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Discussion Starter · #1 ·
I guess this goes for any vehicle.

This is what I think: There is only one advantage to leasing and that is having a low down-payment. The down sides are many. You basically pay for a car that you don't get to keep, insurance premiums are higher on a lease and you are limited on the amount of miles that you can drive.

I had a dealer tell me that the "buyout" at the end of a lease is "what we guarantee the car will be worth" and tried to insinuate that I would have that amount as some kind of equity. Don't be fooled! The buyout is what you would have to pay if you decided to keep the car at the end of the lease. So, add your total payments for the term of the lease to the final buyout price and you get the cost of your vehicle.

Here's another little tip. Dealers always ask you how much you can afford to spend a month. That's crazy! Do you go to dinner and have the waiter ask you how much you can afford before ordering your meal? Ask them how much the vehicle costs, then figure out monthly payments, then you'll know if you can afford it. They are not asking what you can afford to pay a month in order to help you. They want to know how much they can pad the cost.

Think about it. You go to the dealer knowing what vehicle you want. They already know what it costs with the options you desire. So why should they ask you how much you can pay for it? Answer: to get you to pay more. Dealers also make more money on a lease than they do on a normal sale. So of course that's the first thing that they try and push you to.

I'd like to hear your feedback. :roll:

Anybody have a real good reason to lease?

Pissed off about the lease that you're stuck with?
 

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Leases make sense for businesses that can make the payments with pre-tax dollars (that is an expense) and don't have to carry the asset.
 

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getmygoat has some good points, but there are a couple of other ticks on the upside for leasing.

1) you can afford a more expensive car for the monthly payment. Since you are only financing the difference between the negotiated selling price and the residual when you turn it in, you can get more car for the buck. This is the reason there are so many BMW's and Mercedes and Jaguars, Porsches, etc. out there. Especially true as you march up in cost.

2) cars are, by and large, not investments, so if you get a new car every two or three years anyway, you can take the hassle out of disposing of your old car by just returning it at the end of the lease (closed-end only - never, EVER do a an open-end lease.). This is where the big 'Certified Pre-Owned' comes into play with luxury car makers. They end up selling, and profiting, twice on the same car. It's a nice business model when it works. It really is an inventory nightmare when luxury car sales take a dive, because you'll have them stacking up like cordwood in two areas.

It's really a mind-set more than anything. Mileage restrictions are a problem only if you are unrealistic or careless. I have leased two cars in the past, none currently. Never felt burdened by them, and both were sold before the leases ended. IMHO, cars under $40,000 are not good candidates for leasing.

Just my $0.02 on Tax Day
 

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Lease is very popular for quite a few reasons : you have control : at the end of the lease you got the option to buy the car or just let it go. Let s say for example that after 3 yrs you could buy the car that you leased for example $11000.If the market value for that car is $ 13500,I would say you make no mistake if you buy it.Now let s say that the market value is only 9k,would you buy it for 11 k ? Absolutley NOT!
Now so often,peple come in ,and they say I Want to OWN it. Please keep in mind ,that is not totally yours,unless you pay it cash,or you sent the 60 th payment.
Someone was wondering why sometimes customer is asked about the monthly payment. Usually,gives an ideea where the customer would like to be number wise. Is hard to put someone in a $3o k vehicle,for $ 275 a month with :idea: nothing down.
Back to lease. If you replace your cars every 3or 4 years and you can manage with 12kmi or 15 kmi per year ,I would say the lease is a good option. However,if you drive 30 k per yr, or you drive the cars down to the ground, lease is not for you.
And last,remember,sometimes people could get tired of their rides, and that the technology changes quite often.
 

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Discussion Starter · #5 ·
OK, lets say I lease an AWD Element EX for (your price) $275 a month for four years. That comes to $13,200, assuming that I put nothing down. At the end of the lease my residual is $11,000 (your price again). That means, if I want to keep my car and pay the residual, I will pay a grand total of 24,200 not including any taxes or interest or any other charges.

If I had bought the Element for $21,000 I would save $4,200. Tell me again why it's good to lease because this is beyond me.

Cameraman makes a good point that I hadn't realized. But let's keep in mind the excellent resale value of Hondas and how long they last. I still have a 91 civic hatchback that still runs like a dream with 180,000 miles on it.

A good friend of mine is getting ready to sell his 2000 civic ex sedan. Asti would probably tell me that he is the perfect lease candidate because his civic only has 14,000 miles on it. However, his car is worth $14,035 retail blue book. He's selling it to buy the new accord. If he had leased, he would not have this car to sell. He would have to give it back to the dealer, get nothing for it and start from scratch on the accord. Even if you can only get $500 for you old car isn't that still better than nothing?

I'm still waiting to be convinced that leasing is a good idea. :mrgreen:
 

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getmygoat: I seriously looked at leasing my new EX also. I am 52 yrs old and always have never leased a car. I did lease on for my wife, and ended up buying it. However after analyzing it, for me it did not make any sense, to lease the Element. I wanted the EX because I wanted a 4WD utility car that would hold up easily for 180,000 miles. This is about 15 years for me. I hate car payments, of any type, and therefore it was better for me to simply buy the car and be done with it.

Don't get me wrong: I still have car payments on the E for 4 years, but then it is mine and I have (hopefully) another 10 years with no payment. I could not have accomplished this with a lease.

