualy amounts to $30-100 or more a month depending on the car. Why not keep that money in your pocket and pay a little extra a month ?? The realy low payments advertized as leaders, are usualy on bare bones models with standard equipment. Read the fine print on what equipment you are getting for the stated price.

Where do I get my information, you may be asking ?? The local Toyota dealer and I have been friends and car collectors for over 40 years. I can go to him and get a no BS answer on best price, best deals being offered, and best time to buy or turn in a car. I purchased and leased a lot of cars from him over the years. My son also sells cars at the dealership for him, so I also know when a realy nice car will come in on a trade. Jim S
 
Last edited:
Leases

plantman said:
Smitty: There is always a payout on a leased car. Thats the amount you would have to pay at the end of your lease to buy the car, or the amount you can pay to buy the car at anytime during your lease. If the amount of value is enough more than the payout to make it worth the time and effort, and you have somone willing to pay that amount, you can offer the car for sale, have them write out a check for your asking price, pay it off, and have the car title transfered into the new owners name. If you just want to get out of a lease early, find someone that is willing to take over the lease and have the lease company transfer the lease to that person and walk away owing nothing. Jim S
Click to expand...


Maybe, they changed it since I leased over a decade ago.
I have had open and closed end leases. There's plenty on the Internet explaining the difference.
 
sbwertz said:
We leased a car once. I hated it. I was driving "somebody else's car" all the time. I was really not happy in that situation.
Click to expand...

You are absolutly correct Sharon !! I look at our lease car as a no maintaince daily driver for my wife, and I have no attachments to it , and the knowledge that it may be replaced tomorrow. It's sort of like a girlfriend or boyfriend, you stay with it until something new and better gets your eye, or, you are happy with it and make a long time commitment. To the car I mean !!! Probably a poor analogy, but the best one I could think of this late at night. Jim S
 
Last edited:
A long time ago I bought out a Ford lease and it was a whole lot of bother. I wasn't questioning anyone, just relating my own experience.

My first lease was when I "took over" the lease on a 1984 Ford - Ford motor company held the lease and it was a pain in the neck getting it transferred.

The next one was a 4 year lease 1988 Dodge Caravan that was one of the most trouble free cars I've ever had. This one a local bank was the owner.
When I turned it back in at the end of the lease the dealer didn't really know what to do with it....I almost think if I'd just kept driving it they'd have never known.

A 1999 Ford Pickup was next and that one was a major hassel, I moved from NY to Delaware while I had it and when time to turn it in came they couldn't find the title - Ford had it but it was still in NY....That was a really great deal, probably the best deal I ever had on a new car.

I then used Smartbuy on a 2001 Chevy S10 Blazer. It was 39 months payment before the balloon but GM gave me some good incentives to trade to a 2004 Impala after 36 months. I bought the Impala.

I also used smartbuy on a 2005 Chevy Pickup after I decided that the Impala was not a Pickup truck. I actually paid for that vehicle on a credit card...There was a credit card promotion where the Credit card was offering 0% interest that included cash withdrawals and were offering loans large enough to pay off the truck...so I took the loan, got the buy out value of the Smartbuy and bought it.

I traded it because I need an extended cab and I bought what I have now outright

My wife had a 2007 VW on their version of Smartbuy but traded it for another one when the ballon payment was due. Got $2500 more than the residual value in trade but we are buying her new one outright because we intend to keep it a long time.
 
You must log in or register to reply here.
Back
Top Bottom