Author Topic: Cars: Lease or buy?  (Read 699 times)

Offline Spirit of MACe

  • Youngling
  • *
  • Posts: 65
    • View Profile
Cars: Lease or buy?
« on: September 9, 2012, 03:21 AM »
My wife and I have been looking into getting a new car (probably Acura TL), but have been contemplating whether it'd be a better idea to start leasing.  We've always bought our cars in the past, but after 5 or 6 years it's usually a pain in the ass to sell the thing, and you don't get squat for a trade-in, so we were exploring the option of doing a lease this time.  I like the idea of getting something new every few years, with the far cheaper maintenance that goes along with that plan as well.  Does anyone else here lease, or have any thoughts on the matter, good or bad?  I'm aware of the limited miles issue, but that shouldn't be a problem, as we could just do our various longer road trips in the other car, if need be.

When a lease runs out, and you pick something new, is the timing at all flexible while you look around, or do you have to jump into something new on day 1,096?  Do they re-finance everything again, or do loyal (continuously leasing) customers get to keep their original (presumably) good deals each additional time (other than the down payment)?  I suppose we could just drag our butts into the Acura dealership to find out, but I thought I'd gather what insight I could before we eventually wandered over there, lest we become prey to those wonderful auto dealership types.
Softgoods suck.  Almost as much as the Prequels.

Offline Master_Phruby

  • Jedi Master
  • *
  • Posts: 6695
  • It's for display only!
    • View Profile
Re: Cars: Lease or buy?
« Reply #1 on: September 9, 2012, 12:55 PM »
Personally, I believe in never paying interest to anyone. I would rather have interest paid to me. That is why I always pay my credit card balances every month. When I buy a new car, I typically pay cash or if I need to put a large amount down and finance the rest. Then I pay off the car quickly thereby minizing the interest. I also keep my cars for a long period of time.

However, I know that may not work for everyone. Leasing works if you don't have the money for car and don't want to be bothered with out of warranty repairs and want a new car every few years. You get a nicer car than you could normally afford however your insurance will be higher and there are other miscellanous expenses that you don't have on a purchase.

Here is a good article on leasing a car.
http://auto.howstuffworks.com/buying-selling/buy-or-lease.htm
This message brought to you by Wookiee Cookiees - "MMM... Chewie!"
Visit The Endor Express - The Ultimate Guide to Disney's Star Tours

Offline Morgbug

  • Old
  • Jedi Guardian
  • *
  • Posts: 15976
  • mmm. pemmican.
    • View Profile
Re: Cars: Lease or buy?
« Reply #2 on: September 9, 2012, 04:01 PM »
Read me.  Depends on whether you want to play with the numbers at a five year horizon or a ten year horizon.  Just remember, depending on how long you think you'll live, the costs keep changing.  Not suggesting you own a car for thirty years but your lease costs stay higher in the long run. 
Minivans: a sign of the apocalypse.

Offline Chris

  • Founder
  • Administrator
  • Jedi Knight
  • *
  • Posts: 4618
    • View Profile
    • JediDefender.com
Re: Cars: Lease or buy?
« Reply #3 on: September 9, 2012, 08:08 PM »
I lease because I like a new car every 2-3 years, despise the idea of having to deal with selling off my old car and hate dealing with and wasting time on car repairs/problems/maintenance. I'm willing to pay more to keep all the downsides of ownership off of me. Could I be saving $$ by purchasing and keeping the car longer? Absolutely.

Offline Spirit of MACe

  • Youngling
  • *
  • Posts: 65
    • View Profile
Re: Cars: Lease or buy?
« Reply #4 on: September 11, 2012, 04:00 AM »
Thanks for the info guys.

That's pretty much how I feel, Chris.  I'm not interested in keeping a car for a good 10 years anymore, which would obviously be cheaper in the long run, I know.  I'm more around the 5-6 year range currently, but still manage to have the usual maintenance issues popping up within that range, and still hate to deal with selling the thing at the end, or even trading it in for peanuts (always less than KBB trade-in value).  I'd love to get down to 3 years per new car.

As for money, we've always put about half down up front, which would probably be much more (x2) than three of the smaller leasing down payments added up over the same 10 year stretch.  Our credit is like top 2%, so financing is always a breeze and practically immaterial for us.  However, you guys have pointed out something that I was completely brainfarting on: The probable increase in insurance.  Duh.  I'll have to get some more specific info and run some numbers to see what that comes out to in the long run, as that could be somewhat material (and a potential wash on the avoided maintenance problems).

I'm still interested to know how the timing works out at the end of the lease, as you're heading into a new one though.  Do you have to get something else lined up prior to the end of the current lease (assuming same dealership, of course).  Or do they give you a brief grace period to find something new?

Here is a good article on leasing a car.
http://auto.howstuffworks.com/buying-selling/buy-or-lease.htm

Thanks.  Helpful read.

