Jaded41

Howie,

I can't speak for the Canadian Exchange rate of money compared to the US, but let me explain something. I actually used to sell Hondas for a couple of years back in the late 90's. What a lot of people don't realize is that leasing is simply anothe rway to finance the car.

I would say this, if you lease, you will overall pay more for the car, but that may not be a big factor. When I sold cars, we actually worked a lease for a woman on a 96 Prelude SI. The Prelude had one of the best residuals after 2-years of almost any car. After working it up for her, it was actually cheaper by about $200 total to lease for 24 months, and then finance the residual for 36 months after that rather than just financing the selling price for 60 months to begin with. And the nice thing about the lease was that it gave her more options. If the car's resale went in the toilet, then she could just give the car back. If she kept the car in good shape, then it might even be worth more than the residual and she would be buying it at a good price. Also with the lease, you have GAP insurance that is inclided in the lease price. So if you total the car 6 months after you buy it, then you're only responsible for your deductible (hopefully a low one) and then your lease is over and you can go get a new one or a different car with a clean slate. If you had purchased the car and then totalled it 6 months later, it is doubtful that you had built any equity yet and the insurance money that you get for the wrecked car may not pay off the lean so you would be responsible for coming up with the difference between what the car is worth and what you still owe.

I leased my S2K because I've always had good luck with leases. I was living in a downtown area when I first bought my car so I liked the GAP insurance coverage of the lease in case the car got stolen. I also did not want to part with more than $425.00 a month and a 60 month finance for me would have put me at more like $600+ per month. So I really could not afford the S2K if I couldn't swing a low $400 figure. I am going to purchase my car at the end of my lease and that buy back monthly cost will still be within my budget. I will pay for it longer and shell out more money in the long run, but it is a must because I really can't afford the S2K at the purchase price. So for me, the lease was really the only option.

I don't know whether those residual numbers you have are correct. I'd need to look at my lease contract. But you should be in a safe position with the S2K and it's residual based on how they are currently selling. A lot of people bad mouth the lease, but the truth is that it really can be the best option for some people if they really want this car and can't afford the high finance rate and they want the GAP insurance flexibility.

Hope this helps.

suvh8r

what about the story where someone put $5000 down on a s2000 lease to keep the payments low, ended up wrecking the car, and losing his downpayment... ? I'm not sure leasing with a downpayment is a good idea..

Jaded41

Yes, you are exactly right. When leasing, it is typically better to not put any money down besides covering your first payment and security deposit and tag and title fees.

Also, I forgot to mention something else. A lot of people believe it's not possible to have any equity in a lease and that's not completely true either. At least on Honda's, which retain their value extremely well, it is possible to have a little equity.

For example: If you are on a 24 month lease and you are looking to get into a different car, then just take your car to a dealer and have them bid it as a trade-in. You'll need to be about 18 months into your lease for this to work most of the time. Your residual plus the remaining 6 payments is basically your payoff amount. What I found from working with lots of previously leased customers was that if they had taken extremely good care of the car, and perhaps didn't use all of their allotted miles per year, then we would end up estimating the value of their trade-in at about $500-$1,000 more than what their residual and remaining payments added up to be. Although this isn't a ton of money to be considered as equity, it always seemed to be enough to cover their first payment and security deposit on a new lease and they didn't have to come up with much or any money out of pocket in order to get into the new lease on a new car.

Now this only really works with cars that hold their resale and for people who keep their vehicles looking showroom perfect throughout their ownership. I do, so it also worked for me. If you are pretty hard on cars and put a lot of miles on them, then I'd probably do the outright purchase.

I did this exact scenario with my two Preludes that I owned before my S. It worked perfectly both times.

RedCelica

Do people lease cars for the same reasons why people live in apartments?

Not Sure

After 10 years Howie has probably already made his decision.

takeshi

Yes and no. There are various reasons for both.

sanjay

not everyone wants to have a house in the middle of no where

in cities people tend to rent a lot more

steven975

You just dug up a 10 year old fossil