To lease a car, that is the question!?

Question

What would be the reasons you'd reccomend leasing? Is buying better?

Answer 1

Most people do not understand the difference between leasing and purchasing ...for one thing....leasing is NOT more expensive than buying UNLESS the interest rate is higher. You are responsible for ALL maintenance and repair just as in a purchase.

When you LEASE a vehicle you are FINANCING the portion of the vehicle you are going to use FOR EXAMPLE:
If you are looking at a $20,000 vehicle and want to lease it for 48 months (4years), you take the BUY-BACK or RESIDUAL VALUE which is the expected or estimated value of the vehicle at the end of the 48 months. Lets say its supposed to be worth $8,000 at the end of 48 months. SO...you take the original amount $20,000 deduct the residual amount $8000 and that leaves you $12,000. In a lease for 48 months you will be FINANCING $12,000. That is why Leasing payments are less expensive than purchase payments. In the end you can buy your car out for the residual amount. It is just NOT true that you are THROWING away your payments or paying more. Historically (15-20 years ago...and longer) Leasing interest rates were much higher than financing rates but not anymore.
In matter of fact to prove it all you have to do is calculate a Lease payment with a 0 residual value and the financing amount is IDENTICAL, as long as the interest rate is the same.

There are some cases where leasing is CHEAPER than financing....and I will give you an example.

You finance a car for 60 months.....in 4 years you want to trade it in and get a new car (lets face it...now-a days most people just dont keep their cars 10+ years anymore)...in most cases you are going to OWE MORE than what the car is worth at this point....so you have to come up with the difference...maybe 2000$ maybe 3000$...but if you LEASED the vehicle instead you would owe NOTHING...your lease would be up in 48 months....JUST GIVE IT BACK...let the finance company take that loss. Remember...you CAN purchase out your leased vehicle if you wanted to!!!


Long and short of it....if interest rates are the same...LEASING is a more flexible option.....PERIOD.

I do this for a living every single day....I own an auto dealership and I ONLY lease vehicles.

Answer 2

Leasing is a viable alternative to purchasing a brand new car outright.

If you need to get a loan to finance a new car, it could be more financially advisable to lease a car as the monthly payments will very possibly be lower.

Of course, at the end of the lease period, you hand the car back. So you're not going to get any money back on it. But you are also going to avoid losing any money on it in terms of depreciation. Buy a new car, and immediately you lose the VAT you've paid and the car then starts to depreciate over time.

If you want a new car every few years, then leasing is a good way to avoid losing the money you would on a new car when you come to sell it (or worse, trade it in for less than it's worth at a dealer).

Have a look at:

http://www.buyyourcar.co.uk/Bmw/Z4-Roadster.aspx

and compare the new price and the lease price for the BMW Z4.

From £269 a month on contract hire, and from £22,380 new (for the 2 ltr version). Maybe the cost for the new car would place it outside someone's budget, but the leasing option is affordable to them? You don't need the 'lump sum' up front to get a contract hire car, and this is a very appealing aspect to some.

As other people have advised, be aware of exactly what the contract hire deal entails. You will have to ensure the car is serviced and returned in a 'fair' condition - otherwise you might be liable for repairs, etc. On the plus side, your tax is paid for, and as the car will be new, there'll be no MOT for the first 3 years (before the end of which you'll probably be handing the car back).

Hope that helps.

Answer 3

Leasing can be a great way to go for some people. I've been doing it for years and am very happy with it. But if you don't understand how leasing works, you can make a mistake by leasing. Leasing is just another way to finance a car and if you do it for the right reasons, it can be very beneficial.

Answer 4

Purchasing is far more economical, get a 1- 2 year old car from the used lot, it is a close to new as you can get with the original warranty and a dramatically reduced price.

If you need or use it for business, leasing is excellent, a write-off, however make sure your business plan/expense matches the lease term or else you will be stuck with the bill.......

Answer 5

There is hardly a good reason to lease a car. The only benefit is that you are USUALLY not responsible for CERTAIN repairs made to the vehicle. However you are making large payments on something you will never own. Your best bet these days is to buy a used car and pay cash for it. There are alot of nice and exceptionally well-kept used cars out there. Many people don't like that idea, but then again many people are also living outside their means and are in debt.

Answer 6

leasing lets you drive a car at lower monthly payments than financing the same car. Unfortunately, you don't own the car - the leasing company does. I think leasing is great if you want a new car every few years. If you keep a car for 10 years or so then buy it.

Answer 7

ive leased several only because i kept the milage in check and did not run over the specified milage and was able to walk out of one at 2-3 years old and into a new one with warranty without any hassles and most of the time with no money down. its not a bad deal if you are planning on having a car payment forever. but its just like renting the car will never be yours, the last car i bought outright because my kiddos are getting old enough to drive and daddys new car is just not that important anymore.

( IF YOU LEASE, READ AND UNDERSTAND THE FINE PRINT ) it could cost you dearly if your not clear on everything expected of you in a lease agreement ie:damages, milage, etc....

Answer 8

buying is much better seeing as how you own the car at the end of the day whereas,when you lease, the company that you leased the vehicle from still owns the vehicle,they are just charging you to use it.

Answer 9

If you have money to burn, sure lease but if you don't make that investment of purchasing. As long as you keep the maintenance up on your vehicle and don't get in any major accidents, your vehicle will serve you well long past the final payment. Do research on the type of car you buy because some models are crap, i.e, any GM. I would suggest looking at Toyota, Honda, Nissan.

Answer 10

The time.

If you plan to use the car for a very long time, buy it.
It will be quite expensive to lease.