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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: 16,887
    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; '08 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!!!
  • kyfdx%40Edmundskyfdx%40Edmunds Posts: 25,869
    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)
  • kyfdx%40Edmundskyfdx%40Edmunds Posts: 25,869
    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: 16,887
    Is there a reason why the RAV4 no longer meets your needs/wants?

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '08 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: 16,887
    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; '08 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: 16,887
    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; '08 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!
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