Considering Leasing a Car

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jayc
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Considering Leasing a Car

Post by jayc » Thu Jan 03, 2008 12:00 am

I am considering leasing my next car and was wondering if anybody here had experience leasing (for the right reasons). I am not looking into leasing a car I couldn't otherwise afford. I'm considering an Acura which I could pay for with cash if I really wanted.

I used to live about an hour from my parents and my dad could handle any car problems I had for me. I now live 2600 miles away so that's not possible any more. I don't know a whole lot about cars and have no interest in dealing with their issues or worrying about repairs. I don't mind paying a small premium if it means the only thing I have to worry about is standard maintenance.

It seems like leasing a car may actually be the best thing for me. It seems like a fairly small price to pay if it buys me as much piece of mind as I think it will.

Has anybody had experience doing this or can point out any problems in my assumptions? Thanks!

Gekko
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Post by Gekko » Thu Jan 03, 2008 12:17 am

IMO, leasing a car is a glorified rental. you are paying for the highest part of a car's highest depreciation - the first 2-3 years. and you continue that with every new lease! don't get caught up in the lease trap and don't try to justify it with "peace of mind".

i would look at a new or used Acura (if that's the car you want) and pay cash or do a short duration loan. when you write that big check it makes you really question whether you "want" it or "need" it.

personally, i've never had a car payment. i pay cash for my cars and drive them into the ground. i buy japanese.

good luck.

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Dan Kohn
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Don't do it

Post by Dan Kohn » Thu Jan 03, 2008 1:19 am

Your reasons for leasing don't make sense.

If you're concerned that your car might break down, than buy an extended warranty and a AAA membership. Leases are designed for people who can't afford to pay for the car. If you want to pay for a warranty, than pay for a warranty. But don't pay for financing if you don't need it.

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gunn_show
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Post by gunn_show » Thu Jan 03, 2008 2:56 am

I disagree with the two above

Leasing is certainly not the best thing to do for MOST people, but not everyone

Leasing a car is a possibility for people who want a new car every few years, don't buy cars for cash and run them into the ground, and several other reasons

Personally I have a beater 1995 Toyota Camry for trips to costco, rainy days, hauling people or stuff, and for just beating around town in an automatic

But I also have a 2005 honda s2000 that I leased 2 years ago. It is a 2 seater roadster with tons of horsepower, it's convertible, and is a buttload of fun. Will I keep it when the lease expires in Oct? I don't know. But I do know that I got a smoking deal on the lease offer, and will have three options when the time comes.
Turn it in and walk away (it is in flawless condition and wayyyy under mileage limit)
Buy it and keep it
Buy it and resell it (will be worth more than I can buy it out from Honda for)

Most likely I will buy it and resell it as they are small production vehicles and mine is a garage queen and has 16k miles after 2+ years.

Point is leasing can make sense for some people in the right situations. My next car will probably be more practical, and something I will keep for 5-10 years. Thus I will buy instead of lease.

If the Acura you are looking at is something you want to keep for 5+ years, then buy it. If you are considering getting something new in less than 3-5 years, and can get a great lease deal, then lease it. I know Acura is blowing out most of their models right now because the RSX, TSX, TL, and RL are all getting redesigned for 2008. My brother just picked up a fully loaded TL type S for wayyyy under cost.
"The best life hack of all is to just put the work in and never give up." Bas Rutten

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soaring
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If you keep a car over 5 years then buy.

Post by soaring » Thu Jan 03, 2008 5:27 am

In my first 20 years of auto ownership I bought new and sold too often and lost too much money... probably similar to leasing.

In the last 20 years I have owned two new cars. this second car, an Avalon, now 11 years with 110,000 miles will likely last another 10 years. It looks and drives excellent.

Neither of these cars ever broke down. My purchase cost (not considering recouping resale value) of these two cars has a monthly avg cost of $145.

considering the sale of the first and the current value of the Avalon my monthly cost is $115 over the past 20 years for purchase.

