okumasheffield Posted February 12, 2012 Report Posted February 12, 2012 (edited) went to dealerships with a friend who wants to get a new car and it seems leasing is a much better choice to go for especially when leasing rate is only 1% more than that of financing (according to salesmen) Hard to believe it and wonder what the catch is, anyone? money aside, it seems 24000km/yr limit is a NO-NO to any fisherman, what do you think? Edited February 12, 2012 by Okuma-Sheffield
John Bacon Posted February 12, 2012 Report Posted February 12, 2012 Does he plan to keeps his vehicle past the term of the lease? If so, I think he find that leaseing for years or so and then buying the vehicle in the end will costing more than purchasing up front. Likewise, trying to get out of the lease early can also be painful. In wife's case; the cost of getting out of a lease was $500 more than making all of the remaining payments plus the buy out price at the end of the lease. There are some advantages to leasing. You will get lower payments. Assuming that you return the car in good condition you are not responsible if the re-sale value takes a beating... like after 2008. I don't think that will be much of a factor now. Returning a vehicle that needs work can also be expensive. Your payments will be a little higher if you finance. But after the loan is paid it is your vehicle. You can drive if for anther five years without making payments. If you buy a new vehicle you can get something for a trade-in. If you have a minor fender bender you can choose whether or not you want to fix it.
crappieperchhunter Posted February 12, 2012 Report Posted February 12, 2012 We leased a Hyundi Accent a few years ago. Monthly payment was $205/month with no money down....4 year lease...20,000Km a year limit. It was an in town wife drive to work car. So we ended up paying about 10 grand for a 4 year lease on a car that would have costed 16 and change to buy outright.The main reason we went for a lease was I didn't want to buy the car outright...I was a little worried about the reliability of the hyundi's. We came in under the 80,000 Km when we returned the car so we had no penalty there. But the penalties can be a killer if you go over so make sure your buddy has a good idea what that will be if he thinks he will go over. I think leasing is a rip off and would never do it again. However from our experience we found out the Accent was 100% a great little car for my wife to drive around town in... with the occasional long hauls up to Sudbury to visit family...so we ended up buying one when the lease ran out. So in our case it ended up being a good choice at the time.
boombap Posted February 12, 2012 Report Posted February 12, 2012 Depending on your income, leasing can be a good or bad idea. I personally would never lease a car. If I were well above my middle class status then yes, I would be driving a new Porsche every year.
davey buoy Posted February 12, 2012 Report Posted February 12, 2012 (edited) The advantage to leasing in your own business is you can right off up to 100% of the vehicle if used for work.On the other hand if you bought that same vehicle you can right off up to 100% only on a 3 year plan as I understand.The full payment of the vehicle would be divided by 36 payments.Given the monthly payments buying the vehicle gives you very high monthly payments as compared to leasing,which some small businesses can not afford. If your a consumer and just want a new car every 3 or 4 years,leasing is not a bad option. If your a die hard traveler,leasing is a no go.The mileage will kill you. Edited February 12, 2012 by davey buoy
Billy Bob Posted February 12, 2012 Report Posted February 12, 2012 For the average Joe, leasing is not good....when you lease you are actually leasing the depreciation value of the vehicle....so the best lease you can get, but rarely offered anymore is a 24 month lease....the dealer ALWAYS comes out ahead on a lease....so where does that leave you...
okumasheffield Posted February 13, 2012 Author Report Posted February 13, 2012 Thanks for all inputs. What is the catch in plain English?
northernpike56 Posted February 13, 2012 Report Posted February 13, 2012 cash if at all possible. I can't stand to finance a depreciating asset, even if that means not buying a new maserati every 2 years. but if cash isnt an option, i would say financing would be your best choice.
DRIFTER_016 Posted February 13, 2012 Report Posted February 13, 2012 Thanks for all inputs. What is the catch in plain English? The catch is: Leasing: You are renting the vehicle for the term of the lease after which you can purchase it for a fee or return it and you have nothing to show for your hard earned money. Financing: You are purchasing the vehicle and at the end of the financing term you own the vehicle. You have something to show for all the $$$$ you have paid out.
