Car Buying Advice - Lease vs Buy 2017 Civic or Corolla

jlaplante

Hi All - I'm new here but I have what I think is a great question.

I'm a recent graduate in the market for a new vehicle. My options are either 1) find a 2015 pre-owned Civic for around 15k or 16k... and finance it for the best possible price (preferably not too long)...2) Purchase a 2017 Civic or Corolla (I'm torn between the two) and finance it over 6 years for as little payment as possible (this is not my ideal choice, but I've thought about it... and 3) Lease a 2017 Civic or Corolla. Here are the numbers I've gotten on both.


2017 Honda Civic EX w/ Sensing
Selling Price - $19900 w/ $251 monthly over 36 months.
0.0% Interest, No money down, and a residual of $13579.

or

2017 Toyota Corolla SE (sensing included)
Selling Price - $18482 w/ $211 monthly over 36 months.
0.0% interest, no money down and a residual of $14498.
PURCHASE OPTION over 72 months... $325 a month, with .9% APR and $0 down.



I know how much I'll be driving annually so the 12,000 miles a year plan makes the most sense for me.
My idea would be to do one of these leases for 36 months and then financing the residual at the of the lease over the next 3 years. My goal is to do this and run the damn car into the ground over the next 10-15 years.

The main reason I'm leaning for the lease is that it'll allow me to afford a lower payment in the next 3 years, and then ~hopefully~ by 2020 I'll have a better paying job, and more financial security to finance the car.

PLEASE HELP!

Michaell

jlaplante said:

Hi All - I'm new here but I have what I think is a great question.

I'm a recent graduate in the market for a new vehicle. My options are either 1) find a 2015 pre-owned Civic for around 15k or 16k... and finance it for the best possible price (preferably not too long)...2) Purchase a 2017 Civic or Corolla (I'm torn between the two) and finance it over 6 years for as little payment as possible (this is not my ideal choice, but I've thought about it... and 3) Lease a 2017 Civic or Corolla. Here are the numbers I've gotten on both.


2017 Honda Civic EX w/ Sensing
Selling Price - $19900 w/ $251 monthly over 36 months.
0.0% Interest, No money down, and a residual of $13579.

or

2017 Toyota Corolla SE (sensing included)
Selling Price - $18482 w/ $211 monthly over 36 months.
0.0% interest, no money down and a residual of $14498.
PURCHASE OPTION over 72 months... $325 a month, with .9% APR and $0 down.



I know how much I'll be driving annually so the 12,000 miles a year plan makes the most sense for me.
My idea would be to do one of these leases for 36 months and then financing the residual at the of the lease over the next 3 years. My goal is to do this and run the damn car into the ground over the next 10-15 years.

The main reason I'm leaning for the lease is that it'll allow me to afford a lower payment in the next 3 years, and then ~hopefully~ by 2020 I'll have a better paying job, and more financial security to finance the car.

PLEASE HELP!

If your intention is to keep the car for many years, better to just buy it outright. You'll have costs associated with a lease that you won't have with a purchase.

And, at the end of three years, you'll have to buy the car with a loan at used car rates, which are generally higher than for new cars.

FWIW, the interest rate on a lease is not 0% - you will pay some interest.

NathanCrumback

Hi @jlaplante, I agree with @Michaell, it makes more sense to buy the car up front versus leasing it. There are fees that you will have to pay (purchase option fee, taxes, another documentation fee, etc.). Plus, you will have the used car interest rates to deal with.

If you absolutely need to have the payments lower then you would want to go with leasing but buying out a lease is usually the most expensive way to buy a car. This article might help: https://www.edmunds.com/car-buying/compare-the-costs-buying-vs-leasing-vs-buying-a-used-car.html

There is always interest on a lease. It's in the form of a Money Factor and will be something like 0.00080 (equivalent to a 1.92% APR - .00080 x 2,400 = 1.92%).