Buying vs. Leasing a car (plus New vs. Used)

[disneysteve]

I have however bought both new and used cars. There are arguments to be made for both.

We bought a new car in 1996. It was destroyed by a fire caused by a mechanical design flaw in 2000 which was preceded by 4 unrelated recalls. We replaced it with another new car. That one was totaled in an accident in 2002. At that point, we realized that spending thousands of extra dollars on a new car didn't really get you anything special other than the new car smell, which is actually the result of toxic fumes from plastics and glues and solvents. So we replaced the totaled 2000 model with another nearly identical 2000 model except now it was 2 years old and several thousand dollars cheaper than the new one had been.

I can't think of any reason why we would ever buy new again.

[myrdale]

If and ONLY IF ALL of the following four conditions are met, I am 100% for purchasing new:

1) You know what you want
2) It is within your means
3) You plan on driving it for an extended period (+10 years, +200,000 miles)
4) You're out of high school!!

My folks would say they wanted a new car, then go drive around 4 different lots one afternoon and pick a car. Then within a year hated the car. No real thought or consideration went into the purchase. This absolutely violates rule #1.

I have a friend. Probably makes $50k per year. Just purchased a new house for $125k, then purchased a new car for $40k. We had to cancel our hiking trip because he could not afford to take the time off from work... Bad news he has at least 5 years of being broke ahead of him if he keeps the car. That breaks rule #2.

I've known people who were of the opinion, my sister included, that you will always have a car payment. So they buy a new car and trade it in for a new model every 2 years. That blows #3 out of the water.

I'm sure you can justify my reasoning for #4 with out any further detail.

Now consider my uncle who probably makes $150,000+ a year. Is getting close to retirement Everything is paid for, knew what he wanted, and spent $60,000+ on a new truck. No problem in the world with this purchase.

[LivingAlmostLarge]

Bought three cars new two foe me and one dh. Then one used for dh now. Plan is probably buy mine new and keep 20 years then for dh to lease every 2 years maybe 3. Financial impact i fully understand but we're in a special circumstances personally that require the lease and we can financially afford it. But even if money was tight we'd be looking to lease for personal reasons.

We've already discussed it and only put it on hold becuse of our current timing of finances. But as soon as my DH irons out his ccurrent job situation we are going to lease him a car. It'll be the newest subaru legacy with the safety package. Should be around $30k. No other car will be considered.

I am not a car enthusiast and i think cars are for point a to b. But sometimes things happen that different choices are made. And no we dont own our own business nor will the car be paid by job

[disneysteve]

we're in a special circumstances personally that require the lease

we dont own our own business nor will the car be paid by job

Okay, you've piqued my curiosity. What type of special circumstances require you to lease a car if it has nothing to do with his employment?

I assume you don't want to share that info or else you wouldn't have made such a cryptic post but I just had to ask.

My MIL has been leasing her cars. It drives me nuts because she hardly drives at all. When she returns the car at the end of the lease, it might have 10,000 miles on it. She's got to be throwing away a boatload of money to do this. I'm sure the dealer loves her.

[Weird Tolkienish Figure]

The math is easy:

2015 Honda Accord LX CVT MSRP $23,725

Buy it for $21,500 cash ($250 below invoice price, pretty good price but you could probably get it for $21,000)
Loan for $21,500 60 mo @ .9% = $22,010 (current Honda deal)
Lease it for 36 months and then buy it = $21,686 (current Honda deal)

At the end of all 3 scenarios, you own a 2015 Honda Accord LX CVT.

Cash = cheapest
Lease = $186 more
Loan = $510 more

The cash and the lease are about the same. And mileage doesn't matter because in all three scenarios, you own the car.

What am I missing? If I hate the car, at least with the lease I can give it back (the mileage limit matters for that). All I see is that leasing is not the devil incarnate and may not be as stupid as everyone makes it out to be.

BTW, I own all my cars. And would not lease one. Until I ran the math and saw the difference is only $186. Seems stupid not to. Heck, the cost of money alone would more than make up for that small difference.

Tom

Does the Honda lease require money down at signing and did you figure that in? Just curious.

[scfr]

We have owned 2 used and 3 new cars (still driving two of the "purchased new" vehicles). With the exception of the first car we owned (when we were young and not very savvy and in a hurry to get a car), each car purchase decision has been slow & deliberate and based on where we felt we could get the best deal at the time.

I've never leased but since I believe there's a time and place for just about everything I tried to imagine scenarios when leasing might make more sense than buying and I came up with a couple. For example, if I were alone and in my late-70's or early-80's or terminally ill and not sure how much longer I'd be driving I might lease. Why force my executor to have to deal with selling a vehicle? Any situation where you know you'll only be needing a vehicle (or a special type of vehicle) for a couple years, it might make sense to lease.

But as someone else mentioned, sometimes the best economic decision is to NOT have a car if it's feasible. I believe young people should wait as long as they possibly can before buying that first car. Walk, bike, or use public transportation (and rent a car occasionally if you really need one for a weekend getaway or hauling heavy stuff). If couples can get by with sharing one car, that is terrific. For several years of our marriage DH & I have shared one car, and if we move back to a more densely populated HCOLA (as we are considering) we will go back to having just one vehicle. In retirement I know we'll only have one vehicle. Sure it's convenient to have 2 vehicles, but it's an expensive convenience that can be eliminated as long as the couple communicates and plans.

