Hey all. My wife and I are looking into getting a newer vehicle. My wife suggested leasing one. I don't know enough about this, so can anyone clue me in on the pros and cons of this? We do own our own business, so I know it could be used as a tax write-off. Any advice would be appreciated. Thanks.

 

I have never been a big fan of leasing. I always thought of it as like paying rent. You throw out all this money every month and never have anything to show for it. In the case of leasing you don't even get your deposit back. Then they try to sucker you into buying the car at the end of the lease. And at that point you have put so much into it that you say, "What the hell" and buy it outright. Problem is you ended up paying much more this way than you would have just buying it from the start. My $.02

 

ah yes.... an age old ? with interest rates the way that they are, buy!! and you can still deduct the purchase. check with you tax accountant, for the guidelines. a few years ago i would have said lease, but low rates changed that.
P.S. regardless which way you decide. settle on price first,.......then and only then,...... discuss purchase or lease,terms. also get competitive rates from differant banks to compare interest/lease rate from the dealer.

 

I have leased my last 2 trucks and love it. I like to get a new vehicle every 3 years or so so it is great for me. You actually don't have to put a deposit down anyhmore if you take advantage of and cash rebates at the time. I havent put any money down on either one of my leases and walked out of there on my last one (may 03) with nothing out of pocket.

Just me .02

 

How many miles do you put on in a year? My wife and I looked into a lease for me, but I would over run on the miles. Her next car will probably be leased (we bought her current one) as I want her to always be driving something with a warranty and roadside assistance and she only puts on 10-15000m per year on.

 

Unless you can deduct the lease for a business expense leasing is never a good idea. youre tied down to a certain amount of mileage and the overage costs are crazy. In addition alot of times when you try to turn in the car they try to rape you for excess wear and tare or rape you to fix small dings on it that they will never fix . In the long run its cheaper to buy when youlease you pay and pay and wind up with noequity in the car or anything also i had a friend of mine who had a lease who wound up getting screwed because tyhe insurance company said the car was worth less than what the dealer said it was and he had to pay a few thousand dollars for the difference in value
never never lease unless you can use the losses as a business writeoff

 

My wife and I looked into leasing a car once at a (Gasp) Ford Dealership. The salesman was only looking out for himself and tried to snooker us. With no payment up front, the payments were so outrageous that they wanted the car 1/2 way paid off in the time of the lease contract. Then we had to return the car after we paid so long, and hoped we hadn't exceeded the milage allowance. We opted not to go this route and bought another car elsewhere.

 

Depends on the vehicle. A f-250 psd depreciates signfigantly over three years while a honda accord does not. You should be paying the estimated cost of depreciation over time and interest. If you like to drive new cars and not mess with problems a lease can be good. If the vehicle is expensive and could be a maint problem (audi) lease it.

Leasing american cars usually is not cost effective. I decided to buy a 2 year old 250psd and let someone else eat the depriciation after looking at the options. A 2 year old vehicle with some warranty left can be a very good option.

 

Let me work on this- I'l give a detailed reply this evening. The key to leasing, and doing it RIGHT, is knowing exactly what you're getting into. Leasing had been used in the past to abuse customers and add HUGE amounts of profit to the dealer's bottom line. This is why it has a bad reputation; leasing in and of itself is not a bad thing- it's the way dealers used it to help themselves that stinks. And no one can tell me that financing a vehicle for 72 months with no money down is preferable to leasing. at least with the lease you aren't upside down.

 

Leasing works only if you're in the habit of replacing your car every two years or so. If your looking at leasing as a means of financing a car you can't afford you're going to get screwed.

Leasing worked for my old boss who bought new Lincoln Town cars every other year, but when we looked into it for company trucks that we kept 5 years - it just didn't pencil out. Way more expensive.

