Is leasing a car a better idea then buying?

Question

Since when you buy a car, it is one of the worst investments since it depreciates?

Answer 1

Good question.... Leasing a car is rarely a good idea. At least with a purchase, you own the car and can keep it as long as it can run. Leasing restricts miles driven (unless you pay a penalty) and puts you in the bondage of an eternal car payment. The best choice in my view is purchase a car 2-3 years old for a substantial discount off the original M.S.R.P. and then drive it until the wheels fall off. You should be able to drive the car for several years without a payment. Now that makes good sense.

Answer 2

Leasing is an alternative form of financing. Both have fixed terms and payments. With a purchase you finance the whole price of the vehicle and pay that amount, plus interest, back to the finance source. With a lease you also finance the full price of the vehicle, and pay all the interest. You only repay part of the principle of the loan. A lease has an estimated value of the vehicle at the end of the lease term. (Residual value) This is deducted from the principle and you only pay the difference in your monthly payments.

For example:

Assume a vehicle that costs $30,000 and a trade in worth $5000. Also assume you are financing, or leasing the vehicle for 5 years. A final assumption is that at the end of the 5-year period, the vehicle is worth $7500.

With a purchase you would pay back $25,000 plus interest over the period of the loan. You would own the vehicle (worth $7500) You can keep it, or trade it in on a new vehicle

With a lease you pay back $17,500 ($25,000- $7500 residual value), and the interest that is charged on the $25,000.

Your payment is less, but at the end of the term you have nothing!

With a lease there is a limit on the number of miles you can drive and a per mile charge after that. You are also responsible for any and all damage to the vehicle. At the end of the lease, when you turn the car in, you will have to pay for any and all damage and over miles charges!

With both a lease, and a purchase, you are responsible for all maintenance. Some leases, but not many, may have a maintenance program, but that does cost extra, and will increase your monthly payment.

Compare the costs, and decide what is your best option.

You might consider buying a low mileage, late model vehicle, rather than a new one, because the biggest loss of value happens when a new car is driven off the lot!!!

Answer 3

Find a lease with an extremely low interest rate (0 to 3%). The best part about a lease is that if you are in a negative equity position at the end you can just walk away. If you are in a positive equity position, you can sell, trade or keep the vehicle.
If you purchase with long term financing (60 or 72 months); you will probably not be in an equity position if you are interested in getting into a new vehicle before the finance term is up.

Answer 4

If you keep cars for a long time, than it's better to buy, but if you don't drive alot and you want to get a new car every 2-3-4 years, than leasing is better! buying does make it depreciate, but when you're done with your payments you have value, in which a lease you have to give it back, or refinance it then you're in the same boat with buying it!

Answer 5

Well I personally paid for my car in full, but I know some makes such as Honda, Acura, Mitsubishi after a certain amount of years gives you an opportunity to get a new model. For instance, if you have a 2003 Mitsubishi Eclipse they would have offered you a 2006 Mitsubishi Eclipse and they would take the old one back to resell it. I'm pretty sure thats how some car manufacturers do things. Hope I was at least of some help.

Answer 6

I'd only lease if you could write off the payments as a business expense--and you are o-so-right about the depreciation thing

Answer 7

how many miles you intend to put on the car makes a difference

Answer 8

its pretty much the same thing...just when you lease...you get a new one when the contract is up.

Answer 9

yes