When is it good to lease instead of buy?

[Spooner]

My brother just leased a pimped out Saab 93 convertible.

His lease payments would be only slightly higher than my car payments (i'm looking at a new mitsubishi eclipse spyder)

I could get some pimp options if I'd lease, but he's limited to 15,000 miles a year. Is that good?

When is it good to lease?

 

[b0mbrman]

When you want a new car every couple years?

 

[Spooner]

That would obviously be good.

Do they inspect the car like crazy when you turn it back in, or is it mainly miles you have to worry about?

 

[Doggiedog]

15K/yr is more than normal I think.

Normally, its 12K/yr.

It is better to lease if you aren't going to drive the car alot. If you are going to go over 15K/yr, you should definitely buy.

Also, when you lease, you need to pay for FULL insurance coverage.

 

[vi edit]

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<< Also, when you lease, you need to pay for FULL insurance coverage. >>

If you finance through a bank, you have to do the same as well.

 

[RossMAN]

I had a similiar thread which is worth a read.

 

[Jzero]

<<

<< Also, when you lease, you need to pay for FULL insurance coverage. >>

If you finance through a bank, you have to do the same as well. >>


Although, if you buy a brand new car, you should probably get full coverage even if it's not a loan requirement.

 

[Miramonti]

What are his lease payments on the saab & for how many years?

 

[Pacfanweb]

<< Also, when you lease, you need to pay for FULL insurance coverage. >>

<<If you finance through a bank, you have to do the same as well. >>

Not the same insurance. A bank simply requires you to have collision insurance, to fix the car if you wreck it.
When you lease a car, the bank makes you have insurance that will pay off the lease if the car is totalled. On a regular loan, your insurance doesn't necessarily pay off the loan....they pay fair market value of the car; if you're upside down, you'll still owe money.

 

[Spooner]

<< What are his lease payments on the saab & for how many years? >>


I think it's $450/month for 3 years

I talked to him and he was quoted like $3,000 a year for insurance :Q :Q :Q :Q

 

[Ameesh]

<< << Also, when you lease, you need to pay for FULL insurance coverage. >>

<<If you finance through a bank, you have to do the same as well. >>

Not the same insurance. A bank simply requires you to have collision insurance, to fix the car if you wreck it.
When you lease a car, the bank makes you have insurance that will pay off the lease if the car is totalled. On a regular loan, your insurance doesn't necessarily pay off the loan....they pay fair market value of the car; if you're upside down, you'll still owe money. >>




most leases come with gap insurance so you dont have to worry about it.

 

[Cerebus451]

<< When you lease a car, the bank makes you have insurance that will pay off the lease if the car is totalled >>


Actually I've never seen this insurance required. This is called gap insurance, and it is almost never mandatory (though some may bake some sort of gap insurance into your lease payment). I have leased 2 cars and have never had gap insurance.

As for when to lease, I like the option. I get tired of a car after a couple of years and I don't have the money to be constantly buying new vehicles. So, instead of having a loan payment all the time, I have a lease payment all the time, and generally you can get more out of a lease payment dollar for dollar than out of a loan payment. You have to take better care of the vehicle overall with a lease, but so long as you don't go over the mileage limit and don't abuse the car, you should be OK (i.e., if you have young kids, don't bother with a lease since they will destroy the interior and that will cost you in the end). Also, going over the mileage limit will kill you. Lastly, it is better to lease a vehicle that can hold it's value somewhat. Lease payments are based on the difference in value of the vehicle between purchase time and when you turn the vehicle in (since the dealer will have to try and sell the lease used after you turn it in). A vehicle that has no hope of resale value will have higher lease payments since they have to cover a greater difference. This is why leases tend to look better on upscale cars since they tend to hold their value better.

 

[aphex]

<< When you want a new car every couple years? >>

 

[Spooner]

How do I find out the residual value for an '03 Mitsubishi Eclipse Spyder? and estimate lease payments?

 

[Freejack2]

If you plan to be in a new car every 3 years and have near perfect credit a lease is ideal. Mind you it can suck in certain situations though. Say you lease a car today. Along comes April 2005 and your lease is up. The new model of the car you want doesn't come out until September 2005 but your car has to be returned now and you can't go without a car for 5 months. Also say you got a little stain on one of the seats, you have to pay for that at the end of the lease. If you went over the allowed miles for the 3 years you also have to pay for the extra miles.
If you can live with all that a lease is great.

