Lease vs. Buy

[Travel_Dude]

Hey folks,

I was wondering if any of you guys had some thoughts on leasing versus buying a new car.

I am looking at the new Acura TSX V6. I cannot decide what would make more sense. I would drop the car and put rims on it, no other mods other than the factory kit.

Cheers!

[shakalaka]

Well it really depends on what you like. If you'd like to have the option of being able to drive the car for a few years, then getting rid of it and having a decent cash back from the company then go with lease. Buying is a completely different ball game, you own the car, you can do whatever with it and they can't tell you how much to drive it or anything like that.

I could be wrong but I think if leasing you end up paying a lot more than you would if you were Financing it for that much time and getting rid of it. But again leasing takes the headache of selling the car yourself when you want to and stuff. And Financing usually has higher interest rates I think.

[Redlyne_mr2]

Lease a depreciating asset, buy an appreciating one.

That being said I will never lease again.. I like owning everything I have wether it's depreciating or not .

[Aleks]

Originally posted by shakalaka
Well it really depends on what you like. If you'd like to have the option of being able to drive the car for a few years, then getting rid of it and having a decent cash back from the company then go with lease. Buying is a completely different ball game, you own the car, you can do whatever with it and they can't tell you how much to drive it or anything like that.

I could be wrong but I think if leasing you end up paying a lot more than you would if you were Financing it for that much time and getting rid of it. But again leasing takes the headache of selling the car yourself when you want to and stuff. And Financing usually has higher interest rates I think.

Usually if you lease a decent car with low rate and good residual it should come out roughly to the same cost as financing a car over a same period of time. If you finance a car you don't really own the car either. Most people think they own it but they don't until the last payment is made. So in that regard it's really no different.

[shakalaka]

Originally posted by Aleks


Usually if you lease a decent car with low rate and good residual it should come out roughly to the same cost as financing a car over a same period of time. If you finance a car you don't really own the car either. Most people think they own it but they don't until the last payment is made. So in that regard it's really no different.

Well I guess that's true. Although I meant along the lines of how much you can drive a car. For example leases usually they tell you how much you can drive a year and how many km's you can put on it, but don't think they do that for Financed one's.

I agree with Redlyne though, a vehicle is a depreciating and it's not going to make you money, so practically speaking leasing would probably be a better way to go. But again it's depends whether or not if you're ok with that fact that you don't actually 'own' it.

[Redlyne_mr2]

Originally posted by Aleks


Usually if you lease a decent car with low rate and good residual it should come out roughly to the same cost as financing a car over a same period of time. If you finance a car you don't really own the car either. Most people think they own it but they don't until the last payment is made. So in that regard it's really no different.
When you finance a car you DO own it. You hold a bill of sale confirming ownership and you can do with the vehicle as you please, drive it as much as you want, adjust the insurance as you see fit etc. There is a lien registered against the vehicle but you are still the legal owner of the unit. You have mortgage on a home the home still belongs to you, not the bank... same deal.

[Skyline_Addict]

I've been having thoughts about and conversations about this for the longest time.

Essentially, some points are more obvious and talked about than others. It (should be) alot more than just if you want to modify the car or not.

1) Capital Depreciation - the car is losing value rapidly once it leaves the lot. Leasing makes more sense on paper, if...
2) Interest Rates are reasonable and the residual is respectable, keeping your payments low, which is even better if...
3) The vehicle has considerably proven (through the model or the manufacturer) ability to uphold it's market value (which matters most when your lease is expiring)

Other points as mentioned...

1) If you plan to buy out the car after the lease period (pay the residual), then this method should only be used if it ends up being around the same cost (or cheaper) than financing or buying it cash. Much more than likely it is not...
2) Leasing makes sense for those who find themselves and enjoy driving new cars every few years

Advantages
1) Because of the lower payments, leasing can get you into a nicer car for the same monthly payment as a loan
2) Not putting your equity into a depreciating asset means you could possibly put it into an appreciating one (savings account, investment) that could go towards making you more equity.
3) New car every few years
4)Self-Employed can write off as expense

Disadvantages
1) Long term costs usually much higher if you buyout after lease
2) Usage and upkeep restrictions/obligations
3) Modification restrictions

[max_boost]

Depends how you look at it.

