Hey guys, I have some questions for those of you that have been around the block a few times. I have been doing my fair share of research on a "new" truck. I have been looking at used trucks, and it seems that the prices for them right now are pretty darn high for a truck with higher miles, and, sadly to say, their fair share of problems(04-08 trucks). I have started reading about leasing vehicles with the intent to buy them at the end of the lease. It seems to me, looking at what they are trying to sell these used trucks for, that you would end up paying about the same price to buyout your lease at lease-end, as you would trying to buy a used truck now. However, you would have a truck that you knew everything about(maintenance and history), would have likely far less miles, and the fancy newer now. Once the lease was up, you would take out a loan to pay off the residual, and likely have a very similar payment as what your lease payment was. Obviously there are plenty of variables involved in all this. I am just looking for your guys' "educated" opinions and experiences. Especially those that are actually leasing these new trucks, and what kind of deals they are getting, and what their residual values are projected at. Thanks in advance!

 

I am not an expert on this but will give you my thought process and why we do it (for the wife, I own mine). i have had my wife lease her last 4 vehicles including current. Came out of pocket a little on each one initially which you do not have to do - just depends on what payment you want to make (typically about every $1k down, drops the monthly about $25). I do this because she puts very little mileage on, she is always under warranty, always has roadside assistance, is always very close on the latest safety and technology (if you keep leasing new vehicles).
To your question about buying out your lease and financing: we have essentially bought every one of our leases (to be fair, they were all imports aside from a cx-7). The reason is because we keep our vehicles in good (not great) condition and she puts no mileage on. This usually puts me in a favorable position at the end of the term - I have a great condition vehicle with low mileage. I have sold one to a private party when my wife decided to switch vehicles (this was a Honda Pilot, she decided she wanted something smaller (big mistake). I unfortunately shafted myself on this one because I did not factor in tax when selling and ended up losing a little money. We have been fortunate with every other one of her lease vehicles, I have been able to sell to our local Carmax and made anywhere from $50-$2500 in my pocket because they buy tax exempt (I have never purchased a vehicle from Carmax - not that I wouldn't, I just haven't). Granted, every one of these vehicles, we have sold to them before the lease was up - this gives me time to figure out what the best financial move for us would be. Only one we bought out of a lease was a Honda Accord and did the five years financing (about the same as what the lease payment was, as you stated) and then sold it when she was ready. Which brings me to your final comment about buying out your lease at the end. What you say is essentially correct - but remember, at this point you are essentially financing a vehicle for 8 years (assuming a 3 year lease, and then financing for five years afterwards). So to answer - yes, you will always have lower payments, but that is really only because you have extended your financing term. The drawback of this is obviously 8 years of car payments and you will pay close to MSRP for the vehicle (there is some negotiating in leasing, but not a lot). you can definitely go in and negotiate a cash price and then see if they will convert to lease and leave the net price the same - I have done this successfully twice, not because I was trying to "shaft" the dealer, I was just trying to get to a comfortable price for us. Sometimes they just say no and change it over to the standard leasing program.
I know this was a long answer - but hopefully gave you some helpful info. I am by no means and expert or financial wizard, but we have been doing this for her for years. My vehicles we usually buy because I typically put more mileage on and sometimes do some mods.
Some people will come on here and say that leasing is dumb and a waste of money. I have stated our reasons for us, and they are compelling enough to keep my wife leasing. Granted we will always have a car payment, but the other reasons are enough to offset that for me (Her next car may be a problem though because she has one of those Infiniti G37's right now and she says she is never giving it back, but I am thinking in 2 more years i will just have her take it back and get a shinier new one). For me - We were able to pay cash for my Expedtion (that was definitley more favorable times back then) and we have put money in to an account every month just like it would be a car payment. This account is also used to cover all maintence and toys that I want for the Expy. So I am on both ends of the spectrum - we lease and we own. And we do both for very different reasons. Hope this helps some, Mike. You can feel free to ask ay questions and I promise my answers will be much more concise.

 

I appreciated everything you typed up there, except...who's mike? haha

 

Leasing works for some and buying works for others. I could see my wife and I leasing cars for her as we get older and more cautious in life. As stated above, always fully covered with warranty.

If a person were able to lay down say 25% of the purchase price upon purchase, then said person would never be upside down in the loan and then buying every 2-3 years would be possible without taking a bath on the deal.

I'm not familiar with how tax, title and license fees work with leasing but there's no trade in value either. I'm assuming that you pay for the agreed upon period of time then walk away from the car when the contract is satisfied.

 

I'm Mike. It was supposed to end there but then I thought of a few more things. Would have ended like this. Hope this helps, Mike

 

Haha, alright. Thanks Mike, Josiah.

 

I recently leased a car for my wife to drive in the summer and me to drive in the winter. When I ran the numbers it will cost me a little bit more to lease the car for 3 years and then buy it out right when the lease is up than it would have cost me if I financed from the get go. I will be able to save enough money during the lease to do a cash buyout at the end. But I do keep thinking about getting another new car when lease is up.