Leasing attitudes : with poll

[ExtraSlow]

I've owned ~25 vehicles in my life, and I've never leased, I've never looked that closely at it, and I am not attracted to it as an option for future vehicles. I know it's incredibly common, I just feel like it's a perfect way to make sure you have a car payment for the rest of your life. I hate payments.

So, will you consider a lease for your next vehicle?

[88CRX]

If the lease and finance rates are the same then lease every damn time.

Gives you the peace of mind to be able to walk away from your vehicle after your lease term if you've had big hail claim and being smacked around by a fucking school bus. A 4 year old vehicle with 2 huge claims on it is not worth fair market value compared to similar vehicle without those claims.

Returned no questions asked at the end of the lease. Entire 1/4 panel was replaced (among other shit) to the tune of $6500 or something stupid.
https://i.imgur.com/voTVFfL.jpg

In fact if the incentives are the same (or really close) and the finance rates are close then you should lease. Even if you plan on keeping the vehicle you have the ability to walk away if you want. You can even run the marth and see the cost difference to lease VS finance and determine if the extra costs are worth the 'insurance' to be able to walk away.

[dirtsniffer]

I will consider it absolutely.

The biggest benefit I can see is it is a relatively cheap insurance policy against forced depreciation due to accidents or insurance claims. With everyone demanding huge discounts for claims and insurance companies unwilling to pay for depreciation a lease seems like a great way to transfer that risk to the manufacturer.

[killramos]

If you are the type to buy new vehicles every few years anyways and the interest rates are right then why not.

[Swank]

I owned my last car from new for 11 years and hope to own my current one just as long if not longer. I do less mods as I get older but still like the freedom to do so and, like ES, I hate monthly payments and saved up for years so I could pay cash for this one.

[asp integra]

I am in the same boat as OP, I have always bought my vehicles with cash and never had car payments. Keep the vehicle for 1-2 years, sell and buy a different vehicle.
For the first time ever I am considering leasing. I like the idea of have a brand new vehicle that is covered with warranty, especially now for hauling around 2 kids and a boat in the summer time I think it will give me great peace of mind. I also like the idea of not having a large chuck of change being invested in one thing, ie $20k in a car that could instead be sitting in the bank/savings/stocks etc.

[pheoxs]

I owned my last car from new for 11 years and hope to own my current one just as long if not longer. I do less mods as I get older but still like the freedom to do so and, like ES, I hate monthly payments and saved up for years so I could pay cash for this one.

If you found a 0% lease (or 0.9 or whatever almost zero rates they do sometimes) you'd actually be better off leasing it even if you own it long term. This is because if you ended up with a lemon with a ton of problems or it got badly damaged but not quite written off you can always dump it at the end of the lease. And if you like it then you just buy it out with cash and be in the same boat you are.

Plus tossing the extra $ in a modest savings account will net more interest as well.

[gmc72]

I have leased new cars in the past, even leased a used one. I have never purchased a brand new vehicle, always used. Leasing can be good and bad I found. When I leased my 2 year old Canyon, the residual was higher than what the vehicle was worth, but it was an open ended lease, so I had to pay to turn it in ($1000). I leased 2 other vehicles and had no real issues with them. One was taken over by my now ex-wife, so I couldn't care less about that one. The other we had to sell and sold it for what was left owing on it including the buyout.

That being said, if the rate is close, I would consider it. It lowers the payment and you have the option of walking away at the end if you want something different. Of course, I'll probably buy used again when it's time, depending on what my wife wants.

[ExtraSlow]

I admit I have a very old fashioned attitude in regards to money. Some would say it's a "poor person's attitude". There's a real financial argument to be made for leasing in some situations, I can see the math of it.

It's funny, leasing seems to appeal to two groups of people. Relatively wealthy people who have much higher than average financial literacy, and lower income people who are financially illiterate. Outside of beyond.ca, I think the second group is much larger than the first.

[pheoxs]

I admit I have a very old fashioned attitude in regards to money. Some would say it's a "poor person's attitude". There's a real financial argument to be made for leasing in some situations, I can see the math of it.

It's funny, leasing seems to appeal to two groups of people. Relatively wealthy people who have much higher than average financial literacy, and lower income people who are financially illiterate. Outside of beyond.ca, I think the second group is much larger than the first.

Yeah, leases are valuable if you plan things out. They are terrible if you blindly just see its a lower payment than financing.

Especially the last few years with the stock market being insane, it's way better returns to invest $ and have a lease than to pay cash for a vehicle. I tried explaining to my dad my investments are at a 20% return this year when his mentality is you should only ever buy 3% GICs and nothing else.

[Twin_Cam_Turbo]

Ive owned thirty some vehicles now and two have been leased. The only reason I leased those two was because they had extremely low payments with $0 down, otherwise I wouldn’t have even been in the market for them. I am not seeing any deals remotely close these days unfortunately.

[88CRX]

I am not seeing any deals remotely close these days unfortunately.

Yea the recession lease deals are mostly gone. We ended up financing the RDX (after giving back the TLX).

[Mitsu3000gt]

I feel like we have had lots of threads on this but I am a fan of leasing.

