Leasing a Vehicle?

[attworth]

Hello everybody. Sorry I haven't been around much lately. Been dealing with some personal issues.

First topic coming back -

Does anybody here regularly lease a vehicle? My wife and I are considering leasing her new car. She wants a VW Rabbit. The current offer per VW.com is 199 month/36 months, with 12,000 mile per year limit and 0.20$ extra per mile. Which is enough for us.

We aren't planning to have any children for a while, so the option of just letting it go after 3-years is quite appealing, as we may need to upgrade to something bigger at that time. If not, the residual value stated (which as I understand it, is ultimately determined by the dealership,) is rather low considering the relatively good value VW's seem to hold. Their good value is good for purchases, but being new to the world, I'm a little wary to spend a bunch of money on a new car. It's been wonderful not having a payment for the last 6 months.

Biggest questions I have are, what if we want some additional options? For instance, the lease deal is for manual transmissions, and while the boss lady says she's willing to learn if it means getting that car, I know she'd be more comfortable in an auto. Also, the smaller things like cargo organizers and such - do they just roll those into the lease, will they negotiate them into the deal, or can we expect things like that out of pocket?

Also, in a closed-lease deal, are there any hidden costs other than wear-tear, mileage, etc? I know they all say no, but I'm still a little wary.

The worst part about this lease deal is that it ends this month. I assume they'll have more later in the year, but if not, what are some typical leasing prices without special deals? How are they determined - by interest rate like a regular loan?

Thanks again guys/gals, and I'm glad to be back, and hopefully soon to be detailing again.

 :mp:

[tdr6874]

yes there are hidden cost....to get the 199 for 36 months you will have to choke up a few grand...i just looked and they want $2500 down plus tax title and lic fees and dealer fees...this will be atleast another 2 grand...so thats 4500 down on stripped down with manual tranny...yes you can option up and get a few more bells and whistles, but it will make that 200/month climb to 300 or more per month...if you want no money down it would be the 4500 in to 36 months with intrest on that...then at the end of the lease you will get hit for 3-500 for disposal if you choose to drop it off...then at the end of the 3 years if you choose to turn it in one great thing is you walk away and not be upside down on the next car...but they will inspect the car and expect to be charged for anything they deem not normal wear and tear...like dents dings scracthes stains ect ect ect...

if you like brand new cars every few years or high end cars with low payment they can work out for some


but follow me on this:

get something like this used...

http://cgi.ebay.com/ebaymotors/Volkswagen-Rabbit-WE-FINANCE-2007-VOLKSWAGEN-RABBIT-2-5-5-SPD-CRUISE-CONTROL-39K-MI_W0QQcmdZViewItemQQcategoryZ15294QQihZ022QQitemZ350194494686QQrdZ1QQsspagenameZWDVW

if you have the 4500 to put on the other one put it on one like this...then you finance the reamaining 6.5k or so (with taxes and fees thats about what would be owed) over 36 months at 6% your payment would be $198 and you own it...the new one above will be about $385 not $199 if you put no money down.

this is a helpful tool to figure car payments

http://hffo.cuna.org/30392/article/87/html

[attworth]

Always with the pragmatism tdr!

Thank you, that does help. We've got a while to decide I think.

[attworth]

It's growing on me...

[Robby32]

Leasing has worked for us - we don't put a lot of miles on - no kids to damage the inside - etc.

Yes you do need to put some money up front but if you buy you still need a down payment and the sales tax is added each month based on the payment, not all at once based on the total cost of the car, so you only pay tax on the money you spend not the whole car.

Read a report from an auto research firm and it did not mater if you had a new or older car it cost the same to operate. It was all a cost per mile - the amount just varied with the size and type of vehicle.

So the logic is if it cost the same to drive a new one or an old one why not have a nice new one.

There are those who say "I have not had a car payment for xxx long". But, they just had to put on tires or install a brakes, new battery or exhaust system etc. - i.e. it cost the same to operate. Basically you always have a car payment.

If something goes wrong with the new one it is under warranty if it is an old one it is out of your pocket.

[attworth]

There are those who say "I have not had a car payment for xxx long". But, they just had to put on tires or install a brakes, new battery or exhaust system etc. - i.e. it cost the same to operate. Basically you always have a car payment.

If something goes wrong with the new one it is under warranty if it is an old one it is out of your pocket.

This is where leasing seems like a good option for us. I love taking care of my vehicles, but when it comes to the wife's....... Maintenance just feels like a pain in the  :mooner: She's never had a newer vehicle, so whatever we get her has to be either new car fresh or lightly used. Her current 97 Taurus has been her car for the past 3 years, and it was a piece of crap back then. In that time, I've only put about 2500$ into it, but the hassle and headache of dealing with it really is annoying. Not to mention that she hates it - and when mama ain't happy, ain't nobody happy.

[Zaairman]

Leasing is dumb.  Why make payments on a car you'll never own?  Buy, don't lease. 

[attworth]

Leasing is dumb.  Why make payments on a car you'll never own?  Buy, don't lease. 