Fisherman Posted February 13, 2012 Report Posted February 13, 2012 The catch is: Leasing: You are renting the vehicle for the term of the lease after which you can purchase it for a fee or return it and you have nothing to show for your hard earned money. Financing: You are purchasing the vehicle and at the end of the financing term you own the vehicle. You have something to show for all the $$$$ you have paid out. Amen, that's about as plain and true as you can get.
okumasheffield Posted February 13, 2012 Author Report Posted February 13, 2012 (edited) The catch is: Leasing: You are renting the vehicle for the term of the lease after which you can purchase it for a fee or return it and you have nothing to show for your hard earned money. Financing: You are purchasing the vehicle and at the end of the financing term you own the vehicle. You have something to show for all the $$$$ you have paid out. technically speak, as long as the cost of leasing is close to that of financing, you have a choice of returning it OR buying it off. I remember leasing rate was 5~6% higher back in the days sounds like a good deal to him ... I am still not convinced though .. Edited February 13, 2012 by Okuma-Sheffield
Spouph Posted February 13, 2012 Report Posted February 13, 2012 went to dealerships with a friend who wants to get a new car and it seems leasing is a much better choice to go for especially when leasing rate is only 1% more than that of financing (according to salesmen) Hard to believe it and wonder what the catch is, anyone? money aside, it seems 24000km/yr limit is a NO-NO to any fisherman, what do you think? What I have done and what works for me is I set an amount I want to spend per year. My limit is around 2000. So saying that I spent 20,000 on a 2011 jeep liberty. So my bottom line is drive it for 10 years and throw it away or drive it for 5 and hope to sell it for 10, 000 in five. So I look at the trader to simular vehicles and simular years to see if this theory work. Some vehicles it does like pick up and jeeps and pretty much anthing 4 wheel drive. I had my dodge caravan for 8ears and paid 8 grand. so 1000 a year, I had a 4x4 pick up paid 14,000 drove it for 5 years sold it for 8000. just over 1000 dollars a year. Now look at how much you will be annually spending on simular type of vehicle. A lease generally add up to around 4000 plus a year for a 20000 vehicle. The vehicles I buy still have waranty. There was only one vehicle where a lease was more practicle was a cheap pontiac sunfire, paid 14 for it 1 year old, sold it 3 years later for 4300. To a family member so they got a bit of a deal. But crappy cars that have no resale value that are for short term use like the sunfire was, would have been cheaper to lease for us, hind sight is always 20 20. Hope this helped.
okumasheffield Posted February 13, 2012 Author Report Posted February 13, 2012 What I have done and what works for me is I set an amount I want to spend per year. My limit is around 2000. So saying that I spent 20,000 on a 2011 jeep liberty. So my bottom line is drive it for 10 years and throw it away or drive it for 5 and hope to sell it for 10, 000 in five. So I look at the trader to simular vehicles and simular years to see if this theory work. Some vehicles it does like pick up and jeeps and pretty much anthing 4 wheel drive. I had my dodge caravan for 8ears and paid 8 grand. so 1000 a year, I had a 4x4 pick up paid 14,000 drove it for 5 years sold it for 8000. just over 1000 dollars a year. Now look at how much you will be annually spending on simular type of vehicle. A lease generally add up to around 4000 plus a year for a 20000 vehicle. The vehicles I buy still have waranty. There was only one vehicle where a lease was more practicle was a cheap pontiac sunfire, paid 14 for it 1 year old, sold it 3 years later for 4300. To a family member so they got a bit of a deal. But crappy cars that have no resale value that are for short term use like the sunfire was, would have been cheaper to lease for us, hind sight is always 20 20. Hope this helped. Only in this case he was looking for a Toyota, in which, we all know has higher resale values
irishfield Posted February 13, 2012 Report Posted February 13, 2012 If he's not running a business that is doing the leasing at a 100% expense.. then leasing a vehicle is absolute nonsense. Now if he's running a business that's another story. In the good days the residuals where low enough that you leased thru the company and then bought the lease out at terms end personally (they don't care who) and then you sell the vehicle and make some money. With todays 45% residual values.. I wouldn't even consider a lease unless it's the only way you can afford to get some reliable transportation.
GYPSY400 Posted February 13, 2012 Report Posted February 13, 2012 I agree with former posts that leasing, unless for business purposes is a bad idea.. Actually buying brand new isn't the best idea either as it depreciates massively as soon as you drive it off the lot.. The best bang for your buck is to buy something one or two years old with say 20-30000 km on it for probably $10,000 less than brand new. Unless you simply must have a vehicle with 000000.1km on it when you drive it away.
