Leasing vs. Owning

**Don GM** · 12-11-2007, 12:33 AM

I`ve seen this subject introduced on some other boards. How do you guys feel about this? Pros and Cons? I`ve searched, and am surprised it hasn`t been brought up yet.

**imported_DieselMDX** · 12-11-2007, 01:35 AM

I lease and love it, but I know I am not going to keep the truck so it works for me.

The big thing with leasing is mileage if u drive alot leasing is not a good idea

**BobD** · 12-11-2007, 07:57 AM

I was always against leasing but we have two leased vehicles now. I have a 2 year lease on my F-150 and my wife has a 4 year on a Subaru Impreza. Both where excellent deals that got our payments super low. However, after my lease is up I will probably go to something used to keep insurance down. I drive 2 miles to work so I really don`t need a brand new car for that. BUT, if the dealer can talk me into another lease with incentives like returning lease and stuff and make it worth it for me I would lease again. I do like having a new vehicle every 2 years.

**imported_Detailing Technology** · 12-11-2007, 07:58 AM

Go on a vehicle by vehicle basis.

I lease and buy.

TO BUY:

If the car is a solid performer, has a tremendously high resale, and you properly, not overly equip the right color combonation, its money in the bank.

3 series BMW

5 series BMW

Ford F-150 pick-up

Honda Civic

Mercedes E, S, and SL class

Mini Cooper

All Exotics

Miata

Corvette

TO LEASE:

Wait for a factory deal to show up on TV like the 2008 328i 4dr for $359 per month that is advertized now. How can you beat a C&D Top 10 $38,000 car with all included serivce for the monthly payment of a Hyundai?

I just got a Grand Cherokee Limited with a $39,000 sticker for $353.00 per month for 27 months, factory lease deal. The banks are giving these cars away. They eventually will flood the used car market dropping the resale. All except the 3 series, which has defied the car market on a regular basis for the past 15 years.

3 series BMW

7 series BMW

Jeep Grand Cherokee

Ford Explorer

SAAB 9-3

Infiniti G35x

In the past 12 months, I sold 3 leased cars through www.leaseswap.com.

**imported_Detailing Technology** · 12-11-2007, 08:07 AM

Originally Posted by Danase

I was always against leasing but we have two leased vehicles now. I have a 2 year lease on my F-150 and my wife has a 4 year on a Subaru Impreza. Both where excellent deals that got our payments super low. However, after my lease is up I will probably go to something used to keep insurance down. I drive 2 miles to work so I really don`t need a brand new car for that. BUT, if the dealer can talk me into another lease with incentives like returning lease and stuff and make it worth it for me I would lease again. I do like having a new vehicle every 2 years.

Bob - KEY POINT***

50% of leases can be exited early and replaced with a current model year car for the same or a lower payment. With 6 months to go, the bank will start calling you to get a new car and get out of your old lease. Like clockwork I have never kept a lease all the way through the contract completion date.

Plus you dont have to worry about service, repairs, depreciation, and accidents.

In August I have a lease coming due, I know I will buy a car to replace it because I am going semi-exotic. My wifes commute has changed from a 10 hour park in a train station parking lot to a 2 mile drive to a boat yard where she can take 3 parking spaces under cover. My current car lease is over in about 24 months, I`ll lease again unless something life changing occurs.

**BobD** · 12-11-2007, 08:44 AM

Thanks! That would be great to trade up early!

**Darren F** · 12-11-2007, 10:13 AM

If you are the kind of person who will keep a car for 5 years or longer, and/or you drive more than 15,000 mile a year it is more beneficial to purchase a car. If you are the kind of person who prefers to get a new car every 2-3 years than it is more beneficial to lease...Remember that a car depreciates the most in the first few years that you have it...When you lease the car the bank is the one eating the depreciation not you...

**the other pc** · 12-11-2007, 11:57 AM

Originally Posted by Darren F

...When you lease the car the bank is the one eating the depreciation not you...

ThatÃ¢â‚¬â„¢s not true. One way or another, the end customer always ends up paying. ItÃ¢â‚¬â„¢s how the system works. Otherwise, they wouldnÃ¢â‚¬â„¢t be in business.

The very definition of leasing is that you pay money to use the car and give it back after some time. That money covers the depreciation, overhead costs, loan interest and profit (for both the dealer and the bank) and then they turn around and sell it at the depreciated price after you give it back.

