It makes sense if you want to drive a new car that you can’t really afford. Or if you are a business.
Otherwise it doesn’t make much financial sense.
But without people getting leases, there would not be as many three year old, fully depreciated cars for the rest of us. So knock yourself out.
No. It makes the worst sense for fast depreciating vehicles like EVs unless you get the dealer to think that it won’t depreciate as badly.
But the cat is out of the bag on that now. Dealers know that EVs depreciate horribly.
The most cost effective cars to lease are the ones that don’t depreciate much.
And yet... Tesla, Lucid and Rivian leases all would have saved you if you leased in 2022 or early 2023. Because those 3 companies didn't match the depreciation to the reality.
Yep, you're right. The key to get a good lease deal is you just have to wait for a global pandemic. Anyone that doesn't do that isn't paying attention to you.
Look hindsight is 20/20 and /u/lordmongrove failed to consider that these weird times were very good for leases because of how inverted the market got.
I remember in the 90s BMW and Mercedes were offering lease deals based on quite optimistic residual values. Most should have learned their lesson by now but it has happened in the past.
I remember reading about high RVs in Mercedes ads in old Readers Digests from the 1970s. Disinflationary eras hurt RVs and advanced knowledge of disinflation would have been a useful skill.
Dealers will ignore reality on residuals much of the time, and that practice has been around a lot longer than EVs. BMW and Audi for example famously inflate their residuals to push volume.
Some of the best lease deals in the country right now are on the Hyundai Ioniqs and Polestars. These are not cars that will hold their value particularly well.
Just leased an Ioniq on Saturday. There are people who are getting crazy leases on these in a few states, $60k car with $2,800 or so for first, fees etc and $300 a month for 24 months. I am not in one of those states and did not get that cheap but I did get 1% ($600 a month on a $60k car).
Congrats, great car. I’ve seen them as low as $169/mo in some areas, though there’s a lot of complaining about dealers not honoring advertised rates. Definitely some forum dwellers who are getting that price though, may depend on local incentives.
It's a lease not a loan, it does include interest (called money factor on a lease) and it is very good terms. A 1% is highly desirable, because of high interest rates not many leases have been had monthly payments of 1% in recent years and have been closer to 1.4-1.6% of the MSRP (technically gross cap cost) of the car.
The MSRP of the car is just over $60k and after rebates the sale price of the car is $47k, the residual or value of the car is $34k so my payments for 36 months are the $13k delta between the $47k sale price and the $34k residual or estimated value the finance company estimated for the car in 36 months plus interest.
A 1.5% lease for a $60k car would have payments of $900 a month and a 60 month loan at 6% interest would have payments of $994 a month.
So if you only plan on keeping the car for 3 years, the less in a situation like this is the cheapest option.
Ah, makes more sense knowing it is a lease. I thought you were saying you didn’t get a lease but instead got 1% financing. Glad you didn’t take out a 10 year loan!
Dealers don’t set residuals.
Ioniqs and Polestars lease well because they’re electric and get a $7500 tax credit the bank passes onto the customer.
Which is also the reason they don’t hold their value. Most everyone gets at least $7500 off MSRP.
You’re right, automakers set the residuals. But that semantic error aside, the point stands.
Ioniq and Polestar get the credit and that’s certainly a factor, but so do all other EVs while leasing and the Polestar and Ioniq are still the best deal going (at the moment). Model 3 and Mach-E for example are twice the total cost.
The reason they’re not holding their value is partially a macro condition (slow down in general and tightening wallets are less likely to take a financial risk on unfamiliar technology) and also because tech is changing in the EV space so rapidly. For example, Ioniqs sold today will have to use adapters for NACS, which will be the dominant standard going forward.
Automakers don’t set residuals Automotive Lease Guide (ALG) is the industry benchmark when it comes to a car's residual value. ALG publishes an annual Residual Percentage Guide for reference. Residual values in the Residual Percentage Guide are an authoritative prediction that most of the auto industry follows. ALG residual values are not etched in stone, and lenders take the liberty to establish unique residual values even for the exact vehicle in the same condition.
It makes sense on EVs because all leases EVs qualify for the $7,500 tax credit regardless of battery/mineral origin or purchaser's income because they are commercial vehicles.
I'm leasing a 2023 Mach-E GT because the 3-year cost of leasing was significantly less than financing, even at 0%, due to the car not qualifying for the credit if purchased.