When I was young those first 3-5 cars in the first 20 years of car ownership were "pretty" and fast and made me feel good. But the last 20 years were more practical and cost much less.

Good luck
Gene

dougpnca
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Post by dougpnca » Sat Jan 05, 2008 9:54 pm

jayc:

You are confusing financing with maintenance. Leasing is just an alternate (albeit expensive) financing method. You still have to get the oil changed, etc., regardless of how the car is paid for. The cost may be included in the monthly payment (which means it'll be a premium) but you are still paying it.

If you buy a Honda or Toyota product (from the lowly Carollo to the mighty MDX) you've got a car that will be difficult to wear out given proper routine service & should last 10+ years & 150,000 miles. An oil change every couple of months @ $30 is pretty cheap insurance. The Japanese currently make the best automotive appliances in the world.

Think of leasing as making payments and then coming up with the down payment at the end of the lease. The gamble is will the vehicle be worth the residual? If so, you can walk, trade or pick it up, no worries. Dealers LOVE leases (that should speak volumes right there!) because it's easier for them to qualify you for the money. The also like them because they know you'll be back in a few years. 2-3 year old vehicles coming off a lease are excellent for their used car lot. But you're on the other side of the table on this deal. What's good for you?

If you can pay cash & intend to drive the car 5-7 years, I don't think there's any financial finagle that will show a lease to be cheaper without some pretty wild assumptions. Anything beyond that time & you are even further ahead financially.

Good rule of thumb: Don't finance a depreciating asset. And cars depreciate tremendously in the first couple of years. So get one that'll meet your needs for 5-7 years & hang onto it.

Enjoy your Acura. We've had 3 & intend to continue the habit. And yes, we paid cash & still have 2 of them, the oldest is a 91 with 130K on it.

dougP
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Opponent Process
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Re: Considering Leasing a Car

Post by Opponent Process » Sat Jan 05, 2008 11:14 pm

jayc wrote: I used to live about an hour from my parents and my dad could handle any car problems I had for me. I now live 2600 miles away so that's not possible any more. I don't know a whole lot about cars and have no interest in dealing with their issues or worrying about repairs.
I'm pretty sure most people don't repair their own cars!

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jayc
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Re: Considering Leasing a Car

Post by jayc » Sat Jan 05, 2008 11:28 pm

Thanks all for the feedback.
dougpnca wrote: You are confusing financing with maintenance. Leasing is just an alternate (albeit expensive) financing method. You still have to get the oil changed, etc., regardless of how the car is paid for.
I don't think I am. I said "I don't mind paying a small premium if it means the only thing I have to worry about is standard maintenance."
Opponent Process wrote:
jayc wrote: I used to live about an hour from my parents and my dad could handle any car problems I had for me. I now live 2600 miles away so that's not possible any more. I don't know a whole lot about cars and have no interest in dealing with their issues or worrying about repairs.
I'm pretty sure most people don't repair their own cars!
Maybe everybody else is ok with having to make decisions about things they really don't know anything about. I'm not. Being in the computer industry, seeing people who have to take their computer to places like GeekSquad makes me cringe.

I don't want to be financially and mentally responsible for something I don't know how to either fix myself or know enough about to judge somebody else's ability to fix it and what the markets rates are.

Perhaps my point of view is colored by experiences my father has had with owning cars. Yes, even Honda's.

Somebody said leasing is a "glorified rental." Well I rent an apartment and I'm pretty happy. I don't have to worry about who cuts the yard or when the pipes burst.

dougpnca
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Post by dougpnca » Sun Jan 06, 2008 2:28 am

jayc:

Your original post asking what experiences people had with leases indicates this a new area for you. Here's a test you can perform. Chat amongst your friends, in your area, similar age, demo, tastes, etc. Who's leased a car? What was their experience? Where did they get the car? How many cars have they leased? Would they do it again? What problems did they have with the lease, if any?

