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How many here lease their cars / trucks
kimberkid
Member Posts: 8,857 ✭✭✭
Many of you know I'm in "the car business"
I've always owned my cars, but yesterday I went to a Leasing Seminar and it has me re-thinking 30+ years of car ownership.
Of course, in the beginning Leases were "open end" and the lessor was responsible for the value of the car at the end of the lease ... We've all heard these horror stories ... this has changed.
Now lease's are "Closed End" and the value of the car is determined at the time of signing ... its known as the "Residual Value" ... if the actual value is greater, you can still buy it for the agreed residual value at the end of the lease, or if its less ... you drop off the keys and go pick out another vehicle; and you have no negative equity to drag along with you.
Of course a lease "assumes" you are always going to have a car payment and a car not more than 3 years old.
The argument that you don't own anything isn't valid as 99.9% of people have to finance!
You're a co-owner with the bank, but you are completely responsible for it.
That you drive too many miles isn't a valid argument either.
Depreciation for high miles at trade-in is typically 25 to 35 cents per mile ... in a lease you can pre-purchase miles at 10 to 15 cents per mile ... that is a drastic saving in depreciation.
If you have an accident which would negatively affect the value;
You have it repaired (just like you would if you owned it) but doesn't affect the residual value you agreed on and at the end of the lease you can still walk away from it and not take the hit for depreciation due to the accident.
If it's totaled, GAP protection (which is built into most leases) covers the difference between current value and the amount owed ... and you just go pick out another vehicle.
You pay less sales tax
You only pay sales tax on your payments ... not on the price of the whole car.
The argument that leasing requires "perfect credit" isn't true anymore:
Only the worst credit risks can't lease ... but usually they can't buy either (if they can they're paying 15% - 20% interest)
Leasing gives you a better credit score(as long as you make your payments on time)
When you purchase, your credit score reflects the amount of debt you've incurred ... with a lease, your only debt is the total of the payments, not the total cost of the vehicle.
The first 3 years of a vehicle's life are typically the cheapest ... plus it's covered by warranty; maintenance is all you're responsible for, which you'd be responsible for it even if you owned it.
It just makes sense that a person should purchase things that are going to appreciate in value and enjoy the appreciation but lease things that are going to deprecate in value ... and dodge the deprecation (as much as possible)
Your challenge, should you choose to accept it ...
Talk me out of leasing!
I've always owned my cars, but yesterday I went to a Leasing Seminar and it has me re-thinking 30+ years of car ownership.
Of course, in the beginning Leases were "open end" and the lessor was responsible for the value of the car at the end of the lease ... We've all heard these horror stories ... this has changed.
Now lease's are "Closed End" and the value of the car is determined at the time of signing ... its known as the "Residual Value" ... if the actual value is greater, you can still buy it for the agreed residual value at the end of the lease, or if its less ... you drop off the keys and go pick out another vehicle; and you have no negative equity to drag along with you.
Of course a lease "assumes" you are always going to have a car payment and a car not more than 3 years old.
The argument that you don't own anything isn't valid as 99.9% of people have to finance!
You're a co-owner with the bank, but you are completely responsible for it.
That you drive too many miles isn't a valid argument either.
Depreciation for high miles at trade-in is typically 25 to 35 cents per mile ... in a lease you can pre-purchase miles at 10 to 15 cents per mile ... that is a drastic saving in depreciation.
If you have an accident which would negatively affect the value;
You have it repaired (just like you would if you owned it) but doesn't affect the residual value you agreed on and at the end of the lease you can still walk away from it and not take the hit for depreciation due to the accident.
If it's totaled, GAP protection (which is built into most leases) covers the difference between current value and the amount owed ... and you just go pick out another vehicle.
You pay less sales tax
You only pay sales tax on your payments ... not on the price of the whole car.
The argument that leasing requires "perfect credit" isn't true anymore:
Only the worst credit risks can't lease ... but usually they can't buy either (if they can they're paying 15% - 20% interest)
Leasing gives you a better credit score(as long as you make your payments on time)
When you purchase, your credit score reflects the amount of debt you've incurred ... with a lease, your only debt is the total of the payments, not the total cost of the vehicle.
The first 3 years of a vehicle's life are typically the cheapest ... plus it's covered by warranty; maintenance is all you're responsible for, which you'd be responsible for it even if you owned it.
It just makes sense that a person should purchase things that are going to appreciate in value and enjoy the appreciation but lease things that are going to deprecate in value ... and dodge the deprecation (as much as possible)
Your challenge, should you choose to accept it ...
Talk me out of leasing!
If you really desire something, you'll find a way ?
? otherwise, you'll find an excuse.
? otherwise, you'll find an excuse.
