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Leasing vs. Purchasing

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  • My exsisting lease ends soon and i will not be purchasing the 2006 Mazda5. I liked it so much i want a 2009 (same model) The dealer made this offer on a 2009 Maxda 5 touring edition: The sticker price $21,640, He says his price is $20,563. and he will give to me @ $200. over that? = 20,763
    My trade T/A (second car-2000 Mercury Gr Marq. 60,000 miles, good condition) He'll give $3,500. In either scenerio I pay $300. down. He'll also payoff exsisting lease approx. $400. and absorb 2000 extra mileage @ $0.15

    LEASE: 3 years 45,000 mi @ $295. mo. residual $9,738

    PURCHASE: w/ Mazda rebate of $500. = $16,763 60 mo @2.9% $313.mo

    Which would you choose?
    By the way, Mazda is pushing their Mazda3 now, do you think they'll have better deals on th Mazda5 in the near future?
  • qbrozenqbrozen Posts: 17,217
    Out of those 2 scenarios, I would buy it without a doubt. $18 more per month to own? Its a no brainer, really.

    Only thing I would do differently is sell the Grand Marquis privately. For an '00 with 60k miles, I'd imagine you could ask $5,995 and get $5k for it.

    BTW, your purchase price at that rate for 60 months should be $300.48. I assume tax is driving you up to $313? Is the lease payment with or without tax?

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '14 Town&Country

  • volvomaxvolvomax Posts: 5,274
    Given the small difference in payment,you should buy the car.

    Even if you want out in 3 yrs,you should be able to trade it in and be ok if you keep the miles right.
  • Lease includes tax. Thanks for advise.

    Bob
  • cagncagn Posts: 2
    I’m thinking of leasing a 2009 Toyota Prius - $268/mo on a 3-year lease. Buyout stated up-front by Toyota @ $14,634; dealer says that because this car holds its value, the buyout cost will likely be less than its Blue Book value. Because the next generation of Prius is coming out soon, the dealer claims this is a really good deal being offered by Toyota to try and attract customers who otherwise might wait for the new models. Money factor – which I only sort of understand – is stated at 0.00017.

    Same car, cost to purchase outright is $23,469.

    Other part of this picture is that my personal finances are a little uncertain right now, but will be more stable in 2 or 3 years. That is, for the immediate future, the low monthly payments on a lease are attractive; 3 years from now (when I probably would purchase the vehicle rather than turn it in for another lease) the higher monthly payments are less likely to be the problem they are now.

    Help! Some unbiased thoughts from someone experienced with leasing would be much appreciated!!!
  • kyfdxkyfdx Posts: 28,017
    That sounds like it could be a great deal, but you've left out some info..

    Amount due at signing?
    Does that include tax?
    Mileage allowance?

    regards,
    kyfdx
    Host-Prices Paid Forums

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • cagncagn Posts: 2
    Amount due at signing? $1000 + $1000 trade-in on a vehicle that won't pass state inspection without at least $2000 worth of work

    Does that include tax? yes

    Mileage allowance? 15,000 per year (45,000 over the 3-year period)
  • kyfdxkyfdx Posts: 28,017
    Well... I don't know what the purchase price would be, but with the $1000 rebate, I'd guess around $20K-$21K..

    Given that, the lease payment looks very good, and the residual is unrealistically high (that's a good thing on a lease)..

    I'd lease that car, rather than buy it, assuming your driving habits fit the lease parameters.

    regards,
    kyfdx

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • volvomaxvolvomax Posts: 5,274
    Looks like a good lease. You are paying half a percent in interest.
    Residual is too high for the car but that only will affect you if you want to buy the car out at the end of 3 yrs.
    If you bought the car you'd probably be looking at payments in the mid to upper $400's depending on term and money down.
  • hawkettehawkette Posts: 3
    I have a 2006 Toyota Rav 4 with 31,000 miles and 2 more years of payments (it was purchased). Because I tend to put minimal miles on the car and like to get a new one every 3-4 years I'm strongly considering a lease. Currently I'm eyeing some incentives for leasing a Subaru Outback. My question is is this something I could do now or should I wait? I owe slightly less than the estimated trade-in value on the Rav 4.
  • qbrozenqbrozen Posts: 17,217
    Is there a reason why the RAV4 no longer meets your needs/wants?

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '14 Town&Country

  • hawkettehawkette Posts: 3
    The vehicle is fine and meets my needs ok but I used to own an Outback and really liked the size and handling much more than the Rav 4. The main reason we're looking at the lease option is to reduce monthly payments and possibly begin a leasing cycle for my vehicles.
  • qbrozenqbrozen Posts: 17,217
    OK.