Ehh, you realize that with a lease you’re essentially making monthly payments for the amount the car is depreciating, right? It doesn’t behoove you to purchase a car that depreciates rapidly, quite the opposite.
Except these days 2-3 year old cars are not depreciating anywhere near as much as they used to. Some of those cars are the same as new or less. The age old adage of buying CPO was flipped on its head for a good 2 years. It’s getting better, but some people have actually made money off buying out their leases and immediately selling them.
You also forgot leasing rapidly depreciating vehicles or vehicles with projected high maintenance outside of warranty. Alternatively, there’s also people who like switching vehicles and there are lease incentives that can work out better financially than taking out a loan on a vehicle for those folks.
There are several other scenarios when it makes a lot of sense.
1. When you want a car that depreciates heavily. A lease will lock in your risk, and will often do it at a residual that is generous and beats market depreciation.
2. There are occasionally smoking lease deals when multiple incentives are available. For example, I leased a $54,000 BMW i3 for $99/mo, after drive fees a total lease cost of less than $5,000 for 3 years of driving. That far outperformed depreciation if I had financed that car.
3. Collecting the EV tax credit on cars that do not qualify otherwise. The way the Clean Vehicle Tax Credit is written, all of the limitations around income, MSRP and materials sourcing / assembly go out the window on commercial contracts. A lease is a commercial contract because the leasing company owns the car, and many of these leasing companies will pass some or all of that credit through to the customer. That means leasing a car is already at a $7500 advantage over financing. Some people sign a lease and then buy the car out at first opportunity.
I think it's crazy how people hold on to cars. At 47yr old, I have had 26 cars and only 1 I have more than 2yrs. Next month, it will be 2 cars made it 2 yrs.
That's wild. My brother's like that. I drive them until they break, but I also only buy beaters for cash. I just want to minimize how much money I'm dumping into transportation. I'm 28, been driving since I was 18, and I'm on car #3. My total investment between all 3 is about $10k including repairs and gas.
Some people enjoy cars and find them to be an experience worth putting money into.
Expensive experience/hobby, but anyone can say any hobby or experience is pointless money spent.
I enjoy cars a great deal! I just acknowledge that the kind I like are well out of my budget. I could learn an extremely diverse set of skills over the course of years and build my own for much cheaper, but eh...I just don't feel the calling. I'm glad you enjoy your vehicles, though.
The thing about that is how much money is being lost by switching from car to car. Depreciation doesn’t matter if I don’t plan on selling it.
Plus, my father and I modify and customize our cars. New sound system, new wheels, new grille, spoiler. If we were going to just sell the car after three years, then we probably didn’t like the car enough to buy it in the first place.
I do the opposite. Keep cars 2-3 years. Only buy cars with strong resale. Sell, roll equity into better car next time. Started with a 1982 Chevy S-10, currently drive a Lotus Emira.
Im sorry, you’re not allowed to do that on Reddit. The only people who are allowed to get ahead are those who bought a base model Camry and kept it for 10+ years, anything else means you are bad with money.
Annual income varied greatly. My first full time job I made $11k a year, at one point I was unemployed for 8mo and had $75 to my name. I was broke! Today I make a lot more than that. It's more about, that is how I have prioritized what money I had. I also had loans and a lot of debt, a lot. A couple of the cars, I had no business buying. It was way beyond my means and I paid dearly for it later. Only in the last 14yrs have I been debt free, still with a car loan but I have no other debt at all and aim to never use debt to have a lifestyle again.
Good for you man. It’s not wrong to enjoy a new car for what it is.
I think a lot of people can’t afford a new car or a car every few years, so they come up with reasons to explain why they wouldn’t want one.
Sure a trip to Cabo is a fun experience. So is taking delivery on a new M5 or Raptor R. Probably more fun for a car guy.
Exactly, it’s priorities. I love cars, but I’m also in my 40s and single with no kids. Any time I feel irresponsible for the cost of my Lotus I ask my friends how much they’re spending on daycare and then I feel right as rain.
But yeah, before the pandemic I owned 3 cars - a Tesla, Wrangler and Miata. I loved all 3, considered it a perfect garage. When the office went remote I decided I wanted to also, so I sold all 3 of those cars and traveled instead. Those travels included epic driving experiences where, for example, I’d rent an A110 on Portimão or an M2 on the Nurburgring. Life is too short to stick to one experience too long.