Not a universal list that applies to everyone, but this is my take:

Pros:
- Always have a warranty
- Always have a new car (safe, reliable, efficient, etc.)
- Minor damage is not an issue (most lease agreements are surprisingly generous in terms of dents, rock chips, etc.)
- Ideal for people with kids - your kids can do their thing with the interior and you can just hand the vehicle back to the dealer at the end with no stress during ownership about spills, stains, etc.
- And probably the biggest perk, if your car is almost written off, in a serious accident, hail damaged, etc. you are not affected by the massive depreciation that comes along with those events. You basically get free depreciation insurance.
- You still have the option to buy the car out at the end for what is likely a very similar total overall cost as if you financed it, but you of course get all of the above protections for the 4-year term of whatever lease you sign.
- Much lower monthly payments than an equivalent finance
- Virtually all the stress of vehicle ownership stress is gone. You don't have to wash it, wax it, care for it, worry about rocks, worry about road salt, worry about where you park it, how you drive it, cold starts, etc. You can just do whatever you want and enjoy the vehicle stress-free.
- Repairs, such as a cracked windshield, are often cheaper when you return the vehicle than getting it done yourself (eg. if I return my windshield cracked, Honda charges $500. It's almost $1000 to get a new windshield on my own).
- Life happens, so if you run into financial trouble or unexpected tragedy, it's often easy to terminate leases early with little or no penalty (or a credit, depending on the duration and vehicle) rather than having to fire-sale the car because you own it.
- Often times before your lease is over, you will have an opportunity to take advantage of better deals at no cost to you. For example, it's not unusual for a dealership to offer you some cash to trade in your lease for a new model and keep the monthly payment the same on the new lease.


Cons
- Always have a car payment (however, many people don't keep their cars more than 5-7 years or so, so those people tend to always have car payments too - the only real difference in that case is the payments are just higher and the cars are older and off warranty before replacement with no depreciation protection)
- You never own anything, but that is more often than not a good thing when it comes to vehicles
- Typically does not work well for high mileage drivers (somewhere around 25k km/year is probably around the maximum)
- Typically you need to return the car with more than 50% tires remaining and a clean windshield, or you are charged extra
- Mods generally aren't allowed if you want to keep you warranty (for the applicable parts affected by said mod)
- It's easy for dealerships to manipulate leases and just present you with a payment - they are more confusing to most people. Make sure you understand every last detail of your lease, generally it's a bad idea to put money down on a lease, and always negotiate the price of the vehicle from dealership cost up, without telling them if you want to lease or finance until the price is settled. The worst thing you can do is just tell a dealership the payment you want, it gives them a black box for pricing.

Financing/purchasing in my opinion has pretty much only cons. You are on the hook for all out of warranty maintenance/repairs, accidents or hail damage can destroy your resale value, your payments are always going to be higher all else equal (unless you pay cash), far more effort is required to keep the car in good condition (if that's important to you) and at the end of the day you probably haven't paid significantly more/less than someone who leased and bought out, but with none of the optionality or perks. If you outright purchase the vehicle, that is a big chunk of money that could potentially be invested while only paying a fraction of that amount per month to lease. Total cost of ownership can potentially increase dramatically with off-warranty repairs as well, but it's hard to predict those things when evaluating both options.


If you are someone who likes changing cars all the time, leasing is usually a no-brainer.

If you know before hand that you are buying a car to drive it into the ground for 15-20 years, I would still lease first to get ~4 years of protection and keep every option available to me in case something bad happened, then just buy it out at the end if it still made sense to do so at that time - the difference in cost, if any, is basically an insurance policy against most of the bad things that can happen or if you simply change your mind or need to adapt to a different lifestyle after a few years.

I also understand that there is a certain comfort for some people just knowing that they own the vehicle and it's theirs but to me that does not outweigh the advantages. At the end of the day it's just a spreadsheet comparing the financing deal to the lease deal, but it's harder to account for all the "what ifs" that leasing protects you from, and there is just so much more flexibility that you have when leasing that you don't when financing/cash purchasing.

Anyway just my $0.02, I know it won't apply to everyone.

[Aleks]

Lease depreciating assets, own appreciating ones. :angel:

[01RedDX]

.

[revelations]

Given the fact that I cant stand most new vehicles (too much cumbersome tech, engines too complex/unreliable, questionable styling, lack of manual) - leasing is just something that will never happen for us.

Regarding the 'no worries' attitude, I have a winter 'beater' (in decent shape) vehicle and nice summer vehicles. If the beater gets damaged (cosmetically), its not a big deal. Winter tires stay on and the vehicle gets parked in the summer with a cover.

Leasing makes no FINANCIAL sense for the average low/middle income earners though. Having no car payments = huge savings.

[pf0sh0]

I have leased my last 3 vehicles and probably will lease going forward. Most of the reasons already discussed are why I lease.

[Masked Bandit]

I will consider it absolutely.

The biggest benefit I can see is it is a relatively cheap insurance policy against forced depreciation due to accidents or insurance claims. With everyone demanding huge discounts for claims and insurance companies unwilling to pay for depreciation a lease seems like a great way to transfer that risk to the manufacturer.


