Is leasing a car ever a good idea?

Question

My husband drives 4 miles a day, exactly. We don't have enough down for the car he wants right now. His current truck could go at any time. We don't need a new car every 3-5 years. When the lease expires do you have to pay a lump sum or do you continue with payments that go toward purchasing the car?

Answer 1

Unless you're in a situation where the lease payments are tax deductible, leasing is generally never a good idea for the ordinary car buyer.

Once the lease contract expires, you have two choices.

1. Surrender the vehicle to the lease company and pay the surrender fee and excess damage and mileage. Most leasing companies have a much more conservative view of what "fair wear and tear" constitutes so surprises are common at surrender time. These fees must be paid in full immediately. If you can't swing it, you may be pressured to either sign a new lease on the same vehicle, or lease a new vehicle as a replacement. Both of these options are generally bad deals.

2. Pay the lease company the residual value of the car and take full title to it. Most folks don't have enough spare cash to pay it off so they typically get a used car loan to pay off the lease company. Some leasing companies may loan you the money for this, especially banks and auto manufacturers' financial wings, but you should always shop around for the best deal as always. If you do buy the vehicle from the leasing company, they should NOT charge you any fees for excess mileage or damage. Some will try and bully you into doing this but you are under no obligation to do so; you're absorbing the mileage and any faults by purchasing the vehicle.

The residual value is stated in the lease at the very beginning. It reflects the lessor's estimate of the value of the vehicle at the end of the lease. You will know exactly what it will cost you to buy the vehicle at the end of the lease so you can plan in advance for that option. There might be a small administrative fee but this should be well under $100.00.

In your situation, a good late model used car or truck may make much more sense than leasing a new vehicle. Unless your credit is really bad or you buy from one of those "buy here, pay here" outfits, you shouldn't have any trouble buying a decent vehicle for little or no money down.

If your old truck is in pretty bad shape, trade it in. I normally don't recommend that but in this case, push for a high trade-in allowance. It will be treated as a down payment when it comes time to shop for financing so you should be able to secure something decent for little or no out-of-pocket expense.

Answer 2

If you leased you would be o.k. on mileage. You are only allowed so many miles per year. At the end of the lease if you wish to purchase you must have the remainder due in full or you can start a new lease with a new car. It's like a never ending circle. Call your local dealerships. The ones in Ohio have specials all the time with little or no money down for new or used vehicles. Some even have huge trade-in allowances that can be used as a down payment.

Answer 3

OK.I lease a car, been leasing for 5 years now and never had a problem.
It is easier to end a lease than you think, the dealer just takes the vehicle back and puts you in a new one again if you want. If you lease a car, take care of this car and keep the mileage low, then when you return it the vehicle is worth more and now you can bargain on another vehicle. You can just walk away if you like, or you can release or finance the same car if you wish to own it outright. You can at any time convert the lease to a buy to own at any time. If you have a 3 year lease and after 2 years you decide you want to keep the car, you can convert the lease to a finance to own. The price is predetermined before you buy at the end of the 3rd year.

Answer 4

Understand what automobile leasing is — and what it's not

The concept of leasing is fairly simple, yet many automotive consumers don't completely understand it and are often skeptical, even afraid of it. It is frequently misunderstood as a kind of cheap "rent-to-own" scheme hatched up by clever dealers to separate good people from their money. There are even well-meaning but misinformed "consumer experts" who are quick to advise against leasing because "it's all a scam."

In fact, leasing is a well respected financial concept that has long been used in the business world as a method of financing buildings, equipment, and vehicles — although it is still relatively new to most automotive consumers. Because many consumers still are not sufficiently informed, there have certainly been cases in which mistakes have been made and in which customers' lack of knowledge has been taken advantage of, sometimes fraudulently.

Understand how it works

As with any business transaction, the key to successful and intelligent auto leasing is understanding how the process works, taking the time to properly prepare yourself before making decisions, and using it to your benefit rather than your disadvantage.

Without at least a basic understanding of leasing concepts, knowing how to get a good deal, and knowing how payments are figured; you expose yourself to the very real possibility of making serious mistakes, significantly overpaying, or worse, being cheated.

It would be a mistake for you to think that car leasing is like apartment leasing, or car renting, or business leasing. It is not. The differences are so significant that any attempt to try to understand one by drawing on your knowledge of the other will only result in a serious misunderstanding.

Let's make an important statement here: You shouldn't consider leasing an automobile unless you have an understanding of car leasing fundamentals and how car leasing works. That is what this Lease Guide is all about.

Why leasing?

As recently as ten years ago, many automobile consumers had never heard of leasing, much less done it. Now, approximately a fifth of all new cars, trucks, SUVs, and vans are leased. After a slowdown during the last few years because of aggressive zero-percent loan programs, leasing is once again growing in popularity. Just look at the volume of lease ads in your local newspaper and on TV to get a notion of how popular automobile leasing has become.

Two factors helped cause the shift to leasing. First, the cost of new cars has rapidly spiraled upwards over the last few decades, often putting prices out of reach of average buyers. Second, federal tax law changes in the late 1980's eliminated finance interest deductions on automobile loans, which further increased ownership cost. The net effect is that people have become increasingly eager to find ways to make personal vehicles more affordable.

Auto manufacturers and finance companies have come to the rescue in a big way with consumer leasing programs. These programs are simply a modified version of business leasing that have been around for years. This helps explain much of the strange language and confusing concepts associated with consumer leasing today.

Why is leasing popular?

In a nutshell, leasing has become popular because it offers people a way to drive the vehicles they want — often better vehicles than they could buy — for less money and less hassle. Low monthly payments are the big attraction, although we'll soon find out why it's important to look at other factors before deciding to lease.

Is leasing for you?

As attractive as it may be, leasing may not fit everybody's needs and lifestyle. Furthermore, leases can be somewhat more complicated than new-car purchase loans and require greater care and preparation in order to get a good fair deal — and avoid problems. Some people will discover that leasing offers them no benefits and that they should not lease. Others will realize that leasing is right for them and that they can benefit greatly.

Answer 5

It´s a perfect idea! My BF has leased Mercedes in LA Autostore, I do like this car. But don't forget about monthly payments

Answer 6

I don't like the idea of leasing a car -- in a way it is just like renting one for a LONG time. At the end you give it back, and don't get anything.

Answer 7

the only time it is EVER a good idea to lease a car is when you are on some sort of long business trip or are starting a company and need a company car. otherwise you are wasting your money.

Answer 8

never a good idea for a personal consumer u will have to make one big "balloon payment" @ the end of ur lease.

Answer 9

4 miles a day? Buy a bicycle! Good exercise, good for the environment, and a whole lot cheaper.

Answer 10

go to www.swaplease.com and go to the faq's section of the website and that should help.good luck.