But don't take my word for it, not leasing a car made CNNMoney.com's 25 Rules to Grow Rich by. It backs up what I've said many times, leasing looks good on paper but in reality most people get burned. The rule before this one basically says buy used and keep the car until you run it into the ground which also speaks to not going the leasing route. http://money.cnn.com/popups/2006/mon..._rules/21.html

 

I have a daily driver thats paid off and I will drive it to the ground (then throw a new engine in and drive it some more) but I want something new thats under warranty as a second "family" car. Even when I financed I never made out on a trade in so to me leasing is better b/c I dont have to go thru the hassle to try and sell the car or get raped on a trade. Unless you keep a car for 5+ years financing isnt a great option for me, I will probably will reach a point when I'll keep my cars longer but at 28 I like having a new car every few years...why not I have a good paying job and dont want kids. I read that whole top 25 list though and I'm doing most of what they recommend it was a good read

 

Leasing is bad if you don't know what you're doing. All the above mentioned has been in place since the "lease" was created. The problem with leasing is that not a lot of people are educated with the process. Ask yourself are you still purchasing a car instead of leasing? Are you still renting instead of owning? The same magazine said you lease what depreciates in value and buy what appreciates in value. If you are like me who likes to change cars every 3-4 years leasing is the only way to go. I found out long time ago that buying cars outright is a waste of money. I find myself getting a new one every so often and I end up losing more than if I lease the car. Another good tip about leasing is that don't lease for more than 3-4 yrs anything longer you will loose out. The same with financing a car common practice right now with dealerships is that they tend to put you in a longer payment term. With rising car prices people which cannot afford to make the monthly are being suckered into longer payment terms. I know someone who finance a 38K car for 7 years, is it practical then? NO! You have to weigh your finances and see what you can afford don't buy something that is beyond your means. Don't buy a 40K car if you're earning less than 2500/month that is moronic. Buy a 18K where the monthly is more manageble. Lease is a wonderful alternative you just have to know what your doing. Ask the dealer all the question you have in your head about the lease. Get educated the first time around and don't go by hear say from other uneducated fools who think they know everything there is to know about leasing. I.E. What happens at the end of the lease? Am I going to get tagged if I go over my milage after my 3-4 yr lease? Can I modify (change the radio put after market wheels, etc) a leased car? When can I trade my car in during the leasing period? These are simple questions that can be answered by dealers who will give you an honest answer. One reason is they will benefit from the sale should they convince you to lease. I see more pluses than minuses in leasing as oppose to financing. I know so many people who continue to finance their cars only to see them get rid of the car before the 5 yrs was even up. You tell me is this practical? NO! A car that was finance for 5 yrs then was traded in after 4 yrs is the same as leasing a car for 4 yrs and getting a new at or before the end of the term. Remember regardless of over mileage at the end of the lease a dealer should NOT charge you for it if you are buying a new car from them. You only pay over mileage if you surrender the car to the bank at the end of your lease term. Not a lot of people know this fact that's why they shy away from lease. If a dealer tells you that they need to charge you over mileage on a new car that you are buying from them WALKOUT! They have taken so many people with this kind of gimmick that they do it everyday and laugh as they take your the money to the bank. The last car I ever purchase was my 99 Accord it's been payed off for more than 2 yrs now. The only reason I purchase this car instead of lease is because I know I can afford to get it fix if it ever breaks down. 145k miles and still going strong not even an oil leak. Try doing that on an Infiniti maintenance and upkeep will kill you later on should it break down. Ask what is cost to have a 90K miles service done at a dealer. You might be surprise at what they tell you. Again leasing and financing has it's pluses and minuses in my case leasing is great. Be smart and get educated with leasing don't second guess or go by what clueless people tell you.

 

semi-agreed.... but leasing can also be good.

In September, I signed up for a 1 year lease. The selling price (invoice) was great, and I have the option to buy the residualized value of the car when I am done. If you consider that I am paying 0.01% APR (.00004 MF), when I buy the car next year, I will be paying less money and less interest on the same car. Overall, I will be paying over a thousand dollars less this way for the same car....

granted, these type of lease rates (80% residual, .00004 MF) are not easy to come by...

