I've never leased a vehicle. I've also never owned a new one.
Who leases and why? What are the advantages and disadvantages of leasing vs buying a used vehicle? What are the advantages and disadvantages of leasing vs buying a new vehicle?
Who never leases and why?
>>Who never leases and why?
I never lease(did it once), and in general I think it is a very bad idea..
My take on it is that you make about 80% of the payments during the typical lease period, but end up with nothing when the lease is over...i.e. no equity in your car, and nothing to trade in.
There maybe some circumstances where it is beneficial (i.e. you use it for business and the tax advantage of leasing versus owning matters), but I think a lot of people end up leasing so they can drive a car they could not otherwise afford...i.e. it gets the payment down just a little lower.
I am very negative on leasing in case you can't tell.. [img]/forums/images/icons/smile.gif[/img]
Danny, I agree with EJB. I've run the numbers several times over the years both for business and for personal use.
Personally, I've never leased a vehicle although our daughter and her husband once did (and learned their lesson, I think), a brother-in-law also did once.
If you're talking about for personal use, I think the only advantage is lower monthly payments; i.e., drive more car than you could afford otherwise, but you lose in the long run.
If you're talking about for business use, it may be a good deal because it greatly simplifies record keeping and tax reporting.
what EJB and Bird said!
Leasing is great for small businesses that can write off the lease payments. But, imho, bad for individuals. You have all the same costs as owning ... but, in the end, no vehicle. Further ... it can be quite costly if you do use it more than the relatively low annual mileage they "allow" you.
They continue to suck in people with "low payments" .... note .... payments ... not costs ....
pete
it's a shame that common sense isn't
Agree, agree, agree with everyone. The only time a lease is beneficial is when you own a business. Then you can deduct 100% of the cost.
Also agree for individuals to buy rather than lease. In many cases on a lease, you actually wind up paying for the option packages on the vehicle even though it's not yours!
That's not even talking about mileage and condition penalties that can add cost to end a lease.
Plus, that last note is a balloon note and chances are that the next interest rate (if you chose to finance that big last payment) will be way higher than that lower initial rate. My opinion is that - for anybody - if you cannot afford to buy the vehicle and you are not a business then buy something else that you can afford and don't lease [img]/forums/images/icons/cool.gif[/img]
Nick
Danny,
I lease vehicles all the time. I do it for one very good reason. I'm the LESSOR and it makes me a very good living. I would never recommend that you, as a private individual, become a LESSEE of a vehicle. The numbers just aren't there for you.
You'll be far better off buying whatever you choose and doing what you want with it when you want. I could go into a litany of reasons for you not to lease. I won't bore you with it here. Either buy what you want new or buy what you can afford used. You'll be much better off.
Good luck with whatever you decide. I hope this helps. [img]/forums/images/icons/laugh.gif[/img]
What everybody else said. Leasing might make sense for tax reasons if you're self employed, otherwise you lose.
I notice nobody addressed your question about new vs. used. With today's processes and materials, a vehicle life of 100-200,000 miles is not unusual. Therefore, if you buy a 2 year old car with 50,000 or so on it, you've still got a LOT of useful life left in the vehicle.
The only downside I can see to used is the possibility of buying someone else's problems or a lemon that somebody dumped. A little research, a CARFAX report and shopping at a reputable dealer should help to shield you from that. If you're nervous, an extended warranty is good insurance. Also, loan rates for used vehicles are a couple of points higher than for new in some cases.
On the upside, the price will be significantly less than new. Your initial outlay is reduced, the associated taxes are reduced, and the insurance is cheaper.
For example, I recently bought a 2001 Dodge Dakota Quadcab 4x4 SLT. Across the street at the Dodge dealer, a similarly-equipped 2003 stickered at a little over $32,000. I paid $17,600 for the 01 with 32,000 miles on it, plus $1600 for a 6 year, 100,000 mile bumper to bumper warranty.
Including the warranty, that's $12,800 off the top, plus $640 saved on sales tax @ 5%, plus another $400 saved on excise tax and plates. I don't know off hand what the difference in insurance premiums would be, but I'd say $200 or $300 a year would be a reasonable guess.
And after 30 days or so, I defy anyone to tell the difference from brand new.
This is the first time I've spent BIG bucks on a used vehicle. Based on my experience so far, I don't expect to EVER lay out the bucks for new again.
I'm with you, Paul. I've bought lots of both new and used vehicles and sometimes a new one just has features that I want and can't get or find on a used one, but I really think buying used is a much better financial decision. Right now I've got a '99 F150 Supercab that I bought a year ago (next month) with 49,000 miles on it (I've got 59,000 on it now) It looks and handles as well as a new one. And we have an '01 Windstar minivan that we bought in December with 27,000 miles on it. Each of them easily cost $10k less than a new one of the same model equipped the same way. And since, like you said, I'm sure I'm also saving on insurance premiums, I'm convinced I saved a substantial amount of money, and we're driving exactly the type of vehicles that suit us right now; i.e., if I were going to trade either of them for a new one, it would be the same make and model.
I didn't want to be the one to advocate buying used over new since I have a vested interest in used vehicle. Since that ground has been broken, however, I will add to the chorus.
I'm currently driving a 1996 Chevy Tahoe that I've had a little over two years (an inordinately long time for someone in my business to own and drive a vehicle). It does everything I need for a vehicle to do besides being comfortable and even fun to drive. I could easily have bought just about anything I would have wanted and chose to buy a (then) six year old truck.
Frankly, the only reason I didn't buy one a year older (the first year of production) was that the 95's didn't have the Vortec engine available and I wanted that for towing. Since I've bought my Tahoe I've replaced the water pump (literally the very first morning I had it [img]/forums/images/icons/blush.gif[/img] ), the fuel tank and fuel pump (the pump went bad and the tank had a leak near the top the day I bought it) and a wiper motor circuit board. Other than that it's been simple maintenance items (brakes, LOF, etc.).
When I compare the money I'd have spent on new with what I spent on this including the repairs there's no contest. Additionally, it's going to be a while yet before the value of this goes down to the point where it's $10,000 less than what I paid. Had I bought new, that day would have passed over a year ago. [img]/forums/images/icons/smile.gif[/img]
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