With all due respect, I submit that you are mis-informed about your situation vis a vis responsibility for the car. You don't mind paying a small premium if all you have to worry about is standard maintenance. Regardless of how you finance it, you have to worry about EVERYTHING related to the car. It's your car. Never forget that they guy (or gal) with pleats in his pants has larceny in his heart. His job is to get your butt into the seat & the car off the lot, any way he can.

You keep circling back to maintenance, repairs, making decisions when things go wrong with the car, etc., as if they are part of the financing question. You own the car - it's yours, your name on the title, insurance, etc. If it breaks in two, you get both halves. If your apartment burns to the ground, you lose your clothes, furniture, etc., but otherwise walk away & find another. More than huge difference.

Buying for cash, purchase by financing, and leasing are just different avenues to move the money from your pocket to the dealers. The time frames and amounts differ but its all about the money, nothing else.

I'll go out on a limb here & guess from your posts guess that you're young, female & not comfortable with the complexity of today's cars. My guess is based on having a 23 year old daughter who lives 3 time zones away. I'm old, male & have owned cars for over 40 years & I'm not comfortable with the complexity of today's cars. However, they're a huge bunch more reliable than they were when I was your age. The odds of a modern, well made car having a melt down are quite small & should be the least of your worries.

Regardless of how you pay for the car, read the fine print. If nothing else, it drives the closers crazy. Oh, and take a pass on the paint sealant, upholstery protectant, glass registration, premium alarm, overnite insurance, document prep fee & whatever new gyp charges they've dreamed up this year. Then crank up the music & enjoy the ride.

dougP
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Laura
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Leasing

Post by Laura » Sun Jan 06, 2008 9:22 am

jayc,

If your leased car breaks down you are responsible for getting it fixed. It is not the same as renting a car where you just call the rental company and they get you a new car. The closest I have ever seen to "renting" a car for the long term is with Hertz. They have short-term leases that you can do for 11 months of the year. This is just a long term car rental and it is very expensive.

A lease from a dealer is another form of financing the car. The car is yours and you are responsible for all maintenance on the vehicle. The only difference is that you turn in the car at the end of the lease agreement so you don't need to sell it when you are done. Otherwise, leasing and owning are identical.

Given how concerned you are about managing your vehicle I suggest you buy a new car with a long warranty from an established dealer in your area. You can then take your car to the dealer for service. Many new cars come with several years of auto service. If not, sign up for AAA. You might also feel more comfortable with a service like "On Star" where you can communicate with the operator if you have a problem with your vehicle. I know someone who had an accident and the OnStar operator dispatched a tow truck and the police to help. It was very convenient but it costs money. Your own cell phone can accomplish the same thing.

Bottom line is that you understand that a lease and a rental are not the same and the lease is not going to get your out from managing and maintaining your vehicle.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

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dm200
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Except for

Post by dm200 » Sun Jan 06, 2008 9:33 am

certain kinds of business uses, leasing, in my opinion, rarely makes sense for an individual.

You are responsible for insurance, license and the other normal costs of the vehicle. In addition, if you drive fewer miles than allowed, you are paying for miles not driven. If you drive more, then there is a steep penalty. Also, if your needs change before the lease is up, you pay a hefty penalty to get out of it.

Leasing is actually a balloon loan type of financing. Te payments seem low because the loan is amortized over, say, 7 or 8 years, with a lump sum due in, say 3. Additionally, in many jurisdictions, there are taxes on leased vehicles.

I believe leasing is a form of "self deception" where folks thing and believe they are getting a good deal (in the form of lower monthly payments), but over many years they pay more because the car is never paid off and they have eternal lease payments.

dan

FISH
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Post by FISH » Sun Jan 06, 2008 9:56 am

I have leased for years and have no intention of ever owning a vehicle again. If your plan is to always have a relatively new vehicle, then leasing can be a very viable option.
I never enjoyed the hassle of selling my vehicles, so now I just turn them back in.
Even with a 36 month lease, the only thing you will be forced to do is just the routine maintenance. I haven't had to buy tires in years.
I've also liked how leasing doesn't require me to pull large sums of invested capital out of my investments.
It's not for everyone, but it is also not as cut and dried as some of these posts indicate.

