Well you can slam leasing, but I'm driving a new truck with payments I can afford. The alternative would be buy older and hope for a good one. It's all about timing, maybe at another time my finances will allow purchasing new.

 

Exactly- you've nailed it.

 

Well I have to disagree, my take is if you can't afford it then don't buy it. Because all you are doing is making payments with nothing in the end, and the out of pocket overall will exceed a purchase if you keep it, or you get hung up i in a continous loop of re-leasing. If you are a purchaser and keep the truck for awhile your out of pocket is a lot less. The argument of buying an older one and hope for the best doesn't fly either, why because the original buyer has eaten the depreciation. So buying a 2 yr off lease may not be a bad way to go. Dealers just love the lease programs, because to many of us just have the attitude I have to have it no matter what!

 

Just some contrast here to this thread...

Lets assume for example that you are leasing an apartment vs. buying a house or condo. You do this because you can not afford a down payment for the latter two or because you could only afford a house / condo that would not meet your satisfaction. There is an element of desire and comfort in this equation. Those that might not be financially able to purchase a new vehicle outright have the chance now to lease and drive something they otherwise would not be able to afford. Does it always make financial sense? No. Does it always make financial sense to add a lift, mudders and intake kit? Again..probably not.

There will always be exceptions to the rule on what is right or wrong for someone. Each of us has different circumstances and needs. Finding something that works for you is the best way you can go!

I once knew of a kid (17 I think) that leased a brand new Dodge Viiper when they first came out. His lease + his insurance were something like $1700 a month back then and for a kid in highschool it was ludacris. He worked nights and weekends to do it, but was able to pay for his car. I am sure it brought him tremendous joy (even though he looked like a fool to most). Alas...it worked for him and there is nothing wrong with that.

T

 

Kevin M, you make no sense. So then all renters of apartments, houses, cars, and anything else people rent are waisting their money, you know, making all those payments with nothing in the end. You say buying a 2 year off lease may not be a bad way to go, so if I decide to buy it after the 2 years I have it , it's a bad idea, but for someone else to buy it it's OK? I'd be paying the same for it as anybody looking for a 2 year old low mileage truck would. And you say if you can't afford it, don't buy it. Well I'm not, I'm leasing it, and I'm affording it and driving it now. Works for me.

 

Boy, I have to add my .02 here, 'cause I think leasing is one of the least understood transactions in the bar biz. First off, what exactly is a lease? It's simply an extended rental agreement. Payments are calculated by taking the capitalized cost (selling price) minus the residual (used value at end), plus interest and and lease inception fees. It's important to remember that all vehicles have a monthly expense attached to them, whether you paid cash for it, financed it, leased it, or were given it as a gift. Depreciation is usually the largest expense on a late model vehicle. Buyers often ignore this expense because there's no bill attached, while lessees are paying that monthly. At any rate, it's still an expense of ownership.

The benefits of a lease:
1. Ability to identify a fixed cost of operating a piece of equipment for a given period of time. (trade-in value not contingent on market fluctuations) Many large fleets lease- that's the reason.
2. Ease of accounting for tax purposes.
3. Ability to afford more vehicle at the same payment.
4. Lease does not show up as a full liability on a balance sheet (prospective homeowners, small-business owners take heed)
5. In states with a high sales tax, you are taxed on the lease payment, not the value of the vehicle.

The downsides:
1. You never have "equity" in the leased vehicle. Best case, you draw to even at the close of the lease.
2. You are committed to making a car payment as long as you lease vehicles- they're never "paid off."
3. Changes to the lease terms (higher mileage than expected, need to trade before lease expiration) can result in high unexpected expenses.
4. Lease insurance requirements are typically higher than for purchase.

Sooo....generally speaking, a lease makes sense under the following scenerios:
1. low/average-mileage use on a high-resale vehicle (high mileage users are usually better off buying)
2. Customer typically takes better than average care of vehicle (commercial users are typically better off buying)
3. Customer typically is a frequent trader
4. Customer will use vehicle primarily for business use, then buy out lease and convert to private use (eliminates recapture at tax time)

Know thyself.

 

Kato - sorry but you are comparing apples to oranges, an apartment does not suffer depreciation etc., it's not a consumerable like a car, plus it's a necessity as needed for a place to live. A brand new truck is not. You are little mixed up about my comment on buying a vehicle that is off a 2 year lease. You will not be paying the same, why because your initial layout was to purchase the vehicle not lease it then buy it. There a places or dealerships that sell cars off lease with low mileage. The price is negotiable. Just like buying any vehicle. They usually have some warranty and are not considerd old. You in essence threw away your money due at inception of the lease just so you could have a new vehicle. Because you wanted it. You're right you did lease it, why beacuse you couldn't afford it, exactly my point. Hey it's not my money! Have fun! Leasing companies love it!

 

Let's not forget that there will be no SS in the future! :O Like I said before "everybody wants what they want now" even if they can't afford it!

 

actually you will end up paying more for a lease car or truck in the end

 

I agree that leasing a house or condo is a completely different subject, and doesn't really apply to this thread. I have made $60,000.00 on the appreciation of my house, but don't expect to make a penny on my truck.

I have had good luck buying new vehicles, and keeping them for 8 - 12 years. For those that have luck leasing a better vehicle than they can afford to buy, feel free to make your own decisions.

PolarBear,

About 10 years ago, I read a very in-depth article on the subject in Consumer's Magazine. I think your post said it just as well, but was much shorter and clearer. Anyone trying to decide on leasing vs. buying should go back and re-read your post.

John