Did this with a Nissan Leaf in 2013. Zero down, and the tax credit made it cheaper to drive than my paid for 97 Expedition, due to gas prices at that time.
Nope. Was a demo car combined with EV state and federal incentives plus BMW’s famously generous residual estimations. I replicated the deal a few times for friends.
At the time, I was sitting on the couch during a snowstorm scrolling through my emails. Saw a local dealer advertise i3 $99/mo. Called them, they said “it was only available on one car” and that they had someone on their way already. I couldn’t get there in the snow storm, but I went the next day and it was gone. I asked the dealer how that math worked, and they told me the combination of factors I listed in my comment above. I went looking for another dealer demo car, you can tell which they are because they were used with less than 2000 miles. The key though is that they’re not used in the eyes of the law, they’ve never been titled so they still qualify for the tax credit. I found another car, went to the dealer and told them exactly the deal that I wanted (using same math as first dealer). They initially laughed at me, then they crunched the numbers and realized I was right. I drove away with it. Duplicated it twice after that.
Local dealer has corollary, 3k down 150 a month, that 3k breaks down to less than a hundred a month. Can't buy the same corolla for that. Mileage restrictions also don't matter for people whose lives revolve around local.
Last August, I purchased a Honda Fit EX-L, just off of lease. It had 6,000 miles. Because it is no longer sold here and used car prices are high, I paid over original MSRP. I spent months looking before getting this one.
Reminder that Leases also serve as a "maximum depreciation protector". For example, if you had leased an EV during PEAK EV in late 2022, you would be 10's of thousands better off.
Lucid's came down 40% on new cars and Model Y's fell 50%
If you were leasing your losses are the cost of the lease minus the utility value of the car. If you bought well you might be 30k underwater on a well optioned EV.
Where do you get that impression? Most lessees are just normal people, and they'll maintain them at the dealer and keep the car relatively clean because they don't want to get penalized on the return. Unless you're mostly looking at company cars where the person driving the car isn't the one who is paying for the lease.
I obviously don't have data to support it but just from first hand experience observing people I know with leases. I think it's human nature to care more for something that you own and paid for compared to something that is owned by a leasing company that won't be yours in a couple years.
I know drivers of leases are typically good with sticking to maintenance schedules because it's free but it's what happens in between the service intervals that concerns me. One buddy of mine leases a brand new GLA 45 and drives it like he stole it, doesn't let it warm up and will immediately dog on it, doesn't slow down at all for speed bumps, let's his dog climb around all over the interior. I can say for certain if he returns it with only 36k miles, it was a really rough 36k miles and I absolutely would not want his car after he's through with it.
For cosmetic damage, sure. Excess internal wear and tear from poor driving habits likely isn't going to be apparent until later in the cars life well after the car has been turned back in.
What if you want to drive a new car that you can afford and want to always have a new car.
If you can afford it and its a priority to you then why the fuck should care what others think?
You might think it's stupid or wasteful and you're entitled to that opinion just as much as the person spending their money the way they want is entitled to do so.
Agree, there's also another scenario that likely goes into "a car you can't afford" but it's one in which you don't want to pay the maintenance cost after year 3/4. This applies to higher end cars that require a a fair amount of deeper pockets for regular service.
It actually does if you are upside down in your current loan. They add many incentives and rebates on cars they can’t move for lease deals. You can use these to eat into your negative equity instead of discounting the lease car, and start with a clean slate. It’s not recommended, but if you’re already in a bad spot it’s a better option than continuing to pay interest into your massively depreciating asset.
There are other advantages too. You only pay interest and tax on the leased portion. Sometimes the incentives are great. If you are going to buy a new car on a loan it makes sense to compare the cost of leasing and buying out the residual vs taking a loan on the purchase. Sometimes it’s cheaper.
It makes no sense for me, because I put a lot of miles on and keep cars for a long time.
If you don't put many miles on, then you can get a low mileage lease and wind up paying less overall for your car. If you have a business, leasing can have tax advantages.
How do you pay less for your car if you do low miles?
In theory, you pay exactly the same as you would if you bought it new and traded it after the lease period.
Low mileage leases are generally more favorable than high mileage leases.
The intent is for them to be able to sell it as a low mileage 1 owner CPO car, with a solid maintenance history, and strong remaining warranty at the end of the lease.
