Who is a car lease good for?

Question

I know that a lease is better at times than buying. What kind of financial situation is the best for a lease?

Answer 1

It is the most expensive way to finance a car and is almost never a good idea. Perhaps some highbrow can justify it, but the deal usually stinks.

Answer 2

Leasing is good for many different reasons. Businesses usually lease vehicles (and some Brands have special lease programs for business) for the tax write off. It is also good for those who need a low monthly, with little to no money out of pocket.

The best reason for the average joe to lease is becuase of options. In a standard purchase, unless you have a 36 month or a 48 month term, you will probably will run into a negative equity situation (you owe more than the car is worth).

The avaerage American trades there cars in every three to 4 years and the average customer finances 60 to 72 months in order to reduce the payment. While this seems like a good way to go, your finance charges can add up to a third of the financed amount. So all you are paying is finance charge for the first two years. By this time, the value of the vehicle has decreased by more than 15%-20% and unless you put a large down payment, you are in anegative equity situation until the 4th or 5th year of the term.

Leasing with an option to buygives you three options at the end of the term. You can purchase the vehicle outright. Either re-financing or paying cash for the residual value(this is how much the bank says your car is worth after your lease is up. this value is set on your contract when you lease the the vehicle and cannot be changed). You can also get into a new lease with the same bank, which most banks give you incentives to do so. Or you can just return the vehicle, and purchase or lease whatever vehicle you want.

There are restrctions which makes leasing not good for some people. Those who travel often SHOULD NOT LEASE becuase of the mileage restrictions. Also, leasing is not a good idea for families with small children because you do have to keep the car clean and undamged. If you go over your mileage restrictions, or have any damage to vehicle in excess of normal wear and tear, you will be charged by the bank, which is all disclosed on the contract.

Answer 3

Leasing is good if you really get tired of driving the same car. Buying usually takes 5 years to pay off (most people) and most people are already looking to get a new car by then anyway. Me personally, I lease 24 or 27 months, I put about 20000 miles per year, and usually end up terminating my lease 6 months early without any fees. So basically I get a new car every year and a half to 2 years. I am always under warranty and don't have to worry about anything breaking down. I don't even have to worry about resale value. I drive the car during it's best years, and what happens after is not my problem. It really cannot get better than that.
In fact if I purchase a car and pay it off in 5 years, I'll already have 100,000+ miles on my car. Why would I want to drive an old janky car, when by then I would have put the same miles on three different cars.

Answer 4

A lease is always a good idea, and you don't need a highbrow to understand why. It's simple economics. Buy what appreciates and lease what depreciates. No car will ever appreciate (unless your talking about a 67' charger R/T or something, but get that out of your head). These people who think that a lease is throwing away money may have a hard time understanding that unless you pay cash upfront you don't own the car, the bank owns their car. That's an eerie feeling to me. The bank paid the dealer for the car. The customer is in the (usually long, 5 to 6 year) process of buying the car. I could preach 100's of benefits to leasing over buying, but I have a life. The biggest thing to remember is Lease what depreciates, buy your house.

Answer 5

A lease is sometimes a good idea. Some people don't like it, but I personally do. When you finace a car, you are paying interest anyway. In a lease, you just pay for the portion of the car that you use. There are some advantages. First, a lot of the risk is shifted to the bank. If the car is wrecked or stolen, it's the bank's problem. If resale values dip, it's their problem. If you are a person who routinely buys a new car every 3 years and drives a predictable amount of miles, it's a good idea. For me, I drive for business and get reimbirsed for miles I go over my lease. It's a win win for me.

Answer 6

Leases are good for people who put less than say 12,000 miles per year on a car and have a limited income. This allows them to have a nice realiable car while keeping their cash flow in check.

Sometimes car companies do actually run good lease deals. That's because they are focused on selling units, not profit margins. To see if a lease is a good deal, use a lease vs buy calculator. There are tons online. I've provided a link to one below found on Yahoo! Autos

Answer 7

A lease is best for somebody who gets bored with a car easily and doesn't drive very many miles. The payment maybe alittle less but in the end you end up with nothing. It's like renting an apartment.

Answer 8

People who do a lot of traveling and aren't home much..Those people don't put a lot of miles on cars...but still need one available to get around when they are home....other than that its pointless