This X 1000! If you know you're going to rotate through your vehicles ever 2-4 years anyway leasing absolutely adds another layer of protection against diminished value due to a claim or two on the car. If you're the type to keep your vehicles for a decade though I don't know that it provides as much value. The marth that I wonder about isn't focused on finance vs. lease rates, it's more about cash incentives. If a $60,000 vehicle has cash incentives of say $5,000 (making the vehicle only $55,000 to buy outright) does it really matter if lease or finance "rates" are 0%? No, because they're not 0% since you have to pay $5,000 more for the car to get access to that plan. On the other hand the lost opportunity cost of tying up $55,000 in capital in a depreciating item has to be consider as well. In four years this heap of shit's only going to be worth $30,000 (if you're lucky) any way so essentially you've forfieted potential investment growth on at the very least $30,000 in capital over four years. At a modest rate of return of 5% that's $6,600 gone, but that's also potenitally taxable whereas saving the $5,000 cash off the original purchase price is guaranteed money in your pocket. Change that rate to 7% and now it's $9,600, we're starting to see a difference here.




I admit I have a very old fashioned attitude in regards to money. Some would say it's a "poor person's attitude". There's a real financial argument to be made for leasing in some situations, I can see the math of it.

It's funny, leasing seems to appeal to two groups of people. Relatively wealthy people who have much higher than average financial literacy, and lower income people who are financially illiterate. Outside of beyond.ca, I think the second group is much larger than the first.

As someone who sees a broad spectrum of client's vehicle purchasing habits I can tell you that the majority is firmly with the latter group. And they're not taking the excess / available capital and investing it, unless you consider beer & smokes investments.


So after all that analysis I can prove just how dumb most people are. I'm pretty sure the mathmatical answer is to lease assuming you watch the numbers on the agreement and you don't sign a bad deal, but a loathe paying interest & fees of any kind on anything...ever...so I'm inclined to pay cash for the simplicity of knowing I don't have a bank sticking their fingers in my account each month.

[16hypen3sp]

Leasing (for the first time) my next car.

[revelations]

^ its bizarre how financially illiterate many people are.

I tried to explain to one person the cost of ownership of my winter beater (15 y/o civic) and they vehemently claimed it was WAY more to maintain than leasing/buying a newer vehicle. Plus it would DEFINITELY break down more.

For eg. 500$ month lease/finance rate - compared to 500$/year in maintenance (high estimate for a mere civic) and no payments , apparently this is financial rocket science.

[01RedDX]

.

[revelations]

Your EP3 is no 'mere Civic' but I agree, there no comparison unless you own a rare sports or luxury car, or maybe a used bagged Range Rover.

HAHA, type R civics are just slightly better grocery getters than the average one. Nothing exotic !

Sadly though, because 3 door hatches are so rare in North America - I dont see myself with any other vehicle for a long time.

[Mitsu3000gt]

^ its bizarre how financially illiterate many people are.

I tried to explain to one person the cost of ownership of my winter beater (15 y/o civic) and they vehemently claimed it was WAY more to maintain than leasing/buying a newer vehicle. Plus it would DEFINITELY break down more.

For eg. 500$ month lease/finance rate - compared to 500$/year in maintenance (high estimate for a mere civic) and no payments , apparently this is financial rocket science.

To be fair, if you are comparing to your 15 year old Civic winter beater, you can lease a similar brand new car for less than half of the $500/mo used in your example. Probably won't be cheaper than maintaining your winter beater, but it's also not the same value proposition. $500/mo lease gets you a pretty nice $40-45K car. $500/mo finance over the same period gets you a fairly basic economy car.

[revelations]

Sure, lets take a look - a bare bones 2020 Civic hatch is about 4300$ /y for a lease (83$ per week, 52 weeks).

Thats a lot more than 500$ / year in maintenance on my beater.

This is one reason why poor people, stay poor. Basic financial thinking.

[88CRX]

Given the fact that I cant stand most new vehicles (too much cumbersome tech, engines too complex/unreliable, questionable styling, lack of manual) - leasing is just something that will never happen for us.

Regarding the 'no worries' attitude, I have a winter 'beater' (in decent shape) vehicle and nice summer vehicles. If the beater gets damaged (cosmetically), its not a big deal. Winter tires stay on and the vehicle gets parked in the summer with a cover.

Leasing makes no FINANCIAL sense for the average low/middle income earners though. Having no car payments = huge savings.

I think you're arguing the cost/benefit of new vehicles VS old vehicles. Which is valid 100%.

This discussion should be financing a new vehicle VS leasing a new vehicle.

Edit: Also I was leasing a brand new TLX for under $400/month. It had 290hp, AWD, bluetooth, traction control, autostart, heated seats, way better safety feature, a backseat etc etc etc. The FWD EP3 had power locks/window and that's about it. It's OK in the winter but the comparison isn't even in the same ballpark.

[pheoxs]

Sure, lets take a look - a bare bones 2020 Civic hatch is about 4300$ /y for a lease (83$ per week, 52 weeks).