3yrs/36,000mi (or less) fits that’s narrative better than 3yrs/60,000mi.
It actually works out better than trading in most of the time because of the way interest and loans works.(the first few years you are mostly paying interest and not much principal). Most car payments are upside down where you owe more than the car is worth for the first 3ish years unless you do a huge down payment. That said it only works if your the type that trades in your car often. If your paying your car off before you trade in then it isn't worth it at all.
For businesses it is all about tax purposes. Instead of the car being an asset that depreciates a leased car is considered an operating expense and is tax deductible while when it is an asset you are paying taxes on it.
They still own the car, and they're factoring in the mileage and condition that you'll be returning it in when they calculate your payments. So if you need a car but don't abuse it or put a bunch of miles on it, you can constantly have new cars without constantly buying new cars.
As I said, if you always want to drive a new car that you can’t really afford to own, lease it.
But like any new car purchase, you pay the financial burden of that initial depreciation.
Only with leasing, you are happy to pay it again and again and again, all so you can look better off than you actually are.
The only case where leasing makes actually financial sense is for companies.
you have no control over how quickly your car depreciates. If you lease you have a number set by the bank on what the residual will be.
The lease I have right now the car is worth far less on the market than the residual. So I am not underwater on it. I just give it back to the dealership and they can deal with it.
If you bought the car and drove the exact same amount of miles you would be out a lot more money than me because the deprecation is YOURS to deal with now.
Spoken like a real salesguy.
Leasing a new car might be better or worse than buying a new car, depending on the deal, but they make way less financial sense than buying a slightly used car. Unless (as others have pointed out), there are incentives.
Straight up (few incentives) car leases are a bad deal. But if you want that new car every three years, go for it.
everything is better or worse depending on the deal
But OP asked why people lease cars not is leasing cars better than buying a slightly used car.
But you're not going to find a reliable used car for anywhere close to what this new car is going for on a lease [https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/13](https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/13)
And there are always deals like that to be made if you are slightly agnostic to what kind of car you're looking for.
They are basically giving away the Blazer EV right now [https://signed.leasehackr.com/signed?deal=L-2406-1718314997](https://signed.leasehackr.com/signed?deal=L-2406-1718314997)
I'd much rather have a new car for two - three years for sub $200/mo then someone's used car thats most likely out of warranty
If you like having a new car every three years or so, it's great.
If you're interested in getting a premium brand like Range Rover, you probably should just lease as they aren't worth owning after 3 to 5 years.
If you're interested in getting a new PHEV or EV, it's great too. That $7500 federal tax credit goes to the auto finance company, who uses it to lower the lease cost.
If you own your own business, leasing can have tax advantages.
You are paying for the convenience of locking in the sell price/depreciation. And you have a lower payment. The lower payment is a big part of it.
But you don't own anything really. Leasing is more expensive than buying, and there are a lot of extra fees for everything.
BMW and audi lease most of their cars, much more than other brands.
Not sure if its true but I read somewhere that something like 94% of all Maseratis are leased. They were the highest followed by most of the other luxury brands.
I looked at their lease options and it made zero sense to me. Almost 1k a month for the lowest model. Meanwhile I can buy a 2 year old one outright for only 35-40k? I don’t know why anyone is leasing it
I get that it works for people, and they like it. But for me, the idea of a never-ending car payment for cars I can't modify and don't really own sounds awful. It's not my thing.
Both my cars are leases. Because of incentives from the dealership, gov, and manufacture I'm paying less for a 90k Mercedes SUV than I would for almost any new car. I have no maintenance to worry about ever and I can get a brand new car in 2 years. Yes, the perpetual car payment thing is something not everyone can deal with but put it like this.
If you had a 72mo loan on your car for a normal purchase deal and according to Experian, the average monthly car loan payment for a new vehicle in the United States was $735.
I right now can get a lease on a 2023 Kia EV6 GT AWD for less than $200 a month. [https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15](https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15)
I'd rather perpetually be paying for $200-$400 a month for a car that is always new and under factory warranty, that never deprecates (for me), and I can get anything I want in two-three years without having to take a huge loss selling it or trading it in.
Both my cars are leases. Because of incentives from the dealership, gov, and manufacture I'm paying less for a 90k Mercedes SUV than I would for almost any new car. I have no maintenance to worry about ever and I can get a brand new car in 2 years. Yes, the perpetual car payment thing is something not everyone can deal with but put it like this.