Comments
Leasing is comparable to an interest only home loan. You never have any "equity" in what you are driving (well, maybe equity through depreciation). Leasing is good for people who are definately going to turn in the vehicle at the end of the lease period and driving under the mileage. You are wrong about the mileage, going over the miles, whether you prepurchase them or not, cancels out any savings you might get by leasing. Consumer reports has a good leasing vs buying guide.
If you plan on keeping the car beyond the lease period, buy it, don't lease it. There is an almost 100% chance that your car will never be worth its "residual" value. In cases where people do buy the car, the dealers gets 2 incomes. 1 from the sale of the new car and another from the sale of the used car.
Leasing typically benefits only the dealer.
In cases where people do buy the car, the dealers gets 2 incomes. 1 from the sale of the new car and another from the sale of the used car.
Leasing typically benefits only the dealer.
That's not correct ...
The dealer doesn't get a "second" income from the car ... the dealer sells the vehicle to the leasing company, so it belongs to the leasing company and is their vehicle from that point on
Regardless if it's GMAC Leasing or a private leasing company. After the "signing" everything is between you and the leasing company.
In the case of GMAC, if the customer doesn't buy the vehicle at the end of the lease, the car is turned in usually at the dealer (this is where the confusion may be) but GMAC picks up the vehicle and takes it to auction ... then a dealer may buy it back.
Its no different than if you buy a car, and 3 years later, trade it in and buy a new one ... to get a second shot at making money off of it, the dealer has to buy it back.
Typically, the dealer isn't the only one that benifits because you can get more car for your dollar if you lease ... for the same payment.
? otherwise, you'll find an excuse.
I guess I am the .1% that doesn't finance. Sales tax in SC is a Max $300 regardless what the vehicle cost.
That's nice! in Kansas we pay 7.45% on the total value ... only 3-4 states have no sales tax on vehicles.
So do you pay cash?
Do you loose on interest that your money could have earned (because you spent it on a car) and not take advantage of 0% financing?
Don't get this the wrong way, I paid cash for my 04 S-10 Crew Cab.
I'm just starting to re-think.
For instance, why should I take money out of invenstments that are paying 10.5% or more when can use "their" money for free? For that matter, why use my money that's earning 10.5% or more when I can use the banks money for 8%?
Just so I can say "I own it" (but knowing its going to be worth less every day)
? otherwise, you'll find an excuse.
I guess I am the .1% that doesn't finance. Sales tax in SC is a Max $300 regardless what the vehicle cost.
Me too. I own my house and my car and everything in both of them. I have borrowed against my house to finance a second property.
If you take care of your vehicle you can drive it for a lot longer than 3 years. My truck is ten years old, runs great and I intend to drive it til it stops running. If gas keeps going up I'll buy a car cash and keep the truck for camping, hunting and other outdoor stuff.
Money is the most expensive you can buy. I don't like borrowing money for anything.
quote:Originally posted by select-fire
I guess I am the .1% that doesn't finance. Sales tax in SC is a Max $300 regardless what the vehicle cost.
That's nice! in Kansas we pay 7.45% on the total value ... only 3-4 states have no sales tax on vehicles.
So do you pay cash?
Do you loose on interest that your money could have earned (because you spent it on a car) and not take advantage of 0% financing?
Don't get this the wrong way, I paid cash for my 04 S-10 Crew Cab.
I'm just starting to re-think.
For instance, why should I take money out of invenstments that are paying 10.5% or more when can use "their" money for free? For that matter, why use my money that's earning 10.5% or more when I can use the banks money for 8%?
Just so I can say "I own it" (but knowing its going to be worth less every day)
I don't buy Brand New. That is a huge mistake for a buyer. Depriciation kills the first year. I buy from private sales not dealers. Vehicle will still be under warranty and cost approx. 1/2 of list when a year old.
When you purchase, your credit score reflects the amount of debt you've incurred ... with a lease, your only debt is the total of the payments, not the total cost of the vehicle.
This does not make sense. The credit company doesn't know if you are leasing or buying as long as you are making the payments. By this reasoning you will have better credit if you buy an Escalade instead of a Ranger. That statement sounds like the type of propaganda double talk a slick salesman would use to convince someone to lease.
I don't buy Brand New. That is a huge mistake for a buyer. Depriciation kills the first year. I buy from private sales not dealers. Vehicle will still be under warranty and cost approx. 1/2 of list when a year old.
And if no one bought "brand new" ... where would you get your vehicles from?
Miss. Creant-
Your "debt to income" is more favorable in a lease than a purchase, because you're not responsible for the whole vehicle cost ... but you have the same vehicle.
Nation wide, over 30% of the population leases ...
BTW -
I'm not trying to drum up business or sell anyone a vehicle here! Just asking a simple question because I have a new car coming in and trying to decide weather to lease or buy ... and leasing is making a lot of sense for this situation!
? otherwise, you'll find an excuse.
