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Leasing vs. Purchasing

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  • carteachcarteach Posts: 179
    I'm thinking about selling my 2006 Acura TL. I should get about 14K for it. Right now I have a '95 Subie with 218,000 as well as the Acura. I know the Subie isn't going to last that much longer and I need a more versatile car.

    Also, I don't want to get to the point that my car needs expensive repairs. The Subaru has been very good to me. But I know repairs/maintenance on the Acura won't be cheap.

    I had originally planned to use the money from the Acura for a down payment on another car which I'd probably keep another five years. (My logic is that I'd always have a down payment in the value of my old car.) But now I'm wondering whether I'd be better off putting that $14K in the bank/cd/?? and leasing a car for three years. I've owned many cars, so the buying process is not new to me. But I have no clue about leasing.

    I drive about 16K miles a year. Have two dogs (planning on wagon/suv with them NOT on the seats) that would go in it very occasionally and two grandkids that I tote around once in a while. I want a car that is close to the top of the line. Don't know how that factors into the equation.


    Thanks.
  • stickguystickguy Posts: 13,556
    the miles you put on are going to hurt you.

    just from a surface look you seem like a better candidate to just buy something.

    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!)

  • steine13steine13 Posts: 2,409
    the used car market is at an all-time high. that has to work itself into residual values, I'd think.

    there are cars that it makes sense to lease, even with 1k/yr over the typical 15k allotment. i couldn't tell you which ones, though.

    as always, you have to run the numbers.

    i've never leased, being too much of a control freak, but i think it's an attractive option.

    cheers -m
  • dwynnedwynne Posts: 4,018
    Way too many factors to explain them all in one message :-)

    Basically it all depends on the lease money factor and residual compared to the loan rate (if financing) for a particular model. If your goal is to own the car (eventually) then buying is always cheaper. To get x years of use of it, then that depends on a lot of stuff.

    Loan money is cheap right now (my CU is doing 1.9% to 3.49% on car purchases) so in order for a lease to be a great deal you need a discounted lease rate and / or an inflated residual. Captive lease banks (e.g BMW Financial Services) can set rates and values that reflect how bad the company wants to move a model - not based on real world values. If you want something they need to move when they are pretty desperate to move it and you can get quite a deal. I have leased at < 1% effective rate before a few times and under 2% quite a few times.

    On the other hand, with money so cheap you can't make much socking your cash away most places.

    Typical leases are written for 12k or 15k per year, but you should be able to get a lease written for more miles (or factor in the over mile charges into the equation).

    I would decide what you want to get, then we can compare captive loan and lease offers and what 3rd party lease and loans are available and get a better answer.
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,910
    A reporter is hoping to find someone who recently bought a new car and took out a car loan for the first time in a few years.

    Please respond to pr@edmunds.com by Tuesday, February 7, 2012 with your daytime contact information and a few words about your experience.
  • my gf and I cannot decide on whether or not to lease or purchase a new car. She needs a car to drive to/from school which is less than 2 miles and internship (twice a week, less than 5 miles). Base on her driving routines, she will be driving less than 12k a year. We just want to get something new and cheap that she can use for the next three years.

    please help us understand available options
  • steine13steine13 Posts: 2,409
    Forget making blanket decisions here... make reasonable assumptions about residual value and other costs, then work out the cost per month AND cost per mile, and compare.

    Then figure out what your personal preference is, if any, and how much that's worth to you.

    Real-world used-car values are at or near all-time highs, and that has worked to drive residuals up and make leasing more attractive then it's been. Whether it's for you is something you have to figure out for yourself.

    I've never leased until this January, when I stumbled into a $133/month lease on a Cruze LT 6MT with $890 due at signing, 24 month term.
    The starts aligned, and the various GM marketing departments didn't, so they kinda screwed up and made the lease super cheap.

    Alternatively, I could have bought the car for around $16 out-the-door.
    The only reason I leased is in 1.5 years I'd rather start over than look for a buyer, but the cost over two years should have been about the same.

    Lots to like about leasing, except you drive a rental car for 2-3 years. I'm not sure I'd do it if I didn't have a beater around for hauling and scratching-up duties.

    Cheers -Mathias
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,910
    edited February 24
    "With leasing, dealers realize they have a "built-in return customer" and consumers are also realizing the benefits of taking on a lease.

    Leasing requires less of a time and maintenance investment than ownership, and in today's on-the-go, busy world, leasing often "fits more into a 2013 lifestyle" Caldwell said.

    There are also more lease offers out there. It's not the high-end luxury brands anymore; mainstream staples like the Honda Civic are in the game and creating a "wide spectrum" of options for consumers."

    Leasing Levels Believed to Have Hit 2013 High & Could Rise Even More (Auto Remarketing)

    (The breakdown is at the bottom of the link).
  • Michaell@EdmundsMichaell@Edmunds ColoradoPosts: 1,056
    Leasing requires less of a time and maintenance investment than ownership, and in today&#146;s on-the-go, busy world, leasing often &#147;fits more into a 2013 lifestyle,&#148; Caldwell said.

    There are also more lease offers out there. It&#146;s not the high-end luxury brands anymore; mainstream staples like the Honda Civic are in the game and creating a &#147;wide spectrum&#148; of options for consumers."


    I couldn't agree more. I recently leased a 2013 Hyundai Elantra GT for $230/mo - including maintenance visits. 3 years, 15K/yr.

    Yes, in 3 years I'll have to make a decision about whether to keep it or get something else, but that gives me 3 years to think about it.

    No way could I get that kind of payment on financing, unless I put a bunch of money down.

    michaell@edmunds.com

    Moderator, Prices Paid and Leasing Experiences

    2013 Hyundai Elantra GT / 2010 Mazda CX-7 GT / 2014 MINI Countryman S ALL4

  • stickguystickguy Posts: 13,556

    I am going through this debate with my son now. he graduated recently from college, and is working on getting his 1st permanent job. If that happens, he is ready to get something newer than his 14 YO 172K Acura. and of course, wants something nice, so no strippo Accent or some such.

    but typical recent grad, decent income (cashflow) but little to put down. so he either takes a 5 year loan, cleans out his bank account and $400+/month payment, or a sign and drive lease for less than $300 that conserves his funds.

    even a few year old car can be expensive enough that, if you keep a loan to 3 years (no way doing more than that on a 2009/2010), you can still be at $400/mo if you have little down.

    so, a subsidized lease to start, and save some money on the side. Next one can be a 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!)

  • methotamethota Posts: 1

    Dealers get the same amount of money... click on the link and read the page to get the real "leasing vs. buying" facts

    http://www.subaru-montreal.com/en/leasing-vs-buying

  • leonardopleonardop Posts: 1
    By experience, don't do lease!
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