I see all the debates about leasing vs financing/purchasing and im still confused. For people that like a new car change every 3 years or so its a good idea...BUT if you calculate the cost of doing this over the course of a lifetime of driving,( downpayment with payments, or zero down with payments) it probably adds up to WAY more than just buying a car. Leasing pretty nice cars $300 a month for 3 years, for twenty years(7 different cars) could add up to 75 grand...or more,....so i say why not just purchase, I know cars depreciate in value, but i need help on a decision. ANY1 who can enlighten me since im just speculating and Im not a lease/finance expert. thanks

 

leasing is good if u have a lot of money and you change cars every 3 years.. but for average, mid class people.. most people like buying instead.. cuz after u pay off the car its yours.. lease, you lease it then give it back and left wid nuttin.. me personally id hate to throw all that money away on lease and be left wid nuttin, you know

 

if you decide to buy it. don't forget to consider maintenance costs.. almost all vehicles break down just as when it's warranty runs out..

 

The problem with leasing is that there's lots of hidden costs that they hope the average guy doesn't consider. They'll say you can lease this car for only $395 a month, and then in very fine print they'll say plus a $3K capital reduction fee plus an aquisition fee plus a security deposit plus a disposal fee and of course there's destination charges and tags and taxes.

I was tempted by an ad for an '06 M3 vert for $590 a month for 28 months. When I added all the fees and other charges it came to almost $27K for 28 months. So my less than $600 a month charge quickly escalated to almost a thousand a month, and that ain't cheap by my books.

 

Your post is lil bit one sided, cus you only look on the lesasing side, if you purchased a nice car and financed for 450 a months and change it every 3 years over next 20 years? instade of leasing it for 300/mos for 3 years, arent you spend more than leasing? If you leasing? you dont have to change it every 3~4 years, you could just kept it when the leasing term is up, you will end up paying more cus the interest, but at same token? you will have lower payment for 3~4 years, which might be suited for certain situations, like if you just got out school or got the new job so you wont know what your career might take you 2~3 years down the road.

If you change your car every 3~4 years, you will be losing lots of money regardless whether you financed or leased! But If you financed and then looking for other car 3 years down the road and do it over next twenty years? My guess is that you will be losing more money than if you had leased…

Reason one, in most of States, you are paying sales tax on the whole purchasing amount but not when you lease, in leasing you are only paying sales tax on the monthly payment (no sales tax on the residual amount) so everything being equal (selling price/interest rate), you will be owing more to begin with if you decided to finance it rather than lease. In some States allows you to deduct the trade-in value towards new car, so you’d be paying less tax on your next purchase which should lessen the above reason towards leasing, but in great State of California do not allow that so we are paying full sale’s tax on whole selling amount.

Two, most likely you will be trade it in rather than sell it yourself and how often you are not upside down when you doing a trade in? unless you put decent amount of down payment, you’d lucky if you just break even when you sell it privately. Brand new line of cars like G35, its harder to judge the resale value of it 2~3 years down the road, it might hold at its current rate of deprecating or it might take bigger dip next year when new coupe comes out or when there are more used G35 on the lot due to this year’s “one year lease special”, but when you are leasing? You are not subject to that fluctuation, cus the value of the car are lock in (residual value), If market stay hot for your car? You can get out of your current lease and get yourself into other car bit early and enjoy the high resale value just like others who had financed (know few ppl here have done just that) but if market cools down? You will have peace mind because your resale value are lock in, in which you wont be if you had financed.

I am not advocating one way over other, you will have to decide for yourself which way is more suitable to your current situation, like Fast1 said, you need to read the fine print on the lease term, they have more fees and limitations involved , don’t base your decision on the low monthly payment alone, that’s where most ppl get into trouble later on and gives leasing a bad name.

 

Other good point, most ppl dont really factor in the maintenance cost such as the cost of replacement for tires/brakes and out of warrenty repairs, when they discussing which is better to finance or lease.

 

There are pro's and con's for leasing and if you make a good deal the lease can be beneficial to some people; I leased my G and I will tell you why it was better for me.

1- I was divorced a few years ago, partly because she got credit in my name and was hiding the mail and not paying on time; when we split she had accumulated many thousands in debt, she even put a 17K roof on her mothers house! The Judged ruled that we both owed half because we were married, she never paid a dime... This killed my credit rating because to the lenders, I shared the debt, it would have cost me about 9% interest to buy my G and that is after 7 years working to repair my credit. 9% is just too high!