To prevent from being upside down on a loan. I usually get worn out on a vehicle after about two years, and it's time to trade. With a loan, you're usually upside down until you pay it off. It's just a matter of whether you plan to keep a car for more than 3 years.

[Robby32]

With cars you don't win financially wether you buy or lease so why not - "rent" it - use it  -dump it.

[hwm3]

Leasing is dumb.  Why make payments on a car you'll never own?  Buy, don't lease. 

To prevent from being upside down on a loan. I usually get worn out on a vehicle after about two years, and it's time to trade. With a loan, you're usually upside down until you pay it off. It's just a matter of whether you plan to keep a car for more than 3 years.

Your still upside down on the lease.

Leasing works for some people. Not a lot of people, but for some. For most buying is the smarter move. Before you decide do a little research and figure out which way you will come out best.

[attworth]

Your still upside down on the lease.

Leasing works for some people. Not a lot of people, but for some. For most buying is the smarter move. Before you decide do a little research and figure out which way you will come out best.

How? Sorry, just a little confused by that. When you lease, my understanding is that a residual value will be stated for the value of the car at the end of the lease. In this case, the value is 9,180$, which is pretty low compared to the asking prices of most of the 2006 Rabbits I have seen for sale. (Usually with higher mileage than anticipated 36,000.) Granted, that number will vary I'm sure, but that's still pretty good, if we did decide to buy the car at a later date - and at that point, we know exactly where it's been, what maintenance it's had, and whether or not it's a lemon.

For an example, this one is actually really cheap and really low mileage. Still more expensive, but also has a history we don't know about.

http://www.autotrader.com/fyc/vdp.jsp?ct=u&car_id=257168033&dealer_id=582559&car_year=2006&rdm=1240935697845&num_records=25&model=RABBIT&systime=&make2=&highlightFirstMakeModel=&start_year=2006&engine=&keywordsrep=&keywordsrep=&keywordsfyc=&keywordsfyc=&certified=&body_code=0&fuel=&awsp=false&search_type=both&distance=0&marketZipError=false&search_lang=en&showZipError=n&make=VOLKS&color=&keywords_display=&page_location=findacar%3A%3Aispsearchform&min_price=&drive=&default_sort=priceASC&seller_type=b&max_mileage=&style_flag=1&sort_type=priceASC&address=76137&advanced=y&end_year=2006&transmission=Manual&doors=Two+Door&max_price=&cardist=862&standard=false

Too bad that's in MN... we could actually afford that right now.

Just thinking about the previous owner of that car. If they bought the car, chances are they were upside down on the loan when the dealership gave them an offer.

[attworth]

With cars you don't win financially wether you buy or lease so why not - "rent" it - use it  -dump it.

Too true. Essentially owning a vehicle and trading it in at a later date is the same thing, except you pay more. This is where leasing is appealing again. If we know we'll probably trade it in three years, why pay more now?

But, as TDR said above, the out of pocket expenses will usually be higher than advertised.

For the record, we'll be putting about 5,000$ down on whatever we get - unless it ends up being cheaper to lease I suppose and doesn't require as much up front.

[hwm3]

How will you be upside down? Just like if you buy a car, when you lease there is a "payoff" amount. On that lease, your "payoff" will be $16,344, which is the total of the lease payments plus the residual value. Since your "payoff" is $16,344 on a car that has an MSRP of $17,000, you're upside down. Trade-in value of that car is probably $12k or less once you buy it, so you're about $4k upside down.

Also, if you add in the $4k cash it will likely take up front, you're paying ~$11k to drive a Rabbit for 3 years. At that point should you decide to keep it and finance the remaining $9k for 3 years, that $17k Rabbit will cost you over $21k vs. only $19k if you took a regular 5 year loan.

[attworth]

True. For some reason those numbers took a while to make sense in my head.

I guess the only thing I was thinking about is "buying" a 3 year old rabbit at the end of lease for less than one would cost me if I just went and bought a 3 year old rabbit in the first place. However, hadn't factored in the 7,000+ in lease payments made.

Lease -
2500$ "down" + TTL (figure 2000$)
7000$ in lease payments
= 11,500$

Buy at the end of the lease -
=11,500$ already paid
TTL again
9,000$ Loan
=20,500$+TTL

Buy -
2500$ down + TTL (2000$)
16,500$ in payments
and owned.
=17,000$+TTL


So, leasing = bad if you really want to own a car.
Leasing = good if you just want to use a new car for a while.

Hmm...

[gipraw]

Leasing vs buying all depends on how you use your vehicle, and how often you plan on changing vehicles..  for a car whore like me that upgrades every two - three years, the right lease can be cheaper than buying.

Just make sure when you are looking at the dollars, you count them all..  total cost of upfront money, plus payments, vs down payment and interest.

If you are leasing, and thinking about buying at the end of the lease, it is almost ALWAYS cheaper to buy it to begin with.

I have never had an issue returning a leased vehicle.  If it looks brand new, and the tires are in very good condition, the rest is usually gravy ..