NGC tips on leasing a car wanted

[fotoguzzi]

My kids car bit the dust.. (2003 Mazda tribute) best way to sell it? no brakes so can't be driven.
I've given him 2 cars now so this is all on him..
He has a good job but not much cash to buy a used car.. His brother says lease something like a Honda civic, He claims you can get a lease for under $200/mo
I'm not a fan of leasing so looking for the collective wisdom here..

[RinkRat II]

 There are a lot of year end deals to be had, zero percent financing, not much down....leasing is the last resort IMHO.
   
     Paul B

[Lannis]

I'm no help; I never went into debt on a car, always bought what I could afford.   

I suggest buy what you can afford until you can afford something better.   If you buy something you CAN'T afford, you'll never get out of debt and never be able to afford something better ....

Lannis

[PJPR01]

Volkswagen is offering very attractive leasing conditions today as well.

A lease is not a permanent lock...if you're going to keep the car, just negotiate up front the lease factor to make sure you're getting a decent implicit interest rate, and when the lease is up, you buy the car for the residual value.  If you do a good negotiation up front on the real value of the car, you're not in any worse situation in the grand scheme of things, maybe a couple hundred bucks difference in the end, but with cheap interest rates, really you're paying hardly anything to borrow these days with rates like 0.9% or 1.9% or even 2.9%.  Very cheap money indeed.

Think of it as the following simplistic scenario:

Buy Car worth $20K over 60 months...pay approx 350 a month...I'm rounding for simplistic purposes, total payments 21K.  (Principal and Interest)
Lease car worth $20K over 36 months, pay 220 a month, and at the end of the 3 year lease, buy the car for approx 13.5K..., total payments 21.4K

Now if you don't think you can swing the purchase of the car at the end of the lease, you can always go and get a used car low interest loan from the credit union to finance the purchase over 3-5 years.

The only downside really of a lease is:
1.  If you get screwed on the Money factor, so make sure understand this clearly.
2.  If you don't negotiate the right value of the car up front and associated residual value at the end of the lease.
3.  You are locked into the lease for the duration of the lease, now there are websites and companies offering services where you can find someone to take over the lease, but it's not as simple as buying/selling.
4.  If you turn the car in at the end of the lease with excess mileage, you'll pay a hefty fee, but this is not applicable if you buy the car.

And yes...you can get leases in the $200 per month range on a variety of decent cars these days.

[ohiorider]

Volkswagen is offering very attractive leasing conditions today as well.

A lease is not a permanent lock...if you're going to keep the car, just negotiate up front the lease factor to make sure you're getting a decent implicit interest rate, and when the lease is up, you buy the car for the residual value.  If you do a good negotiation up front on the real value of the car, you're not in any worse situation in the grand scheme of things, maybe a couple hundred bucks difference in the end, but with cheap interest rates, really you're paying hardly anything to borrow these days with rates like 0.9% or 1.9% or even 2.9%.  Very cheap money indeed.

Think of it as the following simplistic scenario:

Buy Car worth $20K over 60 months...pay approx 350 a month...I'm rounding for simplistic purposes, total payments 21K.  (Principal and Interest)
Lease car worth $20K over 36 months, pay 220 a month, and at the end of the 3 year lease, buy the car for approx 13.5K..., total payments 21.4K

Now if you don't think you can swing the purchase of the car at the end of the lease, you can always go and get a used car low interest loan from the credit union to finance the purchase over 3-5 years.

The only downside really of a lease is:
1.  If you get screwed on the Money factor, so make sure understand this clearly.
2.  If you don't negotiate the right value of the car up front and associated residual value at the end of the lease.
3.  You are locked into the lease for the duration of the lease, now there are websites and companies offering services where you can find someone to take over the lease, but it's not as simple as buying/selling.
4.  If you turn the car in at the end of the lease with excess mileage, you'll pay a hefty fee, but this is not applicable if you buy the car.

And yes...you can get leases in the $200 per month range on a variety of decent cars these days.

Thanks for the brief tutorial.  I'll be shopping for a new car, either lease or purchase, and your points are quite helpful.

Bob

[blackcat]

I leased a Toyota Tundra for the business and at the end of the lease I didn’t want the truck. It had low mileage, well below the average. Southeast Toyota sent over some guy with a camera after I told them that I wouldn’t be buying the truck and he photographed every little nick in the paint job. They sent me a bill for $600 bucks. I refused to pay it as I told them they were getting the truck back with exceptionally low mileage. We went around and around until finally they relented but I had to pay $100 bucks for some other fine print in the contract. Needless to say, I won’t be leasing again.

On another note, I have purchased two vehicles the last week in December and it was the best time of the year to get a deal.