Simple answer, The leasing companies. They are the ones making money. Then when the cars are a year old or with 15-20K miles they sell them. Here is where I come in... and buy a very nice , under warranty one year old car for a good deal. My latest was a new Malibu. List was $23,800. Purchased it for $12K cash with 17K miles on it still under warranty.
We sell at least 100 GM Program cars a month for that very reaason ... off lease and program cars are the best value for anyone wanting a new/near new car.
However the Saturn Sky I have on order doesn't fall in to that catagory ... right now at auction the off lease Sky is bringing MSRP+ (with 10K miles on them) because Saturn (GM) can't keep up with the demand.
I could pay cash for the car, and own it out right. I'm thinking the Sky will have a high residual so it will have a lower lease payment ... and after the lease is up, if the value is still high and I want to purchase it I can for the pre-determined residual value ... or if the value isn't there walk away.
? otherwise, you'll find an excuse.
36months with 15,000 miles per year.
Current 04 Suburban MSRP'd for over $42,000.
Lease payments are $385 a month, and it goes back in November.
The disposal fee at the end of the lease is $100.
As Kimberkid said, If you keep it clean, dont run or crash the doggie out of it, you pay the disposal fee and go pick out another.
As for residuals, my turn in's were worth at least $2,500-$3,000 above the contract.
If you dont mind the payments, with no ownership, and mileage limits.
Its a great way to have new vehicle every 3 years for about half of the ownership payment.
You have to remember that you still have to deal, to get the price down from the MSRP, the 04 went to contract @ $35,500 compared to the MSRP of over $42,000.
It works for me.
Walte
Many of you know I'm in "the car business"
I've always owned my cars, but yesterday I went to a Leasing Seminar and it has me re-thinking 30+ years of car ownership.
Of course, in the beginning Leases were "open end" and the lessor was responsible for the value of the car at the end of the lease ... We've all heard these horror stories ... this has changed.
Now lease's are "Closed End" and the value of the car is determined at the time of signing ... its known as the "Residual Value" ... if the actual value is greater, you can still buy it for the agreed residual value at the end of the lease, or if its less ... you drop off the keys and go pick out another vehicle; and you have no negative equity to drag along with you.
Of course a lease "assumes" you are always going to have a car payment and a car not more than 3 years old.
The argument that you don't own anything isn't valid as 99.9% of people have to finance!
You're a co-owner with the bank, but you are completely responsible for it.
That you drive too many miles isn't a valid argument either.
Depreciation for high miles at trade-in is typically 25 to 35 cents per mile ... in a lease you can pre-purchase miles at 10 to 15 cents per mile ... that is a drastic saving in depreciation.
If you have an accident which would negatively affect the value;
You have it repaired (just like you would if you owned it) but doesn't affect the residual value you agreed on and at the end of the lease you can still walk away from it and not take the hit for depreciation due to the accident.
If it's totaled, GAP protection (which is built into most leases) covers the difference between current value and the amount owed ... and you just go pick out another vehicle.
You pay less sales tax
You only pay sales tax on your payments ... not on the price of the whole car.
The argument that leasing requires "perfect credit" isn't true anymore:
Only the worst credit risks can't lease ... but usually they can't buy either (if they can they're paying 15% - 20% interest)
Leasing gives you a better credit score(as long as you make your payments on time)
When you purchase, your credit score reflects the amount of debt you've incurred ... with a lease, your only debt is the total of the payments, not the total cost of the vehicle.
The first 3 years of a vehicle's life are typically the cheapest ... plus it's covered by warranty; maintenance is all you're responsible for, which you'd be responsible for it even if you owned it.
It just makes sense that a person should purchase things that are going to appreciate in value and enjoy the appreciation but lease things that are going to deprecate in value ... and dodge the deprecation (as much as possible)
Your challenge, should you choose to accept it ...
Talk me out of leasing!
Spoken like a true salesman that has been sol a bill of goods. It is the MOST expensive way to obtain transportation. PERIOD. The dealer and finance company win the consumer pays and winds up with nothing to show for it. Se what is said about leasing on this web site. www.daveramsey.com
The only way to buy a car; an object that depreciates by 40 percent in three years, is with cash. Then you are driving something you can afford. Financing something that is losing value is paying interest on a loss every month you pay.
CASH and CARRY never lets you down.
99.9% of people don't finance what they are driving. 99.9% of NEW car buyers have to finance their dreams away.
With conventional financing after you've been paying on it for 2 years if your wife died and you were hurting for money you could refinance your car to have a lower payment and maybe even less of an interest rate.
With a Lease you are chained to that payment and vehicle and can only get out of it.....if you are US military and get orders to deploy overseas.
Thaz a new provision they put in the soldiers and sailors act.
You can't lower/lift a leased vehicle.