Another key "element" (ha ha) in your descision will be how important having a new car is to you. To me it is not that important. To others, a new car every few years is very important. If you want to always have a new car, simply lease this one and turn it in for a new leased car in a few years. Then a lease is for you. Just know, in advance, that you will almost always have a payment.
 

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getmygoat

...the difference between 24,200 and 21,000 is 3,200 - NOT 4,200.

Also, your theory is flawed because you aren't comparing apples to apples. You took the lease payment total and added it to the residual value and compared it with the negotiated purchase price in your "buy" option scenario. You left a teeeeeeeny weeeeeeny detail in that buying option called INTEREST. Let's look at this more clearly:

Element EX at $21,000

Lease: 48 months, 12k miles, 0 down = monthly payment would be approx $290.84 per month (according to Honda's lease estimator) - that means, you'd pay 48x290.84 which equals $13,960 - Now, add the residual value to that (in your example it was $11K right?) and you'd have $24,960.

But: 48 months, 0 down at 5% interest would make a monthly payment of $483.62. After four years you would have paid 48x483.62 or $23,213

So, you'd be paying an extra $192.78 a month to say you "own" the vehicle (which, as someone else pointed out, you really don't...the bank does until you make your final payment and get the title). Sure, you could continue to drive it after the 48th payment but you'd then have to factor in repair costs associated with an aging vehicle that is beyond its warranty period. That ain't "free" - OR, you could trade it in and get another new vehicle but everyone knows you don't get near the market value for the vehicle out of a dealer as a trade in. So you could sell it yourself to a private party which...in an economy like the current one is not only a hassle but a lengthy process which could also mean needing to come down in price (not to mention the price of your time associated with advertising and meeting people to show the vehicle).

Just some food for thought.
 

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One other small point to add to the mix is that tax on a lease is pay as you go. In other words, when you purchase a car for $20,000, you pay all of the tax at the time of purchase. With a lease, you pay tax each month on the principal as part of your payment. Even when a lease goes full term, you have only paid taxes on the amount of the lease, not the total original price of the vehicle.
 

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The simple fact is that when you lease a car, you add in another entity that has to make a profit, the leasing company. The more people that want to make a profit on the deal, the more you pay.

The real problem with leasing is that you do not own the car. If you go beyond the agreed mileage, it costs a fortune. You can not customize the car at all. After the warranty is up you must fix anything that goes wrong - you have to turn in the car with everything perfect or money is charged. Any scratch, dent or ding costs you money when you turn in the car. Cigarette burn? You pay! Stained upholstery? You pay! Scratched fenders? You pay!

Leasing always costs more than buying because you are paying the initial depreciation, but may not get the years of payment free driving later.

I can tell you that the greatest feeling in the world is buying a car you love with a 5 year loan and a 7 year bumper to bumper extended warranty. Those two years when you are making no payments and everything is fixed free (just when things are breaking) is heaven.

The advantage of purchasing an odd looking car like the Element is that it never goes out of style because it never was in style. I bought a VW Thing in 1973 for $2005 new, and drove it for 19 years. It was just as weird at the end of 19 years as it was the day I bought it. Thats 17 years without a car payment!

My '96 Lannd Rover just came off the extended warranty. Runs lock a clock, and looks just as odd as the 2003's. Hopefully it will run for 19 years.
 

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[quote:12c8f0fcf9="JoeDentist"]The simple fact is that when you lease a car, you add in another entity that has to make a profit, the leasing company. The more people that want to make a profit on the deal, the more you pay.[/quote:12c8f0fcf9]

Just for the sake of clarity... Leasing is simply an alternative financing option. There is no additional entity involved with a lease than there is when financing a purchase.

All of your other points are valid, although normal wear and tear is taken differently depending on the lessor. In my experience, getting the car detailed by a pro is sufficient to past muster at turn-in time. Of course, I would also do that when I sell or trade-in a car I own... And you can also sell or trade-in a leased vehicle just like a car you whether own it outright or have traditional financing.

I am not saying one is better than the other. It totally depends on the individual and a large set of variables.
 

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Discussion Starter · #11 ·
moosek said:
So, you'd be paying an extra $192.78 a month to say you "own" the vehicle (which, as someone else pointed out, you really don't...the bank does until you make your final payment and get the title). Sure, you could continue to drive it after the 48th payment but you'd then have to factor in repair costs associated with an aging vehicle that is beyond its warranty period. quote]

Thanks for pointing out my egregious error, :oops: my math is not up to par but I still think that my theory is correct. The only way that your quote (above) makes sense is if I always have a car payment. I would, if I leased. Also, one big reason that I like Hondas is that they are mechanically sound and have great resale value. Even the most troublesome used car I ever had never cost as much as a car payment in repairs per month. Haven't you ever owned a car without a warranty?

Another little wrinkle is that leased vehicles have higher insurance premiums than purchased vehicles. The leasing companies require that you carry higher than normal coverage because they can possibly be sued if you hit someone in "their" car. :shock:

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Lot's of great feedback but I still can't see a reason to lease instead of buy.
 

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[quote:a2ade0fba8="getmygoat"]
Lot's of great feedback but I still can't see a reason to lease instead of buy.[/quote:a2ade0fba8]

For you, it doesn't apper that leasing is a good way to go.

To reitrate what I said earlier, leasing may make sense if you want a new car every two or three years. It also enables you to drive a car that is much more expensive than one you could purchase outright.

With so many online resources, it's pretty simple to run an array of scenarios for both leasing and buying before you talk to anyone at a dealership.
 
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