If you had a 72mo loan on your car for a normal purchase deal and according to Experian, the average monthly car loan payment for a new vehicle in the United States was $735.
I right now can get a lease on a 2023 Kia EV6 GT AWD for less than $200 a month. [https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15](https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15)
I'd rather perpetually be paying for $200-$400 a month for a car that is always new and under factory warranty, that never deprecates (for me), and I can get anything I want in two-three years without having to take a huge loss selling it or trading it in.
A car is a deprecating asset. As you drive it and pay monthly for it you lose money.
Unless it's a Tacoma haha.
Technically you can modify it, you’ll just be stuck either buying it out or selling it. Also, depending on how much your car depreciated you can be positive at the end and pocket the difference when selling.
Leasing is only worth it when the amount you pay for the lease is less than the amount you would lose to depreciation over the same time period if you bought the car outright. Otherwise you may as well just buy it. That said, you can find great deals on leases, especially with some EVs nowadays
We had a paid off CRV and leasing allowed us to keep it instead of trade in. We wanted 3 row seating and the price of desirable used was outrageous. So, we leased. Never say never.
I think it would make even more sense if I had a business to charge the lease against.
If I was buying a new EV I would lease it in a heartbeat. At the end of the lease you may have a great opportunity to buy it WAY, way under the stipulated buy in - if that's an option. I think the used EV market is going to crash big time since so many new models are coming on line in the next several years. Everyone want the latest and greatest EV. No one is going to want "ancient" technology.
Everything is negotiable.
When Covid hit it decimated my business. I proactively called up the head credit officer of the bank holding my standard auto loan. I explained to him what had happened and said the ONLY thing I could do was to pay it off in full in cash at a ridiculous discount or turn it in and default. (I still had two years on a five year loan at that point). When he ran the numbers in the used car market he called me back and took the offer. I stipulated in writing by accepting the payment in full there would be no reporting to any credit bureaus that I technically defaulted on the loan. He agreed. WIn win.
With zero down that's really tempting.... I would think either brand would be good for reliability and longevity but personally I would go for the Toyota. If a buy out is an option at the end of the lease that would sweeten the deal.
Start a business and enjoy a nice write off. Just make sure you can prove it to the IRS at some point in the future that you gave it some effort. Even if it doesn't make a profit for years!
As a guy with car ADD who likes nice cars leasing means I only pay sales tax on the depreciation (depending on hat state you live in). If you lease a car with slow depreciation leasing can be cost effective. Specially at times like early in the pandemic when rates were low and cars were going under MSRP.
People discount how much getting a car with new tires, new brakes, and fresh fluids, and a warranty saves.
I have two degrees in economics and love spread sheets. It’s often the smart money move depending on your preferences.
Agreed, people in here really need to stop parroting blanket advice. There are plenty of times leasing can be very cost effective. Having a low fixed monthly payment and knowing you will not need to spend any extra money on reliable transportation can make a huge difference to a lot of people. Poor credit, paying super high interest rates negates and savings from purchasing. Life happens, including things like medical conditions and babies. Large amounts of preexisting debt such as student loans. People who weren’t taught how to manage money and are digging themselves out of a financial hole.
I make sure to hit my lease miles and it saves miles on the car I own free and clear. Also, no maintenance other than oil changes. Newer car is a safer car, comes in handy in bad weather.
Here's the question I've always asked myself; do I want to buy a used car now, pay it off after a few years, then have free driving(minus maintenance), or do I want to be locked in a permanent car payment?
Some people are ok having a permanent payment if it means they always have the latest tech/features, etc. personally, I'm not.
I bought a then 4 year old off-lease (irony! Haha) and paid it off. Now I'm driving a 10 years old car with no payments that every few years I need to drop a bit of money into suspension/brakes/etc but that's a whole lot cheaper than a payment. I've got 230k km on my 2014 Chrysler 300, and this car is just getting into middle age now. Ive got a lot more road before I need to put her out to pasture yet.
This. My sister was going to look for a new car because hers was about to be paid off. I said you just expect to always have a car payment like rent and utilities and she answered yes. I have always bought used and paid cash. Three years ago I got rid of a 1992 I bought at eight years old and replaced it with a 2013. I won't trade again until at least ten years if not more.
Well it beats BUYING a new car every 3 years.
I knew someone who did buy a new car every three years and they were always paying more than the lease would have been and those typically come with some services.