 

Why do you need something under warranty? I'm not knocking wanting something newer, which pretty much implies some warranty, but wanting a warranty has always been odd to me. I'll take my chances and pay the repair bill if it happens. Maybe I'll be unlucky, but chances are that I'll win based on the odds. For example, most extended warranties on cars have a 40% hold back. That is on aveage, if the warranty costs $1000, you'll only use $400 of it in actual repairs. I just bought a SUV for $26K that doesn't have any warranty left on it. If the trans goes and I have to pay $3K to fix it so be it. Better than getting one a year newer and paying $34K for it or a new one and paying $60K.

Your correct, trade in value is pretty bad. I think the better way to go is sell your car privately through a broker lot. Still more hassle, but better than the hassle of being stuck in a lease you don't want.

I don't get the 5 year bit. The single biggest advantage of buying Vs. leasing is that you can sell at any time. Sure selling a car is more hassle than turning a lease in on time, but it is much less hassle than trying to get out of a lease or keeping the car after the lease without losing your shirt.

 

For the purpose of this discussion, lets just all agree that we're comparing the lease Vs buying option with the understanding that they know what they're a smart consumer. I'm not positioning my leasing is bad argument based on some joe six pack consumer. When I'm aruging my point I'm picturing a banker who dots all his i's and reads all the fine print. Even for this type of super aware consumer, leasing is a bad deal.

But they then go on to qualify that cars are special cases and to only lease if you know for sure you're only going to keep the car for 3 years. Car leases are much more restrictive than any other type of lease that I know of.

I'll agree that if you lease a car for 3 years and you're happy to be rid of it after the 3 year period, but not before the 3 year is up, it's a good deal. However, if you're counting the days until the lease if up or if you wish you could have kept the car at the end of the lease then it's a bad one.

The best case lease situation comes out exactly the same from a money stand point as purchasing. Any deviation from the best case lease situation and purchasing is much much better.

How do you accomplish this? Have you looked at what the street price of a 3 year old G35 is? The residual would have to be 85% for you to come out worse off and the G has the best residual in the industry. It's even harder to come out worse off by purchasing on any other car.

[QUOTE=glennp_1999]Another good tip about leasing is that don't lease for more than 3-4 yrs anything longer you will loose out. The same with financing a car common practice right now with dealerships is that they tend to put you in a longer payment term. With rising car prices people which cannot afford to make the monthly are being suckered into longer payment terms. I know someone who finance a 38K car for 7 years, is it practical then? NO![QUOTE]

I agree, 3-4 years is the only type of lease that makes any sense and even then you have to follow the rules of your lease to the letter or it isn't a good deal.

I don't agree that this also applies to purchasing a car. You can buy the car one day and sell it the next. Sure you'll lose money, but less than you would have with a lease.

This is a bit off topic for the discussion, but what the heck. If you're making 2500K/month which is 30K/year, at the most you shouldn't own more than 10K worth of cars. Can you do it? Sure, but your not going to get ahead in life if you have that much money tied up in a depreciating asset. Leasing doesn't change this ratio at all, it's all the same or if anything, a bit worse since you KNOW your going to basically maintain that ratio of income to depreciating assets since your forced to lease again in 3-4 years. Someone who purchases a car can decide to hold onto a car to reduce their ratio.

Getting a new car before the end of the term results in you being charged for breaking the lease. Sure the dealer will "say" they're waving the charges, but they're really just making it back on sale price/leasing fees of the new car.

Leasing forces you to do things you wouldn't normally do like watching your mileage and keeping a car exactly the number of months that's on your lease. Leasing also forces you to try to predict the future since your locked into the agreement for 3-4 years.

Also consider that a car salesman earns more money for leasing a 34K car than selling a 34K car. Where does that money come from?

 

Most of your arguments are weak you really need to learn a lot more about leasing. Like I said you don't have to watch your mileage even in a lease. You fall into this state of mind that you are limited to do things on a lease. When you surrender your car at end of the lease and you're over the mileage then you're screwed. If you buy another car before the end of the lease (which is what most people do) then you are fine dealerships should not charge you extra for the mileage if they do then you're a sucker. You have to know the game to play the game. Regardless if you finance or lease the condition of the car at the time of the trade will determine it's value. Who told you that if you trade your car in before the lease is up is considered breaking the lease? If you bought a car today and traded the car the next day the car will devaluate all the same. At this point it doesn't matter if you finance or lease the car you loose out regardless. Remember you can get a lower payment on a lease even if you don't have a downpayment. Which is almost impossible to do on a purchase. Most banks won't finance used cars 100% so you still have to come up with the difference. There are some used cars that you can still lease and still drive off without paying a single cent at time of inception. You said that if a car breaks down and it's out of warranty you don't mind forking out the 3k for a new tranny. So let me ask you how much money did you save now? You are wrong to think that a G35 has the best lease value (Money Factor) in the industry. It doesn't, the Honda Accord and the Toyota Camry will give you the best MF in the industry. This was true then and it is true now. These 2 cars are the only cars even if they come out with new styling for the year model to get a better than usual MF from any bank that offers lease.