2- The lease has a few perks and the interest was 3.9% so after doing all of the math, I end up paying less than 3K more than if I would have bought the G at 9% and yes, that is after payout on the lease at the end; I still get the car. I will need 8K cash for the payout and I have saved most of that already...

3- Leasing gave me 24 months free oil changes and a set rate of $32 for synthetic blend oil changes at the dealer after the 24 months and I still get a loaner.

4- Leasing gave me Infiniti road side assistance for the term of the lease. (even if I go over the 80K.)

5- I was able to get to drive for 20K a year on this signature lease. (Who knows, I may change my mind and want a new Infiniti or Nissan, this makes it easier because on a 48 mo lease, you get to drive 80,000 miles before you it cost extra.)

6- The perks offset some of the 3K difference in price and my credit is gaining points with every lease payment.

7- My credit with Nissan will be perfect and I will be able to negotiate a deal on the next generation G or a GT-R at a great rate!


Almost forgot:
8- You get to claim 100% of the lease to the IRS, if you buy you depreciate a lesser percentage; it's not allot, but it all adds up to making a lease better for some.

 

the negative about leasing is you have to give it back once the lease is over, and you cant really wait for a car that is coming out in a several months unless you have an extra car. If you want to change your car every couple of years, just buy, and pay it off in 5 years, and sell it whenever u want and use that as a down

 

dont forget when you buy, you have to factor in depreciation value....if you do cost for a 3 year period, lease vs financing there actually very close, considering you get a good interest rate on your finance, but the lease ends up cheaper. If you are the person who keeps a car for 10 years, then of course leasing is out.

 

This point will only be relevant if a leased car's maintenece is completely covered by the lease agreement. The last time I checked you still had to buy your own tires on a leased car.

 

Agree, but you also have to consider the equity you have after you have paid the purchased car in full or close to full. You can then sell the car and use the money for a down payment to offset the cost of that GT-R or V8 M3 you (I) want so much.

Then 5 years or so later you can sell the GT-R or V8 M3 to offset the cost of that ??? AMG you (I) want so much, and so on. Get the point?

 

How much you drive is a HUGE factor. I drive 25,000 miles a year so leasing is absolutely out of the question for me.

Another thing to consider that is kinda unique to G35's, particularly the coupes, is that they are holding value incredibly well. So purchasing, and then selling if you get tired of the car seems to be the way to go right now. Of course I can't predict if it will hold its value as well in the next 3 years as it has the last 3 years.

I have a 5 year payment schedule that has 1.5 years left and even with all the miles, I would come out so right side up on my loan that I could have enough for downpayment on a new G, a set of 19" volks, and an aftermarket cat.

 

Most leases are for 3 years and 36,000 miles. Most maintence items will last that long with no need for repair (ie: Tires, brakes and clutches). Not including oil and basic mainenence.

So at the end of the lease you return the car with out replacing these things. A set of tires (~1000) and a brake job(~ 300). So instead,that money can be used the down payment for the next lease. Of my last 6 cars, the only tires I have replaced are because I needed all season instead of stock. No brakes, or any major repairs because the car is always in warrantee.

 

This is a common misconception.

I drive the same amount of miles. I prepay my miles upfront. Always 2 year lease with 25000 per year. When you factor in depreciation and maintence of high mileage cars, the numbers would probably surprise you.

Also, todays car can be very expensive to fix if something should break out of warrantee.

 

No tires doesnt included in warranty, but how many sets are you goning to change them during course of onwershipp ?, if a set of tires lasts 40~45k? and if you lease it for 3yr/36k, you dont have to change them(with limitions) same goes for the brakes and other "wear" items. Even for cars like G35 which tires/brakes do wear out faster than normal, you might only have to do it once...example, if tires last 20k, you would've change them 6 times to get to 100k(5 time if you like driving on the bald tires), if you leased even for 3yr/50k? you only have to change them 4 times.

This discussion is about ppl who change their cars every 3 years or so, and not about after the they have paid the loan off.

But, lets extend your point a bit regarding the "equity"?, sure, you will have some equity after you payoff the loan, but how much more monthly payment you think you have paid compare to the lease over same period of 5 years?... quick comparison...

To finance -- MSRP of 38k, selling price of 35k, 8% sales tax with 6% interest, monthly payment is 730.77

To lease -- with same guide line as above, with 38% residual and 595 acquisition fees, monthly payment is 515.88

So during course of 5 years, you would've paid 12713 more to finance it, so whatever you can sell it for, you have to subtract that amount to get your true "equity". Not saying you wont come out ahead of lease, but difference should be quite small, because who knows how much you can sell it for 6th year down the road.