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Lease or Buy a car?


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I'm torn between leasing a new car that I would plan to buy out. Or buying a used car that I don't have to worry about mileage on. Mom says buy certified used, it's too costly for me.

 

Brother suggested leasing. Get a new car with modern technology and a low payment. I've done a pros cons for leasing pros won. But reality is I would worry about mileage. My car has 218k on it. I believe 18k of it in the last year. Thoughts, experiences?

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You can buy good used vehicles. Five years ago we bought a really awesome custom F1 50 for about 1/4 of the price used. Never had a day’s problem with it . Just make sure you get a Carfax on it . It’s usually good if it’s only had one owner and maintenance has properly been observed and never been in an accident and get a warranty.

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Okay, people are saying don't lease, I will tell you why.

Lets say you lease a $20000 car for 3 years. You will need to put a down payment on it. Lets say $2000 then you will have low monthly payments lets just say $200/month. At the end of the 3 years, you would of spent $9200 and have $0 equity. So you lease another car for another 3 years with the same numbers ($2000 down $200/month) At the end of 6 years, you would of spent about $18k and you will still have $0 in equity.

Now, lets say you buy a car for $20000, you put $2000 down and you pay the car off in 5 years (to keep monthly payments low). You will have to pay for all the maint yourself so add in another $2k for that for a total of roughly $22,000 at the end of the 5th year, but you could have about $7000 in equity you can use to buy a new car or you can keep it.

 

So for me, I don't want to spend $18000 on a two leases and in the end I would have nothing in my driveway and nothing in equity. Even if you decide to lease for 3 years for $9200, at the end of the lease you have two options. Lease again or buy. And if you want to buy, you just used $9200 you could of used to buy a new car.

 

Cars depreciate the fastest in the first 2 years, by the 4th year the depreciation slows down. So if you cant afford a new car then get a quality used car that is between 2 and 4 years old. Let the owner eat the depreciation.

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If you are self employed and can write off the cost of the lease payments at tax time then it can make sense to lease a new car for 2-3 years. Payments are 100% a write off here in Ontario, Canada. You'd need to know the ins and outs at tax time where you live. If you are not self employed it's probably a better idea to buy a good used car at a price you can afford with monthly payments that wont break your wallet.

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If you have crappy credit and you are totally carless or can only afford something 20 years old = i see benefit in leasing a car - a cheap car with a great warranty that you don't have to shell out a lot of money to fix - a compact entry level car - to be able to be on the road and be able to keep your job. and then hopefully in the 3 years you lease it you will be better off and can buy something - a 3-5 year old car mostly cash or something. I had to do that once. All i looked at is i could well afford the monthly payment and by the time the lease was up i had better credit, more cash, etc, and was able to buy a car. I bought a used car outright cash.

 

For most people, a lease is not a good thing -- but if your life will be ruined (you will lose everything) if your car breaks down and you can't get to work, its a consideration.

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OK, I work as a digital marketer for the automotive industry (and have for years) - AND I lease.

 

The reason is simple - I enjoy having a brand new car every three years, especially with a little one to think of. I never come close to the yearly mileage allotment, and my car is never out of warranty. I have excellent credit and no debt, so I could buy if I wanted to - I don't.

 

Some of the info above is inaccurate. You absolutely do not have to do maintenance on their schedule (but keeping your vehicle healthy is important, regardless), and there are not hidden fees. You can actually accrue equity in a lease in the sense that it can be put toward your next lease or financing if you purchase your lease. Yes, the dealers come out ahead in the big picture - but I can tell you that peace of mind about having a new, working, in-warranty car is worth it for me. I have a toddler, and never want to be without a working car. (My husband buys his, FTR.)

 

Jetta, in your case, assuming you don't have good credit, I'd get a cheap used car.

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My mom on her lease car they made her buy 4 new tires before they would sell it to her and fix this and do that and pay the extra mileage. Before she could “ buy “ the car she had been driving they had to fork over almost $5000 BEFORE they could buy it.

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OK, I work as a digital marketer for the automotive industry (and have for years) - AND I lease.

 

The reason is simple - I enjoy having a brand new car every three years, especially with a little one to think of. I never come close to the yearly mileage allotment, and my car is never out of warranty. I have excellent credit and no debt, so I could buy if I wanted to - I don't.

 

Some of the info above is inaccurate. You absolutely do not have to do maintenance on their schedule (but keeping your vehicle healthy is important, regardless), and there are not hidden fees. You can actually accrue equity in a lease in the sense that it can be put toward your next lease or financing if you purchase your lease. Yes, the dealers come out ahead in the big picture - but I can tell you that peace of mind about having a new, working, in-warranty car is worth it for me. I have a toddler, and never want to be without a working car. (My husband buys his, FTR.)

 

Jetta, in your case, assuming you don't have good credit, I'd get a cheap used car.

