General Question

occ's avatar

Thoughts on leasing a car rather than buying?

Asked by occ (4036points) August 31st, 2010

Honda is offering some very cheap deals for leasing new Honda Fits – around $175 /month. I don’t know much about leasing and am wondering what the advantages/disadvantages are of leasing a car over buying one. Anyone have experience with leasing? I’m trying to figure out the most cost effective options – started out thinking of buying a cheap used car but began to realize I might have to sink a lot of money into repairs, so am considering other options.

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10 Answers

MissAnthrope's avatar

I was taught by my parents that leasing a car, much like renting a place to live, is a waste of money. You pay out all this money to someone and at the end, you don’t actually own anything. Obviously, this viewpoint is not exclusively correct, especially if you have the money to do so, but it makes a lot of sense to me.

robmandu's avatar

Dave Ramsey is famous for his position on fleecing. In his opinion, it’s the most expensive way to operate a vehicle.

If you absolutely must lease, try to stay with cars that depreciate the very least. A Cadillac that drops ⅓ of its value when it leaves the lot or a car like the Chevrolet Impala that is sold in massive quantities to rental fleets would be examples of what to avoid in leasing.

occ's avatar

If the amount paid on the lease over a two year lease, however, is about equal to the amount that the car depreciates in value, then isn’t it basically the same expense as just owning a car and knowing that you can automatically “sell” it back with no hassle at the end of the two years?
Otherwise if you want to sell it two years later you have to deal with the time it takes to sell the car…

robmandu's avatar

First of all, you’re often taking the word of the dealer as to its future depreciation. You can be sure they’re not guessing with your best interests at heart.

Secondly, if you overdrive the miles, you can find yourself in a position where you have to pay even more to close the lease.

But don’t worry, the next dealer will be happy to roll those costs over into a new loan/lease for your next car, and you can find yourself increasingly upside down.

Not trying to talk you out if it. It’s just good to be aware of how things can possibly go so you’re prepared to act early and decisively.

marinelife's avatar

I agree with all of the negative sentiments stated here. Leasing is a bad idea.

If you are going to do it, at least do it smartly: Edmunds on leasing.

wgallios's avatar

I think it depends on your driving/life style really which is the better option. If you have a pretty steady career, like to drive the latest and greatest, and are not driving all over gods creation, then leasing might be a better option. A car is a losing bet either way, you just simply need to choose how much money you want to throw away. The nice thing about leasing, if you do lease, get an extended warranty. That way all you need to do is drop off the car on its scheduled maintenance dates and have it regularly serviced. Some people like me, I don’t really care for the ownership of the car, and I love driving new cars, you have to pay either way to keep a car running, I would rather simply drive something new a reliable.

However if you are wanting to make a long term car commitment and save some money, finance a car, (or if you like to heavily modify your car). Try to get as short as loan as possible so you can pay it off faster, and the best interest rate you can find as well. This way you can drive as much as you want, and after you’re done paying the loan, you can drive it for a few more years payment free (minus any costs of repairs that are going to happen), then trade it in later for a new car after you got your monies worth.

Either way, you are going to pay, and you’re sinking your money into something that isn’t going to give you anything back; so don’t look at anything as an investment. Focus on your driving/life style.

You want a new car, don’t care to own, don’t drive too much, financially steady – lease.

Want to own something, customize it, drive a ton, want to be payment free in a few years – Finance

boffin's avatar

Buy the lease return car. It’s two years old the deprecation has been paid by the lease. Now you get a car with low miles, and has lots of miles left.

YARNLADY's avatar

The number just don’t add up for my family, so it doesn’t work for us. You have to do the math.

DelfinAshley's avatar

Leasing car is always an economical option instead of spending huge amount to buy a brand new car you can enjoy the same car in just an average cost $200—$300 per month.
Economy Car leasing is very good option for the people get bored with one car in few months then can enjoy any car they want whenever they want, no restriction.

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