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Boris
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Re: Considering Leasing a Car

Post by Boris » Sun Jan 06, 2008 1:00 pm

jayc wrote:Maybe everybody else is ok with having to make decisions about things they really don't know anything about. I'm not. Being in the computer industry, seeing people who have to take their computer to places like GeekSquad makes me cringe.

I don't want to be financially and mentally responsible for something I don't know how to either fix myself or know enough about to judge somebody else's ability to fix it and what the markets rates are.

Perhaps my point of view is colored by experiences my father has had with owning cars. Yes, even Honda's.

Somebody said leasing is a "glorified rental." Well I rent an apartment and I'm pretty happy. I don't have to worry about who cuts the yard or when the pipes burst.
Just as people take their computers to GeekSquad, all you have to do is take your car to a mechanic/shop. You don't have to work on your own car (just get AAA after free roadside assistance is gone). It seems like your mind is made up on the subject and you're just looking for justification to pull the trigger. If you have money to burn and it means nothing to you, then by all means, go lease. Whatever gives you the most utility is fine. You'll get a new car every 12-60 months (typical lease is 24-36 months though), but you'll pay all the maintenance and depreciation costs. Every decision doesn't necessarily have to be based on a better mathematic financial outcome. Sleeping better at night is worth something too.

Just so you know, when you lease the car has to come back in the same shape it left the lot brand new, with only standard wear and tear. You're also limited in how much mileage you can drive per lease period (increasing this amount costs more money). If you're over the amount you'll probably be better off buying the car out because you'll pay so much in penalties. If you damage anything in the interior it's out of your pocket, if you have a scratch on your bumper then it's out of your pocket (insurance may cover it depending on your policy, but then your rates will go up), etc.

There's a lot to consider when leasing a car. Do you know that you drive exactly 10, 12, 15k miles during a year? If you purchase 15k just in case but only drive 7k, you don't get a rebate--you just make more money for the dealer. If you purchase 12k and drive 20k you'll owe many MANY thousands of dollars.

For most who don't have a business, the decision is simple... don't lease. Whatever makes you sleep better at night--just remember it'll all cost you, and it's not cheap.

Boris
Short term moves in the market are like "a tale Told by an idiot, full of sound and fury, Signifying nothing." | - John C. Bogle quoting Shakespeare

blood_donor
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Re: Leasing

Post by blood_donor » Sun Jan 06, 2008 3:43 pm

I respectfully disagree with much of this, and what others have posted in this same vein.

When you lease a car, it does not actually belong to you--it belongs to the finance company, for example, GMAC. It does not belong to the dealer. In fact, you can return your GM lease car to any GM dealer.

When you lease a car, it will be under full warranty, bumper to bumper, so most things that break, unless they are deemed "normal wear" or "abuse" (you trash the clutch, for example, or melt the upholstery) are fixed by the dealer, no questions asked.

However, if you ding the car, have it broken into, burn it up in a fire, etc., you are liable for that, but your exposure is limited by your insurance. All lease contracts require full comprehensive insurance coverage to protect them from losses, so you are basically on the hook for the deductible.

If the car was yours, you would be able to modify it, however, in a lease deal you must return the car in pretty much the same condition as you took it, or face paying for the "repairs". For example, GMAC may not appreciate the flames and huge spoiler you have glued onto your leased Aveo.

Leasing a car is not usually a better deal than buying a late model used one, but if someone just doesn't want the hassle of higher-mileage maintenance (tires, brakes, clutches, batteries, belts, hoses, shocks, etc.) and likes to the latest and greatest technology, leasing is the way to go.

For someone who wants hassle free ownership and the latest technology, plus the chance to customize the vehicle, buying new and selling after a few years (around warranty expiration) is the way to go, but it is expensive and you have to figure out how to sell it when you are done.