Unlike redlyne_mr2, I will never finance another car again. Leasing only for me.

I search for cars with good residuals, low rates and the numbers make sense. It's all in the numbers man.

My 04 330Ci, 03 RSX-S, 08 Civic Si were all cheaper to lease than finance at the time. It was a no brainer. I have also leased cars where the interest inccurred would be higher than finance but if the spread isn't that great, it doesn't bother me if I really want that car.

Selling a used car is a bitch and annoying. Leasing gives you options.

You know what the major kicker for me was? If I leased a car, and someone hits me and wrecks, I don't really give a shit because I can return it. Now if that car was financed and it got mangled and insurance won't write it off, good luck buddy. It's not the same and no one wants that car.

[Travel_Dude]

I am also buying another house by this time next year. Will owning the car help my chances of getting approved for another mortgage vs leasing?

[dr_jared88]

Originally posted by Travel_Dude
I am also buying another house by this time next year. Will owning the car help my chances of getting approved for another mortgage vs leasing?

The difference would be marginal. If you finance you can use your car as an asset however banks don't look at cars as much of an asset since they depreciate quickly. It really all comes down to debt ratio, so depending on the monthly payment difference, leasing may be in your favor.

[Redlyne_mr2]

Originally posted by max_boost


You know what the major kicker for me was? If I leased a car, and someone hits me and wrecks, I don't really give a shit because I can return it. Now if that car was financed and it got mangled and insurance won't write it off, good luck buddy. It's not the same and no one wants that car.

That's a great point man... that would piss me off so much if it happened to me.

[Redlyne_mr2]

Originally posted by Travel_Dude
I am also buying another house by this time next year. Will owning the car help my chances of getting approved for another mortgage vs leasing?
No it will hurt your chances... don't buy a new car before you buy a house.

[Mar]

I prefer to lease rather than finance. If financing gets you payments at $300 a month to pay off in 5 years and leasing gets you payments of $200 a month with a buyout after 5 years, it's easy. Lease the car, pay the $200 per month and put away the extra $100 per month, making the same payments out of pocket as if you were financing. Instead of putting that $100 a month into the bank's pocket to earn interest for them, you can put it into short term GIC or some other type of interest earning plan for 5 years and keep adding to it $100 every month. After the term is up, withdraw your money, buy out the car with it and have some left over. Bingo bango, car is yours just like you financed it but you got to earn interest on 1/3 of your payments in the process. And if a month here and there you're tight for cash, just do the $200 and don't worry about the extra. It gives you options while leaving you with the same outcome as financing.

[Xtrema]

Originally posted by max_boost
You know what the major kicker for me was? If I leased a car, and someone hits me and wrecks, I don't really give a shit because I can return it. Now if that car was financed and it got mangled and insurance won't write it off, good luck buddy. It's not the same and no one wants that car.

Exactly my take.

Especially if you want to switch often.

Sure, you pay more interest with lease vs finance (if rates are the same). But one accident will offset that. If you drive it in winter, go this route.

As for mods, you may have to reverse all mods or plan to buy out at the end.

[Skyline_Addict]

never thought about the accident perspective of things (since I thankfully haven't been in one), but that's a great point.

lease your daily driver, own your toys, basically.

[Tomaz]

Take into great consideration on what you use your car for and how much you use it.

I cannot lease because I drive anywhere from 60,000 - 80,000 kms/year. I don't know a single lease that allows me to do that (without paying out my ass for it).

The financing option really worked for me because it ended up being very similar to a lease. In 4 years, I will have paid off more of the car than it would (breaking even). At which point the dealership would be willing to buy her back as long as I buy another car from them. It's very similar to the idea of 3-year contracts with a cell phone company. Because those plans have always worked for me, I decided to take the gamble and go for it. So far I feel great about it!

[Sorath]

lease is the way to go. i find it easier to get rid of your lease than financed vehicle

[max_boost]

Yeah accidents do happen. My car was parked outside and it got smacked by a trucker who said he didn't see it in his blind spot. LOL!