Thats a lot more than 500$ / year in maintenance on my beater.

This is one reason why poor people, stay poor. Basic financial thinking.

On that logic why do you eat anything other than just bulk rice? If I have any kind of long commute I'd much rather be comfortable than as cheap as possible.

Also you aren't factoring buying the beater in the first place too. Not a big amount but still needs to be considered since eventually it will need to be replaced.

[88CRX]

On that logic why do you eat anything other than just bulk rice? If I have any kind of long commute I'd much rather be comfortable than as cheap as possible.

Also you aren't factoring buying the beater in the first place too. Not a big amount but still needs to be considered since eventually it will need to be replaced.

This also. My Honda Element that I purchased used (i believe it was 4 years old when I bought it) lost about $180/month in depreciation over the 6 years I owned it. That does not include any repair or maintenance work.

[adam c]

if you lease a vehicle then buy it out in the end, are you not paying more for the vehicle than if you had financed it at the start?
For most people to come up with the thousands at the end to buy it, there's a finance for 3/4/5 years there, so a potential 5 year finance turns into a 8-10 year lease & finance

As someone who keeps cars for a while, I still see an outright owned car as an asset regardless if it depreciates or not, in a financial pinch I could sell that vehicle (after outright owned) if absolutely needed, for a lease I would be onto the next lease and now having to pay out financial penalties
As I get older, I'm not caring about the mods anymore, but more on the quality, comfort, tech and performance, sure you don't get that with an older vehicle however I also don't have a monthly (perpetual) car payment

Trying to understand if I'm in the right ball park or not

[revelations]

On that logic why do you eat anything other than just bulk rice? If I have any kind of long commute I'd much rather be comfortable than as cheap as possible.

Also you aren't factoring buying the beater in the first place too. Not a big amount but still needs to be considered since eventually it will need to be replaced.

Again, low/middle income mindset. When I was in that class, I was eating bulk rice (or other such things). Fiscal austerity. Buying a 1000-2000$ vehicle vs spending 4300$ a year - after 5 years the numbers look pretty ridiculous.

Now, I just use the cheap vehicle in the winter when damage is most likely.

Also, my lowly Civic is certainly not uncomfortable by any means.

[killramos]

Buying a new car rarely makes anything in the way of financial sense. But neither does buying most anything else people buy.

If the 4000 dollars a year makes you happy that’s money well spent.

[pheoxs]

if you lease a vehicle then buy it out in the end, are you not paying more for the vehicle than if you had financed it at the start?
For most people to come up with the thousands at the end to buy it, there's a finance for 3/4/5 years there, so a potential 5 year finance turns into a 8-10 year lease & finance

As someone who keeps cars for a while, I still see an outright owned car as an asset regardless if it depreciates or not, in a financial pinch I could sell that vehicle (after outright owned) if absolutely needed, for a lease I would be onto the next lease and now having to pay out financial penalties
As I get older, I'm not caring about the mods anymore, but more on the quality, comfort, tech and performance, sure you don't get that with an older vehicle however I also don't have a monthly (perpetual) car payment

Trying to understand if I'm in the right ball park or not

Lease per month will always be less than finance per month so if you save/invest the difference you can come out again. But it does depend on the interest rate and terms.

Let's say for example both are 3.25% because thats whats on Mazda's lease rate now. A top of the line loaded CX5 will be around 45k out the door so I'll use that because I kind of want one. (Obviously cheaper vehicles out there but also people sometimes go for fancier than that).

Lease 48 months @ 3.25% = 562$/month with a residual of 20k$
Finance 48 months @ 3.25% = 990$/month and you own it outright (I adjusted the % because their current finance promos are less, but trying to compare apples to apples)

Difference of 428$ per month. 428$ / month invested in a index fund which nets 6% return (Which is historically close to average, but significantly less than the past decade actually) would give you a final value of 23,154$ (with 2,610 taxable as capital gains at 50% of your tax rate so lets say 20% net is 522$.

So 23154 - 522 = 22.6k left over and you pay off the residual as soon as your lease is done and you have 2.6k$ left over in cash at the end.

Now thats with a 6% return, historically the S&P500 has increased 9.4% year over year across the last 5 years which would've netted closer to 4k in profit. Obviously at some point markets do drop and such so it is a riskier option. But if you can get finance/lease rates of 0-2% then you could even beat them just getting a basic 3% GIC

[nickyh]

Typically we pay cash for our cars, i set money aside every month for a "car payment" so when we are done with our cars we have cash on hand to buy.
Usually my husband and I keep our cars for ~6-12 years, so it makes sense.

But, I had just purchased my car and the fund was depleted, while we planned to keep my husbands car for another 3 years a costly repair forced our hands to sell it. Husband did not know what he wanted, other than he wanted 1) car, 2) AWD, and 3) manual. So we are currently leasing his car. We should be able to buy it and sell it privately, and pocket $5-6K to go towards something he wants when the term is up. If not, we walk away.....
We put zero down on the lease and our friend negotiated the deal (the finance office had to approve the deal with the manager as we were basically taking it for cost).

