question on leasing?

[lam-boy]

k lately i've notice (well just viewing sircanada) how does leasing work?

like he just leased a maxima, but wants to get rid of it to lease a new volvo?

when you lease a car don't you stay on some sort of "contract"?
that makes you keep the car for XX amount of time?

can someone explain to me how it works and such?

[1badPT]

Instead of ownership, you agree to take the car when it has a certain value, and return it when the value has depreciated to a lower value, usually several years later. What you are doing with leasing in essence is financing the difference in cost.

The value you take the car at is the initial value, and the value you return it at is called the residual value. So if you take the car when its 30,000 and agree to return it when its 20,000, your lease essentially is a $10,000 financing agreement.

If you take it back early, the car might be worth more then the $20,000 - let's say its $25,000. They'll look at the payments you've made to date and determine how much you've already paid off - let's say in this case you've made payments equivalent to $3,000 - when you return the car, you'll have to write them a cheque for the other $2,000.

[benyl]

On most leases, you are normally upsidedown right until you bring the car in.

In other words, the car is worth less than what you owe. Leasing only works if you don't plan on keeping the car for more than 3 or 4 years, or if you have a business to write off the payments.

If you want to keep your car, mod your car, or you don't own a business... buying is probably better.

[Gonthro]

Originally posted by benyl
On most leases, you are normally upsidedown right until you bring the car in.

In other words, the car is worth less than what you owe. Leasing only works if you don't plan on keeping the car for more than 3 or 4 years, or if you have a business to write off the payments.

If you want to keep your car, mod your car, or you don't own a business... buying is probably better.

or if you cant afford higher payments you can lease for say 5 years, and then buy it out at the end... or you can finance the buyout as well, but then you'd be paying for like 10 years on a car, which would suck!

[izzoblitzo]

hmm... I always looked at leasing as kinda like renting. You dont actually own the car, the leasing company does (dealer) and your expected to bring the car back when the lease is up, unless you do a buyout.

What about modding? can you actually mod the car? will they penalize you if you did, because you technically dont own it?

[1badPT]

They can - you've probably heard the term normal wear and tear. That's the only modification you are allowed to do to the car. Now if you are certain you will buy it out at the end of the lease, you can do whatever you want, but if you take the car back modified, they may assess it as damage and bill you for it.

Although many people look at leasing as renting there are some important differences - you can usually opt out of a rental agreement fairly easily with minimal liability. Leasing on the other hand, if the leasing company wants to be a shit can make your financial life miserable if you get out of a lease early - especially if its for a car that has depreciated fast - IE you started the lease a few months ago and the car has already depreciated to its residual and you decide to cancel the lease, they can hang you for the entire difference in cost between the initial and residual values.

[Weapon_R]

I've always looked at leasing as a good alternative to buying. It seems as though you end up in the same boat, regardless.

When you lease a $50,000 car for 3 years, you probably end up paying about 15-20k on it.

When you buy a $50,000 car and sell it after 3 years, you end up selling it for about 30-35k.

Really, it's similar. It's even better when you own your own business, and are able to write off the payments. This is why leasing is so attractive to many people.

[max_boost]

The only thing I don't like about leasing is the high interest rates. For example, if it's 5.5% on lease and 5.5% on finance, the unknown would think you pay close to same amount of interest.......NO! haha the money factor and way the calculations is done in a way where you pay MUCH MUCH more interest on a lease car......LOL hope that makes sense.....

[sxtasy]

Like 1badpt mentioned, leasing is essentially paying for the deppreciation of a car.
There can be several ways that you can get out of your lease early. You can have someone assume your lease, dealers sometimes offer incentives that will allow people to get out of their leases early and into something new, or you can buy out your lease (ie. buyout your residual and any payments that may be left).
Leasing has its upsides and downsides, its more personal preference. With leasing you can get into a new vehicle every few years, and your vehicles are more often covered by warranty. Some leasing companies offer "gap protection", so lets say you get into an accident and your insurance company only pays you out what your vehicle is worth yet you owe more on it. The leasing company, not the lessee, takes the loss on the difference.
Another advantage is, at the end of the lease, if your vehicle is worth more than the residual, you can buy it out and sell the vehicle and make some money on it, and if your vehicle is worth less than the residual, you can just return it and take no loss at all.
You can afford a nicer car with leasing, as opposed to financing, because the payments are lower. Some people like the idea that instead of tying more money into a car, you can put your money into more worthwile investments (ex. morgate)
You can also write off the lease payments, if you own your own business, and another nice thing is, you dont pay gst on the whole vehicle, only your monthly payment.
some downsides to leasing, you dont own anything at the end of the term, there are usually kilometre limits per year. Anything extra and you will have to pay per kilometre.