 

This is the biggest reason I hear about, even from car salespeople, about why leasing is a good idea. And if safety features are important to you, then getting the most state-of-the-art in airbag, collision avoidance or camera technology could make leasing worth it, for peace of mind, if nothing else.

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This is something I take an epidemiological approach to. Speaking to the general population, it can be problematic pitching leasing as a long-term strategy. To someone I trusted to be diligent enough to responsibly lease? I'd definitely tell them it's worth the consideration. I'm tagging along with my wife as she car shops for her commuter now that we're relocating, and there was actually a pretty amazing leasing opportunity. But considering she'll be commuting a decent distance, we'd be breaching terms within a year. If she were to both live and work in the city, it'd be a strong consideration.

 

Conventionally, it's almost always been a better deal between buying a reliable used car vs. leasing vs. buying new (in my own order of most-to-least value). It's my personal belief that we're coming up on a new golden age of automotive technology where you could make a stronger argument for leasing new vehicles one after the other, but if you can find a respectable used car, I still think it's by and large the best case for most people. In your situation, it sounds like you simply can't afford a reliable used car, so I'm gonna go against the grain and say leasing may not be your worst bet. I don't know the intimate details of your finances, but if you're in a living situation where you'd essentially be out a job if rolling the dice on a beater with a heater didn't go your way, and supposing you're being paid well enough to save money after your payments to afford a certified-used car once the lease is up, leasing really may not be all the irresponsible.

 

Speaking more generally and of course setting aside extending yourself beyond your financial means, I think the worst you can do is buy a car, especially a new one, and treat it as an investment, which is 90% of the reason leasing gets such a bad rap. Assuming you're not someone who refurbs vehicles to turn them around, you're quite simply not ever going to get any positive return on it. Check your pride and emotions at the gate. It is going to cost you, and the very best you can do is limit that cost. I personally have no desire to own a vehicle more than five years, especially with any decent mileage on it. There's no reason to let it depreciate in resalable value simply for the benefit of paying more to maintain it. And whether you'd get a better deal selling a car you'd originally bought new but used enough not to pay an extra ten grand on the new-car smell or simply going from one lease to another is dependent on how good a deal you could negotiate for either one at the time.

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Bottom line is if you don't live near a bus line and need your vehicle to function in order to keep your job, you need to be thinking about your immediate needs. If it's between a $2400 used car gamble and crossing your fingers the head gasket doesn't blow or $200 a month on leasing a new, reliable, and covered vehicle for two years, it's pretty much a no-brainer. Take the money you're able to save monthly and either put it to relocating somewhere that leaves you less vehicle dependent or being able to afford payments on a much more reliable used vehicle than you could previously afford.

 

One big thing: Leasing to own is almost always a God awful idea. Leasing is cheaper because you're paying for the depreciation rather than on a loan for its entire value. Buying it afterward on a very fundamental level goes entirely against that benefit.

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Bottom line is if you don't live near a bus line and need your vehicle to function in order to keep your job, you need to be thinking about your immediate needs. If it's between a $2400 used car gamble and crossing your fingers the head gasket doesn't blow or $200 a month on leasing a new, reliable, and covered vehicle for two years, it's pretty much a no-brainer. Take the money you're able to save monthly and either put it to relocating somewhere that leaves you less vehicle dependent or being able to afford payments on a much more reliable used vehicle than you could previously afford.

 

One big thing: Leasing to own is almost always a God awful idea. Leasing is cheaper because you're paying for the depreciation rather than on a loan for its entire value. Buying it afterward on a very fundamental level goes entirely against that benefit.

 

In her case in subsidized housing and how car repair took every penny she had ad more, i agree in her case.

But its moot if she doesn't qualify. But she needs a down payment and that could be the issue either way.

 

If she has $2000 and there is actually a reliable used car out there for that and she can afford to fix it, that's another thing

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A good question to ask. Cars are like filling water into a bucket that has a hole in it. Always a losing battle...the key is to try to lose as little as possible.

 

Firstly: The only time leasing makes financial sense is when you can write it off as a business expense.

 

Secondly: I've learned from many others (and I have followed the same formula for all three of my cars) that the secret is to buy a good quality car 3-5 years old with 40-80,000 miles on it. (such as a small car like a Civic or Corolla- $15,000 or compact SUV for $20,000) Drive it for 7-12 years or until it dies. (*the key is to save for new one during this period once it's paid off.)

Then repeat for the next car. Since you've been saving for car #2 while driving car #1. You can pay cash for your next car! Not paying interest or taking out a loan is a contagious feeling!

 

-Least amount of money lost on depreciation

-less money wasted on sales tax (since purchase price is several thousands less)

 

Good luck!

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So, let's say $200 a month for car lease. Registering the car (depends on where you live), $75-$250 (of course, this is only a one-time fee). Comprehensive auto insurance (again, depends on where you live, your driving record and what kind of car it is), $75-$150 per month.

 

Estimating on the low side, this would add $275 to your monthly expenses. Is this something you can comfortably afford?

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