Here is how I view the lease vs. buy scenario. Someone correct me if I'm wrong. I'm thinking about leasing my next car so I want to see if my way of thinking is correct.

With leasing, it's generally less money out of your pocket up front and during your payment term (3 years for this example). There is a set residual value already. Let's say 2 years down the road and 30k miles later, I want a new car. I can sell it off for the current market value. I may lose out a few thousand. I may not. With buying, theres more out of pocket and higher monthly payments. If I decide to sell the car, I would sell it for the same amount as if I were leasing. I'd still lose out the same amount. Therefore, leasing would be the best option if you decide to get rid of the car within the lease term or even at the end of the term.

Yes?

 

If you don't keep your cars for long, you can probably do better with a lease, but that's not always the case.

Try using a lease vs buy calculator to check for the best option:

http://www.edmunds.com/finance/?mktcat=lea...&mktid=ga343699

There are plenty of other financial calculators out there too.

 

Most dealerships are also offering other options, which are like a half lease, half buy. You don't have to come up with any money up front like a usual lease, but you have the limited milage like a lease and after the term agreed you turn the car in to the dealership free and clear or you finance the remaining value of the car.
Your payments are usually lower with this option as well.
If you go through cars often this is probably the way to go unless you can pull off a really good deal when you buy the car.

 

Generally speaking, yes.

Other things to consider:
Lease Pros
- Leasing, provided you do NOT keep the vehicle, also saves the portion of the sales tax you would have paid if you purchased.
- If you are self-employed, you may be able to write off your lease payments.

Lease Cons
- Usually, interest rates on leases are higher than on loans, unless there's a special lease rate offer.
- Be careful how the "capital reduction" (i.e., lease down payment) is handled in the lease. Some companies will still charge you interest on the down payment.

Other things to think about leasing a Honda:
1. Due to high resale values, Hondas are great to lease since the lease payments are lower. On the other hand, since Hondas last for a LONG time, they make great cars to own, not lease.
2. If you plan to keep the vehicle after the lease, be prepared to get hit with a huge residual. In this case, you are better off buying the car from the start.

 

[QUOTE=aldo90731,Apr 26 2007, 04:22 AM] Generally speaking, yes.

Other things to consider:
Lease Pros
- Leasing, provided you do NOT keep the vehicle, also saves the portion of the sales tax you would have paid if you purchased.
- If you are self-employed, you may be able to write off your lease payments.

Lease Cons
- Usually, interest rates on leases are higher than on loans, unless there's a special lease rate offer.
- Be careful how the "capital reduction" (i.e., lease down payment) is handled in the lease.

 

Also, when you are in a lease, your Debt to Income ratio is a lot less than if you were financing. When leasing, you are only responsible for the amount of the lease term. Generally, you'll have better credit.

 

So it seems like I am right.

 

I like leases personally, so I'm on your mindset too.

The only time leasing is bad is when you go over mileage and are stuck in the contract. Very important to know your contract in and out. That's pretty much it I think...

 

my friend for example is leasing his s2000 for $450 a month zero down for 3 years which comes out to $16200 out of the pocket. hes also over his allowed milage so he might have to pay more at the end. 12k miles a years.

now if you finance for 5 years on a $32,000 s2k with zero down your monthly is $600.

if 3 years later you want to sell the car you paid up to now. $21,600 you roughly owe $13000 with interest added.

a used 3 years old s2k goes for about $21k so after you sell it and pay the bank loan off you have $8000. now 8k minus the 21600 you paid over 3 years is $13600.

so after 3 years you pay less than a lease might be worth it might be not.

what you pay for on a lease is the depreciation value of the car. we all know the s2k isnt going to depreciate 16k in 3 years.

hope this makes sense....

 

forget rules of thumb

look at specific cases

figure out how much you want to spend/can afford , specific lease terms , and analyze from there


my only "rule" is i would not lease a primary car. only a 2ndary car, after fully owning a first