Someone explain to me the differences between leasing and buying a car

[krunchykrome]

Please explain to me the pros and cons of leasing vs. buying. Why would someone want to lease. What is the difference in the payments with leasing vs buying?


Automobiles that is

 

[waggy]

lease is great if you want a new car every 2 years and want a nicer car then you can afford.

buying a car is good if you are going to keep it longer then 3 years. i find it silly when someone buys a car and then turns it in and gets antoher a year latter. that is a waste of money.


for me leasing is a bad idea. first off i buy 1-2 yr old cars and drive them until it cost more to repair them then it is worth. but for my sister its great. she gets a nice car every 2 years.

 

[krunchykrome]

Originally posted by: waggy
lease is great if you want a new car every 2 years and want a nicer car then you can afford.

buying a car is good if you are going to keep it longer then 3 years. i find it silly when someone buys a car and then turns it in and gets antoher a year latter. that is a waste of money.


for me leasing is a bad idea. first off i buy 1-2 yr old cars and drive them until it cost more to repair them then it is worth. but for my sister its great. she gets a nice car every 2 years.

How much of difference in monthly payments is there between a lease and financing?

 

[jhayx7]

Just had to do an assignment on this for one of my classes. Leasing is a better option ONLY if you do not drive over the average limit and you plan on getting another car in less than 4 years. If you plan on driving your car over 4 years then it is better to purchase the car. Cars are one of the wore investments you can make, purchasing a car and driving it until the wheels fall off is usually the best way to go. Also, do research on the cars depreciation value, imports usually hold their value better than domestic cars.

 

[iamwiz82]

Originally posted by: krunchykrome

Originally posted by: waggy
lease is great if you want a new car every 2 years and want a nicer car then you can afford.

buying a car is good if you are going to keep it longer then 3 years. i find it silly when someone buys a car and then turns it in and gets antoher a year latter. that is a waste of money.


for me leasing is a bad idea. first off i buy 1-2 yr old cars and drive them until it cost more to repair them then it is worth. but for my sister its great. she gets a nice car every 2 years.

How much of difference in monthly payments is there between a lease and financing?

Lola's Liberty stickered at $26,000 and our monthly payment for the lease is ~$187, I believe. That is $0 down. A loan at that price would be around $500/mo.

 

[krunchykrome]

Originally posted by: jhayx7
Just had to do an assignment on this for one of my classes. Leasing is a better option ONLY if you do not drive over the average limit and you plan on getting another car in less than 4 years. If you plan on driving your car over 4 years then it is better to purchase the car. Cars are one of the wore investments you can make, purchasing a car and driving it until the wheels fall off is usually the best way to go. Also, do research on the cars depreciation value, imports usually hold their value better than domestic cars.

But if you lease a car for two years and then get another car, what do you have to show for those two years of lease payments? For a higher monthly payment, you could own principal on a car.

 

[waggy]

Originally posted by: krunchykrome

Originally posted by: waggy
lease is great if you want a new car every 2 years and want a nicer car then you can afford.

buying a car is good if you are going to keep it longer then 3 years. i find it silly when someone buys a car and then turns it in and gets antoher a year latter. that is a waste of money.


for me leasing is a bad idea. first off i buy 1-2 yr old cars and drive them until it cost more to repair them then it is worth. but for my sister its great. she gets a nice car every 2 years.

How much of difference in monthly payments is there between a lease and financing?

a bunch. can be a few hundred a month.

oh as jhayx7 said if you drive a lot you do not want to lease. think its like under 12k or so a year.

 

[jhayx7]

Originally posted by: krunchykrome

Originally posted by: jhayx7
Just had to do an assignment on this for one of my classes. Leasing is a better option ONLY if you do not drive over the average limit and you plan on getting another car in less than 4 years. If you plan on driving your car over 4 years then it is better to purchase the car. Cars are one of the wore investments you can make, purchasing a car and driving it until the wheels fall off is usually the best way to go. Also, do research on the cars depreciation value, imports usually hold their value better than domestic cars.

But if you lease a car for two years and then get another car, what do you have to show for those two years of lease payments? For a higher monthly payment, you could own principal on a car.

Lease vs. Purchasing

Here is a great website that can answer all your questions on this subject.

 

[waggy]

Originally posted by: krunchykrome

Originally posted by: jhayx7
Just had to do an assignment on this for one of my classes. Leasing is a better option ONLY if you do not drive over the average limit and you plan on getting another car in less than 4 years. If you plan on driving your car over 4 years then it is better to purchase the car. Cars are one of the wore investments you can make, purchasing a car and driving it until the wheels fall off is usually the best way to go. Also, do research on the cars depreciation value, imports usually hold their value better than domestic cars.