Garnet Posted February 13, 2012 Report Posted February 13, 2012 The salesman wants you to lease, the dealership wants you to lease, the car company wants you to lease??????? With a reasonable down payment and 48 month or less payment plan the car will always be worth more than your loan.
bigbuck Posted February 13, 2012 Report Posted February 13, 2012 ONLY LEASE if you can write off the expense. It's a game that the car companies are playing with consumers these days, get a car you can't afford to buy, but can afford the lease payments and get a new one every 3-4 years. They have you for life that way. I can write cars off and what I do is buy a 2-3 year old car with less than 60 000kms and depreciate it over a few years. I drive them till the tires fall off. A car is a car is a car. Don't spend a lot unless you can afford it. Here is a free piece of financial planning advice, take your gross annual income and divide by 3, that's the maximum you should spend on a car. More than that, you are living beyond your means.
torco Posted February 13, 2012 Report Posted February 13, 2012 ONLY LEASE if you can write off the expense. It's a game that the car companies are playing with consumers these days, get a car you can't afford to buy, but can afford the lease payments and get a new one every 3-4 years. They have you for life that way. I can write cars off and what I do is buy a 2-3 year old car with less than 60 000kms and depreciate it over a few years. I drive them till the tires fall off. A car is a car is a car. Don't spend a lot unless you can afford it. Here is a free piece of financial planning advice, take your gross annual income and divide by 3, that's the maximum you should spend on a car. More than that, you are living beyond your means. Never hear about that calculation before, I'd agree its probably sage advice but my guess is most people are spending far more than 33% of their gross income on a car. Over course most are financing over 5+ years. As for leasing, I did it briefly after graduating and starting my first job. I needed a reliable set of wheels to get to work and did not have a substantial amount of cash in the bank. With bank loans running over 5% I looked at new cars, with my only real expenses being rent and student loan payments I figured out I could afford around $280 per month for car expenses (insurance not included). At the time I was able to lease a nissan at around 1.5% or buy at 2.5% if I remember correctly. So I leased, it worked out well as I was well under the kilometers and even oil changes were included for free as part of a promotion and that vehicle never cost me any extra. When I became we (married) we went down to 1 car for a period and were able to transfer the lease before the term was up at no cost as the low kms made it attractive. Would I lease again? Probably not, would prefer to buy used and in cash but depending on one's situation and the interest rates involved a lease could be a viable option and is definitely worth exploring.
craigdritchie Posted February 13, 2012 Report Posted February 13, 2012 The catch is: Leasing: You are renting the vehicle for the term of the lease after which you can purchase it for a fee or return it and you have nothing to show for your hard earned money. Financing: You are purchasing the vehicle and at the end of the financing term you own the vehicle. You have something to show for all the $$$$ you have paid out. Bingo! That's about as plain & simple as it gets. I'd buy used and be done with it. For someone who wants the best bang for the dollar, that's definitely the way to go. You can pick up a two or three year old lease return vehicle for much less than what it costs new, and usually with a good chunk of warranty remaining. Let someone else pay the depreciation! Only in this case he was looking for a Toyota, in which, we all know has higher resale values Not any more! Those recalls have hurt Toyota's resale values in a big way. Flip through an Auto Trader and see for yourself. The salesman wants you to lease, the dealership wants you to lease, the car company wants you to lease??????? That should set off alarm bells right there, shouldn't it? As others have noted, leasing is fine IF you can write it off as a business expense. Otherwise, you're paying a lot of money to get little in return. If you want a new vehicle, buy it outright. If you want a lower monthly payment, get a used vehicle. If you want to get sucked into a cycle of making payments forever and never having anything to show for it, then by all means, lease. The dealer will love you for it.
pikehunter Posted February 14, 2012 Report Posted February 14, 2012 If it can be a tax write off then lease, that's about the only way it's sensible. Even my accountant advised me years ago to buy and not lease, but I did lease twice. The second time was in 1997 for a 4 year term on a new Aerostar and because of my unusual situation at that time it more than paid for itself. And to top that off I let them talk me into a disabillity insurance policy. And that actually paid off too! I went on compensation for an extended period, about six years, so after about a year and a half of payments I never had to make another lease payment again and even though the buy out wasn't a great deal I bought it out cash in hand. Reason I bought it was I knew the van's history and that made the buyout worthwhile. Buy it, or even better pick up a slightly used one. Stay away from leasing...don't be their slave every few years. Remember even though you don't own it you still have to do maintenance and repairs including new tires, exhaust etc.
super dave Posted February 15, 2012 Report Posted February 15, 2012 I agree with Bill and Craig. Go used. You can find some great deals on craigslist and kijiji. just gotta act fast! I just picked up a 2009 highlander with 50000 kms on it for a great price.
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