Laura wrote:jayc,

If your leased car breaks down you are responsible for getting it fixed. It is not the same as renting a car where you just call the rental company and they get you a new car. The closest I have ever seen to "renting" a car for the long term is with Hertz. They have short-term leases that you can do for 11 months of the year. This is just a long term car rental and it is very expensive.

A lease from a dealer is another form of financing the car. The car is yours and you are responsible for all maintenance on the vehicle. The only difference is that you turn in the car at the end of the lease agreement so you don't need to sell it when you are done. Otherwise, leasing and owning are identical.

Laura

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Boris
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Re: Leasing

Post by Boris » Sun Jan 06, 2008 5:14 pm

blood_donor wrote:I respectfully disagree with much of this, and what others have posted in this same vein.

When you lease a car, it does not actually belong to you--it belongs to the finance company, for example, GMAC. It does not belong to the dealer. In fact, you can return your GM lease car to any GM dealer.

When you lease a car, it will be under full warranty, bumper to bumper, so most things that break, unless they are deemed "normal wear" or "abuse" (you trash the clutch, for example, or melt the upholstery) are fixed by the dealer, no questions asked.

However, if you ding the car, have it broken into, burn it up in a fire, etc., you are liable for that, but your exposure is limited by your insurance. All lease contracts require full comprehensive insurance coverage to protect them from losses, so you are basically on the hook for the deductible.

If the car was yours, you would be able to modify it, however, in a lease deal you must return the car in pretty much the same condition as you took it, or face paying for the "repairs". For example, GMAC may not appreciate the flames and huge spoiler you have glued onto your leased Aveo.

Leasing a car is not usually a better deal than buying a late model used one, but if someone just doesn't want the hassle of higher-mileage maintenance (tires, brakes, clutches, batteries, belts, hoses, shocks, etc.) and likes to the latest and greatest technology, leasing is the way to go.

For someone who wants hassle free ownership and the latest technology, plus the chance to customize the vehicle, buying new and selling after a few years (around warranty expiration) is the way to go, but it is expensive and you have to figure out how to sell it when you are done.

Laura wrote:jayc,

If your leased car breaks down you are responsible for it's maintenance and getting it fixed. It is not the same as renting a car where you just call the rental company and they get you a new car. The closest I have ever seen to "renting" a car for the long term is with Hertz. They have short-term leases that you can do for 11 months of the year. This is just a long term car rental and it is very expensive.

A lease from a dealer is another form of financing the car. The car is yours and you are responsible for all maintenance on the vehicle. The only difference is that you turn in the car at the end of the lease agreement so you don't need to sell it when you are done. Otherwise, leasing and owning are identical.

Laura
blood_donor,

I think what Laura meant is that if anything happens to the car while it's still under warranty you're still responsible for getting it fixed. It doesn't come out of your pocket, but you don't get a "replacement" vehicle like you would from a rental company. You may get a loaner while yours is getting fixed, however. Her point was that whether you lease a car or buy it, the maintenance, repairs, etc. are still your responsibility (even though repairs maybe covered under warranty).

If the OP wants least headaches possible, then after the OEM warranty he can buy an extended warranty from an insurance company. This is effectively the same thing that happens when you buy a "certified pre-used." However, even if the car has a 10-year 100k-mile warranty, he must still maintain it and have records of maintenance, else the insurance (nor even the stock warranty) will apply. This will also be part of the lease contract that all maintenance must be performed and probably by the same dealer (I know with BMW's the maintenance is free for the first 4y/50k miles, but you still have to show up for all the maintenance).

Boris
Short term moves in the market are like "a tale Told by an idiot, full of sound and fury, Signifying nothing." | - John C. Bogle quoting Shakespeare

Laura
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Boris is correct

Post by Laura » Sun Jan 06, 2008 5:34 pm

blood donor,

Boris is correct in describing my intent. I apologize if I was not clear but the OP seems to be concerned about doing anything at all to a vehicle. A lease isn't the same as a car rental in terms of driver responsibility.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

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