    Well, frankly, I think you hold it longer. You did finance it, after all, and with only 31k miles, your best years are ahead (meaning little to no repairs and depreciation has slowed).

    Granted, if going into a lease, its not like you need equity in your current car. But it is a cheaper option right now because, while the payments may be high, you are building equity. Equity you will no longer be building in a new lease. So, for instance, maybe you are burning through $200/mo on your RAV4 right now for the next year or 2 (payment minus equity). But on a lease, it would be twice that.

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '14 Town&Country

  • hawkettehawkette Posts: 3
    Thanks. I should mention that my payments are more like $460/mo at 6.7% and the incentive for the Subaru is $239/mo lease. (The purchase incentive is $2000 cash back at 2.9%.) I am inclined to hold onto the Rav4 however.
  • qbrozenqbrozen Posts: 17,217
    I figured it was in the $450-$500/mo range.

    The Subie deal may be tempting ... but is that $239 all inclusive (taxes, tags, bank fees, etc) and the exact model you want? Little differences in equipment, money down, miles per year, etc, can make a substantial difference in lease payment.

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '14 Town&Country

  • dtownfbdtownfb Posts: 2,915
    A couple of quick math calculations shows the Subaru being the better deal as far as out of pocket money. But at the end of 3 years, you'll need a new car if you go the Subaru route. if you stay with the Rav4, you have a paid off car.

    personally, unless the Rav4 is a complete lemon, i would stick with what you have. buy a can of "new car" spray to get you by.
  • virosariovirosario Posts: 2
    Hello. I've been reading a lot of posts about leasing vs purchasing, but still don't decide what is best for us. I'm married with no kids so it's only the two of us. We have a 2004 Mitsu Outlander 2004 xls and are making monthly payments of $300. We are still 53 monthly payments away from paying it in full. The car is still good but it's begining to have it's problems with the suspension and the obvious wear and tear. We bought it used, 2 years ago with 43000K and now it's 57000K, we drive in town, never out-of-state or long trips, just to go to work which is a daily commute of less than 7miles. I'm worried because it was a big mistake to make a 72 month commitment for a used car. i got a lemon warranty on this too. This car depresses too quickly and I would like to have a vehicle with better gas mileage, and not to deal with a lot of maintenance, as I can barely pay the monthly payments. I'm just trying to live withing my means and lower my bills. I would like to know what is better for me in the long term. Sorry for the long post, I will appreciate any advice, thanks.
  • volvomaxvolvomax Posts: 5,274
    As you noted,your first mistake was in taking out a 72 mo loan for a used car.
    If you had to go 72 months, maybe it would have been better to find a car that you could afford with a shorter term.
    Having said that, its tought to geta decent car for $300/mo. That corresponds to $15,000 financed for 5 yrs.
    Right now, there just aren't many leases running less than $300/mo without some significant up front money.
    You probably have a very firm grip on your car,so trading is probably out of the question. Besides, its hard to come up with a crossover that gets better mileage than an Outlander. Hoepfully, you can just drive your car for another 4 yrs,do the maintenance and be ok.
  • tidestertidester Posts: 10,110
    I'll second what vmax said but I think the good news is that your Outlander has very low miles on it so it should remain functional for a good long time. Typical mileage on a family vehicle is about 12,000 to 13,000 miles per year and you're driving at half that rate.

    tidester, host
    SUVs and Smart Shopper
  • I recently went to a dealer for quotes on the 2009 CTS. The 48 month lease (12,000 mi/year) quote was $540/month and the financing quote (0% for 72 months) to purchase car was $550/month. No money down for either quotes.

    I've always leased my cars for no more than 39 months. So, is 48 months too long to lease a car (i.e. is it worth it)? Since I've never financed a car for purchase before, is 72 months too long of a time period to finance?

    HELP!
  • Kirstie_HKirstie_H Posts: 10,850
    Both certainly seem like a long time to me.

    On the lease - be aware that it is difficult to impossible to get out of a lease once you're in it, without HUGE financial penalties. If you go the leasing route, you need to be sure that the 12,000 mile/year limit and the vehicle will suit your lifestyle for 4 years. Think about the future - any possibility of moving? is your job stable?