[lam-boy]

Originally posted by 1badPT
Instead of ownership, you agree to take the car when it has a certain value, and return it when the value has depreciated to a lower value, usually several years later. What you are doing with leasing in essence is financing the difference in cost.

The value you take the car at is the initial value, and the value you return it at is called the residual value. So if you take the car when its 30,000 and agree to return it when its 20,000, your lease essentially is a $10,000 financing agreement.

If you take it back early, the car might be worth more then the $20,000 - let's say its $25,000. They'll look at the payments you've made to date and determine how much you've already paid off - let's say in this case you've made payments equivalent to $3,000 - when you return the car, you'll have to write them a cheque for the other $2,000.

so lets say i lease a car worth 20 grand, i drive it around da da da how would i know when the car reaches the point of the agreed return price? and say i return it around the 10,000 area.

[sxtasy]

^you lease on an agreed term, ex. 48 months, 24,000km per year at $200 a month. Once the 48 months is up, your agreement is over. Your residual is determined before the agreement is made.

[lam-boy]

Originally posted by sxtasy
^you lease on an agreed term, ex. 48 months, 24,000km per year at $200 a month. Once the 48 months is up, your agreement is over. Your residual is determined before the agreement is made.

so when your in a lease your basically bound to a contract?

the only way to get out early is if you can get someone to take up the lease on your car?

[max_boost]

sxtasy......I think it was Rickdatuner who wrote off his Altima during his first month of driving and him saying that the buyout offered by his insurance company didn't cover his buyout from Nissan....perhaps he can elaborate more on it.....

The problem with someone taking over your lease is......although you switched the contract over to the buyer (dealers charge around $300 for administration fee) if the buyer defaults on payment, you are still liable!!!!! That is something some finance managers don't tell you so becareful on that one

One would think after the dealer performs credit check on buyer etc. you are free, but NOPE! haha

[lam-boy]

Originally posted by max_boost
sxtasy......I think it was Rickdatuner who wrote off his Altima during his first month of driving and him saying that the buyout offered by his insurance company didn't cover his buyout from Nissan....perhaps he can elaborate more on it.....

The problem with someone taking over your lease is......although you switched the contract over to the buyer (dealers charge around $300 for administration fee) if the buyer defaults on payment, you are still liable!!!!! That is something some finance managers don't tell you so becareful on that one

One would think after the dealer performs credit check on buyer etc. you are free, but NOPE! haha

so your saying if someone has a leased car for sale, i take it off him (showing that i have good credit and such) i can basically walk off drive the car, and never pay or make late payments? and the old leasee gets in trouble? wow that is really some bullshit.

[sxtasy]

^hmmm i dont think that is the case. Pretty sure the person who takes over the lease is responsible. But I'm sure it probably differs from company to company. Lease assumptions arent too common anyhow.

[sxtasy]

Originally posted by lam-boy
so when your in a lease your basically bound to a contract?

the only way to get out early is if you can get someone to take up the lease on your car?

Originally posted by sxtasy
There can be several ways that you can get out of your lease early. You can have someone assume your lease, dealers sometimes offer incentives that will allow people to get out of their leases early and into something new, or you can buy out your lease (ie. buyout your residual and any payments that may be left).

[lam-boy]

Originally posted by sxtasy



sorry bout that sxtasy.


and the only reason im asking is because i want a diffrent car. ahhh...damnit.

[sxtasy]

haha no prob. What kind of car are you looking at? You should go to a dealership and get them to print you out a build sheet for leasing. Lease rates and incentives are always changing, so some great deals can be found. Let me know what the build sheet says on it, I can help you with any questions.:thumbsup:

[lam-boy]

Originally posted by sxtasy
haha no prob. What kind of car are you looking at? You should go to a dealership and get them to print you out a build sheet for leasing. Lease rates and incentives are always changing, so some great deals can be found. Let me know what the build sheet says on it, I can help you with any questions.:thumbsup:

im looking at a car with a little more kick to it..and with this "higher-classed" civic, it doesn't have much.

ahh but im in a rut..i believe my lease terms for this car is for like 48 months :dunno: not too sure on it but im pretty sure its for 48 months. i haven't even reached a full year with this car yet so...im basically stuck with this car for the next few years right?

