We are thinking about upgrading to an SUV. I'll be trading in my car and we are deciding whether to lease or buy a new car. Has anyone had experience trading in a car and then lease? How does this work? Thanks in advance for all responses!
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My BIL leases a car, and one downside for him is that he has to watch how many miles he puts on it. I think there are options and you can decide if you want unlimited miles, but he didn't do that and now he's has to pay extra if he goes over.... which is bad for us because he uses it as an excuse not to come visit!
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@artbee: Yeah, the mileage thing is sort of a pain!
DH leased a car when his truck unexpectedly went out and he was sort of in-between life phases (just graduating college, was probably moving out of his bachelor pad and into a place with me) and didn't want to be stuck with a long-term loan.
If you want something new every few years, leases are good. But you get no equity and they are more expensive. If you want something long term and have something that holds value for you, it is better to buy I think!
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@highwire: couldn't have said it better!
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I'm currently half way through my lease. I was also in between life phases- wasn't ttc yet but knew it would happen shortly thereafter.
Watching mileage is the only big complaint I have. I pay extra each month for more mileage. Leasing was a breeze, just put a down payment and the leasing company (Chase in my case) sends a statement every month.
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I've leased before, and like the others have said, watching the mileage is probably the biggest thing. I had to be really conscious of how much I was driving so I wouldn't have to pay any extra fees.
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DH used to lease, but we just bought a car. Leases are nice because the monthly payment is lower and you pretty much always have a newish car. The downside of a lease is you always have a car payment (which is why we bought).
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my old nanny family used to lease all their cars- they never bought! They liked it because they could just keep trading in cars and trying out new ones. I personally like to see the end at the light of the tunnel when I'm close to paying off a car. I would hate to have a car payment every single month forever. But it's up to you to decide if that's an issue or not.
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Back in 2009 I traded in my junker first car and opted to lease a new one. Your trade-in credit is applied against your lease down-payment (a lot of the lower-per-month leases require $x at signing).
At that time it made sense to me, because I was finishing up college and didn't have a any cash to put towards a car loan (and I didn't want another "junker.")
My lease is up this December and I am opting to buy my car out. When you sign a lease, they give you your buy-out price at that time. I finally have a decent amount to put down on a loan, so I'm hoping to be able to get a 36-month loan at a decent rate.
As PP have mentioned, mileage is a big factor. I have to pay $.50/mile if I go over 12,000 a year.
Oh, and if you don't buy out your lease, you have to pay a "disposition fee," (I think mine is $250 or something) in addition to "penalties" for any damage (scratches, dents, interior damage, etc.) You obviously do not have to pay for excess miles, damage, or the disposition fee if you choose to purchase the vehicle.
Another reason I am choosing to purchase my vehicle is because I don't want a car payment forever!!
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When you lease do you get the money back that is due at signing? Aka on a commercial when they it says "1,900 down and $199/month". I've heard different stories. Some say that money is essentially a deposit and you get it back and some say that money is gone.
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@sheskrafty: Nope, that money is gone. I wish you got it back, though!!
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I leased and bought out my lease as well. I put 1000 down, made payments of 212/month for 60 months. I had a balloon pmt of 8k. I ended up paying a little over 21k to own my car in 5 years. Because I bought out my lease and the residual stayed high on my car, I didn't end up upside down and the cost to own was very little. It also did not depreciate as much because I watched my miles as well-it is 9 years old with 84000 miles.
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I buy my cars.
The downsides to leasing (my opinion)...
1) watching mileage
2) when lease is up, you better have a down payment saved for your next car...I heard the only good reason to buy leased...
1)You like driving a new car every 2-3 years
2) Lower payments
3) You don't have a long commute or use your car that often. -
@sheskrafty: There can be a security deposit though that you put down that you can sometimes get back. Just like a security deposit you put on an apartment.
I leased an SUV for $225/month for 24 months (usually leases are 36 or more months) and I think I got the extra miles (15,000 instead of 12,000). I traded in an old car for $3,000 I think which covered all of my up front costs. There was 0% interest. Basically, the two years costs me almost $10,000 when it was all said and done.
For my next car I decided that I would rather spend $10,000 on a used car and HOPE that it lasts 2 years (most used cars in this range do). Plus with a used car, you can sell it for a few thousand usually.
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I might be wrong but I believe if you own a company and your company leases the car, the whole cost is tax deductible. I know that because of taxes that most of our friends with businesses go that route.
We buy but I could see my husband leasing if he starts doing free lance work.
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Personally, I sell my cars rather than trade them in at the dealer because you get more money for them. Obviously, its more work but I made an extra $1000 on my car that way. It also is one less variable to negotiate at the dealer.
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This thread came at the perfect time. We've decided to trade in SO's car and are planning on signing our first car lease ever, TONIGHT.
It seems to make sense to us because we'll be able to afford payments on an SUV - but we're not committed to the high payment. For long trips, we will use the car we own. We're hoping to move overseas in 3 years, so didn't want to commit to another purchase.For those that have experienced leasing - perhaps you can share any tips for what to include/review in a leasing contract?
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@Cole: The same is true if you own a vehicle and own your own company
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@travelingbrit: I would just say be careful at not just looking at the monthly cost. I think leases are harder to negotiate because there are a lot more places they can hide fees and such.
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Can't help but feel that leasing is a waste.
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i would always buy... and i would buy used, but that's just me. you're throwing away money leasing and with buying new, you're throwing away money when you drive away. for a good used car, you can still get one through a dealer that's been checked over, etc and pay less than new and keep some money in your pocket, IMO.
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After reading all of these posts, I'm more tempted to buy. My DH thought about leasing one of the cars (possibly mine) and buying the other car, so we have one available for long distance trips. It might be a good idea, but I'm not too sure how it will work sharing our cars. We've never tried this before and I'm not sure if he'll like switching cars whenever I need to visit my family.
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