To Lease or Buy?

Question

If you had the option to buy or lease a $60,000 car, and you could afford both options, which one would you choose? Considering that you don't have to keep the car more than 5 years.

Answer 1

I spent 5 years in auto finance / leasing. Leasing used to be real attractive when rates were high and banks wanted to stimulate the market. After 9/11 everything went to "0" percent on new cars so leasing wasn't as attractive.

When I used to sell cars as I'd ask people a few basic questions.

Do you keep your cars for a long time or trade them in every few years? If you like to pay off your car and hold onto them for 10 years then you shouldn't lease.

How many miles do you drive each year? If you drive over 20K then you might as well purchase since the car will depreciate quickly. Many banks only allow up to 20K a year. If you plan to buyout at the end of the lease it doesn't matter. However, keep it mind you paying interest on the residual as well.

Do you have a business? A business can write off a lease payment reducing their tax liability. Plus, it doesn't show up on the balance books as a "debt affecting their net worth. That's why equipment leasing is so popular.

As far as buying or leasing a 60K car it would depend on what type of car it is....

When you "lease" you are financing the depreciation over a period of years. Cars that depreciate more than others will have a higher lease payment but a lower residual buyout at the end. A 40K import (BMW, mercedes, toyota) will have a lower lease payment than a 60K domestic car since it depreciates less. You really need to take that into consideration. It's not so cut and dry with leasing.

Answer 2

Buy the car when you are through with it you will be able to sell it for more then the amount you would save if you leased it. The banks make the most money off of a leased car and if you do any damage of exceed the miles in the contract they can charge you a lot of money at the end of the lease. Also if you decide to get rid of the car before the lease is up you will pay a big penalty.

Answer 3

If it were me, I'd buy. Many people will tell you to never buy a depreciating asset, and that makes sense, but to me if you're going to spend $60K on a car you should consider keeping it once the payments are done and driving it as long as it is reliable. Today everyone thinks they should have a car payment every month of their lives - lease for 3-5 years, trade it in, lease again for 3-5 years. You never stop paying. If you keep the car another 5 years, you can save a lot of money towards other things.

Answer 4

Leasing provides flexibility in terms of the thoughts obtainable. in case you want to alter your automobile each few years or in the experience that your existence type demands a clean automobile each few years, then leasing is an appealing option. So hire is greater advantageous while in comparison with a private loan.

Answer 5

I'd never even think of leasing a vehicle. I like to be able to take off cross-country at the drop of a hat and can't be bothered with worrying about the expense of excess mileage and excess wear and tear on a leased vehicle. On top of that, my weekly commute is over 350 miles so I'd be in the excess mileage bucket pretty quickly.

Leasing is a terrible idea for nearly all drivers.

Answer 6

If you could afford to buy it why would you choose to give it back when the lease ends.

The ONLY advantage to leasing over buying is the ability to drive a car you can't afford to own.

Answer 7

it all depends on you if you are a person that does not travel a lot and likes that every little thing that goes wrond with a car then you are a leaser if you don't mind a limited warranty and a higher payment then buy it outright