lease, finance or buy used?

[nature boy]

winnie and i were talking about this today. i thought lease was the best option because you don't have to worry about reselling and depreciation. she said we should just buy used so we can pay for the car outright and not worry about it anymore. but i said there will always be repair bills and maintenance costs with older vehicles.

what do you guys think?

[jeSteR]

Lease only works out better if you can write it off as a business expense. Period.

The only other advantages of leasing are that you get to drive a new car every 3 years or that you can drive a car that is actually out of your means. Neither of which actually save you money.

A well maintained car that was manufactured post '95 should be able to last you well over 20 years or 280,000kms and ultimately cost you less money. Of course, that's only if you don't have issues with driving an older model vehicle.

[joel]

what's the diff between lease / finance?

[jeSteR]

You never own the vehicle on a lease, you are renting it. All you're paying for is the depreciation of the car ( and the interest ). Plus, lease interest rates are ALWAYS higher than a finance interest rate.

The most prudent decision financially is to by a three year old vehicle that is off lease. The previous Lessor has paid the largest portion of the depreciation of the vehicle for you already, and you get a car that probably still has 2 or 3 years left on the warranty. Within that space, there is plenty of time to get all the inspections and maintenance to ensure that it's health is top notch. From there, it's up to you to proactively maintain it then to last you another 20 years. This will always be the most inexpensive way of running a daily use vehicle.

[Duncan]

i agree, leasing is never a good option unless you have the money to not care or you're writing it off for a company... you might as well finance the car for a lower cost and if you want to sell later, then sell later...

most of us drive our cars for close to or at least 10 years anyways (except for G and Nathan somehow) so might as well finance it....

[nature boy]

uuuhhhh... what? leasing rates are always lower than financing, both actual dollar figures against the same downpayment and in interest rates. go to any car manufacturer website, price one out and see.

my car's lease is sitting at 2.9% interest over 48 months with 0 down and i'm paying $400 a month. if i had financed it for 60 months with zero down i'd be paying 3.9% and my payments would be over $600 a month. sure, you get to keep the car when you're done, but you could do that with a lease as well.

and those aren't the only two advantages of a lease. with a lease you don't have to worry about resale value. if you get into a major accident, you don't have to worry about long term reliability. a friend told me about his buddy who leased an x5 and got t-boned. the damage was over $18k and he just had to return the car without taking a huge hit in resale.

people say that leasing is stupid because you don't keep the car and you're throwing money away, but i'd say the same for buying a new car as you're just paying off the depreciation anyway.

[jeSteR]

Apples to apples buddy.

a 48 month finance would not be at 3.9% ... nor a 60 month lease be at 2.9%

If you are serious about calculating the total cash outlay, then you need to evaluate the cost of owning a new vehicle over 20 years vs. leasing 4-5 new vehicles over the exact same amount of time.

That is just the $$ side.

Of course there are more advantages to leasing when you consider the accountability / responsibility and the materialistic aspect of the vehicle.... but at the end of the day, those considerations will cost you more $$$

[nature boy]

yeah, that's true. i guess my point is that there's so much time and effort involved in selling your used car (or a huge dollar hit by trading it in), that leasing just makes all of that so much easier and smoother.

and seeing as how i never owned a car for more than 4 years anyway, leasing is probably a good option for me. however, that might change after this lease is up, we'll see.

[jeSteR]

Try and think longer term though. Not having any monthly payments for anything (apart from my phone, hydro, gas, and cable bill) opens up a LOT of freedom to save more, give more, and share more.

[nature boy]

yeah, i see that. but i would imagine you still have to pay for major service on your car? on most cars the major services happen all around 100-200k. that all could cost a pretty penny too. with a lease you don't have to worry about that stuff.

so if you think about it, leasing a vehicle for 10 years and owning a vehicle for 10 years could possibly cost you about the same (because a lease monthly payments will always be less than financing monthly payments).

i'm not trying to convince anyone to lease over finance, i'm just saying that there are more benefits to leasing than just a tax write off.

[joel]

is this discussion exclusively for cars or include other things as well?

[geForce]

[Duncan]

haha... i'm not saying that you get rid of your cars before 10 years irresponsibly, i'm just saying it's happened... and i got rid of my civic after 7 years not because it wasn't a good car, but because it would've been inconvenient to keep it as a family car... actually, i still regret getting rid of it...

anyways, yea, if you're speaking long term, lease is gonna cost you more... especially with all these 0.9% or 0% finance rates out.... i mean, it'll probably be a nice feeling when your mazda5 is paid off and you don't have to keep dumping money into your car payments as opposed to a continual lease where after 5 years, you have to pay into another lease and then another 5 years you pay into another lease etc...

i dunno, not trying to convince anyone either, but i suppose it goes back to the whole renting vs buying philosophy when it comes to a house... like you said nat, it's a lifestyle choice... leasing is the "cheaper" option up front as is renting, but in the long run, buying/financing is pretty sweet once the item's paid off... you just have to deal with the fact that you don't have the "newest" car out on the road every 5 years.

but yea, it really comes down to your lifestyle choice... i'd rather bunker down and eat the higher costs for 5 years and then drive the car w/o worrying about payments for 10+ years afterwards than having to worry about carpayments forever... i think for my life choice, i'd sooner do it that way, and buy a new car once every 10/15 years...

[geForce]

So many dealerships are doing 0% financing over 5+ years... on a per monthly payment standpoint, that is the same as a lease. Model year end sales are the best because that's when they come out with these crazy offers.

[nature boy]

still, having to sell 3-4 cars in the past 8 years made me not want to have to deal with that again. leasing (to me) isn't just paying a bunch for nothing, but paying for piece of mind that i don't have to worry about warranty, major maintenance and depreciation (because really, the dealership have to guess the depreciation rate, if my car holds value i can buy it out at the end of the lease and turn around and flip it for profit... if it doesn't hold value i can just give it back and have them lose out on the depreciation value).