Coles notes:
If you plan to keep it, buy it.
If you don't know what you want or change cars often, leasing is better.

[Mitsu3000gt]

Sure, lets take a look - a bare bones 2020 Civic hatch is about 4300$ /y for a lease (83$ per week, 52 weeks).

Thats a lot more than 500$ / year in maintenance on my beater.

This is one reason why poor people, stay poor. Basic financial thinking.

Like I said, it's not the same value proposition. A 15 year old econobox will always be cheaper than leasing a new vehicle. The question becomes if you can lease a brand new vehicle with full warranty, recent safety features, etc. for a couple hundred a month, it might be worth it to some. If all you care about is price, I'm sure you could find an even cheaper way to go about it. You also did not account for what it cost you to buy that beater, tires, breaks, further depreciation, any repairs, an accident, etc. It's not automatically way cheaper and nobody has a crystal ball. The proper comparison though is new vs new, since a super old beater vehicle will always be very cheap, but comes with it's own list of disadvantages.

[Buster]

the argument for running older cars to minimize depreciation isn't as good nowadays, with safety tech improving so dramatically. A car even a few years old isn't nearly as safe as new ones.

[Thaco]

I have always considered leasing to be more like renting, its alright if you don't want to have any of the responsibility, but i'd rather finance, that feels more like a mortgage where you're paying to eventually own.

That said i have never and likely will never buy new so the initial depreciation isn't really something i take in to consideration.

[shakalaka]

I have always considered leasing to be more like renting, its alright if you don't want to have any of the responsibility, but i'd rather finance, that feels more like a mortgage where you're paying to eventually own.

That said i have never and likely will never buy new so the initial depreciation isn't really something i take in to consideration.

You could always buy out your car at the end of your leasing term by paying whatever the residual is.

Sometimes you can even come out ahead with leasing depending on the car you buy and the demand for it and the amount you pay.

For example, my father's last Range Rover Sport Autobiography was leased and the payments weren't exactly low. Not quite sure definitely around $2500 vicinity a month. At the end of the 3 year lease, his residual was supposed to be just under $70K. He kept it for 3 years and drove it maybe 30-40K km's as he has several other vehicles (well below the allowed limit). Before turning it in back to RR I suggested to look into selling privately. I literally sold the car overnight for $10K more than what his residual was and even at that price point the buyer got a sweet deal as the vehicle was somewhere like $7-$8K cheaper than the next comparative version.

Porsche's (not all) from what I understand also work out similarly as they too tend to not depreciate as much as other vehicles.

[e31]

the argument for running older cars to minimize depreciation isn't as good nowadays, with safety tech improving so dramatically. A car even a few years old isn't nearly as safe as new ones.

Who is this soccer mom that hacked into Buster's account?

The argument for running nice older cars is to minimize the owner's depression, not the vehicle depreciation.

"Buy vs lease" can only be deliberated if the auto market produces new vehicles that get people into showrooms. Unfortunately for humanity, the "Samsung A-to-B auto appliance" shitboxes seem to do well in sales.

[Buster]

Who is this soccer mom that hacked into Buster's account?

The argument for running nice older cars is to minimize the owner's depression, not the vehicle depreciation.

"Buy vs lease" can only be deliberated if the auto market produces new vehicles that get people into showrooms. Unfortunately for humanity, the "Samsung A-to-B auto appliance" shitboxes seem to do well in sales.

huh?

I'm saying that running an older car to save a buck isn't worth it any more because a new car buys you a much safer car.

[C4S]

I highly recommend Lease over finance or Cash, especially most luxury brands don't offer any additional discount for Cash anyway .. (Domestic may still do)

Some people say they only finance, never lease, because they never own the car when lease .. but if they finance for 96 month, they don't own the car till the have made the last 96th payment anyway ... :dunno:

[benyl]

One key thing people are forgetting is the mileage requirement. If you are driving 30K kms per year, leasing might not work for you even if the payment is lower.

[Aleks]

I think you're arguing the cost/benefit of new vehicles VS old vehicles. Which is valid 100%.

This discussion should be financing a new vehicle VS leasing a new vehicle.



This. Comparing leasing to a used car makes little sense as those are completely different decisions. (new vs used).



I have always considered leasing to be more like renting, its alright if you don't want to have any of the responsibility, but i'd rather finance, that feels more like a mortgage where you're paying to eventually own.

That said i have never and likely will never buy new so the initial depreciation isn't really something i take in to consideration.

I've done both and to me lease and finance is exact same with a few more options/benefits during the lease period. I switched to leasing as I find they are easier to get out of, return if they are smashed up, vs financing. You can even sell them with a bit of work. Other than admin fee there are no penalties for getting out early, transferring etc. Out of all the cars we leased we have never returned 1 to dealer and have only bought out 1, the Odyssey.

[jutes]

As I get older, I'm not caring about the mods anymore, but more on the quality, comfort, tech and performance, sure you don't get that with an older vehicle however I also don't have a monthly (perpetual) car payment

Trying to understand if I'm in the right ball park or not

I agree completely. I'm in my mid 30's now and I have no desire to do anything more than regular routine maintenance.