[sxtasy]

well, maybe call your dealer and find out the residual and your term. Add up all your payements left plus your residual and determine how much that is. You will be able to see whats left to pay on the vehicle. Might give you an idea if you can get out of it
(sell it) and how much of a loss. Mention to your dealer that you would like to get out of it early, see what they have to say.

[lam-boy]

Originally posted by sxtasy
well, maybe call your dealer and find out the residual and your term. Add up all your payements left plus your residual and determine how much that is. You will be able to see whats left to pay on the vehicle. Might give you an idea if you can get out of it
(sell it) and how much of a loss. Mention to your dealer that you would like to get out of it early, see what they have to say.


residual is like how much i owe at the end right?

my payments are about 300 some a month so lets just say
350.

ahh cruddy. haah.

[WGR4Pussies]

don't lie lam-boy, it;s your moms car.

lol, j/k man, thanks for this thread, I always wodnered exactly how leasing worked, I think i'll convince my dad to lease.

[sxtasy]

Originally posted by lam-boy
residual is like how much i owe at the end right?

my payments are about 300 some a month so lets just say
350.

ahh cruddy. haah. residual = buy out



Originally posted by WGR4Pussies
don't lie lam-boy, it;s your moms car.

lol, j/k man, thanks for this thread, I always wodnered exactly how leasing worked, I think i'll convince my dad to lease. if he's interested in a GM product, send him my way


;)

[lam-boy]

k in that case, payments so far made is around 3500 range.

buyout is 10,XXX
car was purchased at 26,XXX + tax and those fees.


so all intotal, i have alot of money left to pay haha.

[96Mx6]

Looking over 6 years ( 2 lease terms)

Lease a car 22K, zero down, 300/month, buy out is 10K, low int rate. You return the car, and sign up again for another car. At the end of year 6 you have nothing but your hand in your pocket, made 72x300 =21600 woth of payments.

Now if you bought the one car, 22K you would have made 22K worth of payments, but still own 4-5K worth of car.

You will have to pay for problems after the warantee, where with the lease you wouldn't have to do anything.


Seems simple to me. Buy:thumbsup: lease :thumbsdow

[ZorroAMG]

What about leasing the car and at the end instead of buying it out with cash, get a car loan to pay the buyout, keep montly payments and then own in the end. The adv to that would be lease payments are smaller than finance payments at the beginning, allowing you more room on budget and then you can adjust when buyout time comes...

[WGR4Pussies]

Originally posted by sxtasy



if he's interested in a GM product, send him my way


;)

yeah, I was just at a GM dealership looking at vehicles with my parents the other day, and lets just say we left, unimpressed. The escalade they had in there had orange peel, Gm doesn't offer any sports cars any more with a manual tranny that compete with the SRT-4 and ford mustang. the only thing I might buy from them is a duramax.

[max_boost]

Originally posted by lam-boy


so your saying if someone has a leased car for sale, i take it off him (showing that i have good credit and such) i can basically walk off drive the car, and never pay or make late payments? and the old leasee gets in trouble? wow that is really some bullshit. You bet!

I tried having someone take over my lease and talked to Honda Canada Finance myself and that was what I was told. They basically said, unless the new owner is my brother or by blood, I am crazy! LOL

I think it is BS too, what is the point of the adminstration fee? What is the point of credit check? on the new owner....
Ahhhh

[Xtrema]

On the same interest rate, leasing cost more than buying in the end.

If you own a business, you're allow to write up to $600 off /month on lease payment as expenses on transportation. And this is when it make sense to lease, instead of paying business tax, it goes toward your car.

Leasing has no advantage for average consumer because of all the constraints. Unless it's a really good deal and buy out is set at a very good price.

If you're leasing just because the payment is cheaper than financing and can't write it off, that only means you can't afford that car. Time to look for something within your range.

[sxtasy]

^thats not true, in many cases leasing then buying out, can be cheaper than financing a whole vehicle. And with 0% finance rates as well. Leasing has many advantages and is right for some people