You have to look at the big picture ask yourself what are my plans with this car after 3-4 years? Do I want to keep it? Is it worth keeping after all the years I've owned it? That new model G35 is looking fine I wonder if I can trade my car in without loosing to much on the trade? This is the reason I purchased my Accord instead of leasing it. I wanted to have a daily driver that is not only reliable but is also easy to maintain. My Accord has been payed off for 2 years and it has more than payed for itself. If I ever ended up needing a new engine and tranny I can get a used engine w/ tranny for 800-1200 depending on where I buy it. The Infiniti however is another story numerous recalls, TSB's and tranny failure just to name a few. Tell me is this a car you are willing to keep if the manufacturer can't even fix the tranny problem that is all to common even to this day. I'm glad I just lease my G instead of purchasing the car.

Don't be to narrow minded when it comes to finances be open to other options. Lease is not for everyone people will always have their own idea about leasing. I for one will never finance a car unless I have plans on keeping it for the long haul. With my Accord being so reliable I won't be purchasing any car anytime soon. I will lease another car when the time comes perhaps when a new model car cathes my eye. I can't even tell you how many people I know who keeps on financing a car and later they end up trading the car in because they want something new. They end up putting a bigger downpayment just to cover the upside down on the trade. They even get suckered into financing for 7 yrs just to lower payment even after a big downpayment. And then there are the total fools who pays cash for their car. That is the most idiotic thing to do it's like paying cash for a home you just don't do that. I'm at the point of my life where I can pretty much buy anything I want. I have 2 kids in college so I have no choice but to be creative with finances. One will be graduating in 2 yrs and another next year. My mistake was not setting something aside for their schooling after high school. Now I'm setting something aside for my retirement so I have to be open minded and need to think out of the box to save money. I left a corporate job with a comfy salary to setup my own business. This was a decision I had to make in order for me to make more money. The money I earn now is determined on how hard I want to work. Point being is that you need to keep your options open and don't just get stuck with one option. I don't know how old you are, but just keep that in mind It may help you later in life.

 

Can you post a link or URL that explains how this is done? Only way I can figure it out is that you actually have equity in your lease and the dealer is using that to cover the early termination charges. The dealer isn't some magical legal super hero that's able to get you out of your lease in a single bound. The dealer doesn't own the lease, the leasing company does, they're just a middle man. They might handle the paper work for you, but they don't get any more of a break with the leasing company than you would.

[QUOTE=glennp_1999]Regardless if you finance or lease the condition of the car at the time of the trade will determine it's value. Who told you that if you trade your car in before the lease is up is considered breaking the lease? If you bought a car today and traded the car the next day the car will devaluate all the same. At this point it doesn't matter if you finance or lease the car you loose out regardless.[QUOTE]

Um...the lease contract says it in black and white. There is an early termination fee if you surrender the car before the term of the lease is up. Sure you lose if you buy a car then turn it in the next day no matter if you lease or buy, but you lose more if it's a lease.

No doubt, leasing lets you drive a nicer car than you could if you were a buyer. If your goal is to get the nicest car you can afford then leasing is the way to go. But like everything, short term savings means long term loses.

Well, since getting my car with warranty would have cost me 8K more, I've saved 5K? Now if the engine burned up, I'd probably lose 5K, but I'll take my chances. Taking on risk earns you money. Hedging risk costs money. There is a fine balance but everyone today seems to want zero risk for some reason.

Camry isn't even in the top 10. The accord is, but only the hybrid model. I'm not saying these are great cars, but they're too mainstream to make the top 10 list. Being so mainstream means there is a lot of them avaliable in the market and therefore competition for buyers. Notice how all the Top 10 are high end cars..all except the mini cooper.

http://www.kbb.com/kbb/Advice/Generi...WebContent:572

My point is that by leasing your giving up the choice to decide from month to month what you want to drive. Sure you can get out of a lease, but it costs a lot of money. I'm saying that today I can't begin to know what will be important to me in 3-4 years so I buy my cars to give me the most flexibility. Buying doesn't have any downsides as long as you can afford it. Leases are much easier to afford month to month, but much harder to afford in the long term as you're constantly paying the depreciation during the high depereciation period of the cars lifespan.

