OK, I know all positive points of lease, but I wanna hear some negative(s).

 

How about you're virtually in a long term rental plan with some possibly tough stipulations (milage, damage to vehicle, ...)

I guess it's good for those with the warped, "I need a new vehicle" often mindset. But for the rest of us in reality land.... buy a vehicle and use it up ....

 

Mileage - I don't drive much, I have 7 years old Mustang with 42,000 miles.
Damage - isn't there insurance for that?

 

Car insurance will not cover the minor dings and road wear that can happen. Depending on the returning dealer when the lease is up can cost, as many almost nit pick them to death and deduct for that.

 

i didnt even know there were positives to leasing- unless as said youve got the "i need to have a new vehicle" mindset. basically its just a long term rental contract. you have to give it back when youre done. your payments basically cover depreciation, and as said you will be charged for everything the dealer can possibly find wrong with the vehicle when you turn it in, and any "excess mileage" you will be billed for. i like my 1975 ford van in this respect. i paid 300 dollars for it and have been driving it for the past year with no problems, and itll still be worth 300 dollars when i go to sell it. the only bad things about it are the terrible mileage and rear main leak, but itll start no matter what the temp, and get me where i need to go and back again.

 

Do dealers really expect car to look like brand new after 36 months of ownership?

 

Brand new..NO!! BUT, 3 years of normal wear and tear should be nothing but some minor scratches. There really should be no dents. Very small rock paint chips can be expected, but touch those up before returning. Windshield or any other glass should not have cracks or large chips. Interior should not have any noticeable blemishes except for the floor mats being stained (those are replaceable).

I have leased vehicles before and as long as I was under mileage, I had no problem. I also washed, waxed, and cleaned the interior really well (not detailed) to make it look good. Mileage is the big thing. As far as major damage, you will have to repair it. That is what insurance is for.

Many people like lease, Many people don't. I for one like the lease option, because me nor my wife drive very many miles in a year. I'm not a mechanic, so especially on newer vehicles, I don't know much to fix em myself. Honestly, I have had some pretty bad experience with mechanics I don't know, even dealerships, not doing what they are supposed to do and charging way to much. So, I don't trust anyone I don't know working on my vehicles. In the lease, if they don't fix it, they replace it. Depending on what you want for a vehicle, brand new or older, can really make your decision to lease or not. Leasing gives you the opportunity to drive a vehicle that you would not normally be able to afford. Vehicles are getting outragously expensive in my book. I have not had a vehicle for more than 4 to 5 years yet. The Minnesota Winters and salt really degrade the vehicle even if you wash them often. The undercarriage of the vehicles look 10 years old after one winter. That really justifies me on leasing a vehicle, and also I don't go over the mileage limit. Now, right now I have 2 new vehicle payments which I don't want to have anymore, so I'm getting down to one. I figured either way I'll probably going to always have a vehicle payment so why not have a new vehicle every 2-3 years anyway. But that's me.

If you drive many miles, don't like making alot of payments, want to start putting money in your vehicles after so many miles, don't mind keeping a vehicle for a long time, and just plain out want to own your vehicle, then don't lease. It's whatever floats your boat.

 

In states with high sales taxes, you pay tax on interest charges, which are built into the monthly rental payment. Another big gripe I have about lease contracts is that the disclosure laws about APR dont apply, so you dont really know what interest rate you are paying, at least from a quick read of the contract. "Aquisition fees, disposal fees, etc etc, are things that tend to be put in lease contracts that you wont find in a conventional loan.

Non-business leases are for people who cant afford the car or truck they want and are suckered in by a low payment. In the end it costs you more. Leasing cars is not a charity, after all.

The rare case where the customer "wins" financially, is if the leasing company badly miscalulctes depreciation. Mercedes, many years ago, had a slow-selling outgoing bodystyle and gave really low lease payments, based on historical Mercedes resale value. The residuals on these cars were way below average and almost everyone turned in the cars rather than buying them at the end of three years.

