Leasing a car rather than purchasing. Pro's & Cons please.?

Question

2006 Pontiac Pursuit G5, anyone leasing or has leased a similar car through GM. Let me know how leasing is working out .

Answer 1

You already have a lot of answers but, unfortunately, many from people who haven't let their lack of knowledge about leasing prevent them from answering your question. I suggest you educate yourself rather than accepting other people's opinions, which will allow you make more intelligent decisions.

This web site may help you get started:
http://www.leaseguide.com/index2.htm

Answer 2

You have to think of what YOUR needs are in order to decide if leasing is better FOR YOU. If you are liking a car that you cannot afford to buy leasing can be the way to get it. The payments are lower because you are paying for only the part of the car that you are using. The downside of this is at the end of the lease you do not have a car and you must go about deciding if then you want to lease or buy again. If you are a resless person leasing also keeps you in a new car every 3-5 years depending on the length of your lease. For people that enjoy new cars this is a good option - If you are going to drive the car into the ground then buying it outright is they best choice. Also if you drive alot of KMS you have to consider this - most leases are 20,000 kms a year... some 25,000 however if you know that you do 30,000 a year you can buy extra kms upfront and it will not cost you as much as if you were to bring the car back with too many kms on it. It is a bad idea (cost wise) to lease a car then buy it out only because you end up paying more at the end for the car. BUT if its the car you wanted and you cant afford to buy it outright to start it is an ok idea as long as you realize you will be paying more in the end.

Answer 3

Pros:
1. You can drive a nicer car.
2. You pay for depreciation only (how much a car's value goes down), plus any extra miles
3. You don't have to worry about selling the car later.
4. Typically a good deal when interest rates are High, because you are only charged interest on how much the car depreciates as opposed to the entire value of the car. (ie, if the car cost $35K and it depreciates $15K in 3 years you are only charged interest on the $15K)
5. You can't be upside down on a lease, meaning in 3 - 5 years you just drop off the car and that's it. If you read some of the people on this board are upside down on their loan. Meaning they purchased their car, but now want a new one and have to actually pay $2000-$5000 more, because their car isn't worth what they owe on it.

Cons.
1. You don't own the car, you are basically renting it so you can't make modifications, such as tinting windows without permission.
2. You must carry full coverage insurance, while if you purchased you are only required by most state laws to carry liability.
3. If you exceed the mileage per year, you have to pay an excess use fee.
4. You typically can't get out of a lease early unless you pay penalties.


Leases are not all bad. Some key things.
1. Negotiate the price of the car, not your lease payments. The lower your price of the car, the lower the lease payments will be.
2. Determine all dealer fees and negotiate those also. All fees can be negotiated. Some of the fees that are charged are excessive, but people who don't negotiate pay.
3. Know the approximate mileage you plan to drive. If you know you drive 20K/year, don't get a lease with an agreement of only 12K/year. Overestimating a little is typically better than underestimating. (it' like the days were cell phone companies charged excessive fees if you went over in your minutes usage)

Do your homework. GM cars depreciate a lot over a short time, which typically means you'll be paying more in a leasing situations.

For example.
Honda Civic: MSRP: $19,000
Depreciated value after 5 years: $12,000
Cost to the leasee: $7000 (so you'd only pay for the $7000 plus interest)
Pontiac Pursuit: MSRP: $17,000
Depreciated value after 5 years: $5,000
Cost to the leasee: $12000 (so you'd pay for the $12000 plus interest)

So watch the numbers and do the math! When you lease it's not only what you pay now, but what the car is worth later down the line.

Answer 4

In most cases, I think leasing is a more expensive way to get a car than purchasing. The salesman will tell you that you're only paying for the part of the car you use. That's true, but you're paying for the most expensive part.

Here's why - the value of a car depreciates the most in the first year, less the 2nd year, even less the 3rd year, and so on. If you lease for just 2 years, the car has lost more value then than it will for the next 4-5 years, maybe. Then you have to lease another one for the next 2 years, and so on.

If you buy the car and pay it off in 4 years, and drive it for 8 years, you have 4 years of absolutely no car payments - only maintenance. And if you can pay it off in only 3 years, you're even further ahead of the game.

Answer 5

I've only known personally one person who leased a car, and it was because she had gone bankrupt but had worked for the president of a company and needed to uphold her image. Other people lease cars because of their career (such as real estate agents) or salesmen (because they travel a lot). So if your career is such then sure go ahead and lease. I've heard on tv there are several kinds of contracts so "leaser beware".
Those people who have leased usually turn in their car at the end of the lease instead of buying it. Years ago it was a status symbol to have a new car all the time. Some bought a car every 3 years and felt superior too that they could hand off their car to someone else and get money out of it. Others would lease their car to "so to speak" keep up with the Joneses who really did have the status. So, is up to you what you need, and what status you want to portray.

Answer 6

If the car retains its value after 3-5 years then leasing usually doesn't make sense when you punch in the numbers.

This is what you do, go to KBB.com online and see what the value of your car would have been had you done this 4 years ago. In percentages check the decrease in value. Now, using that percentage calculate what your car would be worth at the end of the lease minus any payments. Then add up all costs (payments, etc.l for the lease and the ownership). Now compare them knowing you OWN this car that is now worth x dollars so it is an asset and see which way you come out ahead.

Good luck.

Answer 7

Leasing a car is the same as renting it in a way. At the end you still don't own it. And, if you drive a lot it is a bad idea since going over the allotted milage can really cost you. However, your payments are lower than if you purchased. Also, if you are someone who changes cars a lot -- like every year, leasing might be better for you.

Answer 8

Leasing is better in the short term if you dont want it for the rest of your life however purchasing it is much better because if you damage a leased car you have to pay the full price of the car so you're better off purchasing the car.

Answer 9

Lease is a waste of money, you are just paying for a car you don't own, you will return it @ the end. The only pro is that you get to drive a different car after a couple of years

Buy you own it, it is your asset that you can sell in a future date and get back something. The only con is that you are stuck with driving the same car day in day out and you might get seriously bored

Answer 10

well it depends. i myself am currently trying to decide if i want to lease or buy my next car as well. The bad thing about a lease is you are only allowed so many miles per month, but the payments are usually alot cheaper then buying. Its good to lease if you want to get a new car every couple of years. But of course buying makes more sense if you plan on keeping the car, then you have freedom to drive it as much as you want. Leasing is good if you have another car that you can use as your main commuter car, or you dont drive that much

Answer 11

Any lease is not a good idea unless you drive around 12,000 miles per year and use your vehilce for work. Making part of it a tax write off. All leases are not equal. You could have a "balloon" payment due after X number of moths. Be very careful what you sign on a lease deal.