 

Say you've got xxx/month that you can put towards a car. The same amount of lease payment is going to get you a nicer vehicle than if you were to finance that same amount monthly. A lot of leases are 0 down these days too, which means your initial payment is pretty low. Typically dealers are only asking for a security deposit, first month's lease and admin costs, which usually is less than $1500. If the car has problems over the course of your lease, you just give it back to the dealer. Leasing is pretty advantageous on makes and models with high depreciation because you don't have to eat those costs, the dealer does. Some dealers even negotiate the buy-back price when you first enter into the agreement, you can try and use this to your advantage. Look at leasing as a 'payment for service' rather than 'payment for product'.

 

I have leased the last 5 Fords... and it was great for me but this year I am going to buy my vehicle because I will always go over my milage now... I commute about 50 miles a day and then add all recreational stuff When I turn in my Explorer I guess I will be over by about 7k eeek... but it is nice that you can usually lease a car you would otherwise not be able to afford...and you can write it off if you use it for work etc etc.... I didnt mind leasing but I am ready to buy now.. Ford was always fair with me, never been charged for any damage or anything.

 

We decided to try leasing with our Expedition. After it was all said and done, I would still prefer buying - a two year model as someone earlier pointed out - can be an excellent deal. Key Bank held our lease and when turn in time approached, I had to have it inspected by their agent who went over it with a fine tooth comb, looking for any mechanical or cosmetic defects to charge us for. Any small nick in the paint would be a $300.00 charge and there is no recourse or second opinions allowed. Watch out for the 39 month lease, as the manufacturer warranty runs out at 36 months and the dealership will try to sell you a costly 'bridge warranty' for those 3 months plus an extended warranty. In the end, our local market was saturated with Expeditions coming off lease, the economy was slow with depressed auction prices. For 3 months prior to lease expiration, we negotiated with the bank's leasing agency and wound up buying the truck for below market value.

 

Leasing and business ownership were made for each other. Unfortunately, most CPAs are actually unaware of a lot of the benefits. Do a search of the IRS website about vehicles, depreciation and leasing.

The pros to lease should be obvious by now: lower monthly payment for a nicer vehicle, little money upfront, a new vehicle every 2-4 years in the driveway. The downside is getting into a lease without understanding all that's involved. Since this is a Ford website, I'll assume you're looking at a Ford Credit Red Carpet lease. You can save a few dollars a month by going to outside lease companies, but you'll lose big time at lease end (see aerocolorado's post above). Ford Credit has no acquisition fee, no disposition fee, and are very fair about vehicle condition at lease end. There isn't time or space to get into details here, so if you have any questions about the "mechanics" of a lease, just respond here or e-mail me.

We forget there was a time when the federal government restricted auto loans to a 24-month maximum. Owning a car made sense when you were forced to pay it off in 2 years, because you had all that equity. Now that 72 and 84-month car loans are common, and 96-month loans on the West Coast, leasing looks better all the time. Why? Because: A CAR IS NOT AN INVESTMENT; IT'S AN EXPENSE!! Too many people think of their vehicle like they do their house. Think of this: what if your house were like a car? Buy a house and it's guaranteed to be worth 10% of what you paid for it 10 years from now. Interest and taxes would no longer be tax-deductible. But you could RENT that same house for a lower monthly payment than what a mortgage would be, and you'd do some minor maintenance (mow the lawn, shovel the driveway). But the BIG stuff would be handled by the landlord, 'cause he owns the place. If that were the case, wouldn't it make more sense to RENT the house than to OWN it? Isn't that what we're doing with our vehicles? You're lucky if it's still worth 10% after 10 years, the tax (sales) and interest are no longer deductible, and the cost of repairs go up every day. I'm not saying that leasing is PERFECT, it's just that so many of the advantages of OWNING a vehicle have disappeared.

Again, if anyone has questions, fire away. I'm sure I missed something, but I'm getting tired, and it's time to go home!

 

Can a user lease through you with the same purchase price terms as the FTE purchase program you sponor?