I outright own my own home by paying extra cash on my mortage for 3 years,. I also paid cash for my previously mentioned $26K used SUV. I'm honestly not trying to brag, just pointing out how far apart we are in terms of how we handle our finances.

 

I agree.

Actually, usually short term savings means bigger long term savings.... If you're referring only to leasing, then I'd agree sometimes. Like what Glenn is arguing, it depends on your overall goals and objectives.



Sure, but you are comparing saving 5k on a used car to a brand new car. Yes, you are saving money, but part of that is because the used car is worth less. Right, hedging risk costs you money - you bought car insurance didn't you? What about home and life insurance? From a pure probability standpoint, insurance companies are making money or else they wouldn't do it. So technically, the odds are in your favor (to not purchase warranties/insurance) but if you get burned.. (for most people) it's much easier to pay a slightly higher payment and get a warranty than all of a sudden they need to come up with $3,000 for repairs.


In many cases, the exact opposite is true.. If you buy a car but don't know what you want say 2 years later... well you'll be paying for that choice in negative equity for a loan (or just sheer depreciation if you paid cash). And that's not even mentioned how horrible of a decision it would be if you changed your mind month to month about what kind of car you wanted to drive (and purchased a different car every month). However, in cases like this, paying an early termination fee on a lease would be cheaper than the negative equity you'd get for purchasing and selling a car. (not to mention getting ripped off on trading in a car or the extra work required to sell a car privately).

So, sure - if you plan on having a car more than 5 years, purchasing is the way to go. If it's less than that, there's definitely a grey area. For not knowing your future, I just provided an example of how leasing is better. Purchasing is even worse if your future is up in the air - since the advantage to purchasing is long term ownership. However, like owning, leasing does have some distinct advantages. You are only paying taxes on the depreciation, as opposed to an entire car with purchasing. Also, you can sometimes get better financing specials.

Just trying to point out that leasing can be good - if not great, if it fits in well with your goals. Purchasing is good too, but it's for people with different priorities. It seems short-sighted to me to make a blanket statement such as "leasing is bad". Sure, it's a luxury, and you're paying for it. But in many cases it can be a better financial decision than purchasing.

 

Trust me on this I have done this before I wasn't charge early termination because I was replacing it with a new one. Banks don't really care about early termination at this point as long as they get paid the balance of the loan. Bank understand how the business works cars do get traded in before the end of the lease term. Did you know that some banks will ask you if you want to trade your car in for a newer one 6 months before the lease is up. Most will even pay the last 2 months of the lease so you don't have to worry about it. Provided that the car is below mileage if it's over mileage then trade the car in you won't get charge for it.

How so? Do the math for example 10k car was bought the same day one lease with nothing out of your pocket and the other taxes and dmv fees out right. Same make model car was traded the next day. If both car are identical both will depreciate in value the same way regardless of how it's finance. Tell me how does a lease cost more at this point?

What's the point on buying a car if I set out to buy the ugliest car on the road. If that was the case then I'll take the bus to get around and not worry about leases and financing of any car. But we all know that is not the case everyone works for a leaving and they all need basic necessities in life. Depending on your needs maybe purchasing is good, in my case it's not.


8K more for a warranty? What dealership do you deal with? A 100K warranty should not cost more that $800 if it does then you're getting raped. Taking on risk earns you money. Now you're getting it, you wanna lease yet?



It is with financial institution that offers leasing programs. I don't see your point on this comment. Are you reffering to resale value or something else?


So what your saying is that you want to change your car every month? I hate to break it to you but if that is your goal it won't matter how you finance your car because you will loose out regardless. I don't know if you know this but on a purchase you don't get any equity from your car until about the 4th year of ownership. Can you imagine the poor people that actually finance their car for 7 yrs. "Buying doesn't have any downsides as long as you can afford it"? WOW! That is the most pointless argument you ever made. Leasing has a thing called residual value this is what determines the actual value of your car at the end of the lease. This is a guaranted price of your car by the bank at the end of the lease term. But most people who lease will get rid of the car before the lease term is over. This is the reason why I said that the determining factor at the time of trade is the overall condition of the car itself and not how it's finance.

