Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
A reporter would like to speak with you about your experience; please reach out to PR@Edmunds.com by 7/22 for details.
A reporter would like to speak with you about your experience; please reach out to PR@Edmunds.com by 7/22 for details.
Options
Dealer's Tricks - bait & switch, etc.
This discussion has been closed.
Comments
That's a great point.
If the manufacturer puts out a regional or national ad for $399/mo (for a base car, of course), the dealer might not actually have one of those cars. That's not bait and switch.... Manufacturers make their dealers look like idiots when this happens. Not to mention they cut out almost all profit.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
Is this a common practice - adding upgrades to a leased vehicle? I saw on another thread where a woman had a leased truck that she had added bed liner, tonneau cover, brush guard, step rails, etc. Isn't that like adding an addition to your rented house? :confuse:
YOU PAY $259/mo
$3000 cash or trade allowance due at signing, 48 mo lease, WAC, plus tax, tags and fees.
Most states have a truth in advertising law that requires the printed ads to state what are the conditions of the price given.
Any Payment calculation has 3 key variables
Down Payt : $3000
Term ....... : 48 lease
Interest : WAC ( implies best rate )
I had a friend that moved from the city to the burbs. He needed a car for the first time in his life and had blown his life savings getting into the house. I'm going back a few years here but he saw and got a Corolla lease for less that $1,000 down and less than $200 per month. It served him well for three years and then he bought a better car once the lease was up and his finances stabilized.
With the Corolla, he saw one of the come on ads in the paper and got exactly what was advertised with very little hassle. For him at that time, buying a used car that he had no idea of how to maintain didn't work and financing a new car to own at 300 or 400 a month didn't work either.
In my case it made more to lease a car then to buy it. I own CR-V and we just leased Accord. We just bought a house and have a lot of big-ticket items on our list. To spend around $5000 for something that depreciates very fast and still has bigger monthly payments vs. lease payments – it doesn’t make any sense. In 3 years when my lease is up we could revaluate our financial situation and decide what we want, need and most importantly can afford. We have 2 small kids and my wife just got her license so even we considered a minivan we decided to wait until my wife gets more comfortable driving and then we might get a van, and we do not have to deal with selling or trading in – just return the Accord to the dealership and go shopping for a car we want.
With $4500 down, the payment is $325 a month. Unfortunately, I bought before the rebate kicked in but I've been paying $375 a month. I got my house a few months ago and am now looking forward to paying off the Alt in another year and a half and then enjoying a reliable car with no payments for a few more years.
I think for most, buying is a better deal provided:
1 - You can handle the increased down payment and slightly higher monthly payment
2 - You know how to take care of a car
Where I think leasing is bad is when people use it to get a car that they absolutely couldn't afford to buy. It's part of the credit card mentality that is hurting America.
If you're looking at leasing a car at $500 a month go find something that you can buy for that same $500 and you'll be better off.
You said: "If you're looking at leasing a car at $500 a month go find something that you can buy for that same $500 and you'll be better off." To buy that same car would cost you even more per month unless you put down at least 50% of its price.
I'm not saying that lease has more advantages then purchase, but they both making sense based on personal situation.
I think gsemike meant to find something different i.e. cheaper so that the purchase cost would have been the same as the lease cost on a more expensive vehicle.
I'm not saying that lease has more advantages then purchase, but they both making sense based on personal situation.
Agree in principle, especially for those who can legitimately write off leasing costs as part of doing their business. However, in the example above of a gentleman who spent most of savings on a house and leased a Corolla for $200/mo: with the same $1000 down, he could have been paying $300/mo for 48 months to own it outright in the end. Couldn't/shouldn't most people find this extra 100 that makes a difference between ownership and a rental?
OTOH, if he expected to need a different car in 2-3-4 years (as in, planning to have as many kids ASAP), then leasing a high-residual car is a good option, but buying one (or a used vehicle with poor resale) should also be considered.