It seems like when it comes to new Euro vehicles leasing is always the way to go since depreciation is absolutely brutal after 3-4 years. We have two vehicles in our household, my paid off 2010 TL with almost 200k on it and a leased X1. I do my own maintenance on the TL and the X1 is completely covered for 4 years worry free. Living in the Prairies we do a lot of driving, so it's nice to have a new reliable vehicle to travel in, along with a back-up car if we are getting close to the yearly mileage limit for the X1. I guess we could've always bought something used for $20k that's just as reliable as the X1. But like the poster above said, why bother going to McDonalds when you can afford a steak. We got a good deal on the X1 at .9% and a few thousand off MRSP so I'm not regretting it. Hopefully BMW will offer us something when we go to swap the X1 for an X3 in a few years.

[Thaco]

I'm mid/late 30's as well... I just drive beaters, but i don't give a shit what other people think about me and don't need status for my own happiness, so i'd rather keep that cash in my pocket and use it for stuff i enjoy.

[Xtrema]

I admit I have a very old fashioned attitude in regards to money. Some would say it's a "poor person's attitude". There's a real financial argument to be made for leasing in some situations, I can see the math of it.

It's funny, leasing seems to appeal to two groups of people. Relatively wealthy people who have much higher than average financial literacy, and lower income people who are financially illiterate. Outside of beyond.ca, I think the second group is much larger than the first.

End of the day, if you are buying a car that has low depreciation or EVEN appreciation and you want going to keep it way beyond warranty anyway, finance or cash.

If you never drive any cars beyond warranty or have car ADD, lease.


Again, low/middle income mindset. When I was in that class, I was eating bulk rice (or other such things). Fiscal austerity. Buying a 1000-2000$ vehicle vs spending 4300$ a year - after 5 years the numbers look pretty ridiculous.

Now, I just use the cheap vehicle in the winter when damage is most likely.

Also, my lowly Civic is certainly not uncomfortable by any means.

If a $2K Civic makes you happy, may as well keep $ in the bank. New cars are emotional purchases and not logical.


I'm mid/late 30's as well... I just drive beaters, but i don't give a shit what other people think about me and don't need status for my own happiness, so i'd rather keep that cash in my pocket and use it for stuff i enjoy.

Totally prove my above point.

[rx7boi]

I admit I have a very old fashioned attitude in regards to money. Some would say it's a "poor person's attitude". There's a real financial argument to be made for leasing in some situations, I can see the math of it.

It's funny, leasing seems to appeal to two groups of people. Relatively wealthy people who have much higher than average financial literacy, and lower income people who are financially illiterate. Outside of beyond.ca, I think the second group is much larger than the first.

Don't sell yourself short re: poor man's mentality. Money problems aren't always mathematical as much as they are behavioural. Anyone can tell you that it makes mathematical sense to pay off items with the highest interest rate but there are psychological reasons why strategies like debt snowballs work.

I've only ever owned 4 cars and only one of them was brand new which I won't ever do again unless I have enough disposable income set aside for this luxury that the initial depreciation is a non-issue. Overall, my mentality is that it doesn't matter whether you lease or finance as long as you can afford it. I have my own definition of what is "affordable" but that's a story for another time.

[ExtraSlow]

Don't sell yourself short re: poor man's mentality. I actually hope to never lose that mentality. It works good for me.

[adam c]

Lease per month will always be less than finance per month so if you save/invest the difference you can come out again. But it does depend on the interest rate and terms.

Let's say for example both are 3.25% because thats whats on Mazda's lease rate now. A top of the line loaded CX5 will be around 45k out the door so I'll use that because I kind of want one. (Obviously cheaper vehicles out there but also people sometimes go for fancier than that).

Lease 48 months @ 3.25% = 562$/month with a residual of 20k$
Finance 48 months @ 3.25% = 990$/month and you own it outright (I adjusted the % because their current finance promos are less, but trying to compare apples to apples)

Difference of 428$ per month. 428$ / month invested in a index fund which nets 6% return (Which is historically close to average, but significantly less than the past decade actually) would give you a final value of 23,154$ (with 2,610 taxable as capital gains at 50% of your tax rate so lets say 20% net is 522$.

So 23154 - 522 = 22.6k left over and you pay off the residual as soon as your lease is done and you have 2.6k$ left over in cash at the end.

