Let me run something by you....

If you go into a lease with the idea that you will purchase the car at the end isn't the lease/purchase just like takng out a 8 year loan to pay off a truck?

I've been trying to run numbers to see what I can afford and here is my situation... I have a $25,000 paid off trade-in but no monthly income to support more payments. If I lease, then I could take the $25,000 buy 1/2/ and 3 year CD's to earn interest, keep some money out for a down payment and some for the 1st year's payments. The residual is around $18,000 after 3 years. I would have paid about $18,000 up to that point and with interest earned on the CD's have another $10,000 cash left over from the original $25,000. I would then finance about $9000 for 3 - 5 years when I am in a position to handle a monthly payment of around $200. This would bring the grand total to about $38,000 over 8 years.

If I purchase new, then I put a down payment of $15,000, take the extra $10,000 to help me make payments, blah blah blah for a total of $38,000 over 5 years.

If I can pay the same either way doesn't it make sense to put it off as long as possible.

Thanks for reading all this and deciphering it... I'm a math teacher by the way so it all seems clear to me.

Any $.02 is appreciated

BB

edit: BTW I'm looking at a F150 Lariat 4x4 SCAB that MSRP's for 38,500

 

Hi math teacher!

I think you've got the pencilling figured out pretty well, now here's the next question- is there any other higher-interest debt lurking in the backround that could be retired, and make way for a truck payment at the supported (low) interest rates?

And another, $38K question- are you 1)absolutely sure you'll keep the truck through the lease payments? Leases work OK unless you decide to terminate early- the charges can be astounding, to say the least. Some banks actually call this a default, and will report accordingly, even though you've fullfilled the terms of the contract. 2) Are you absolutely sure the mileage on the lease reflects your actual miles driven? A miss here is another way to generate hundreds/thousands of dollars in excess mileage fees. 3) Is the way you take care of a vehicle consistent with the wear and tear terms of the lease agreement?

From a professional standpoint, those are the major issues to a lease that need to be thought over carefully. I personally avoid them unless the manufacturer puts out a supported lease that's too good to be true. It isn't that they aren't good, it's that you loose a good amount of control of the purchase once you've signed on.

 

Polarbear

You ask good questions... same ones I have been reading about for 10+ hours the past 3 days on just about every lease vs buy website known to man and by looking at every calculator each bank has to offer. The answers are no, yes, yes, and yes. The nesxt question to answer is if I should go with Ford Motor credit for the lease or should I go with an independent Leasing company?

 

FMCC, IMO. A bank or lease company's only interest is making money off of the lease. FMCC has to be concerned about retaining that customer through many more leases/purchases- the difference is huge, both in monetary and customer-service issues. It really comes home right about buy-out time. You could substitute "GMAC" or "Chrysler Financial" in that sentence as well.