Where I think that leasing is bad is when you say, "I could never afford to buy a BMW so I'm going to lease one for $500 a month". The guy that says that probably can't afford to maintain it either and probably has too much debt already.
If you instead took that $500 and bought, say a Maxima, you'd still have a nice car and at the end of the term, you'd still have a nice car if you take decent care of it. With the lease, you just have more payments. Even though a car is a depreciating asset, the equity in a car that is paid for is probably greater than it apears on paper.
That said, I do agree that if you've got a small down payment and need something for a couple of hundred a month, leasing is the way to go.
This is beside the point, but BMW has 4yr/50k of full maintenance (oil changes, scheduled interval maintenance, brakes & rotors, belts, hoses, wiperblades, etc.), so the cost of maintenance for a BMW lease is almost nothing. (Only have to pay for tires, as you would for any car.)
When all these Beemers come in off of lease with Pep Boys tires on them, will BMW charge you for new tires?
The larger theme is that people need to exericse some financial prudence and buy what they can afford. With all the interest only mortgages, car leases and easy money HELOCs, some folks are heading for a hard fall.
Exactly. For the guy getting into the Corrola, for such a high reliability vehicle, why why would someone PLAN on turning it so quickly (2-3-4yrs) for a new vehicle?
I didn't know a company could write off a Lease. For the average person, though, why Lease? Like you said, it seems to be a means to get into a vehicle which is perhaps not a prudent choice given one's economic constraints.
Unexpected changes in the family, like having twins, regular or Irish ones :P Seriously, I wish I bought a minivan instead of a midsize sedan 2.5 years ago - I could sell it now, but would lose about (at least?) 7k in depreciation, plus, as rroyce puts it, "taxes and fleas" - which would have to be paid again.
I didn't know a company could write off a Lease.
My understanding that one does not even need to own or run a company (inc, llc, etc.) - just to be self-employed, as a real-estate agent - or even have a self-employment business on a side along with a regular job. Disclaimer: I never leased and I am not self-employed.
It's not quite that easy. Keep in mind that if you are truly self employed and have a work only vehicle, the vehicle can be depreciated on your taxes as well. The rules for writing off a lease or depreciating a vehicle get very complex.
I know you were only using BMW as an example. That's why I said it was beside the point....
Anyways, in order for BMW to certify their cars, they need to have either Michelin, Continental, or Pirelli tires, and a minimum H speed rating. They also need to be more than 50%. If not, then they are replaced.
If money is that critical, get whatever Honda you can afford and fits your situation.
Lastly, I would never buy an off-lease BMW without complete maintenance records. Their "free" maintenance is fine only if you drive 7500 miles a year.
7500 miles/year? Why is that?
BTW, you can ask for maintenance records from any BMW Center service department. They won't be able to give you the name of the person who had the car, but they'll show you the records. FWIW, why wouldn't a BMW owner service their car if it's free? I'd be afraid of any other manufacturer's car where the owner might have "stretched" a few oil changes or the 15k service interval because they didn't want to dish out a few hundred bucks at that time... You don't have to worry about that with BMW.
I leased my most recent vehicle for several reasons. First, I wasn't going to be able to pay cash for a vehicle, so I was going to have a car payment regardless of my financing route. Second, I was selling a 97 Audi A4 that had become more expensive (on a monthly basis) for maintenance than it was for the last few months of payments that I had (I bought it used). A new vehicle would ostesibly be much cheaper from a maintenance perspective than a used car. Third, I saw value in being able to walk away from the car at the end of the lease term, with no worries about trade-in prices or selling it privately. The dealer takes all of the risk in setting the residual - if they blow it on the low side, I can buy it and flip it for a quick profit. Finally, as an about to be married 26 year old, I had no idea what my family situation was going to be in a few years and liked having a definite "out."
Leasing isn't for everyone and neither is buying. I think that it's wrong to call it a mistake for everyone without having more substance to the argument than you presented.