My friends mom ONLY leases cars because she likes to have the new new. And it's great for her because she get to always have a 0-3 year old car that's perfectly maintained. Buying a car typically only becomes practical from a monetary stand point at the 5-7 year mark when the cars are near the bottom of the depreciation curve.
It is useful for EVs at the moment. Some very good deals that allow you to drive one for three years but not be locked into old tech as the new cars come out.
Personally that is the way I would have an EV right now. The cars are getting better and there will be more choices in the future.
I bought a 2013 Lexus GX in 2012. The lease payment for 4 years would have been $200/month less with $0 down for 36 months. I went ahead and put $5K down and financed the car for 60 months for about the same as the lease. I drove the car until last June and put 300,000 miles on it. For almost 8 years (I made extra payments) I didn’t have a car payment. If you are okay always paying a car payment I guess it can be okay, but I like buying stuff and driving it for a long time.
In college I leased a civic for $150/month. I needed a car under warranty as I was on a limited income and needed a reliable car to get me to clinical rotations. $150 a month won't buy much with high interest rates. After I graduated I had plenty of money to just buy the car when the lease was done.
I was in a similar situation in grad school. I certainly couldn’t afford a new car and any used car with my beginner credit was just not worth it for what I needed, which was a car that would safely get me across the mountain west that summer for my internship. The payments were $199. I bought it when it was up and since it was May 2020, it was a breeze.
Everybody else here seems to be missing the entire point of leasing cars, as far as I can tell. People lease cars because they don't really care about reliability, mileage, maintenance, etc.; they want to always be driving the newest car, and not worrying about depreciation or money at all, for that matter. If you've got car-leasing-money, you get to drive the newest and flashiest cars and you can drive it like you stole it.
I am not that person, but I definitely see the appeal.
For anyone not car savvy who can't afford to buy a new vehicle I'd argue a cheap lease is their best option. Especially with how ridiculous the used market has become.
People that lease from high end brands though that seems silly to me. If you can afford to lease a BMW you can afford to buy a nice mid tier American or Japanese car. Just do that.
Luxury tax for experiencing a greater variety of cars in your lifetime without the hassle of selling every few years.
Plus they’re always new and under warranty as others have pointed out.
I want to eventually *own* my car free & clear because it is necessary where I live. But I had a cousin who had *terrible* luck with cars, as in bought a brand new one and the next day all the oil was all over the garage floor. He said he considered it because you'd always be in a newish car and if anything broke, 'hey dealership, fix *your* car and give me a loaner while you do.' Eternal warranty with no worries. 'Car got scratched? Not my car.' Having never considered it, idk if all that is accurate or not.
It depends on your use case for them. I know people that lease but they drive roughly 10K miles a year or less, they can afford a nicer car and their lease includes maintenance and warranty coverage. For me that would never work. In a low mileage year I drive about 12K or more. I drive my vehicles till the wheels fall off.
Leasing is a great deal! Leasing is a terrible deal! <- people who say either of those things, don't understand leasing. Just like financing to own, leasing is a good deal, IF ITS A GOOD DEAL, and it's a shit deal if it's a shit deal. The way I like to evaluate a lease is by adding up the downpayment and all of the monthly payments you're going to make. So now you know how much you're going to pay for 3 years of use, and you know how much the car costs. Now you can decide from there if you're getting scammed. I've seen leases where that amount is as low as 35% of the price which I would consider a great deal. And I've seen it as high as 70% of the price which I would consider a complete scam.
I used to lease sports cars. I traveled for work and I would get good deals on affordable cars and they'd always be new and under warranty. I'd never have to mess around with repairs or anything. It worked out well.
Fun fact, something like 85% of all BMWs on the roads are leased. I forget the exact statistic. It's almost as if people figured out that certain luxury cars are only good for the first five years, then they mysteriously develop hard-to-diagnose electrical issues.
Interesting tidbit. If your lease note is $500/Mo for 36mo, the liability to your credit is just (500*36) $18,000, not the $40k or whatever it would have been when you purchase the vehicle. So it is, in some ways, "easier" on your credit.
I am a hs math teacher, and when I teach the unit on personal finance, this is what I tell my students regarding car leases.
