I won't succumb to making blanket statements because everyone's situation is different. Every deal is different.

 

Part of the burden falls to the buyer. You say the interest rates are higher. What are you basing that on and did you not try to negotiate it? In addition, the interest rate is only ONE factor in determining the monthly payment. If the interest rate it too high, the vehicle is no longer competitive and it doesn't sell.

 

I'm not against buying a 2-3 year old used car as that's what I did for my current vehicle. However, not everyone wants a used car. They have concerns about its long-term maintenance. They want a strong warranty. They like the new car smell. Whatever the reason, buying like I did is not for everyone.

 

If you are a long-term holder of a vehicle then leasing is a terrible way to go. However, most of us trade out after about 32 to 36 months. So with that being the average mindset added in with people like to buy a new car instead of a used car, leasing makes much more sense. Why? The average loan today is about 61 months (fast approaching 66 months). If my payments are spread out over 60 months but I want to trade it in after 32 to 36 months, in most vehicles, I owe more than my trade is worth. So that takes away the "you have nothing argument" since most people never see the end of their loan anyway. These people not only get to finance a new purchase, they also get to add onto their loan the amount they were in the hole on the car they are trading in. Does that seem like a good deal? If that's your MO in buying vehicles , leasing is a good alternative.

 

Your argument is good ONLY for those who don't mind used cars AND they are going to hold on to the vehicle for 5 to 7 years. The average buyer does not fit that profile.

Again, if you are buying a vehicle and you have to finance it for 66 months so you can afford the payments then you can't afford the vehicle. If you look at monthly payment amount only then your right, you are better off leasing. If you look at the whole picture then a lease is never a good idea. You lose too much money, I don't care how often you trade in. I am saying the interest rates are higher because it's true. Why do you think you can lease for such low monthly payments? Do me a favor, if you are currently leasing call and find out how much the interest rate is on your lease?

I just looked up the money factor on a 36 month lease through Toyota Motors Credit Corp on a Camry. Its about 6.85%. Is that insane?

How much is the lease payment and what is the sticker price?

I just looked up the money factor on a 36 month lease through Toyota Motors Credit Corp on a Camry. Its about 6.85%. Is that insane?

I just looked at their website and for a 36 month lease on a Camry LE it is $368/month. It does not tell you what the interest rate is. It does however give you a 6.4% on a 60 month loan for buying with a payment of $431. Now you tell me how it makes since for Toyota to let you drive thier car for 3 years and pay less then buying it?

Again, if you are buying a vehicle and you have to finance it for 66 months so you can afford the payments then you can't afford the vehicle. If you look at monthly payment amount only then your right, you are better off leasing. If you look at the whole picture then a lease is never a good idea. You lose too much money, I don't care how often you trade in. I am saying the interest rates are higher because it's true. Why do you think you can lease for such low monthly payments? Do me a favor, if you are currently leasing call and find out how much the interest rate is on your lease?

 

1. Your first point is accurate for the most part. However, if the person wants that same vehicle, leasing can be the way to go. Real-world example:

 

Toyota Camry 36 month lease = 438 per month . Total payments = $15768.

Same vehicle 66 month buy = 493.12. Total of payments = $32538.

 

2. "I don't care how often you trade in" is not a smart statement because it absolutely impacts the total cost of ownership.

 

3. The current money factor on a 36 month lease through Toyota is .00285. A generally accepted way to convert a factor to an APR is to multiply by 2400. So, that "interest rate" is about 6.85%.

 

4. Lastly, you ask "why do you think you can lease for such low monthly payments?" That tells me that you truly do not understand a lease - like the majority of folks. By the way, that's not an attempt to insult you. We all have things we don't fully understand.

 

A lease is made up of a few components. You take the price of the car less the residual value. So if the price of the car is $25k and the leasing company estimates today that it will be worth $16k in 36 months, you are "using" $9k. You divide that $9k by the term (36 months) which = $250. However, since you're paying monthly you also have to add in some finance charge. To calcualte that , you take the $25k plus the $16k and multiply it by the money factor. So, if the money factor is .00285, in our example, you would multiply it by $41k to give you a total of $116.85. Add those two together and you have your lease payment.

 

So, its low because you are not paying for the entire $25k in our example.

 

So assuming you are not the type to drive a car for 7 years, tell me why its bad.

Edited June 20, 200818 yr by Clyde

I just looked at their website and for a 36 month lease on a Camry LE it is $368/month. It does not tell you what the interest rate is. It does however give you a 6.4% on a 60 month loan for buying with a payment of $431. Now you tell me how it makes since for Toyota to let you drive thier car for 3 years and pay less then buying it?

 

See post #19.

 

You are also forgetting that Toyota will get that car back when you end your lease so they can then sell it.