The near luxury segment cars that we offer seems to attract the most folks who are leasing because they can't afford to buy....I agree that is no reason to lease but it's hard to impress your friends when you can only afford to buy and own an 4 cyl Altima but you can lease a TL for the same payment
'Rent' any asset tht depreciates.
Buy any asset that appreciates.
Here is an extreme example.
There are two assest you can lease for $50 or buy for $100.
Asset 1... use it 20 times and you must throw it away; rent 10 uses for $50 or buy it for $100?
Asset 2... use it 20 times but you can sell it for $350 when you are finished; rent 10 uses for $50 or buy it for $100?
It's the same argument as renting an apartment vs buying a house.
The ones that buy usually buy pre owned, or really old cars, if a deal shows up on the lot.
If the interest rates for leasing or lower or equal to interest rates for financing, typically on a honda it would cost the same amopunt of money whether you lease or buy, even after adding up all the costs and fees, buyouts, etc.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
Where might that be, Equador, Thailand, the far side of Pluto ?? ... that has to be one of the craziest statements to hit this board ..... where are these "95% of the auto industry" people.?? ..l.o.l.... oh yeah, you live in Vancouver ......
Dealers spend half of their lives trying to get people "out" of their leases ........ too many miles, the wife had a baby, the wife had twins, they lost their job, they got a better job, they moved to a different area, it's too big, they got a divorce, they got married, it's too small, they bought a house, they sold a house ..... so if they did anything out of the ordinary, they're trying to get out, or trade or sell, or something .... the boards are riddled with em' .... I'm sorry Boom, but you're cracking me up ...
Leases are fine for the right situations ... but one of the infamous lease statements in life are: "when I'm done with the lease, I just walk away" .. walk to where.? Madrid.? .. Disney World.? .. the Greyhound Bus station.? .. no, you walk right into another lease ..l.o.l... (they always forget that part) .. then the dealer down the street will be trying to get you out of it in 25 months because someone had a Hernia operation and they need a 4 door ....
Most "car salespeople" (as you call them) .. that are really in the car biz are going to buy that one, two or three year old vehicle that comes in on trade or depending on the dealer, they will allow them to purchase one at the auction ... and yes, a few will even lease .. but you can bet they feel they have a very firm grip on the next 3 years of their life, and usually it's for their other half and they feel they can keep a handle on it -- cuz' thats what they hear aaaall daaaay looooong .... I'm sure things are a little different in South Van ......
Terry.
ok - you carpool, ride a bike, take the bus, take the train, walk -> but you don't buy something you can't afford. you save for a purchase.
strategy: find a higher mileage vehicle in good condition: say a 9-10yr toyota or honda. buy it for $2K.
in your scenario the guy is ahead in 5 months. all it has to do is go 5 months without repairs and he's ahead. he doesn't have to know how to fix the vehicle just a good independant mech to give the vehicle a good look over.
if you could just walk away from a lease and owe nothing (?), you'd have at best nothing.
the other guy would have something...
It depends on the location, the dealership, the product and what part of the country ... some stores do 20%, some do 80% .. it all depends on the store and how good the salesman are at talking you into a lease ..l.o.l.....
Terry.
When I sold in SO Cal, All the salespeople who drove VW (what we sold) leased. Now as for me, and the some of the other guys, (especially the old car guys) drove pre-owned vehicles until they died and bought another one.
When, I started selling VWs in DFW, all the guys who drove VWs did BALLOON purchases, Managers had demos, and then there was me and the other old car people drove pre-owned until they died.
In the World of Audi, Managers have Demos, we have salespeople, one drives a CPO S4, One drives an 83 Golf Diesel, I drive a truck. But we all wait around for the Employee lease programs that are really fun, (We had one for 399 for 6 mos on a A6 if we were with our store for 2years.)
For Vanity reasons, Leasing is good because you can drive more car for less money (And in Dallas proper, it is the land of 35K millionaires) but if your young and and you drive 12k a year and you know for the next 2-3 years thats what you are going to be doing, don't tie yourself in a 5 year note, because you will be getting the itch 2-3 years into it.