If you plan to keep a car more than 3 years then buying is by far the best way to go. It allows you to pick and choose when to get a new car and as long as your car is worth something you can put that towards the cost of a new car.

I leased my previous car. For me it was somewhat of a mistake. If I was able to wait a few months more I could have gotten some great financing deals.
This car I bought. I intend to drive it into the ground before I get another car.

 

[Doggiedog]

I leased a 97 Honda Prelude SH for 2 years and when I returned it, all they did was walk around the car and sign a document stating I returned it.

Their inspection wasn't rigid at all. I had tons of dings and dents but was about 4K less in mileage. I guess the inspection really depends on the dealership you are returning the car to.

 

[Spooner]

I'm a big fan of a new car every three years.
My credit is near perfect, but I haven't leased before (does that hurt me?)
I'm a consultant, so might not be using my car a lot (if out of state, they rent for me)
I'm a consultant, so might be using my car a REAL lot (if in state, i'm forced to drive)
I could take (and plan to) extremely good care of the car, but would like some sort of headroom for normal wear and tear.


Uuuuuuuuuuugh.... i still don't know

 

[Cerebus451]

<< How do I find out the residual value for an '03 Mitsubishi Eclipse Spyder? and estimate lease payments? >>


Not sure, but you can call around to banks and say you are looking to lease this vehicle with this sticker price and ask what kind of lease terms they can give you. One problem with leasing is that you have to still negotiate a selling price for the vehicle just as if you were buying it (don't let a dealer just walk off and come back with a lease payment, ask to see the numbers behind the payment, just as you would if you were buying it).

 

[Thegonagle]

If you're not into displaying status, never.

 

[vi edit]

Status my arse.

Maybe I'd rather not ever have to worry about being out of warranty, and maybe I appreciate being able to try out a new vehicle every couple years because I get enjoyment out of it.

Sure I spend some money a month on it, but it's an expense that I'll sacrafice for a little variety and piece of mind. By the time I figure that I don't pay on a $45 a month cable bill, a $40 a month high bandwith payment, a $35 a month cell phone bill, and sacrafice going out to eat once a week, I just made my lease payment. When I drive 15,000 + miles a year, it's nice to have a car I enjoy to do it in.

 

[Spooner]

I'm still not getting any closer to deciding which is better

 

[StageLeft]

So your brother is LEASING a 93 vehicle whereas you can buy a new one for lower payments? And you wonder which is better? If you get into leasing you get into having car payments forever. If you buy you own the car afterwards. Yes the payments are higher but it's equity for you.

Net conclusion by most people is that you should lease if you like a new car frequently and buy if not.

 

[Spooner]

<< So your brother is LEASING a 93 vehicle whereas you can buy a new one for lower payments? >>


Dude, it's a saab 9 3 ... as in the make, not the year.

It's brand new.

 

[Doggiedog]

So your brother is LEASING a 93 vehicle whereas you can buy a new one for lower payments? And you wonder which is better? If you get into leasing you get into having car payments forever. If you buy you own the car afterwards. Yes the payments are higher but it's equity for you.

9-3 is the model of the Saab not the year.

 

[vi edit]

Ok, here's the thing.

If you buy a car, how much money are you going to put down? If you are putting little to none, you are going to be looking at a financed amount of about $28,000(after TTL). At 60 months loan, at 6.9% interest, your loan payments are wee bit above $550. After 36 months of payments, your payoff is right around $12,300.

Judgeing by Edmunds resale ratings on a 3 year old GT Eclipse Convertable, trade ins are anywhere from $8,000 to $11,000. That's a complete estimate there. Assuming you landed in the middle of that range, you'd still be $2,000 or so upside down on your trade in since you still owe over $12,000 on the car.

If you plan on trading in your car after 3 years, or less, then you will still owe a pretty good chunk of $$ on your car, just to get an even trade in.

Check with a Mitsubishi dealer and see what lease payments are running on the specific car you want. You then need to compare two things -

1. monthly payment and how much you are willing to pay
2. how long you intend on keeping the car - THIS IS THE KEY thing you need to consider. If you KNOW that you are going to want to trade up in three years time, and you aren't making a big downpayment, then you would BE FOOLISH not to lease IMHO.