It is a huge tax advantage for certain professions such as a realtor because they can deduct 80% of all expenses off the top and then some incremental car expenses as well. for most people is it would not be an advantage. My wife is a broker so we lease because if we did not our CPA would kick us in the behind. It's works for us. Sometimes it is smart to lease if the lease payments plus the residual value of the car equal a good sale price, the adavantage would be if the lease payments are less than a loan payment, makes buying a car more budget friendly if you are looking for low payments.It is important to negoiate a no money down lease, first payment only.

Edited June 20, 200818 yr by Xtiger69

Lease is stupid IMO....If you purchase, you will own it in the end. Leasing, you give it back, no trade in or anything....

 

If you are like PH and I and need to look at the amount of money going out per month, then, go for a longer loan...yes, I know that you will be paying a lot more doing it this way, however, you don't have to fear that the car will be taken away. We did that with my car...took 6 years, however, I have my car paid and it is mine....I have been the only one to own it, the only one to drive it (except PH when he had legs) and I know everything about her....

The van, same thing....PH is the only one that drives it...we took out a 7 year note on her, however, we pay 300 per month. I told the dealership that because of everything we went through in order to be comfortable in living, I did not want to go over 300 a month...PH agreed (he knew he better LOL LOL)....any way, we have our loan through GM and they worked with us until we got the payments where we wanted them....that included a 10 year added on warrenty.

I think, with the gas situation the way it is, that dealerships will probably work with you more than ever now...I can not see leasing a car.

Same can be said with renting an appartment....no way would I ever do that again. It is money just going out the window.

I had a friend that was....well, I will not call her names, but she rented furniture, washer, dryer, television, etc...well, anyway, she was paying around 700 a WEEK!!! I told her she was dumber than she looked...she thought she could rent them long enough to pay them off...which would have been forever....instead, they had to take them back because she was several payments over due...looked really bad on her credit I am sure. She could have got them on credit (which I am not advocating in the least) and had a much more reasonable monthly payment and they would have been hers in the end....

This is just my thought on the whole thing....if you are going to get something, get it to last you a life time!....or as close to lifetime that you can.

.....Sorry, the van is not through GM, it is through Chrysler Financial.

Lease is stupid IMO....If you purchase, you will own it in the end. Leasing, you give it back, no trade in or anything....

 

 

Of course you also didn't pay nearly as much, correct?

I have lease 3 Nissan's over past 7 yrs and it works for me. I have a car paid for and I have a new Pathfinder. Started out with an Xterra, then a Pathfinder and now another Pfinder. Nothing down, modest payment per month and when things are due to start hitting the fan around 45Kmiles we turn em back in.

 

My opinion is that I have one car paid for and has been paid for for 3 yrs. I will take care of that until it quits. The leased vehicles are nice because they are new and reliable and low on maintenance. Basically we do oil changes and that is it until its time to give back.

 

Like I said, nothing down, modest payment per month.

I've leased before, and I'll never lease again. I'm the type that will never rent (car, house, appliances, etc), because in the end, I come out with nothing. I look at a car lease as a status symbol for many individuals, someone that has to have that new car every 2 to 3 years. That's nice, but you're always stuck with a car payment. I prefer to buy used, pay it off in a couple years, and then not have to worry about a payment.

I did it once and I was afraid to take the van on any long trips due to the mileage factor. If you lease when going on trips, rent a car and save the miles.

I did it once and I was afraid to take the van on any long trips due to the mileage factor. If you lease when going on trips, rent a car and save the miles.

 

Of course, you can negotiate those miles into your lease as well. A lease promo in the paper may be a 10k or 12k per year lease. However, you can simply tell them you want more miles and see what that does to your payment.

 

In the lease I quoted above for $438 per month, it was a 12k lease. Changing it to a 15k lease takes it to $451 and changing it to 18,000 miles per year takes it to $476.

 

Everything is negotiable. Its no different than negotiating on a traditional purchase.

Edited June 21, 200818 yr by Clyde

Of course you also didn't pay nearly as much, correct?

 

 

The way I see it, you keep leasing, trading in, leasing another one you never own it and never get it paid off. Therefore, in the end, buying it is cheaper!

We paid a lot more for the van. It is a limited...fully loaded...no options to get....including a power sliding glass sunroof...really neat for night drives to look at the stars....or, at the drive-in theater.

Anyway, the car is paid for and the van will be one day!! In the end, like I said, it will be a lot cheaper to purchase!

It all comes down to a few things IMO.

1. You can buy a car, have a higher payment but in the end you own it. You don't have as much cash each month as you would if you lease it. People almost have to be crazy to buy a new car when you can get a much better deal on one that's been driven a little bit. You own the car in the end but it has also depreciated.

2. You can lease a car, have a lower payment and in the end you don't own it. The big thing is that you have a lot lower payment each month so now you have cash in hand that you didn't have before. It all comes down to what you do with that money. Do you invest it? Do you save it up to put money down on something else? Eveybody is different. It depends on what you do with your extra cash you are saving.

 

I have never leased but I do think there are ways to come out ahead by doing it if you are disciplined and have a plan. Going over your miles is something you HAVE to factor in too. If you are going to go over then I wouldn't lease.