As for me, I drive 30k a year, I beat the crap out of cars, (I maintain them, I just find an excuse to go off-road.
Another thing, you pay for BMW's "free" maintenance when you buy or lease the vehicle. Finally, I wonder how many leasees do more than the minimum recommended by BMW.
It is insane to think that lease is cheaper than purchase. Except when money factor is null or so, depreciation is best in the industry, the driver actually does not drive their car or wahes it every other day, waxes every week and does not allow anything shorter than 4 feet or anything with more than two legs in. Yeah, it this case your lease may turn cheaper than loan. Otherwise - it is more convenient, of course, but it is not cheaper.
In order to make equivalence comparison, one needs to take a longer period of time than first three years. I think six years would be just right. Lets compare than a 40K car with 55% residual after 3 years.
1. Lease option: two standard leases three years each, MF=0.0025 (6% eq.) payments plus 7% tax: 72*($500+$155+$46) = $50040 plus acquisition fees plus disposal fees, roughly $2000, plus mileage penalties, and wear and tear, if applicable. Say maintenance was included.
2. Loan option, 6% APR no down: 60*$860 = $51,600 plus maintenance in last two years, plus some fees BUT minus trade at the end of the turn, roughly $10K.
You do the math. Lease is good only if you actually HAVE money and like those new cars every so often (I concede that if you trade in the middle of a loan term, the hit might outweigh loan advantage), not if you DO NOT have money.
It may be an OK move if you want "one time" shot to drive your dream car for a couple of years but you cannot afford to buy by some slight margin (say you could buy a $28K car, but you want $40K car) and at the same time it so happens they offer special rates, you are single, you don't really drive a lot, etc. But after that back to Corrolla (or can you say Kia
2018 430i Gran Coupe
It was all started in the Lincoln/Mercury stores in 87/88ish(?) and it was called the "Red Carpet Lease program" via Fomoco ...
Their thinkin' was, they had a vast core of Luxury buyers that were trading about every 24/36 months or so .... well, back in the ol' days, you could trade for in and around $4,000/$5,000 and your driver .. then it crept to $7,000/$8,000, then it crept to $10,000/$12,000, then $15,000/$18,000+ .. then came the idea of the Red Carpet lease program and a TON of their buyers (and everyones else's) started the ball rolling --- aaahh, yes - the ol' days ...l.o.l......
Terry
The way I figure it, if someone is riding the wave of turning cars often, either they've got no financial dicipline, or they've got a good amount of disposable income. In that scenario - buying or leasing makes no sense to me. Everyone's mileage may vary.
It's true my wife and I tend to drive "appliance" vehicles, but I'm older and wiser now, and I've got better places to be putting my money.
When I see someone traveling down the road in an expensive ride, I can appreciate their vehicle (unless it's truely ugly)... I just have to take satisfaction in the fact I'm living within my means. I don't need a vehicle to impress myself, or anyone else.
I've driven a carrera 4. I know what I'm missing.
Nice to hear somebody still does...LOL
Of course we would see a huge decline in sales if everyone was like you.
The ones with montly payment are not ones I hate (I don't really care for them, but I'm not a payment buyer anyway - I know how much total I can afford). The following ones are:
YOU PAY: $12899*
*Price includes $3000 trade equity or cash, plus military dicount
So those three grand is obviously paid by Santa Claus, I presume? Not to mention I don't qualify for the military discount (and they wouldn't even say how much it is). Assuming the discount is "usual" $500, the actual street price is $16399, which may or may not be a good price, but it's not the point at this moment. Plus, there is a dealer's fee, here in FL usually $300 plus, often close to $600 in large volume dealers (so they can advertise "better" deals that are not actually better, but surely look like ones), which should be really considered as a part of a price, IMHO, since the entire proceeds go to the dealership (I don't dispute the charge itself at this moment - just just stating the fact that it is a part of the REAL, or final price). Say it's an average $450, so we have now $16849.
