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Thread: Lease vs Finance for vehicles, school me.

  1. #1
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    Default Lease vs Finance for vehicles, school me.

    I think this topic has been beaten to death, but I'll admit I still don't understand leasing fully. So, beyond, please advise me on the following scenario.

    Vehicle cost: $50k (new low/mid option F150)
    Finance rates up to 72 months 1.9%
    Lease rates up to 48 months 2.9%

    I have ~25k I could put down, but would likely put down less and leave the remainder in a low-ish risk investment earning ~5%.

    I fully intend to keep this vehicle more then 5 years. I've owned a vehicle of this type for at least the last 10 years.

    So, monthly payments are nice when they are low, and leasing payments are lower, but then ya gotta buy out the vehicle at the end of you want to keep it. I haven't had a vehicle payment in a decade, and I remember I kind of hated it, so I may want to pay this out faster if possible.

    How does beyond advise I analyse this situation?
    Let's all work on positivity this week.

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    If you fully intend on buying it out you can figure out the present value of cash flows as everything is known up front.

    Just table the finance payments and lease payments and compare. You might as well throw in the balloon finance option too since it seems like all you want is lower payments and is fine with a lump sum at the end.

    The only reason for leasing vs. finance worth considering is when you intend to sell the vehicle before the lease/finance term ends. Do you need to know this option? You would then need to estimate private sale/trade-in values during the term.

    Edit: one more factor is if you're writing the lease payments off in a business, but that's another discussion that another thread has covered
    Last edited by realazy; 09-01-2020 at 08:22 AM.

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    Well cost of borrowing is lower with the finance, and considering you might pay it out anyway I say finance instead of lease.

    You will pay far less interest, and can keep your 25k invested to mitigate some to all of the 1.9%.

    With the lease you are paying high interest to pay for the option to throw the keys back at the dealer in X years. If you have no interest in exercising that option you might as well not pay for it.

    If the lease and finance were both at 0% my opinion would be different.
    Last edited by killramos; 09-01-2020 at 08:22 AM.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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    It's funny, I've owned a lot of vehicles, but only one ever had any financing. I'm a real noob with that stuff. Just want to make sure I'm not overlooking anything.
    Let's all work on positivity this week.

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    You have to ask yourself:

    Do I ever keep vehicles forever
    Do I enjoy selling vehicles privately

    Any time I have financed (sub 5yr term) the trade in value is basically a wash with what’s owing, it’s always after a few years and the payment is higher than the equivalent lease payment for the length of actual ownership... lease for me

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    Being honest with yourself on whether you are keeping the car is very important yes.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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    Leasing hasn't been generally favourable since the 08 crash. There are the odd deals but the smoking good rates have been gone for ages.

    You can finance the balloon payment at the end, there's nothing stopping you from doing that. The total cost of your lease financing will be pretty high then. These days the residual value is kept very, very high.

    The other thing with leasing: let's say you don't want the vehicle and want to return it. They will ding you on every little fix that needs to be done. And if it's dirty inside, they'll charge you for detailing.

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    If you finance, your payments for 72 months should be about $288 with a $25k downpayment.
    If you lease, your payments depend on the residual value after 48 months. Don't put a down payment. Only silly billies do that.

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    Quote Originally Posted by The_Rural_Juror View Post
    This quote is hidden because you are ignoring this member. Show Quote
    If you finance, your payments for 72 months should be about $288 with a $25k downpayment.
    If you lease, your payments depend on the residual value after 48 months. Don't put a down payment. Only silly billies do that.
    I think OP needs a chart to compare the numbers.

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    The nice thing about leasing is that it is a finite relationship that you have the option of extending or getting out of with no questions asked.

    I would never lease for more than the base warranty time. In this case, 36 months.

    With leasing, you should do the maintenance at the dealer if you intend to turn it in (save hassle of them arguing). Also, you need to keep it in shape and get all the nicks fixed unless you get the damage insurance.

    Never put a down payment on a lease, even if you intend on buying it.

    I've stopped leasing cars.

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    Quote Originally Posted by 88CRX View Post
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    I think OP needs a chart to compare the numbers.
    I only do charts for Trackhawks and Teslas.

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    For the whole wear and tear thing. Probably something to consider if you are intending to return a tow vehicle kid hauler.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
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    If you lease don’t be a dumbass and put lots of money down.

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    Always get the extended wear n tear... the cost is also negotiable. Mine was less than a set of tires... and I can easily return a vehicle that needs tires... and a windshield

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    Quote Originally Posted by killramos View Post
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    For the whole wear and tear thing. Probably something to consider if you are intending to return a tow vehicle kid hauler.
    I mean, I'm not intending to "return" a vehicle at all. but yeah, it'll have some wear and tear, because of kids and towing.
    Let's all work on positivity this week.

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    You should also find out what the lease transfer fee is in case you need to get rid of the vehicle and I believe most of them will charge you a documentation or admin fee to buy out or keep the car after the lease. These costs can be quite high i.e. > $1000 so make sure you consider this in your calculations.

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    Quote Originally Posted by ExtraSlow View Post
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    I mean, I'm not intending to "return" a vehicle at all. but yeah, it'll have some wear and tear, because of kids and towing.
    Just because my train of thought is I have no idea why you would lease if you aren’t returning. and if you lease wear and tear is a consideration. Wear and tear protection is just another added cost to leasing that is money burnt if you don’t return.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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    What's the residual value? Jeebus.

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    I've also stopped leasing cars, reason because good interest rates and residuals on leases have been hard to come by. Been like that for a couple years now.
    Originally posted by SEANBANERJEE
    I have gone above and beyond what I should rightfully have to do to protect my good name

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    GF made leasing worthwhile within 6 months of ownership... sideswiped a 5 ton truck, ~$20k repair now on carfax report... way too much of a headache to try and sell that for a decent price, hell... even trade in value would be shit

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