It comes down to a personal choice. You can choose to pay for the benefits of leasing, an always new car, minimal to no service, fixed/predictable monthly cost or you can choose to own. You decide which route meets your needs and best and gives you value for your money.

Me, I have four cars and a total monthly payment of zero, zip, zilch, nada. ThatÃ¢â‚¬â„¢s a good feeling.

I don`t have the newest cars on the block. I do have to pay for maintenance out of pocket. Some of those bills can be steep but I can sometimes go for months paying less for maintenance on fours cars than for a single payment (loan or lease) on a new one.

PC.

**imported_Detailing Technology** · 12-11-2007, 12:08 PM

Correct, that could not be further from the truth. You, the buyer, are paying only the depreciation. Hence the term RESIDUAL VALUE. The bank is making INSANE interest on you every month, not to mentinon ridiculous Bank Fee`s and Lease Termination Fees.

Google a lease calculator to see the formula which breaks down the Interest+Principal. you would be amazed.

**Darren F** · 12-11-2007, 12:59 PM

when you buy a car unless you pay for it in cash you are making monthly payments, so in essence the bank owns the car and you are making payments that include higher interest rates than if you were to lease a car..So you are paying interest on something that is depreciating....and every month you do that you are losing money...If you lease a car the lease payment is based on 2 things, 1- money factor, which includes interest and partial depreciation, and 2- residual value, which is what the bank has determined the car to be worth at the end of the lease. Take a currnet example of a lease that is currenly running at Mercedes Benz on a new C Class....MSRP $35265...Lease payment for 39 months is $399 with 5k down at the lease start....Over the 39 months you are paying $20,561.. if you want to buy the car after the lease ends you will pay 21,865 so the car will cost you a total of $42,426 for the car....If you were to purchase the same car and finance it for 60 months @ 7.9 % your monthly payment with the same 5k down would be $706...So this way you would pay $47,360 for the same car....Plus you dont know what the car would be worth at the end of the 60 months....Do the math

**imported_Detailing Technology** · 12-11-2007, 01:13 PM

Is 7.9% competitive on new car finances over 60 months now?

The last car I bought I got 1.9% financing on $50,000 over 36 months. Good thing Bernake is dropping the overnight rate at 2:15pm today.....

**Bert** · 12-11-2007, 01:24 PM

Originally Posted by jsatek

Is 7.9% competitive on new car finances over 60 months now?

Someone with bad credit could probably get a better rate than that. Someone with good credit should be able to the prime rate plus a percent or so.

Generally you are better off buying the car and financing with a credit union than leasing. Leasing companies due very well with the interest figured into the lease.

**imported_Detailing Technology** · 12-11-2007, 01:27 PM

Multiply the money factor by 2400 to get the interest rate.

.00331=7.94%

**Bert** · 12-11-2007, 01:29 PM

Originally Posted by Darren F

when you buy a car unless you pay for it in cash you are making monthly payments, so in essence the bank owns the car and you are making payments that include higher interest rates than if you were to lease a car..So you are paying interest on something that is depreciating....and every month you do that you are losing money...If you lease a car the lease payment is based on 2 things, 1- money factor, which includes interest and partial depreciation, and 2- residual value, which is what the bank has determined the car to be worth at the end of the lease. Take a currnet example of a lease that is currenly running at Mercedes Benz on a new C Class....MSRP $35265...Lease payment for 39 months is $399 with 5k down at the lease start....Over the 39 months you are paying $20,561.. if you want to buy the car after the lease ends you will pay 21,865 so the car will cost you a total of $42,426 for the car....If you were to purchase the same car and finance it for 60 months @ 7.9 % your monthly payment with the same 5k down would be $706...So this way you would pay $47,360 for the same car....Plus you dont know what the car would be worth at the end of the 60 months....Do the math

You forgot to calculate the interest on the monthly payments on the $21,865 to buy the car after the 39 month lease. If you would like, I can do the math to figure out what the monthly payments would be to purchase the car after the lease. To be consistent, I would stick with your 7.9% interest rate (which I believe someone with decent credit would be insane to agree to) and extend the payment over 21 months so the total months equals 60 to make the two examples comparable.

**Bert** · 12-11-2007, 01:30 PM

Originally Posted by jsatek

Multiply the money factor by 2400 to get the interest rate.

.00331=7.94%

Hence my quote that leasing companies make a ton off of you in interest.

That is why I always buy cars that are 3-5 years old and pay cash. With all that I have learned about detailing, I can make a 3-5 year old car look as good as it did off the lot (assuming it has no dents or bad scratches).