"I pay" also taxes, registration, etc - all legit., no dispute here, but we have to add that to the bill. I don't care that dealer does not get that money - I still PAY it. Say it is $1800. Thus, I REALLY paid $18,649 on the "YOU PAY $12,899" deal. Nice spread, isn't it?
I can of course figure that out before I even show up (as I just did), but it's not the point. The point is someone thinks I am so stupid I would not be able to do so, and stick out that "YOU PAY XXXX", meanig "My final price is XXXX+YYYY+ZZZZ PLUS there is obious government cut of QQQQ, so you really pay AAAA. But I think you are too stupid to know it, so come here and I will tell you that when you show up".
My request is simple: don't treat me like a retard - I can handle the truth and your true price, including your fee. Put is separate, if you really have to, just put it there, so I can figure it out. Of course there is that small possibility, I may not show up at all, because the competition might actually have a lower total price. Perhaps not $12.9K, but definitely less than $16.9K total before taxes. Or not, but that's not what I'm talking about here. However, when I see such ad, I lose all my desire to go to that place for it tells me at that place they're probably not very trustworthy, so say the least.
2018 430i Gran Coupe
2018 430i Gran Coupe
Custom homes with all the amneties starting from $299,900 ...
lot and property charges are extra ...
By the time you add the dirt $65,000/$95,000, get the good 13x13 tile, add the wood kitchen cabinets, put the solid core doors in, get the dual zone air, add the Corium or the marble tops, change out the cheap patio doors and put in the "good stuff" carpet .. you're going to be looking at $400/$500,000 .....
Yabut, Yabut, Yabut ... isn't that a rabbit in Australia.? ..... what happened to the $299,900 stuff.?
Terry
It's great that you live within your means, that's something that very few young Americans can say. But, I'm sure you have your vices somewhere, expensive wine? cheap hookers? {did I say that out loud?} My vice happens to be cars. A car is a bad investment regardless. If you come out a little ahead by paying cash, and driving something used, then great. To each his own. Congratulations on driving a paid off car. You have successfully nickel and dimned your way to financial peace of mind. Now here's the number for AAA. They like to come tow people in they're paid off cars.
Just traded my 2002 ML500 for a 2006 Land Rover and I hope it will be as good as the Mercedes. My brother has a 2003 Land Rover Discovery and it has been flawless for 37,000 miles. Some are good, some are not... we'll see.
Mark
I didn't say that 95% of all salespeople lease cars. Out of the salespeople that drive NEW cars, 95% of them are leased. And like you said the ones that don't have new cars usually pick up used ones on trades, or really old ones for cheap.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
I've just caught up on the last 50+ statements, and you guys are all over the map. Leasing is good, leasing is bad; and my favorite: "rent what depreciates", as if that were the general answer.
I've never leased; don't like it. But I might, for the right car and contract. The question lease vs. buy cannot be dedided in a general way; it has to be looked at deal by deal, and the personal situation figured in.
I *almost* traded in my Vibe and leased another one... it would have made sense, but I decided it wasn't worth the hassle... the depreciation portion would have been $70 or $75/month for 24 months... with nothing down. Really.
Like I said, I don't like leasing, but there are many good reasons... sales tax advantage (expensive cars) ... don't want to own past warranty (Germans)... super-high residuals (some GM; Honda)... and otherwise subvented programs (Audi comes to mind)...
Why some of you guys feel the need to categorically argue for lease OR purchase, like one is a mistake and the other is 'the way', I can't figure out.
Happy Sunday,
-Mathias
24 month-old '05 Vibe, residual = $12k. I owned the same car as an '04, it was one year old with 9k miles, and it was barely worth $11...
Honda Accord, 36 months, residual is 60% of sticker, car sells for invoice....
This old saw about "somebody else's depreciation" does not work on every car out there... if the car is hot, the first 3 years will not be any more expensive than the second, and sometimes less. Don't forget that depreciation is always calculated off MSRP, not off the street price.
Subaru leases tend to be lousy, so I'd agree there... but those cars don't depreciate a lot either.
-Mathias