Now thats with a 6% return, historically the S&P500 has increased 9.4% year over year across the last 5 years which would've netted closer to 4k in profit. Obviously at some point markets do drop and such so it is a riskier option. But if you can get finance/lease rates of 0-2% then you could even beat them just getting a basic 3% GIC

Did some playing around... if I look at a Mazda CX5

With a base CX5, using 60 month terms
Finance
Cost - 534.32/month
Total cost - 32,059.20

Lease
Cost - 410.50/month
Residual - 9,940
Total cost with residual - 34,570

So $2,500 difference between finance and leasing

[pheoxs]

Did some playing around... if I look at a Mazda CX5

With a base CX5, using 60 month terms
Finance
Cost - 534.32/month
Total cost - 32,059.20

Lease
Cost - 410.50/month
Residual - 9,940
Total cost with residual - 34,570

So $2,500 difference between finance and leasing

Yeah the current finance promo rates are lower. So I ran it through a interest calc to use the same % rates. I did that since the rates constantly change and sometimes you can nab lower lease rates or lower finance rates. Always best to shop for whats best for your situation

[adam c]

So from my perspective, there's no real savings of leasing, you're more contractually tied, have km requirements, but can give the vehicle back at the end, so that's $24,630 at the end of the lease with the potential to have nothing to show for it

[Mitsu3000gt]

So from my perspective, there's no real savings of leasing, you're more contractually tied, have km requirements, but can give the vehicle back at the end, so that's $24,630 at the end of the lease with the potential to have nothing to show for it

It's easy to get out of a lease, and if you bought the right car, the dealer will pay you to leave after the first 2 years or so (that is the case with mine). You can also get someone to take over your lease on the private market or whatever. You also need to account for the fact that you are completely protected against depreciation from accidents, hail, etc. for the duration of your lease, and there is a value attached to that but it's going to be different person-to-person. Same deal with any money you might spend for car washes, car care products, PPF, ceramic coatings, etc. - you have the option to not spend a dime beyond the required maintenance with a lease with no financial disadvantage down the road. All that needs to be factored in based on the individual's expected habits, so IMO it's not as simple as just looking at purchase dollars. If you have an expensive car and you end up in a serious accident that doesn't trigger a write-off, you will be out thousands of dollars right there if you financed or bought with cash unless you drive the car to the end of it's life.

[revelations]

If a $2K Civic makes you happy, may as well keep $ in the bank. New cars are emotional purchases and not logical.



Once again, this was intended for low/middle income earners. Im no longer in that bracket but I still use the cheap (but good) vehicle in the winter. In that bracket though, vehicles are often, wrongly bought based on emotion, rather than logic.

With upper income - and available disposable income - I definitely see the rationale for leasing if you are going to have a vehicle used year round here for commuting on the Deerfoot for eg.

Having said that - I definitely have cars bought purely for emotional value. But they are strictly summer only (and the convertible, sunny days only).

[Xtrema]

So from my perspective, there's no real savings of leasing, you're more contractually tied, have km requirements, but can give the vehicle back at the end, so that's $24,630 at the end of the lease with the potential to have nothing to show for it

What your math didn't show that is finance is 2% cheaper than leasing which exactly the difference.

You also have access to the same car for $120 less per month. If you put that into RRSP and say get 36% tax refund, you would have extra $2600 in 5 years. If you put that against mortgage , it could save you around $1K during the 1st 5 year interest term of a 25yr amortization.

Again, leasing is about opportunity cost and not tying $ into depreciating asset. How you capture that opportunity is all up to you.

Of course, if you don't have to drive the latest CX-5, just buy a 4 year old one and just pay cash and hope you don't have high repair bills. My buddy got a 1999 4 runner in 2009 and to this day, it's still rock solid. Even if his car is worth nothing today, it still cost him no more than $100/mth to run that thing and he probably help the environment more than anyone driving Teslas.

[never]

So from my perspective, there's no real savings of leasing, you're more contractually tied, have km requirements, but can give the vehicle back at the end, so that's $24,630 at the end of the lease with the potential to have nothing to show for it

But if you finance, and sell the car for $7-10K at the end, you're in almost exactly the same spot. The vehicle cost you $24,000 +/- over the 60 months. Just with the finance, you paid extra money up front to get it back later.

Though if you plan on keeping the vehicle longer than that, then definitely finance, as has been mentioned by others.

[88CRX]

so that's $24,630 at the end of the lease with the potential to have nothing to show for it

Even if you finance, the vehicle is only worth +/- $9k at the end of the 60 month. The residuals are usually close to the market value of that vehicle at the end of the lease. Not always but this is a factor to consider when comparing the lease terms to financing.

So the lease cost you $24k and you have no vehicle after 60 months.
Or financing costs you $32k and you own a vehicle thats worth +/- $9k. (You just spent $23k to drive that car for the previous 60 months)

[Mitsu3000gt]

Even if you finance the vehicle is only worth +/- $9k at the end of the 60 month. The residuals are usually close to the market value of that vehicle at the end of the lease. Not always and this is a factor to consider when comparing the lease terms to financing.

So the lease cost you $24k and you have no vehicle.
Or financing cost you $32k and you own a vehicle thats worth +/- $9k.

I find many vehicles are actually worth more than the residual after the lease is done (most of the ones I've looked at anyway), so again it's hard to just do straight math. For example if the buyout is around $12K, but the car is worth $16K on the used market given condition, mileage, etc., then for anyone doing a total cost of ownership calculation, you need to consider the few grand or whatever you may potentially be able to recoup by buying out the lease and selling it yourself. I honestly struggle to find any good reason to finance, even if your goal it to keep it forever - you can still enjoy ~4 years of lower payments (put your money to work elsewhere), more flexibility, and zero stress or chance of depreciation due to damage. Pretty much the only scenario I would ever finance would be out of necessity due to KM requirements.