But if you lease a car for two years and then get another car, what do you have to show for those two years of lease payments? For a higher monthly payment, you could own principal on a car.

with a lease you have nothing to show after the time is up.

but the postive is as iamwiz showed you get a nicer care for a far cheaper price. a Liberty for under $200 a month? darn good price. but after 2-4years they will have to turn it in and have nothing to show for it. but thats ok for some poeple. renting is fine in some situations

 

[iamwiz82]

Originally posted by: waggy

Originally posted by: krunchykrome

Originally posted by: jhayx7
Just had to do an assignment on this for one of my classes. Leasing is a better option ONLY if you do not drive over the average limit and you plan on getting another car in less than 4 years. If you plan on driving your car over 4 years then it is better to purchase the car. Cars are one of the wore investments you can make, purchasing a car and driving it until the wheels fall off is usually the best way to go. Also, do research on the cars depreciation value, imports usually hold their value better than domestic cars.

But if you lease a car for two years and then get another car, what do you have to show for those two years of lease payments? For a higher monthly payment, you could own principal on a car.

with a lease you have nothing to show after the time is up.

but the postive is as iamwiz showed you get a nicer care for a far cheaper price. a Liberty for under $200 a month? darn good price. but after 2-4years they will have to turn it in and have nothing to show for it. but thats ok for some poeple. renting is fine in some situations

We will have $7,000 in cash that we didn't spend on the loan . So we spent $4500 over two years, a loan would cost $12,000 in that time and we'd still have 4 years to pay. Plus, there is no real maintenance to do, other than $100/year in oil changes. There are no new tires to buy, batteries, wipers, filters, spark plugs, etc.

With our particular leases (my truck is $219/mo), it would take a LONG time to break even if we went with purchases.

EDIT: Most of the time, however, people go nuts with leasing, since they can "afford" more. We went into the dealerships asking for the cheapest

 

[PlatinumGold]

Originally posted by: jhayx7
Just had to do an assignment on this for one of my classes. Leasing is a better option ONLY if you do not drive over the average limit and you plan on getting another car in less than 4 years. If you plan on driving your car over 4 years then it is better to purchase the car. Cars are one of the wore investments you can make, purchasing a car and driving it until the wheels fall off is usually the best way to go. Also, do research on the cars depreciation value, imports usually hold their value better than domestic cars.

anyone who thinks a car is an investment is a moron.

a car is an EXPENSE. it is a necessary expense for lots of people but it is no more an investment than the ink you buy for your printer.

finance pay down payment up front.

lease pay down payment at the end.

 

[krunchykrome]

Originally posted by: jhayx7

Originally posted by: krunchykrome

Originally posted by: jhayx7
Just had to do an assignment on this for one of my classes. Leasing is a better option ONLY if you do not drive over the average limit and you plan on getting another car in less than 4 years. If you plan on driving your car over 4 years then it is better to purchase the car. Cars are one of the wore investments you can make, purchasing a car and driving it until the wheels fall off is usually the best way to go. Also, do research on the cars depreciation value, imports usually hold their value better than domestic cars.

But if you lease a car for two years and then get another car, what do you have to show for those two years of lease payments? For a higher monthly payment, you could own principal on a car.

Lease vs. Purchasing

Here is a great website that can answer all your questions on this subject.

Thanks!

 

[SoulAssassin]

I've leased my past two cars and I believe if you plan on keeping a vehicle for 3 years or less it can often work in your favor. Before I leased my current car I did the math on the last vehicle to see if it made sense. I knew what the "purchase price" of the vehicle would have been when I got it as well as the interest rate and what my payments would have been with a payment. I calculated how much I would have paid over a 3 year period on the purchase and the lease, looked up the current KBB value for trade-in minus what I would have owed on it, and figured out that I saved about $2K over that time. Plus I was driving a brand new Benz for 3 years.

It can make sense in the right situation but keeping a car for 5+ years past when it's paid off is definitely the smarter thing to do. If you know you won't keep a car that long than it might be worth it.

 

[dullard]

With Leasing you may have a ~$300 payment per month for the rest of your life.

With Buying you have a ~$400/month payment for a few years, and then $0/month for the rest of your car's life.