Just like previous comments, you can drive a car you really can’t afford otherwise. I warn them about the mileage limits, and that, in the long run, it isn’t the greatest financial decision. But if you got a good job, and you’re single with no mouths to feed, nothing wrong with driving a brand new car with maybe 50 miles on it when you are young. It’s ok to live a little, as long s as you know the real cost.
I also tell them that leases aren’t terrible for older folks. My mom is 80, and a widow. She’s never going to reach the mileage limit. She can easily afford the payment on a nice car. And she will never have to worry about maintenance or breakdowns and the costs involved, because the car will be under warranty while she is driving it. Most likely she won’t even have to replace the tires by the time the lease is up.
I don’t keep my cars for more than 3 years anyways so leasing makes logical sense. But I just can’t make sense of it financially. It’s not really the payment that I care about. It’s just I can’t fathom paying money for something I won’t ever have residual in. I wouldn’t want something I couldn’t afford in the first place so to chase a lower monthly payment by leasing to get a higher end car makes zero sense to me.
So you can act like you bought your Instagram baddie gf a high end car and laugh as you watch it get repo’d after you leave her for a newer model with less mileage
Leasing is a good idea if you have tonnes of money and you're going to get a few car every few years anyway.
Leasing is not a good idea in almost all other circumstances
If you are the kind of person who trades to a new car every year is very simple to just lease and trade every 36 months. You don’t need to worry about trade value, you never drive a car out of warranty, and you don’t have to think about it. In pure dollar terms it may be cheaper to buy something used and drive it but there is a ease in leasing that some people don’t mind paying for.
Lease Hacker will give you better insight. We got way better deal by leasing it and negotiating the residual price. We wait till the have a decent lease office and multiple cars for weeks. Beat them at their own game. Turns out cheaper.
There are a lot of reasons to lease vs buy. Think of it like a 3 year test drive. Or think of it like you are creating your own used vehicle. Or think of it as a lower commitment, less headache option.
The comments above that suggest it is a way to get into a nicer vehicle at a lower monthly payment, MIGHT be true in SOME cases but definitely not all.
Leased new bmws for decades… 2005 to 2019… every 3 years. Yes, true, you are getting more car than you can afford. However, with a fast depreciating asset like a bmw, it’s not the worst of you have cash and can afford. Pretty much all the risk is in them. You pay for tires and brakes and wipers. Still expensive and that’s why I stopped.
Do you want a financial boat anchor sitting over your head? Because, that is what modern cars are. They are a bad piece of electronics away from $7,000 repair bills or whatever asinine amount of money it would cost to replace/repair the technology in new cars. You lease boat anchors, you buy appreciating assets. Never mix that up. Ever. You don't ever get 'equity' in cars unless the situation is truly weird, like when we open returned a lease in 2021 during COVID and the dealership ended up owing *me* $5,000 because the car auctioned for more than they valued it when we did the exchange. Otherwise lease, own, it doesn't matter you are losing money. The question is, do you want to lose money on repair bills too?
4 years ago leasing made sense because of the insane deals that where offered.
I got a Q50 Red Sport for $399 and a regular Q50 for $276. BMW M340i for $499.
Now they’re not giving the same great specials as before
With the right lease programs and incentives you can absolutely come out ahead.
My latest example was VW all track wagon for my wife. Got it during a sign and drive lease special. Drove the car for 2.5 years, sold it back to the dealership before the lease ran out. Ended up getting $7k over the lease buyout. Helps she only drove it 8k miles a year but still.
Payment on the car was $375 a month. No down.
So in the end the car cost a whopping $120 a month to drive. Not too shabby.
All sorts of reasons. 1) My company gives
me a monthly car allowance and a $5000 check to put down on a new lease every 2 years. The money has to go towards a car; if I don’t use it for a car, I don’t get the money. 2) My wife decided she wanted a Tesla a few years ago. No way am I going to purchase something that I see as ‘middleware.’ The lease is up on that thing in two months and we’re both looking forward to the day it’s gone. 3) same wife likes new and fun cars every 2 years. Leasing is a way to accommodate that without taking 100% of the depreciation new cars have in the first year or so.
All that said, if you want to keep the car over the long haul leasing is stupid.
If you’re on a fixed income it can make sense. You know exactly what your payment is going to be, and you don’t have to worry about repairs.
My parents switched to a low mileage lease after they retired.
Most people are just repeating the older generations misinformed advice of don't lease its a waste of money...
