Comments on: Pros & Cons of Leasing a Car vs. Buying a Car

By: gigi

gigi — Thu, 26 Jan 2012 07:37:00 +0000

I’m in the exact same situation (except not med school, but a degree that I’m just starting out on and a 1996 Camry instead of Grand Prix) and the exact same budget, and have already done the “Throw what I would have paid on a car loan/lease into a savings account for repairs thing”. It’s not fun. A lot of time at repair shops, a lot of worrying, and a lot of driving around in a beat up car. No I didn’t replace the engine but might as well have.

If you’re just over it, like I am, I feel like leasing is a good option as well, especially considering the cars I can afford right now will be worth so little when I’m done paying them off in 4 years and won’t come with a warranty. I don’t think the $6-7k “equity” I’d earn in 4 years is worth the increased payments and lack of warranty I’d get by purchasing a 2 year old economy car right now.

By: gigi

gigi — Thu, 26 Jan 2012 07:21:00 +0000

I know this is pretty old but must say I agree with Anna and, yes, El Pe. Leasing vs Financing Cars is not as cut and dry as Renting Vs Owning real estate and while I agree that renting is a waste (I rent and hate it!) I think the lease versus buy decision should not be looked at as an investment decision (if so, financing would always win, because you end up owning something…even if that something is a car that has depreciated in value and will be a p.i.t.a. to get rid off) but a lifestyle choice. The way I see it, if you have budgeted for it and can afford it I don’t think there’s anything wrong with leasing new every couple years rather than wearing your car to the bone every 10 years. Trust me, I’ve owned my 15 year old car for 10 years. It just broke down and I’m renting a 2012model. I’m realizing that having a new car greatly improves your quality of life, not only from an image perspective, but a peace-of-mind perspective as well. I don’t know if the cost savings from running cars into the ground to spread out the cost is worth the peace of mind leasing affords.

By: gigi

gigi — Thu, 26 Jan 2012 07:21:00 +0000

By: Christina

Christina — Wed, 18 Jan 2012 00:14:00 +0000

Thank you for the interesting and informative perspectives shared above. I can see friends and relatives in the various scenarios mentioned. I’ve often wondered- why do they lease? Now I have a better idea as to the thinking that goes behind the process.

By: Chadsakarter

Chadsakarter — Sun, 27 Nov 2011 14:30:00 +0000

Leasing works for me, as I am in my third one. All though my wife’s car is financed and we are in a good position with that loan. LEASING isn’t for everyone, especially if you’re the classic old fellow that likes to own the car for many years to come… Just described my wife and that’s why we didn’t lease her vehicle when we signed the papers on it new. But myself on the other hand, I get tired of any “new” car that was my choice within the first few years and I become addicted to shopping for a new one whenever I get a free moment. I do LOVE driving a nice newer car and that’s just me, not smart, but I have a great investor that makes up for that. So let’s try not to become arrogant and act like our overbearing opinions to lease vs finance will change anyone’s life. Each to their own and hopefully it really works for them.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 16:17:00 +0000

Sorry this happened to you but it sounds like you need a better mechanic to do pre-purchase inspections. For 11k, you could have bought a car under warranty from a dealer. And, whoa, you have a loan for this purchase? You should have purchased something you could have paid cash for.

Lessons learned for next time?

By: Tweedle

Tweedle — Wed, 02 Nov 2011 05:40:00 +0000

I’d rather my kids not be teased because their parents CANNOT spell. Although I am not concerned about what you speak of because I drive very nice luxury cars, which are a bit of a waste of money, I’ll admit THAT I PAID FOR IN CASH.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 05:27:00 +0000

I believe many people are already well above the income level you describe and hands down, the fastest in terms of your time is paying cash. Trust me. I bill $250/hour and have no shortage of work, and I pay cash.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 03:44:00 +0000

Also, you’d still have a warranty on a car you pay cash for, if you buy new/CPO/late-model used. You don’t only get a warranty if you finance/lease. The bottom line is you are rationalizing that it makes financial sense when it really doesn’t. You want a new car because you want a new car. That’s fine, despite being not great from a financial perspective. But, the reasons you’ve given for it making more sense (comparing to a mortgage and bringing up the warranty) do not make sense.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 03:41:00 +0000

Houses are appreciable assets OVER THE LONG TERM, even though they are prone to short-term slumps, they appreciate over time. Cars do not.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 03:38:00 +0000

