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Discussion Starter · #1 ·
I've done a lot of searching on this site, but I still have an issue that I can't seem to resolve: Buy or Lease.

Here's the situation: I'm 26, single and finally have a great job (after a couple years of temp work in a poor economy). Luckily, I have no student loans or credit card debt. However, I'm trying to rebuild my savings, so I don't have a lot there either. I was considering buying a 2004 E and with all the taxes and etc. here (Los Angeles) I would need to borrow about $20,000 (trying to avoid a down payment to keep cash on hand, although I could put down a thousand or two). By my math that puts my payments in the $385 range for 5 years. I can swing that, although it's more than I've ever paid for a car.

On the other hand, it looks like I can lease the same car for about $310 for 3 years. If ever there was a candidate for leasing, it's me. I live close to work and drive 10,000 miles or less each year. I don't want to put a ton of money down (none, in a leasing situation). If I were to lease, I would roll some of the saved monthly money (about $50) into a retirement account, so I'm not thinking about leasing just to have extra money for parties.

My arguments for leasing are that I may not want the car longer than 3 years as my family needs change, and that the resale on a 2WD burnt orange box may not be where I'd want it to be if decided to sell it in 3 or 5 years. My arguments against leasing are concerns about the hazy negotiations going into a lease deal (never done it before), my paranoia about keeping it in good condition since it isn't mine, constant checks of the odometer and fear of hefty wear-and-tear fines - even if I did my best to keep it clean and it looked OK to me.

I'm very practical and pragmatic - I have researched this car and this issue to death, but I still can't decide whether to buy or lease. Can anyone help with an opinion? Thanks....
 

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Alarm-

Although I'm younger than you (I'm 17) I had some of the same concerns as you when I was buying my E... Since I wasn't sure if I would want the "burnt orange box" in another four years, I decided to lease. I don't know how the car will hold up and I don't know if it will be practical for my lifestyle in another four years... so it made the most sense. I decided to lease, with no money down (except for tags, the first month's payment, keyless entry, and fog lights) and my payment for 12,000 miles a year, for four years, a month is $279... SOP EX 4WD... Not too bad...

Erin
Sunset Orange Pearl, EX 4WD, Three and a Half Weeks Old
 

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My personal opinion is more towards owning rather than leasing. Leasing is great if you really enjoy driving a new car every few years and the car is looked upon as more of a transportation device. I must say though that from reading these boards, a lot of people enjoy having that pride of ownership. I know I certainly do. To me, leasing won't give you that same feeling because you'll know that after 3 years, you gotta turn it in or pay a relatively huge amount to actually purchase it.

With that said, it does really boil down to personal preference, your financial situation and how long you actually plan to keep your vehicle. If you forsee a lifestyle change in the near future, then leasing is probably a great option. I usually like to keep my cars for a long time, as long as it remains fairly reliable (of course that is why I chose a Honda) so I have always opted for purchasing.

Also part of the fun of owning a car (especially the Element) is adding all the personalized touches to the car in accessories, add-ons, customizations, etc. I don't think you would want to spend that kind of money on a leased vehicle. Of course, I could be totally wrong here! :)

It looks like you have already put in a lot of thought into your decision and being very wise about putting some money away for retirement. So it becomes a very tough decision. However, buying a car shouldn't always be so pragmatic. I figure, you have to enjoy life too, so live it up every now and then!
 

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As a CPA, the only response that comes to mind when asked "should I lease?" is NO! The reality is, if you can't afford to BUY then you shouldn't be looking at cars.

In the real world, people need to keep cars 10 years in order to get ahead. That means the car should be paid off in year 4 or 5 and then kept for 5 to 6 years without payments. Cars are made well enough now days that 10 years and 200,000 miles is nothing tough to do without any major repairs.

I like that you are thinking of retirement, but the reality is that if you would buy your car and keep it longer then you would eventually be putting a lot more into retirement. The problem with our generation is that we constantly want new and better... our grandparents didn't retire well by always trading up, they bought well and then kept it forever.

