When is it a good idea to lease a car instead of buying one?

Answer 1

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.

Answer 2

If you want a new car every 2 or three years (NEVER lease longer than that) and drive no more than approx 12,000 miles a year it can be worth it as you always have a car under warranty. Downside, of course, is you're always making payments.

Answer 3

a.) Do you like having a new car every couple of years?
b.) Do you ALWAYS keep your car under 12,000 (or 15,000, depending on the lease ) miles/year?
c.) Do you like to always keep your car stock (not modify it in any way)?

If you can answer yes to all of these questions, you should consider leasing. If not, you should probably buy. I personally like to run my cars up to 100,000 miles before I get rid of them so I would never lease.

Answer 4

ONLY when you are being supplied with all car expenses by your employer, then auto is a 100% expense and you don't have to pay taxex on car cost...