Respectfully disagree with the first point. I’ve gotten 0-.9% interest rate on cars that I’ve already negotiated a very good price on simply by: letting them believe price is my biggest concern and I’d take higher financing; mentioning at the last second (after purchase agreement is drawn up and before loan docs are signed) that I’ve decided to pay cash, which they don’t like because they MAKE LOTS of money in commission when you finance, due to kickbacks from their corporate finance dept.; “relenting” to finance after all, but for a much better rate (max of .9%). As I said, they make a lot less off a cash paying customer and are more likely to discount the car if you finance because they can make up lost commission on the sales price via the kickback from their corporate finance company. I only ever do this if I can literally get a rate less than 1% and there is no rebate on the car, as financing at the low rate often does make you ineligible for the rebate, and I always have the cash to pay for a car in full before I even start looking. I, too, am a millionaire.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 03:30:00 +0000

sabbir, it would never work. Those lease agreements are locked in tight, unless you want to upgrade to a more expensive lease on another car in lieu. They know all the tricks.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 03:27:00 +0000

+1 again. Robertplattbell, but you’re wasting your breath and you know it.

By: Tweedle

Tweedle — Wed, 02 Nov 2011 03:19:00 +0000

By: Tweedle

Tweedle — Wed, 02 Nov 2011 03:17:00 +0000

Where your logic is flawed is assuming everyone who buys a car is financing, and also the idea that contemporary cars will start incurring expensive repairs in just a few years or starting at ~45k miles is ridiculous, with a few exceptions. Most modern cars do not start needing expensive reparis at anything close to the timeframe you describe. The bottom line is, unless the lease write off makes sense as a write off against your business, any kind of car payment (whether for a leased vehicle or a financed new or used vehicle) likely doesn’t make sense and you can’t really afford the car. Most people are driving around in cars they cannot afford. We purchase our vehicles and pay in full at the time of purchase. We sometimes buy late model used or lease returms. We occasionally finance when there are 0-1% APR deals, and invest the money we’d have spend to buy the cars outright, but we always have on hand the cash to pay in full. We have no debt to speak of, other than our mortgage, have fully funded retirement accounts, fully funded emergency accounts/savings, etc. I realize we aren’t the norm, but most people live far beyond their means. We drive luxury cars, by the way, so this isn’t about having to sacrifice a nice car in order to afford paying for it outright. I will admit that we don’t have to drive luxury cars. They are a luxury. The money could be better put toward something else, but we are among the few who can truly afford are vehicles live far below our means.

By: josh

josh — Wed, 26 Oct 2011 00:06:00 +0000

if you can afford a lease then you can afford to put that money aside for repairs. You just need to have the self control to put it and keep it there. if you put 190 a month away, then in 18 months you would have saved 3420 dollars, more that enough to replace or rebuild the motor if you shop around. in 5 years you would have 11,400 in savings. even if you had to replace the motor and transmition and other things up to 7 grand ( which is an exageration) then you would still have 4,400 dollars left over, and if you spent that much ( 7 thousand) on the car you probably could drive it another 3-5 years after the inital 5 years……

By: josh

josh — Tue, 25 Oct 2011 23:56:00 +0000

well said, very true. people want their needs covered ( now or in the future) so that they can just pay for their wants. ( now.) i say now because non of these persons have the self control to wait.

By: josh

josh — Tue, 25 Oct 2011 23:50:00 +0000

i could tell you that standing in the middle of the freeway was a bad idea for you but guess you wouldn’t listen. I could also tell you that buying 1995 ford escort for 20 grand was a bad idea for you, but you wouldn’t listen. And nobody needs to have the most money when you die, but you don’t want to be forced to work in retirement, and to have a comfortable retirement is worth it. Live like no one else now ( live poor when you are young) and you can live like no one else later. ( you will have saved and be well off in your golden years.) not working at a burger joint because you wanted to live it up when you were younger…..

By: josh

josh — Tue, 25 Oct 2011 23:43:00 +0000

well take that 220 a month and put it in a savings acount, and in 1 year you could have 2,640 (enough to replace the motor if you did some shoping around) in 5 years you could replace the engine and transmition and many other part up to 7 thousand in repairs ( now that doesn’t sound very fun but…) But if that same 2000 Grand prix lasted another only 5 years ( probably could last longer with 7 grand in it) 5 years putting aside that 220 every month you would now have paid in 13,200. ok, now subtract that 7 grand you have had to dump into the grand prix. YOU STILL HAVE $7,200! that is how much you have saved by driving around your old beat up car. do that in 2 increments and you have $14,400 in cash to buy a car and not have and payment, or do what ever you want to with it.

By: Vemaja74

Vemaja74 — Fri, 21 Oct 2011 05:43:00 +0000

I am leasing a toyota corolla and my car was hit while it was parked. Can u help me figure out how to get my car fixed without owing the finance company?? I still have 5 months left on the lease but my insurance company did not consider it a total loss. My email address is vemaja74@gmail.com. I appreciate any help here.