And, by the way, I live by my own advice. I bought a new 1994 Saturn during my first job. That car was paid off in 3 years and just this fall I am looking for a new vehicle to replace it... 10 years and 200,000 miles later I am now drooling over the E! I will buy, and yes I will keep it for 10 years!

If you still want to lease, then call for insurance rates first. Many times the rates are much higher than buying and people don't realize that until they are committed to the lease. You can actually pay more for leasing sometimes when you add in insurance. And by all means if you lease then purchase "gap insurance" as your loan amount will ALWAYS be greater than the cars value when you lease, and if you have an accident you won't get enough out of insurance to payoff the loan unless you get gap insurance first (pays off the gap between loan value and cars street value).

Good luck!
 

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If you think at all that you will keep this vehicle over 3 years, BUY IT, don't lease it. I am stuck in a lease right now and will have to pay to get out of it to buy my E. And when I do buy my E I will have nothing from the previous vehicle to pu toward it as I have in previous vehicles. In other words, no trade, no car to sell for at least a little down payment. If you do decide to lease DON'T GO FOR A 5 YEAR LEASE! They really rook you when you go for the long term. You should look at what the vehicle is really costing you, not just the monthly payment. If you can't afford the top of the line E, then go for a less expensive DX. Believe me, being stuck in a lease, having to apy to get out of it, is no fun at all! :(
 

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Discussion Starter · #6 ·
Thanks for the replies. As I mentioned, I've been thinking a lot about this. Here are couple more details: I don't really expect to keep this car longer than 3 years, whether I lease or buy. In Los Angeles, a reliable car is of paramount importance, as it takes an hour by car to get just about anywhere down here. I really just feel like this a fun, but not too impractical car that I can drive for a few years before I move on to something like an Accord.

Another fact of life here in LA is renting an apartment. Unless you make a nice 6 figure salary (hard to do at 26), it is near impossible to buy a house. This means I have essentially no room to do routine maintenance like oil or brake changes. With my current car (a 95 Nissan 200SX), I'm getting into a lot of minor problems that are adding up to major pains (brakes, battery, alternator, starter). The thought of dumping a car as soon as it's out of warranty is highly attractive.

As far as accessories go, there are only a few things that I might consider if I lease. I will try to get Honda to throw in some floor mats, as it's in their best interest to get the car back in good shape, right? Aside from that I might install keyless entry and perhaps sidesteps myself, and then at the end of my lease, yank them back out and sell them on eBay. I won't get all my money back, but I'll probably have gotten my 3 years worth.

I'm already checking insurance rates now - leasing or buying. I also realize that my grandparents were a little thriftier back in the day, but times change. They have a lot of money now, but they're too old to enjoy it. I'm trying to find a balance here. I'm at least keeping myself in good shape by contributing to retirement accounts now and staying out of credit card debt.

I'm still on the fence...
 

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Discussion Starter · #8 ·
That's insane. I don't plan on paying much over invoice as they're starting to stack up on lots around here. Every Honda dealership nearby has at least 5 on hand, including some side airbag models.
 

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My wife was in a 3 year lease on a 98 Jetta when we were married, we will never lease again. If you keep the car three years you will almost assuredly break even selling or probably better.

I fully expect my Element to be completely dependable in 5 years when it has 120k and even ten years with 240k, though I may not keep it for ten years (sold my '92 Accord in 2000 w/ ~180k nothin' but oil change and a timing belt). A brake job, an air filter or two, some fluid changes, it doesn't take much. With the amount of driving you do you will own the car before it needs any maintenance other than inspections and fluid changes, at that point (after 5 years), it will be much cheaper to replace an alternator and brake pads than to have a new monthly payment for a new vehicle.

Also I highly doubt that you will outgrow the Element in 3 years, I'm married with two big dogs, and kids in the future in the next couple years and this car should work great for our family. Your choice of course, but my recommendation is: Don't lease, I think you will regret it.
 
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