Clearly, if you hold a car for more than a few years, buying is financially far, far, far better than leasing. Buying in that situation is much cheaper because you can have many years of no payments at all.

Financially, buying a car every year or two is about the stupidest thing you can do. Leasing was invented for those people. Therefore, leasing is the second stupidest thing you can do, but it is better than buying new all the time.

 

[krunchykrome]

Originally posted by: SoulAssassin
I've leased my past two cars and I believe if you plan on keeping a vehicle for 3 years or less it can often work in your favor. Before I leased my current car I did the math on the last vehicle to see if it made sense. I knew what the "purchase price" of the vehicle would have been when I got it as well as the interest rate and what my payments would have been with a payment. I calculated how much I would have paid over a 3 year period on the purchase and the lease, looked up the current KBB value for trade-in minus what I would have owed on it, and figured out that I saved about $2K over that time. Plus I was driving a brand new Benz for 3 years.

It can make sense in the right situation but keeping a car for 5+ years past when it's paid off is definitely the smarter thing to do. If you know you won't keep a car that long than it might be worth it.

And what happens if you get into an accident, or the car is totaled. Can you smoke in the car if you wanted to? To me, it sounds a lot like renting a car. You're driving it, but you can only put soo many miles on it and you can and can't do this to the car.

 

[PlatinumGold]

Originally posted by: krunchykrome

Originally posted by: SoulAssassin
I've leased my past two cars and I believe if you plan on keeping a vehicle for 3 years or less it can often work in your favor. Before I leased my current car I did the math on the last vehicle to see if it made sense. I knew what the "purchase price" of the vehicle would have been when I got it as well as the interest rate and what my payments would have been with a payment. I calculated how much I would have paid over a 3 year period on the purchase and the lease, looked up the current KBB value for trade-in minus what I would have owed on it, and figured out that I saved about $2K over that time. Plus I was driving a brand new Benz for 3 years.

It can make sense in the right situation but keeping a car for 5+ years past when it's paid off is definitely the smarter thing to do. If you know you won't keep a car that long than it might be worth it.

And what happens if you get into an accident, or the car is totaled. Can you smoke in the car if you wanted to? To me, it sounds a lot like renting a car. You're driving it, but you can only put soo many miles on it and you can and can't do this to the car.

actually the accident thing supports the lease.

 

[Exterous]

It boils down to
In the short term its cheaper to lease
In the medium term its about the same
In the long term its better to buy

The length of 'term' varies depending on intrest rates and financing options, deal/promotions, financial ability and personal monetary policies, but generally having a car for 3-5 years will make it cheaper to buy. However, this holds true for only that particular car for that one instance. Over the course of several cars it will almost always be better to buy -assuming you will be getting another car after your lease is up. (If you don't then its cheaper to lease)

Edit: I think Edmunds does a better job of breaking down the details
In my opinion its only better to rent if you have money to burn and its bad enough putting lots of money into a car (IE the most depriciable asset out there), let alone putting money into something you won't even own (IE nothing to show for that money)

 

[Armitage]

Originally posted by: dullard
With Leasing you may have a ~$300 payment per month for the rest of your life.

With Buying you have a ~$400/month payment for a few years, and then $0/month for the rest of your car's life.

Clearly, if you hold a car for more than a few years, buying is financially far, far, far better than leasing. Buying in that situation is much cheaper because you can have many years of no payments at all.

Your insurance and registration (in some states) can be substantially cheaper in the out years as well.

Financially, buying a car every year or two is about the stupidest thing you can do. Leasing was invented for those people. Therefore, leasing is the second stupidest thing you can do, but it is better than buying new all the time.

 

[ElFenix]

Originally posted by: krunchykrome

How much of difference in monthly payments is there between a lease and financing?

depends on the car and the term.

cars that don't depreciate much have lower lease payments (measured in monthly payment/$1000 of vehicle cost). this is because with a lease, you are paying for depreciation. so, the cost of a luxury car that doesn't depreciate much is generally not all that much more than a ford that depreciates a ton. that is a big reason why people lease (and a big reason why luxury car 'sales' are up a lot).

the longer the term for both, the more they'll approach each other. on a two year buy, you'll be paying for the whole car in two years. on a two year lease, you'll be paying for the 1/4 or 1/3 of value that the car drops with use. on a 5 year term, you'll be paying for the 2/3 or 3/4 of value that the car drops with use.

where you can really benefit from a lease is if you don't get a car that is more than you would if you bought. and then you socked the money away in nice investments. but pretty much everyone gets a car that is more than they would have if they bought. because, of course, the monthly payments compresses and luxury cars aren't *that* much more.

the other big problem with leases is that you're more likely to get screwed. most people can do some rough math in their head for a buy payment. that can keep the dealer honest. but with a lease the payment is so much lower that you don't realize that the dealer just padded your payment, or didn't use the price you'd just negotiated (instead using sticker), etc. i had one dealer, when i asked what the selling price on a lease they'd advertised was, tell me that the price didn't matter. that was when i left.