Jim

 

My Dad's kind of a black-and-white sort of guy. He hit on it with the most eloquence. "Any deal with that much fine print, cannot be good for the customer."

The only justification I've seen for leasing that works is for business vehicles. Makes accounting the depreciation easier. The lease payment is deductible.

 

If you want a new car every few years and can stay under the mileage AND lease during a special then leasing is the ONLY way to go.

Example;

Bought my Marauder @ 0% financing for 72 months.....paid aprox 450 a month. When I traded it in, I was aprox. $2000 upside down.

If I had leased, the payment was about the same and I could have walked at 36 months. I thought I was going to keep the car, should have leased it, I could have made the decision at 36 months.

Currently looking at Honda Accord lease specials.......$199 a month for a $21,000 car.

A retail payment would be nearly double that on a 60 month note and you'd be certainly upside down at the 3 year mark.


Yes, you can get screwed on a lease if you don't pay attention.........but there's always good deals out there EVEN IF YOU MIGHT KEEP THE CAR!!

The beauty is if at the end of the lease IF you have equity, you can buy it, sell it or trade the car in............if the car has negative equity, you drop it off.

On a retail, you are stuck with the car untill you are even which usually isn't untill the end of the note.

Fully expect all the financial gurus to pipe in on not buying new, or not financing but that's not what was asked.

 

With a lease, the lessor is constantly paying interest on the residual. This interest paid is of no value to them, but it helps guys like me make money. Really, and I've said it before, people who want get further ahead financially will realize that payments are to be made only on things that appreciate in value (such as real estate); for things that depreciate in value (such as cars, trucks, motor homes, etc) you pay in CASH. This means one must invoke the process that confuses and causes pain to so many Americans, you save money.

Another issue with a lease is that you never own anything, you are just paying to use it. Hope this feels good after one retires and for most people their income picture changes. I can see ways where a lease can make sense for a company vehicle but for private use it looks like it's a way to get people into cars that they otherwise can't afford.

 

I can for sure stay under mileage. I mentioned before that my 7 years old Mustang has 42,000 miles.

But I worry about other things. After 3 years car may not be in a good shape (dents, scratches ...) and I fear that I'll be stuck with large bill.

 

Three comments.........one is you pay interest on the full amount of a retail loan also. You never "own" it till the end of the term.

#2, not a lot of people have $10,000, $20,000, $30,000 plus to pay cash for something...........and some people can't wait months or years to buy something "cash" when they need a car NOW.

#3, I 100% disagree on buying something for cash when the rate you get is LOWER than what you can earn somewhere else.

An example would be I could have bought my Marauder for cash or put a substantial down payment on it..............instead, I borrowed free money, used my capital to buy a 1/2 acre lot, build a house and now have 1/2 million dollars equity. It would have been ignorant to buy a car cash with low financing available.

There are no "set" rules concerning finances.............you have to take each individual transaction on a case by case basis. The reason I'm looking into an Accord/Camry/Fusion lease is that I can free up close to $15,000 capital for another project by selling my Jetta TDI......$199 a month for 3 years is a cake walk.

 

What's interesting about your concern for damages is that if you wanted to trade or sell the car after 2 or 3 years, the same scratches and dents are deducted from the value of the car.

If you get a good money factor (interest rate) the total of your lease payments plus your residual will come very close to what you would have paid for the car over 5+ years.

Of course if you decide to keep the car and finance the residual(buyback) the lease will have cost more.

But if you're thousands $$$ upside down and decide to terminate the lease, you'll be ahead.

 

IF you feel you MUST have new cars, then perhaps. Doesn't make it an all around good plan. I went the other way. I currently own 5 cars. Tell you what, that $0.00 dollar per month car payment sure leaves a lot of money for gas each month. Also makes those gas price hikes more bearable.

A better plan would be to pay cash for cheap used cars in good condition. Put the equivalent payment into a mutual fund. A few years of that and the mutual fund will buy your new cars for you from then on.