99.9% of people don't finance what they are driving. 99.9% of NEW car buyers have to finance their dreams away.
With conventional financing after you've been paying on it for 2 years if your wife died and you were hurting for money you could refinance your car to have a lower payment and maybe even less of an interest rate.
With a Lease you are chained to that payment and vehicle and can only get out of it.....if you are US military and get orders to deploy overseas.
Thaz a new provision they put in the soldiers and sailors act.
We plan on buying out the Element. I could buy out my lease and the rest of the value with a payment about $75 less a month. I plan on paying the lease until March, then buying it out. My payment will drop from $375 to less than 300/mo.
If you are leasing a vehicle, you are renting the right to drive that vehicle for the time period with the mileage/maintenance provisions.
If you are buying a vehicle, IF you had to, take out a second on the house, and purchase the vehicle. Why? Finance charge on your house payment is tax deductible for an individual.....
I do not believe in leasing - you have NO residual value - EVEN if they tell you what the vehicle will be worth. All dealerships and leasing companies are there to make money....THEY have it figured out...I guarantee it.
I am lucky - I get GM employee price on new vehicles - which more than takes care of the immediate depreciation on a new vehicle ($5K to 8K off of a $27K to $35K sticker price) PLUS the incentives.
Shop around...you can find similar deals.
I am lucky - I get GM employee price on new vehicles - which more than takes care of the immediate depreciation on a new vehicle ($5K to 8K off of a $27K to $35K sticker price) PLUS the incentives.
Shop around...you can find similar deals.
Incentives like that on other vehicles yes, but not on the Sky or Solstice ... There is a 6 month build time and there are no specials, incentives or dealers that will give up a unit out of their allocation for GM Employee Price (or at least none that I've found, and I wouldn't buy it from another dealer anyway) These cars are bringing over sticker USED!
It'll look like this only mine is Chile Pepper Red ...
BTW-
I ordered a 2007 Suburban for a customer and was expecting the typical 4-6 week wait ... it was here in 19 days!
? otherwise, you'll find an excuse.
Car leasing (car fleecing) is a win-win situation, for the dealer.
You drive a car for three years or so, and turn it back in. If it has a good residual value, the dealer wins. If it doesn't, and is worth less than the unpaid balance, you get to make up the difference, and the dealer wins.
Always have a car payment? Not me. All a car payment means is that you bought a car you can't afford.
Credit score? All a good credit score means is that you love to be in debt. I am shooting for a score of zero.
leasing is fine especially factory subsidised leases. they buy down the front end and lower your payment
the argument that you never own your car is half right but most leases offer guarnteed financing for the residual if for whatever reason you decide to buy the car at the end...
the miles thing is a misnomer...only comes into play if you keep the car for the duration and do "turn it in"(most people don't) at that time there are also restrictions against worn tires rock chipped windows rock dings in the paint or door dings bigger than a dime or of sourse any collision damage you neglected to repair...
the worst thing about a lease is there are different laws covering it....on a purchase contract the car is the only colalteral for the loan (unless specified) with a lease, if you bail they can come after you for all the missed payments plus reserve and cost of making the vehicle sale ready including the cost of the auction it took to sell it....
I agree leasing isn't ideal for everyone, but if the program fits your buying/trading habits and is in your range of affordability, it is VERY attractive. Do the math. Those that summarily poo-poo the proposition should better educate themselves as to how modern leases work and under which circumstances an individual can benefit from the program.
Personally, I don't lease mine. I have a 57 mile commute each way to work, and live in the country so anywhere we go is a haul. It's not practical for me. I finance for a short time to manage cash flow, and pay it off asap. Then drive it till the wheels come off![:p]
I'm having my own quandry at the moment, trying to convince myself to trade the wife's '03 explorer on a new one while this 0% deal is happening. 0% trumps lease in this case......
By the way, Kimberkid......NICE car you got coming!!! Enjoy!
I wish Ford would come out with something cool like that...
Here's a good example of a "throw down" car. Inexpensive, Easy to replace, but still lots of cool points.
Looks like you found it in the ditch. Don
Here's a good example of a "throw down" car. Inexpensive, Easy to replace, but still lots of cool points.
you should try to include them in the photo. scott
quote:Originally posted by mrseatle
Here's a good example of a "throw down" car. Inexpensive, Easy to replace, but still lots of cool points.
Looks like you found it in the ditch. Don
Some of the bests deals are found in a ditch
Here's a good example of a "throw down" car. Inexpensive, Easy to replace, but still lots of cool points.
with a littl paint and elbo grease it could look like this
A Volvo S60 has an extended warranty for about $2000.
6 or 7 years, 100,000 miles.
I could drive it for three years, 70K miles, and the wife would drive it for the remainder.
There is no way she would max out the milage to 100K in the remaining 3 or 4 years.