 

[SoulAssassin]

Originally posted by: krunchykrome

And what happens if you get into an accident, or the car is totaled. Can you smoke in the car if you wanted to? To me, it sounds a lot like renting a car. You're driving it, but you can only put soo many miles on it and you can and can't do this to the car.

GAP WAIVER
Our GAP Waiver is designed to give you peace of mind. If for some reason (such as accident or theft) your leased Mercedes-Benz is declared a total loss, we will cover the difference between the insurance proceeds and the balance owed to Mercedes-Benz Financial, less any deductible.

No need to worry. I quit smoking years ago so that wouldn't be a concern and I've never heard of a lease contract saying you couldn't.

 

[Lonyo]

Originally posted by: waggy
lease is great if you want a new car every 2 years and want a nicer car then you can afford.

buying a car is good if you are going to keep it longer then 3 years. i find it silly when someone buys a car and then turns it in and gets antoher a year latter. that is a waste of money.


for me leasing is a bad idea. first off i buy 1-2 yr old cars and drive them until it cost more to repair them then it is worth. but for my sister its great. she gets a nice car every 2 years.

Well I find it silly when people confuse "then" and "than".

 

[waggy]

Originally posted by: Lonyo

Originally posted by: waggy
lease is great if you want a new car every 2 years and want a nicer car then you can afford.

buying a car is good if you are going to keep it longer then 3 years. i find it silly when someone buys a car and then turns it in and gets antoher a year latter. that is a waste of money.


for me leasing is a bad idea. first off i buy 1-2 yr old cars and drive them until it cost more to repair them then it is worth. but for my sister its great. she gets a nice car every 2 years.

Well I find it silly when people confuse "then" and "than".

bummer. boy you sure burned me. damn i better go get in the bathtub to cool off! dam you the man YOU THE FVCKING MAN NOW! woot!

 

[SoulAssassin]

Originally posted by: ElFenix
i had one dealer, when i asked what the selling price on a lease they'd advertised was, tell me that the price didn't matter. that was when i left.

Selling price and what they call the "money factor" (more or less your interest rate but not exactly) are everything in determining the final cost. That dealer is an idiot.

 

[Kaido]

My wife and I both lease our cars.

There are several advantages:

-If you're not good mechanically, they usually include a warranty that covers any repairs required. I don't have the time or interest to learn about cars or to try fixing them.
-It's cheaper in the short-term; you can save anywhere from $50 to $200+ a month by leasing.
-You get to drive a nice brand-new car every few years (more reliable, safer, and so on)
-You don't have to worry about selling it when your lease is up

There are some cons:

-miles are limited (12k, 15k, and 20k miles per year are usually standard), so if you drive a lot it's not a good option
-customization is limited - if you want to soup up the car in any way other than upgrading the stereo they probably won't let you
-you don't own the car at the end of the lease, you have to keep paying...forever.

I look at it like living in an apartment...it's just something you pay the rent on. You get a reliable car for a low monthly payment. To me, cars are appliances...they get me from Point A to Point B, extra points for quietness inside and a smooth ride. I will probably never buy another car again. It's not for everybody, but if you have a steady job and can afford it, and don't mind the cons, then I'd say go for it

 

[homestarmy]

Ok, I am not going to read this whole thread, but let me bring up one thing that hasn't been brought up on the first half of the thread, and many people forget about.

Leasing can be a good gamble if you want to purchase a car, but it is a gamble.

When your lease is up, you are given an opportunity to buy the car. Sometimes, paying the lease for that two years and then buying it is cheaper than buying it in the first place, due to factors such as depreciation and how the specific car model has done in the market (or if a new bodystyle has been released, etc).

Therefore, if you are lucky, you can buy a car cheaper by leasing it in the first place.

This is a hell of a gamble though, and I wouldn't take it in most cases if you have the means of buying the car in the first place. It can work well for college students who know they will be making more money in the future for instance (I know someone who was in this scenario, and it worked out perfectly for them).

EDIT: I did read the whole thread, and it was not clearly brought up.