Read me

Um...  Thanks, again?   :P
Softgoods suck.  Almost as much as the Prequels.

Offline Master_Phruby

  • Jedi Master
  • *
  • Posts: 6695
  • It's for display only!
    • View Profile
Re: Cars: Lease or buy?
« Reply #5 on: September 11, 2012, 09:56 AM »
When I leased my 95 T-bird, I could just turn in the car and walk away or I could buy the car outright. A new lease is a completely unrelated transaction.
This message brought to you by Wookiee Cookiees - "MMM... Chewie!"
Visit The Endor Express - The Ultimate Guide to Disney's Star Tours

Offline Spirit of MACe

  • Youngling
  • *
  • Posts: 65
    • View Profile
Re: Cars: Lease or buy?
« Reply #6 on: September 11, 2012, 05:46 PM »
Thanks again for the reply, but maybe I'm not being quite as specific as I should be here.  I know they're entirely separate transactions, but if the car dealership and I are both on the same page and understand that I want to remain a continuously loyal and leasing customer over the years, I wonder if I'm granted as good of deals each time (or better), more of a grace period between leases (if needbe), or... I don't know.  Just a question if loyal leasers are highly valued by dealerships and afforded special care as they choose each new ride every three years on a go forward basis.  Sorry for the confusion.  I think I've actually confused myself with my own goals and questions at this point.  :P
Softgoods suck.  Almost as much as the Prequels.

Offline JediJman

  • Jedi Sentinel
  • *
  • Posts: 13796
  • Everyone is ignorant, but on different subjects.
    • View Profile
Re: Cars: Lease or buy?
« Reply #7 on: September 11, 2012, 06:18 PM »
We have some close friends that lease both their vehicles.  They have a Sienna Mini-van and some sporty new VW - not sure of the model.  I can tell you that they get a loyalty discount for renewing their leases - at least it is positioned that way.  They were both on year 2 of their existing leases this Summer, but received calls stating that the dealership wanted to reward their loyalty with new vehicles and that they wanted the existing leases because they were short on used cars to sell.  My friends went with upgrades to their existing cars at no change to their lease rate.  If you don't mind spending the monthly fee for the foreseeable future, then you should probably lease.  I'm sure you can continue to get new vehicles at about that same rate from your dealer well into the future.

Here's why: My friends saw this as a win-win.  They don't see a rate hike, they get brand new vehicles, and the dealership gets more used cars in their inventory.  They love new cars and probably would have gone with leases again, so this was the right move for them.  Of course, the dealer just locked them into an extra 2 years of leasing.  They went from 2 years remaining to 4, and I'm sure in 2 years they will get a similar offer to lock them in again.  You see this trend with phones, cable, etc....companies will give you something extra to guarantee you stay subscribed.  Getting another 2 years on the lease far outweighs the risk of letting the lease expire and hoping they come back at $425/month istead of $400/month.

Honestly, if you want a new car every 3-4 years minimum, leasing is your best bet.  I've never leased - I'm a firm believer that you buy the car, pay it off, then save thousands until you need a new car again.  My wife and I have had both our cars paid off for at least two years now.  A lease would cost us about $800/month, so we've saved just shy of $20,000 (Maybe $18,000 worst case, assuming you'll spend money on tires, breaks, and other servicing).  If you want to replace your car every 6 or 7 years or longer, you're far better off buying the car and paying it off quickly.  You'll net all that extra cash to do other things with in the period between your payoff and your next purchase.  I think that's an awful lot of dough to fork over just to have a newer car all the time, but it depends on your priorities.  Hope that helps.
"If trees could scream, would we be so cavalier about cutting them down? We might, if they screamed all the time, for no good reason. " -Jack Handey

Offline Spirit of MACe

  • Youngling
  • *
  • Posts: 65
    • View Profile
Re: Cars: Lease or buy?
« Reply #8 on: September 11, 2012, 06:35 PM »
Now we're talkin'.  Thanks Justin!

My car's been paid off for a while, and my wife's car will be paid off in 3 more months, which is why we thought we'd start exploring the leasing option.  I was thinking we'd keep one paid off car, as I don't mind driving around in something slightly older, and keep her in something newer and nicer on a go forward basis - since I think she deserves it (not because she's a materialistic snob).  ;)

« Last Edit: September 11, 2012, 06:50 PM by Spirit Of Mace »
Softgoods suck.  Almost as much as the Prequels.