If you don't mind me asking how much did you buy your house for? Because here in California paying extra cash for 3 years will not payoff any house. 26K for a used SUV tell me what happens if you total your car tomorrow? And don't tell me you have insurance to cover your loses. Insurance will pay fair market value for your car what if the value is less than what you paid for?
Something to think about let's see if you can figure this one out. Obviously finance is not your concern maybe because you earn to much that you don't care about money. I want to make my money work for me not the other way around. My money is earning interest in different investments not losing value on something like a car. Have you learned something yet?

 

This argument is retarded. Leasing a car is equivalent to financing the purchase over a longer period, and paying off the debt in one lump sum at the end of the term. Assuming realistic residuals, the simple answer is that leasing has the advantage over buying when you can get a lower cost of money (i.e., if you can get a 1.9% APR instead of a 6% APR).

 

+1 on this argument although I have to admit I couldn't read all of those long posts with no paragraphs and poor grammar.

Another consideration on leasing vs buying is business tax planning.

 

Getting out of a lease is CAKE as long as you didnt get screwed when you got the car, or put some $$$ down. for example:

My gf leased a 2005 is300 last year just before the 06's came out. she got the car in jan, 05. they gave the car away at 389$ a month for a 36 month lease, 15k a year. she only put down 2500-2800 if i remember correctly. it wasnt really giving it away, but it was a good deal. she kept the car for 11 months and then traded it in for a 2006 g35X. THE PAYOFF ON A LEASE IS THE TOTAL AMOUNT OF PAYMENTS PLUS THE BUY OUT. so if you have 20 payments left of 400$, you owe 8000$ plus the buyout. she traded in th is300 and they gave her 1500$ less then what she owed, which we paid off in the process.

Now dont get me wrong, doing this we lost the down payment on the is300, and had negative equity, but there is no early termination fees with leases, at least i've never seen a car with one.

Leasing is a great idea for people looking to get in and out of car often. even if you plan on not keeping it for the full term. MIleage worried are stupid too. i have an 06 loaded coupe and i got 18k a year with my lease, i was going to get 20k but i figured 18k would be enough.

modding leases is another thing people cry about. if your gonna have the car for 2, 4 or 4 years, do what you want and either give it back with some mods, or make it stock. I have an 06 coupe that came with the 19's when i got it. right now it has exhaust, lowered and 20" rims. Chances are, i'll either return it on the stock 2005-2006 17's, the 20's i have on it, and probaBLY LEAVE IT LOWERED!!! worse case i get stock springs and have them put in. i'll prob also leave teh exhaust on it. if i get another infiniti they wont care whats on it, they'll sell it the way it sits. Best bet is to bring the car back at night time too, preferably if its cold that time of year, real cold. they come out, give it a onceover and then go back inside and get you in your new car.

 

There was no termination fees because you didn't terminate the lease, you did a buy out. This is the most expensive option of all. You paid the remaining lease payments and then did the equilivent of buying the car after the lease is over. You then turned right around and traded it in for wholesale.

Good job avoiding that termination fee. In your defense, sometimes this is the only option to terminate a lease, but you would have been much better off tyring to sell the car to someone who would take over payments.

If the car was purchased instead of leased, then you would have just lost the amount it depreciated in 11 months. This is what leases tell you they do, but it's only true if you follow all the rules to the letter. This includes driving all the miles allocated to you and no more, turning it in on time and making sure you get a fair lease deal.

 

If you get a great lease deal and follow the rules to the letter, you can come out at the end slightly better by a few hundred dollars. However, any small mistake and you end up paying more. If you're likely to do any of the following, you shouldn't lease:

1) Drive more than the allocated miles
2) Drive less than the miles allocated
3) Change cars before the lease is over
4) Keep the leased car after the lease is up
5) Wish you could switch cars
6) Wish you could keep the car

#5 and #6 are overlooked but I place them into an opportunity cost type category. What is the cost of driving a car you don't like just because you would lose too much money switching? Same holds true for having to give up a car you really like and having to take on another new car.

In fact, #6 is the real key to why no one should lease. I know it seems odd since who doesn't like getting a new car? Getting a new car is expensive. You're paying the highest depreciation the car will expirence over and over again when you go from lease to lease.

Comparing someone who leases for 9 years to someone who buys a car at the beginning and buys a new car, the buyer will come either the same if he switches cars a lot or way ahead if he hangs onto a car for longer than the typical lease period.