Lease vs buy...

[96Firebird]

I've always been the type to think leasing a vehicle is a waste of money, since you get nothing in the end (unless you purchase the vehicle after the lease period ends). However, my buddy just got a 3yr/15k mile lease on a 2016 Silverado Z71 for $0 money down and $300/month. With the cost of a truck in the $40ks, it seems to make more sense to lease the truck for 3 years, especially here in upstate NY where rust will start eating at the metal almost instantly. I guess there is also about 20 non-Z71s (still V8s though) for $258/mo (still 3yr/15k miles). I've been looking at getting a truck since I bought a house earlier this year and would like to get something to transport building materials/lawn mower/etc... I have 2 other vehicles (Trans Am for summer car, Park Ave for daily driver) so I could easily stay below 15k miles per year. $258/mo seems pretty low for a new truck, even when comparing purchase price after incentives. Thoughts?

 

[monkeydelmagico]

Some of the lease deals right now are fantastic. You gonna daily drive it?

 

[tweakmonkey]

I think leasing completely makes sense if you like new cars and plan to get something else down the road. You are basically buying the car with the option to change your mind and walk away in 2-3 years. Assuming you want to sell and move to something else in a few years :
If the car plummets in value you come out ahead. If the car stays the same in value you can still buy it and keep it. If the car goes up in value you still pay the same.

 

[dave_the_nerd]

Leasing makes sense if you only drive <12k miles a year. (I do 15k just commuting to and from work. Plus grocery stores, camping weekends, trips to grandma's house...) You can "buy" additional miles, but the cost is insane.

As far as buying a truck that's a second/third "home improvement project" truck, I don't see the point of getting a new truck for that. Or signing a lease on a truck you'll only be using 6 months out of the year. But hey, at least you won't go over mileage.

I'd rather do the proper redneck thing and buy somebody else's $1500, 150k mile pickup truck every couple years, then sell it for scrap when enough stuff breaks that it's annoying.

If your vehicle is rusting out in 2-3 years, try not driving it into the lake when you launch your boat. (No way you have worse snow, ice, and salt issues than Minnesota.)

 

[monkeydelmagico]

I'd rather do the proper redneck thing and buy somebody else's $1500, 150k mile pickup truck every couple years, then sell it for scrap when enough stuff breaks that it's annoying.

Agreed, that's why I asked if OP was gonna daily drive. Seems silly to spend all that money just to park it in the drive.

A $1500.- truck is beat down pretty hard. Another alternative is you can rent a uhaul truck for $20.- plus mileage. For $1500.- you get at least 50 truck rentals in 3 years. I doubt I will have that many hardware store and dump runs. YMMV.

 

[vi edit]

Lease value varies from state to state. Leasing in IL sucks. You pay sales tax on the *FULL* purchase price of the vehicle even though you are only using 40-60% of the vehicles value. Some states will only charge you based upon portion used, others will only charge you a monthly sales tax on your lease amount. It just really depends. Depending on the price of the car that could be a $1000+ difference from one state to the next. That's almost $30 a month over 36 months.

 

[hans007]

im thinking about this very same thing. buying a benz in a month or so. they give a 60% residual for 10k miles for 3 years. but there is an origination fee and the money factor would be worse than i could get at a credit union by 2%.

That said, I am locking in 60% residual after 3 years. have to factor in the fee to return the car if you don't buy it out too.


Leases and buying is not a one way or the other type deal.

ultimately if you are buying a car you are leasing it to yourself. you could always sell it. But you are taking the depreciation risk and having to get a loan with your own credit. When you lease form a company they take the depreciation risk (that it wont be worth as much as the residual they are quoting and they are using their credit to borrow money for the floorplan of that car).

So you have to think about it that way. If you can't get the best credit union rates anyway , and want the option of locking in a residual in 3 years ( case in point during the 2008-2009 financial crisis prices for SUVs collapsed. Anyone who leased in say 2006 and having to return an escalade did way better than the residuals GM locked in originally which was a massive loss for GM once the escalade went out of style)


I guess think about it this way. if you want to keep the car say 3 years. figure out how much itll likely be worth , how much you can borrow money at (penfed btw.... 1% for 3 years if you go through truecar on their site) and compare it to the money factor and residual the dealership is offering. then you have to factor in the lease origination fee (which on a lot of cars like say BMWs is in the $800 range) and the tax laws in your state (when you buy a car you pay tax on all of it, vs just the payments on a lease). leasing is basically just buying a car except you pay origination fee to sell it back at a locked in percentage in X years. which is useful if say i dunno y ou buy a roadster and in 3 years you find yourself with a kid or something and need an SUV. so yeah leasing in finance terms is like buying a PUT option

depending on your situation , what state you live in and their tax laws, if you own a business and can more easily write off lease payments etc, it can go either way.