Offline EdSolo

  • Jedi Knight
  • *
  • Posts: 3177
    • View Profile
Re: Cars: Lease or buy?
« Reply #9 on: September 12, 2012, 07:17 AM »
As everyone else has stated, it all depends on your needs.  I purchased my first care in 1997 and my second in early 2008.  I'm more in the camp of drive it till it dies.  My wife even used my first car for another year or so because it got better millage than what she was driving.  When I purchased my second car, the dealer was only going to give me $1,000 in trade-in (blue book value was around $2,500 for excellent condition; the car was in fair condition), so it wasn't too big a deal to skip the trade in so we could save some gas money.  We still managed to sell it for $2,000.  I plan to keep my current car for a minimum of 10 years, so leasing really was never an option for me.  Since interest rates weren't that great for auto financing, I went with a home equity loan, so technically my car was paid off at purchase.  In the long run, that will cost more in interest if you don't make extra payments, but it does allow some flexibility since the payments are low.  I have been paying extra towards the principal for most of the time so that I could pay off the loan in about five years, but when I was laid off in 2009, it was nice to be able to pay the minimum payment of about $275 versus what would have been over twice as much if I had gone with 60 month financing.

Offline Chris M

  • Jedi Apprentice
  • *
  • Posts: 2077
  • Time to nut up or shut up.
    • View Profile
Re: Cars: Lease or buy?
« Reply #10 on: September 12, 2012, 09:06 AM »
I'm in the camp of if you are going to spend money on something big, spend it on something you will own.  I can understand how it works better for some people to lease though.

Since I got out of college in 2001, I've owned three cars.  The first I purchased after I got my first paycheck and totaled it in a wreck about four months later.  The second (F150 4x4) I bought at the start of 2002 and drove it until August of 2011.  I then purchased the Jeep Wrangler I drive now.  I prefer to buy slightly used to give me some room to negotiate a deal and to avoid the depreciation hit in the first year.  (However, if you buy new and drive for a long time, that's almost inconsequential).  My wife drove her first car until the wheels were literally about to fall off.  We traded that in in 2004 and she's been driving her Santa Fe since then.  Once I only have a year or less to pay on the Jeep, we'll get her a new car and the cycle will continue again.

I grew up working on cars, so I can do some of the general repair or maintenance on my own if I need to, although I also prefer to have a professional do the work.  However, for some, maintenance is a PITA and they'd rather have somebody do it for them and not have to worry about dealing with it.  I don't feel the need to "keep up with the Joneses" and have the new vehicle.  I can buy new parts and continually "upgrade" what I have now...it's also becoming a bit of a hobby.

There is some good advice here on car buying vs leasing.  Again, I fall into the camp of why put money towards something big if you will never own it?  To me, that's just tossing money away.  But again, like some have said, you have to go with what works for your budget and needs.
"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote."  Ben franklin


Embrace the suck.

Offline Jesse James

  • Staff Member
  • Grand Master
  • *
  • Posts: 31237
  • Slippery When Poopy
    • View Profile
    • JediDefender.com
Re: Cars: Lease or buy?
« Reply #11 on: September 12, 2012, 09:02 PM »
I think you probably should think about what type of value your car retains...  Chris M and I both drive Jeeps (his also being a wrangler I think?) and they hold value...  Mine's a 1998 and I still could get a pretty penny out of it if I sold it or wanted to part it out even, should something catastrophic happen to it, and it's far from perfect.

I'm with Chris in the "If you buy big, own it" camp though too...  I just don't dig leasing.  Plus they're pretty particular on the condition it's in when it comes back to them, IIRC...  I guess that kind of stuff could vary by where you live, what kind of traffic you're in regularly, where you park often, etc.

I guess a lot of variables could make leasing/owning worth it, or not worth it, for everyone.  :-\
2011 Rebel Fleet Trooper Gets My Seal Of Approval!  But Where's The Friggin' Holster On Him!?
Jedi Defender.com Contributing Editor, Twitter @JediDefender & @Jesse_James77

Offline Spirit of MACe

  • Youngling
  • *
  • Posts: 65
    • View Profile
Re: Cars: Lease or buy?
« Reply #12 on: September 13, 2012, 04:31 AM »
Well, as far as "buy big", in my opinion that's what our house is for.  It (usually) appreciates, where a car starts depreciating the moment you drive it off the lot (assuming it's not a vintage/collectible car, obviously).  Owning something that just depreciates year after year 'til there's only a few grand left in it doesn't feel overly worthwhile to me anymore, to be honest.  Plus, to me our cars start to look and feel pretty dated by the time they're paid off in 5 -6 years.  Maybe we're just becoming snobs in our old age now, I dunno.

Like I said, we've still got 3 months to think about it, so maybe now that I've got a little info to start me off, we'll head on over to a couple dealerships soon and see what's what, and take it from there.  Thanks again!
Softgoods suck.  Almost as much as the Prequels.

Offline Chris M

  • Jedi Apprentice
  • *
  • Posts: 2077
  • Time to nut up or shut up.
    • View Profile
Re: Cars: Lease or buy?
« Reply #13 on: September 13, 2012, 07:04 AM »
I think you probably should think about what type of value your car retains...  Chris M and I both drive Jeeps (his also being a wrangler I think?) and they hold value... 

Yep, 08 JKU with a little work done.  I'm currently debating a new pistol or bumper for the Jeep.

"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote."  Ben franklin


Embrace the suck.