[Misterman]

If your options are either lease or finance. Then leasing is a no brainer once you understand it. I was always a die hard finance and pay it off guy. And I got fucked on every car I ever owned, because I ate the depreciation hard when I sold the vehicle. A lease has this all worked in. I don't have to deal with tire kicking losers from Kijiji when I want to change vehicles, I already know the depreciation number and just give it back to the dealer and get a new one. And if I plan to buy something on finance and keep it forever, then I'd still lease it because it costs zero dollars more than financing, and I am insulated from getting screwed on a vehicle if it is a lemon or it gets ran into by someone, etc. If the value is shit at the end of the lease, instead of paying out the balloon payment I can just give it back and get a new one.

[jutes]

It's easy to get out of a lease, and if you bought the right car, the dealer will pay you to leave after the first 2 years or so (that is the case with mine).

Who lets you do that? Say half way into your term you just want to give the car back and get something else from the same dealer penalty free.

[npham]

Who lets you do that? Say half way into your term you just want to give the car back and get something else from the same dealer penalty free.

MB will take your car back a few months early. VW was doing it for Golf R's. Definitely dealers out there who will, but it also might take some sort of relationship with the dealership to make it happen.

[Tik-Tok]

I've only leased a car once, and I got spoiled with it so much I can't do it again (because the deals are nearly as good).

30 month lease on a Civic 2-door for $190 a month. Bought it out at the end for $12g, and sold it 6 months later for $14g.

Cost of ownership for those 3 years was $100 a month, lol.

[Aleks]

Who lets you do that? Say half way into your term you just want to give the car back and get something else from the same dealer penalty free.

Potentially anyone will. Has nothing to do with anything other than what the car is worth on trade in vs current buyout amount. In reality on a few vehicles will have a market value so high that after 2 years even a dealer trade in value will be higher than total buyout at that time.

My example was a 2014 Tundra I leased for 60 months. After about 28 months I sold it for $7500 over my buyout making the equivalent payment something like $230 per month. But that's rare and it was during the time when a lot of CND trucks were going to USA so our used truck values were artificially high. I did the same with a 2017 Tacoma, but only got about $2000 back over my buyout.

[speedog]

I'm mid/late 30's as well... I just drive beaters, but i don't give a shit what other people think about me and don't need status for my own happiness, so i'd rather keep that cash in my pocket and use it for stuff i enjoy.

It really all depends on what one desires out of their vehicles, my wife and I own two vehicles which are 19 and 18 model years old. Mine is truly a beater but a reliable beater used solely as a work vehicle, my wife's is a year older but has all the bells and whistles of that era for a GM.

We haven't had a car payment in decades because we've always personally bought use and great used vehicles at that. Are we rich or baller, hell no but it did allow my wife to be a stay at home mom which was a part of our plan. Do we care what others think of our vehicles, hell no. I'll plop my miter saw on the hood of my Suburban as a place for it to sit while I get my table saw out. Do I worry about scratches or dents, hell no because that shit happens on the job sites I'm at, really I don't get people spending $50,000 plus on a work truck that's going to get beat up - first week I had mine, minor dent in the front fender. Not sure who did it but I sure as hell didn't lose any sleep over it. Other guys in their new trucks, well it's quite a scene.

All I'm saying is each to their own, we can't be bothered with the whole economic math of leading versus new and to be honest, there plenty of great used vehicles out there - our Trailbazer (written off by a distracted driver who hit my wife) was bought use and still had the factory protective plastic on the second and third row seats plus the rear entertainment video/audio stuff and it was 6 years old when we bought it. My wife's current SUV, bought at 16 model years old only had 58,000km on it - very old seniors owned it in Medicine Hat and used it only for getting groceries and going to church on Sundays.

[tonytiger55]

Im a late starter to the game of life. So I would not consider leasing and I could not afford it and have short and medium term savings.

However if I was a teacher or a AHS worker I would consider as might be able to afford to do so.

[Buster]

shots fired!

[adam c]

What your math didn't show that is finance is 2% cheaper than leasing which exactly the difference.



That doesn't matter though, I'm basing this on the current rates, not 1:1 since that's not what is being offered

[ExtraSlow]

However if I was a teacher or a AHS worker I would consider as might be able to afford to do so. Having a secure job with great pension and benefits certainly frees up cash flow for discretionary spending. You should be a teacher, it's easy.

[gmc72]

Im a late starter to the game of life. So I would not consider leasing and I could not afford it and have short and medium term savings.

However if I was a teacher or a AHS worker I would consider as might be able to afford to do so.

You must spread some Reputation around before giving it to tonytiger55 again.

Dammit, that was good!

[Xtrema]

That doesn't matter though, I'm basing this on the current rates, not 1:1 since that's not what is being offered

Rates aside, there is also residual. Yes, not all vehicle are good leases. A lot of brands don't want to deal with returns so they either artificially set rate high or residual low to discourage leasing customers.


However if I was a teacher or a AHS worker I would consider as might be able to afford to do so.

I may have witnessed a murder.