 

[agent00f]

The concept in the post above is accurate.

Generally speaking if your driving situation fits the terms and you get a subsidized lease, in theory the manufacture is taking the hit vs. if you finance/sell it yourself.

 

[DietDrThunder]

I just rent a pickup for a day from UHaul when I need one. $19.99 a day plus mileage.

 

[chimaxi83]

Lease value varies from state to state. Leasing in IL sucks. You pay sales tax on the *FULL* purchase price of the vehicle even though you are only using 40-60% of the vehicles value. Some states will only charge you based upon portion used, others will only charge you a monthly sales tax on your lease amount. It just really depends. Depending on the price of the car that could be a $1000+ difference from one state to the next. That's almost $30 a month over 36 months.

Nope. IL changed that almost two years ago. Sales tax is only paid on any down payment you make (which you shouldn't if you're leasing), and on each monthly payment.

As an example, I leased a 2016 Sonata in March. My monthly lease payment is $228, the tax is around $21, so my monthly payment is around $249. Total tax over the life of my 36 month lease is about $750.

 

[BurnItDwn]

For $20 an hour, you can lease the menards/home depot truck.
Financially, its a bad deal for you to lease the truck as your third vehicle that you will hardly ever use.

If you really want a truck, and you have money to burn, and you are willing to spend $9288 to rent a truck for 3 years that you may not need all the time .. then pull the trigger and lease it.

Otherwise, 9288 for a used truck that you don't have to return after 3 years might be a smarter "middle option"...

 

[vi edit]

Nope. IL changed that almost two years ago. Sales tax is only paid on any down payment you make (which you shouldn't if you're leasing), and on each monthly payment.

As an example, I leased a 2016 Sonata in March. My monthly lease payment is $228, the tax is around $21, so my monthly payment is around $249. Total tax over the life of my 36 month lease is about $750.

Nice. I moved out of IL about 2.5 years ago. Good to see they changed that *AFTER* I left.

 

[bruceb]

Bought have good and bad points:

Good:

Great if you have some sort of business to put it under. Tax deduction.
Great if you will not put more than the allotted maximum miles for lease term.
Great if you want a new car every 3 to 5 years.
Great as all you will likely incur is routine maintenance (oil change, brakes, tires) as nothing else usually goes wrong before 80K or more
Monthly payment usually less than buying outright.

Bad:

You must keep the car in good physical shape or you will get hit when you give it back.
You never to get to own the car.
You must keep Collision and Comprehensive Insurance on it.
Since you do not own it, you really can not do much customization or modifications to it.

Personally I buy the vehicle. And I usually keep them until they give up the ghost entirely.
Still have a 1999 Grand Prix which I use for most errands (244K) and just got a 2016 Cadillac ATS4
with the 3.6 V6 335HP all wheel drive (GM provided 0% APR for 72 Months loan)

 

[96Firebird]

Forgot I posted this!

I would be using this truck as a daily driver mostly in the summer and using my Buick in the winter. Maybe it's because I just moved into my house, but it seems like a truck would help me out a bit... Before winter starts, I have to pick up my winter wheels from my parent's house, bring those and the new winter tires to get mounted/balanced. Also have to bring a compressor from my parent's house to my house, and grab a snowblower from my sister's house. Would also be nice to have a truck to bring stuff up to my parent's cottage in Canada, right now my Buick barely makes it back there (off-road trail).

Maybe I'm just trying to justify getting a truck, but it would be useful. And finding a $10k truck up here would most likely result in a rot box. I'm amazed at how used trucks hold their value, maybe it's just locally but I'd have to search down south to get a decent used truck.

Also, while my Buick has been a trooper, I'm always afraid one day it might not start/pop a brake line/etc in the morning and I won't be able to take my Trans Am to work in the winter. Essentially a backup winter vehicle, and daily summer vehicle.

I think I'm going to go look at some GMC Sierras sometime this week, see what kind of year-end deals they have.