I have always purchased all vehocles I ever owned. My dad liked the lease because of the lesser per month payment. I was always leary of the idea. Well one day he came to a crossroad where he was facing retirement and his debt was huge. He needed to get his finances under control so he could even retire. Nevermine retire with some savings. So he is in year 3 of a three year lease. He had a F-150 XLT 4X4. He was really screwed. Since he had no equity in the truck that he payed $325 a month for the past 36 months. So he had nothing for a trade to get into a new F-150 purchased. The payment was like $650 a month with nothing down for 60 months. So he had only one choice, buy the truck that he just leased for 36 months at $325 a month ($11700 for the 36 months). The he baught it for KBB which was $18500. So he payed $540 a month for another 36 months.

 

The only time I leased it worked out well for me. 2001 F-150 with the worst piston slap I've ever heard in a ford. It had a rod knock or something too. Burned about 1 quart in 3000 miles. Dealer gave me the run around on warranty, but I didn't sweat it because it wasn't mine.

Eric

 

The bottom line is that if you abuse your vehicles or put a lot of miles on them, don't lease.

Otherwise there is very little if any difference between the two forms of financing.

The major advantage of a lease is at the end of the term (which is usually 2-3 years LESS than the retail purchase) you have the option of dropping off your vehicle and getting the new 600 HP V10..........If you have equity refinance it or pay it off or sell it private party............bottom line is you have more options with a lease.

If you are 3 years into your purchase and have 5K negative equity (upside down) what are your options?


I always chuckle when people say, "You get dinged for any minor damage when turning in a lease"...............People, you'd get dinged for the same stuff if you tried to trade it in if it were a purchase!!!!!

Sure you have "nothing to show" at the end of a lease. But on that purchase you paid higher payments for the term and you still have a few years left on the loan.


I've done both over the years........bought my '01 V10, it's paid for. Could go either way as far as if leasing would have been better.

Bought my '03 Marauder........30 months in, I'm $5000 upside down. If I had done a 36 month lease, the most I'd be upside down is maybe half that and I could jump on all these great deals going on.


I will make one caveat to this.........the interest vs money factor(lease) must be in line with each other.

In other words, when all is said and done the total cost for ownership should be close;

Lease= total of payments + residual

Buy= total of payments + down

I've never been burned by a lease. In fact it probably lets you drive new vehicles more often. Polarbear informesd us of a GM deal where they'll let you outta your lease a year early to lease another, with no penalties!!!

With the current affairs going on and used car values plummeting........both my F-250 and Marauder are not worth that much.

I very well may lease my next vehicles.

 

And that, my friends, is the average beef.


Look at what you just typed. A fresh purchase would currently cost him $650 a month.................He had a $325 payment for 3 years.

No equity????? He had a 2-3 hundred dollar less payment for 3 years.....There's his equity!!!!

Even if it was $100 less a month..........there's $3600 he could of used for a down.


You don't buy out a lease at KBB.........you buy it for what the predetermined residual was. If the residual was higher than the KBB or NADA you walk away and shop, if the residual is lower, buy it out or sell it private party. Again, choices you wouldn't of had on a purchase.

And lastly, how much equity would he have on a purchase in 3 years???

 

A lease is going to cost more than buying. Why? There is a whole nother group of paper shufflers trying to make a living off your lease payment.

 

Just realized I never voted.

My situation is this: 4-year unlimited mileage lease - my consulting firm picks up the tab and insurance, and at the end of the lease, the truck is only $9K - with less than 30K miles on it, it should be worth a little bit, eh?

 

Yeah, I tried to vote "purchase" twice to pad the purchase talley a little, but the web site wouldn't let me

 

Thank you, I am so much smarter for having read that.

 

And there lies the beauty.........regardless of the lease end value (residual) you have the option of buying or dropping it off.

 

If your goal is to turn over the vehicle every 3 years, leasing might actually be a very attractive means to support your addiction. I like to run my vehicles for 10+ years. Thus purchasing is the only viable option for me. While the person who leases is on their 3rd lease paying about $12,000 more than I did in payments, I am still happily driving my slightly worn car all the way to the bank.

Now, if this where a business use vehicle. Leasing actually turns out to be a much better deal as the entire cost of the lease is an operating expense and since there is no assests involved, your ROI/ROA looks better on paper.

 

I will agree that if you KNOW you want to keep your vehicle for a while......then don't bother leasing.

The main complaint here is that people are whinning that they have no equity at the end of a lease......(meaning to me they're not looking to keep the vehicle like you do) I just find that mindset hilarious because even on an average buy you're upside down a good portion of the loan.

Rhetorical question for ya.........of that $12,000 more in payments (which would be incurred if you bought every 3 years also) how much gets eaten up in repairs, tires etc???

 

In my case, it is a business use vehicle. Never can tell when we'll get 2 feet of snow and I have to go into work (I work from home, 99% of the time)...

I just figured it out, and for what the monthly payment on my 4-year lease w/$9K buy-back is, I could borrow $24K for 4 years at 6%, which is about right, my '01 was $32K. The buy-back is $9K, so I took that off the loan amount.

Maybe I'm looking at it backwards, but that's not a bad deal...

Especially when I can buy-out the truck for $9K and sell it for $20K. It only has 21K miles on it

art k.

PS: My lease is a Ford Red Carpet, and has UNLIMITED mileage, available only to corporate customers (2-man consulting firms apparently count).

 

not backwards and sounds good on the surface, but you failed to take into account the tax advantages to a purchase...

Depreciation and interest deduction on the loan.
both of which you loose on a lease. And as far as taking the entire lease payment off your taxes, I'd say you'd best check with your tax advisor. There may be a % you cannot deduct..

Besides what the leasing co. dings you if you don't adhere to the fine print on the lease concerning up keep, maintenance, etc.

How do you figure a 4 year old F150 will bring $20 k? I'd say $9k is god's awful plenty to buy that p/u especially the way used vehicals are going.

 

Are you an Accountant???

If so, please give us the breakdown on depreciation vs writing off the entire lease payment (isn't that all business related anyway??? The average consumer writes off neither as far as I know.)

Your leasing co. "dings you if you don't adhere..........." comment shows a total misconception of a lease. Ford Red Carpet Lease has no clue when, where, if I've done maintenance........


Again, if you mistreat a "buy" you still get dinged either on re-sale or longevity.

Just a different way of financing that gives you more options IF you have half a head on your shoulders and look at the whole picture;

Cap cost vs purchase price.....A lot of leasees get suckered here beacuse they're payment shoppers.


Interest vs money factor.....you need to ask point blank how those #'s compare, if they are outta line with a low interest buy......DON'T LEASE!!

 

Couple of things: I am one of two guys in an incorporated consulting firm. The lease is a business expense. I ALWAYS buy out the vehicle at the end of the lease, this is my third.

It's an F250 Superduty, not an F150. It'll have less than 30K miles on it, and be ready to work ... I keep an eye on used car prices around here, and any Superduty in decent condition is going for more than $20K with 60K miles. Even gassers. The diesels are more like $25-26K.

If Ford gave me an unlimited mileage lease and still assumed the truck was worth $9K at the end with god knows how much mileage on it, that means they ARE worth something on the open market after so much time.

Anyway, I wasn't saying leases were good for everybody, just relating my experiences with them.