Leasing will always be popular. It keeps the payments affordable and sales numbers up. There are always great deals, you just have to look for them. I like switching every few years. To me, it's renting. Cars=expense. I'm not limited or have allegiance to any brand, if the deal is good, I will lease it and drive it and see what it's all about. With that said, no domestic please, I don't care if it's 70% residual with 0% lease haha. :D

[max_boost]

Originally posted by Tomaz
Take into great consideration on what you use your car for and how much you use it.

I cannot lease because I drive anywhere from 60,000 - 80,000 kms/year. I don't know a single lease that allows me to do that (without paying out my ass for it).

The financing option really worked for me because it ended up being very similar to a lease. In 4 years, I will have paid off more of the car than it would (breaking even). At which point the dealership would be willing to buy her back as long as I buy another car from them. It's very similar to the idea of 3-year contracts with a cell phone company. Because those plans have always worked for me, I decided to take the gamble and go for it. So far I feel great about it!

WTF? LOL

That's a lot of driving. What the hell are you doing? 60-80,000kms/year? :eek:

[Aleks]

Originally posted by Redlyne_mr2

When you finance a car you DO own it. You hold a bill of sale confirming ownership and you can do with the vehicle as you please, drive it as much as you want, adjust the insurance as you see fit etc. There is a lien registered against the vehicle but you are still the legal owner of the unit. You have mortgage on a home the home still belongs to you, not the bank... same deal.

Yes but still there is a lien. To me that means it's not truly mine. I've sold financed and leased cars before and in each case there was no difference, I had to pay them off first before I could legally sell them.

[Redlyne_mr2]

Originally posted by Aleks


Yes but still there is a lien. To me that means it's not truly mine. I've sold financed and leased cars before and in each case there was no difference, I had to pay them off first before I could legally sell them.
You don't need to pay them off first before you can legally sell them, again I use a home as an example. :) I understand where you're coming from but technically you do own the item you have even if there is a loan out against it, wether it be a car, truck, seadoo, atv etc.

[Travel_Dude]

All of this is great info guys. Thanks!

[max_boost]

Originally posted by Redlyne_mr2

You don't need to pay them off first before you can legally sell them, again I use a home as an example. :) I understand where you're coming from but technically you do own the item you have even if there is a loan out against it, wether it be a car, truck, seadoo, atv etc.

You own it when you pay cash for it. :bigpimp:

[Weapon_R]

Originally posted by max_boost


You own it when you pay cash for it. :bigpimp:

Unless you're smart, in which case you'd always finance no matter how much cash you had :bigpimp:

The bottom line is always the numbers. There is no 'better' option until you sit down, figure out the numbers, and decide from there.

[Tomaz]

Originally posted by max_boost


WTF? LOL

That's a lot of driving. What the hell are you doing? 60-80,000kms/year? :eek:

From home, to work, to school, to friends house, to Tim Horton's, then a cruise, then home. Usually anywhere from 100 - 250kms/day. Just to get to work is 35kms one way. Hence why I was excited to buy my new Mazda 3 2.0L!! she get's almost 800km/tank ($35 fill), if I am nice to her!

[blownz]

Originally posted by Weapon_R


Unless you're smart, in which case you'd always finance no matter how much cash you had :bigpimp:

Still not always the case. I know several guys with lots of money that always pay cash for cars. Some of them 2-300k a year in new cars and always cash. They like knowing that no one can ever touch it because they own it 100% with no liens. Plus they can't be bothered to fill out the paper work. lol

Personally I have paid cash for my last 5 vehicles mainly because I like keeping my monthly costs to a bare minimum. Granted I don't buy very expensive vehicles, with 2 of them being in the 20-30k range and 3 in the 30-40k range and only one was brand new.

[Xtrema]

If you don't have a mortgage and expose to enough risk in investments, and have no avenue to write it off, buying cars cash isn't a bad idea.

Your cash is probably sitting on 1 to 2% with income taxable. So why pay someone 3 to 5% interest for something you can buy out right.

[prae]

Yeah. I much prefer cash car purchases, primarily because of the points made above. Sensitivity to monthly cashflow, and not many other avenues to utilize the cash in a more beneficial way.