[corn18]

Does the Honda lease require money down at signing and did you figure that in? Just curious.

Negative. They had a deal for a lower monthly lease payment and $1999 down but curiously, that ended up with a higher total capitalized cost.

[greenskeeper]

Okay, you've piqued my curiosity. What type of special circumstances require you to lease a car if it has nothing to do with his employment?

I assume you don't want to share that info or else you wouldn't have made such a cryptic post but I just had to ask.

My MIL has been leasing her cars. It drives me nuts because she hardly drives at all. When she returns the car at the end of the lease, it might have 10,000 miles on it. She's got to be throwing away a boatload of money to do this. I'm sure the dealer loves her.

her next lease should be for whatever miles she thinks she will drive over the term. 10k miles over 3 years should drop the payment significantly.

[Olivia1]

First car, purchased with my parents, 2 year old Accord. We kept that car in the family for almost 20 years (94-2014). Engine still ran great, but everything else was failing (Steering, brakes, windows, locks, A/C, etc). Finally my mother and I just took the car to car max and sold it for $200. Father was livid we got rid of it.

First 2 cars I've purchased were brand new. Had considered buying a used car while living in NYC, Many many off lease vehicles there, but people abuse the cars up there. Felt it was better to get a used car. Bought a jetta for $2000 below invoice with 0.9% financing. Other used options were similar in price at the time with higher interest rates.

2nd car we needed to get, but financially wasn't the smartest move. Bought it with no money down (before first real job, but we needed a 2nd car). Still a very dependable car (mazda). At time I had considered buying a friend's old Lexus LS400 (had close to 200,000 miles on it, but kept up well). Interior was horribly maintained though ...

Once considered a lease, but the cost of it all. And living in the southwest where we drove to visit family and friends, the mileage restrictions were a real pain.

Leasing can be a smaller cost up front for a new car, but its much more expensive in the long run.

[97guns]

ive been thinking about doing a lease on something and am just running my preliminary numbers. i havnt looked at any offers but if i can get a lease for $160/mo for 48 months like i see on tv that would put me at around $7,600 out of pocket provided theres no up front fees.

what can a 4 year old $20,000 car resell for? if i cant get more than $12K for it then leasing could be the better option

[Titonton6@]

2016 Honda Accord Sport Leasing Advice

So i just got a deal on a 2016 4dr Honda Accord Sport for a 36 month/12,000 mile LEASE. I am in northern VA.

I was told:
-that the MSRP is about $25,000.
-that with the discount, I was getting the car at a sale price of $20,900 (without fees, freight, tags, and processing).
- that after all fees, it would come out to $23,000 including everything (fees,tags, freight).
- they said the MF was .00179


offer is:
$2,500 down payment
$255/month for 36 months.
The sales manager claims that they are losing -$1,715 on the car.

is this a good deal or not?

Let me know if more info is needed.

thank you so much in advance for your help. This is my first time leasing a car and i dont know much about it. Please help.

[disneysteve]

The sales manager claims that they are losing -$1,715 on the car.

That is complete and total BS. Do you honestly believe that the dealer would agree to a deal that didn't have a nice fat profit for them?

This is my first time leasing a car and i dont know much about it.

You should never enter into a transaction that you don't fully understand.

Why are you leasing rather than buying?

[rennigade]

I would continue to purchase new. Ill gladly pay a premium if I have to. I like the peace of mind knowing that someone else didnt do dumb things before hand that will affect the car down the road...such as routine maintenance that can really screw things up. Doesnt mean that the brand new car wont be a lemon though.

I never ever consider the trade in value...because I do not trade cars in. I run them for as long as possible before buying a new one at which point they're almost worthless.

[rennigade]

That is complete and total BS. Do you honestly believe that the dealer would agree to a deal that didn't have a nice fat profit for them?

Dealerships do not make the bulk of their money on new cars. The used car business is where its at...larger profit margins. Also...the service department is where they make an absolute killing. Yes they want to make money on every car but the more vehicles they can move the more often customers will be bringing cars in for repair.

[dawnwes]

So i just got a deal on a 2016 4dr Honda Accord Sport for a 36 month/12,000 mile LEASE. I am in northern VA.

I was told:
-that the MSRP is about $25,000.
-that with the discount, I was getting the car at a sale price of $20,900 (without fees, freight, tags, and processing).
- that after all fees, it would come out to $23,000 including everything (fees,tags, freight).
- they said the MF was .00179


offer is:
$2,500 down payment
$255/month for 36 months.
The sales manager claims that they are losing -$1,715 on the car.

is this a good deal or not?

Let me know if more info is needed.

thank you so much in advance for your help. This is my first time leasing a car and i dont know much about it. Please help.

I am confused. Is this a sale or a lease?

You get the car for $20,900 by buying it after the lease is up? So, if you pay $255/mo that comes to $9,180 paid. What is the interest rate? How much of that goes towards the purchase price? Do you plan to purchase? Do the lease papers say how much you will owe after 36 months in order to purchase the car?

No way to know if it is a good deal without some more facts.