Lease, and then take the Purchase option

[destrekor]

So, generally it is said if you are are pretty much decided you want to own the vehicle, you should make the purchase at the start, instead of following a lease.

If you are unsure, it's a different story obviously.

However, what if you don't have the greatest credit at the first, due a two year lease, and then fight to improve your credit over those two years.
With better credit, you could get better financing offers for a car loan... so if it ended up working out (as in, in those two years you dramatically improve your credit)... would that prove to be less costly in the event you did make the purchase at the end of the lease term?

Currently pondering this, because I can't afford a new car right now, and my credit probably wouldn't get a good offer for financing a purchase... I don't plan on getting a new car for a little while (my truck is currently in good shape, it has had a ton of work over the past few years, and now a lot of the major components are under new warranties It is 13 years old with a little less than 120k, so at this point I should be making preparations for that untimely major problem).

Just curious, if my truck dies in the next half year... I don't think I could get a good finance offer, but might absolutely require a very dependable method of transportation (officer-related things are very far away from current place of residence). Insurance would go up, but if I could have a more affordable means to own a relatively recent vehicle when compared to an obscene APR on a large loan at this point... I'd quite like that.

 

[DominionSeraph]

No.

If your credit is bad you're not going to get the best lease terms, so you're going to be overpaying during the lease period. Then you're going to be overpaying on purchase price when you take your option to buy. Then you're going to be financing it... so on top of overpaying you're going to be paying interest on the amount you're overpaying.

I really can't imagine a situation in which you wouldn't be better off just buying an off-lease car to start off with if that's what you expect to be finishing with. Even with higher interest payments (which isn't a guaranteed thing -- shop around) you're not taking the major hit of depreciation. And you're not giving yourself the temptation of taking the easy way out by overpaying to purchase your lease vehicle just to avoid the hassle of used car shopping and because you've become attached to your car.

 

[vi edit]

Be sure to look into the sales tax laws for your state and leasing.

In amazingly lease friendly *cough* state of IL they charge you sales tax on the FULL sales price of the car. Not sales tax on the payments or the "used" value. The full sales value.

Then should you decide you want to buy the car at the end they charge you sales tax *again* on the buyout price.

Yeh. Explain that one to me.

Needless to say leases rarely get bought out in IL unless you have some serious overage penalties.

 

[Zap]

In amazingly lease friendly *cough* state of IL they charge you sales tax on the FULL sales price of the car. Not sales tax on the payments or the "used" value. The full sales value.

Then should you decide you want to buy the car at the end they charge you sales tax *again* on the buyout price.

Yeh. Explain that one to me.

Is that in Cook County with the 10% sales tax?

 

[Vette73]

Plenty of cheap used cars that are reliable.

My first 2 cars were $2000 range and I got them to the 200k range before moving on.

 

[exar333]

If you don't feel like you can afford a new car, you probably can't. How many miles a year do you put on? 120k isn't a ton of miles (expecially for a truck). if you have put repair time in, and don't anticipate major repairs, then hopefully you are good for a couple more years. Focus on getting your credit score up NOW, and buy when you can both afford it, and can get OK financing.

Generally, leasing requires higher credit scores that buying, remember that you are basically paying to borrow a car from the bank. if your car dies before you can afford to do this, then getting another inexpensive car is the best choice. You can get a solid car for not a lot of money, but it won't have a lot of bells and whistles.

 

[kornphlake]

There are used cars for people like you, (and most other types of people too!) if you haven't figured it out yet, your credit sucks because you aren't good at making financial decisions. Buying or leasing a new car, even if you get a good deal, is not a good financial decision. You should be looking at something for around $5000, which isn't too difficult, and put the money you'd make in monthly payments in the bank, in a few years when you have $7000 cash for a down payment and you've learned some financial responsibility your credit situation will look a lot better.