    On the purchase - 72 months is also a long time. If you are used to changing vehicles every 3.5 years, 6 years may seem like an eternity. Since you're putting no money down, you are going to be upside-down on loan-to-value for a long time, meaning the vehicle will be worth less than you owe on it for the majority of the loan payment period. This means that if you don't like it or want to trade it in, you may not be able to do so (without significant negative financial implications) for about 5 years.

    There isn't a one-size-fits-all decision here. You just need to be aware of the financial facts - if you look at them and think, "yeah, I can live with that," and you love the vehicle and can comfortably afford the payment, then it's reasonable for you to get the vehicle.

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  • Thank you kirstie h!
  • stickguystickguy Posts: 14,295
    well, given these facts, the purchase seems to be a better idea.

    Usually a lease is going to be significantly cheaper monthly. $10 doesn't seem to qualify!

    Look at it this way. For $480 total over 4 years, you can effectivley "buy" a 4 YO CTS for $550/mo for 2 years.

    look at it the other way, if you keep it 4 years, you will owe. $13,200 o nit. Do you think it will be worth at least that much at that piont? Is that less than the lease buy out price (which is what the leasing company is "betting" it will be worth at that point).

    Hard to tell with 0% financing when you will cease to be upside down in the loan, but as Kirstie noted, getting out of a lease is nasty. If you want to trade the Caddy in after say 3 years, piece of cake.

    2013 Acura RDX (wife's), 2007 Volvo S40 (when daughter lets me see it), 2000 Acura TL (formerly son's, now mine again), and new Jetta SE (son's first new car on his own dime!)

  • corvettecorvette United StatesPosts: 4,092
    Make sure you have gap insurance if you're putting 0 down and financing for 72 months.
  • After reading through lots of discussions, I've decided leasing would work well for my situation. What can I negotiate?

    Obviously, I will be negotiating the purchase price of vehicle to calculate lease payments. Can I negotiate Money Factor and RV with the dealer? I'll also need 18,000mi/yr which should reduce the RV but by how much?

    I actually don't mind a highly monthly payment if the RV is very low b/c then I'll just purchase it at the end of the lease. Can the dealer/financing company arrange that?

    I'm looking only at Acura, BMW, Infiniti and Lexus. Will the dealer automatically use their companies' financing arms or do they sometimes use an independent one?

    Sorry for all the questions but may try to get this done before the end of year incentives expire!
  • My husband and I have always been warned against the follies of leasing. We have to get out of my current car (2002 Civic) because the AC goes out on it unpredictably and we have two small children (in California). The wisdom given to me in the past is that the best value is to buy a car new and run it completely into the ground. True? Now we are looking to get into something with $300-$325 monthly payments, which we could do on a 36 mo. CRV lease through the Honda dealership. We could also do it by purchasing a 2006 or 2007 CRV with 45-60,000 miles on it for roughly $16-17,000. What is our best bet? We would purchase the lease at the end and keep the car for 8 years, if it held up. Does that make it as valuable as purchasing it from the get go? Thanks for your advice.
  • stickguystickguy Posts: 14,295
    Well, how many miles on the civic? Do you like it other than the AC problem?

    If the answer is not too many and yes I do, then your best bet is probably to just get the AC fixed. If it works intermittently, it may not be that big of a deal (not as bad as having a seixed compressor say).

    17K for a 50+K used CRV? Yikes.

    2013 Acura RDX (wife's), 2007 Volvo S40 (when daughter lets me see it), 2000 Acura TL (formerly son's, now mine again), and new Jetta SE (son's first new car on his own dime!)

  • Thanks for your message. My Civic has 160,000 miles on it. It does work well other than the AC, but we tried to get it fixed recently and it didn't take. We're concerned about putting money into a car that won't last us too much longer, and I'm concerned about taking it to the desert (my folks house) and having the AC go out on me, as my youngest is three weeks old. I think it's time for the Civic to go. Now thinking about purchasing a slightly used Kia Sportage or a Jeep Patriot for $13000. Any thoughts about those?
  • fezofezo Posts: 9,328
    I'll tell you my youngest brother has a Sportage that must be 10 years old and he loves it. Hasn't given him a speck of trouble.
  • stickguystickguy Posts: 14,295
    Well, with those miles on a 2002, I can see your point! If it was fixable and only had 60K on it, differetn story.

    Sportage and patriot are OK, cheap, basic transportation units with some utility value. A good value at least. Make sure to get it inspected thoroughly before you buy.

    2013 Acura RDX (wife's), 2007 Volvo S40 (when daughter lets me see it), 2000 Acura TL (formerly son's, now mine again), and new Jetta SE (son's first new car on his own dime!)

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