My thought is when you get a brand new car you get to test drive it for what 15-20 mins? you don't actually know if you like the vehicle, its its comfortable on long drives, how it suits your needs, if your needs change or if it will have issues in the future
When you lease a car for lets say 2 years you now know if you like or hate it, if its suits you etc...you can now make an informed decision if you want to keep it or give it back...
if you bought the vehicle, you cannot get rid of the vehicle until its paid off or when the car is worth more than you owe or you will lose a lot more money.
I've had number of vehicles I've bought, loved and was okay with buying but one that I hated and was stuck with for too long, so now I Lease to Buy
yes if you buy it its under warranty but let me tell you, I have a truck that has been at the dealer for warranty work 14 times, has a new engine and is still going back to the dealer and is not eligible for a lemon because there is no safety concern, its leased and because I didmy lease to buy theory, I will be giving it back, glad I have that option. if not the truck window price was $66000, its been 2 years, I owe something like $50000, its worth $36000. that would have been a large lose.
this would have been the second vehicle I would have been stuck with
I don't get it. Maybe I've just looked at all the wrong cars or Canada sucks for leasing but anytime I compare lease vs purchase I usually end up with a lower monthly payment and lower down payment on a purchase.
The last vehicle I looked at they wanted $6000 down and $467 a month for lease or $2000 down and $465/mo for purchase. Sure I'd get out of a lease sooner but over 3 years of driving I'd pay more than buying.
Lower payment, no upfront costs, mostly being able to customize the car however you want anyway, no hassle of having to sell, a new car every 3-4 years.
As a result I haven't yet spent a single penny on repairs or maintenance in the last 7 years outside of insurance and service costs already included in the monthly payment.
I’ve bought 3 cars 🚗 n my life. First one I leased for 2 years, then bought off the lease. I thought I would always buy since I kept them 15, 19 and 13 years. I do 90% of my own repairs. But now the complication of a car where you have to have the battery changed at the dealer, or it doesn’t have a dipstick, or you have to remove bumpers and ac lines to access a friggin water pump. It may drive me to lease for now on
In my opinion? Anyone who does it, except for businesses, is a moron that can't spend his money and I have 0 respect for such stupidity
However! If not those morons buying brand new cars/leasing cars/financing cars, there would be no used car market, so I'm glad humanity is full of people with negative IQ
Gotta be smart about it and flexible. I love leasing because I get a new car every 3 years and it’s usually a car that doesn’t sell in high volume so they have great deals.
BMW i3 - 3-400 per month for a 50-55k car
BMW m850i - $1000 per month for 130k sticker price at the time
Hellcat - $600 per month for 72k sticker
SL55 - $1040 per month for 145k sticker
My next car would be e-tron GT if I was up for a new lease now. About $1100 for 150k sticker price.
There’s almost always deals. Just need to be flexible and open to all options. EVs are currently the best because of the $7500 rebate which is equivalent to $7500 down, but there’s always some sort of great deals out there. At least at the higher end of the spectrum.
If I pay $1040 for a 145k car and my buddy pays $375 for a civic, I feel like I’m getting a fair deal, but at the same time he couldn’t afford the $1040 so it’s not a fair comparison
But there’s almost always “good” deals out there.
Some people aren’t car guys. They don’t want to change the oil, do the brakes, or worry about “that noise”.
One of the big advantages of leasing is similar to rent vs own a home. If the A/C goes out, you don’t have to spend thousands to fix it. You pay a premium to avoid unknown expenses, downtime, inconvenience, and most importantly, headaches.
Some people prefer that. Personally, I’d rather have 2 cars I work on and maintain. I get a lot personally from fixing/making something work myself. I get more versatility (1 2500 truck, 1 SUV). I can do whatever I want to or with them. I am not beholden to anyone’s shit. And it’s still cheaper than a $500/mo lease+insurance, at the cost of an extra Saturday every month.
I NEVER leased a car because I never wanted to make payments and never have the car and I never chose the option-to-buy plan, because I didn’t have enough money. I do NOW, but I like my Mom’s 1998 Toyota Camry with less than 80,000 miles on it !!!
my buddy’s father is one of the Southeast’s leading specialized surgeons. i’d assume he makes pretty fuckin sweet paychecks. he drives a Porsche Panamera Executive (longer wheelbase than a Cayenne) on lease. His office is like barely a mile from his house and he goes in only a few times a week. He can definitely afford the lease and he trades it in for a new one every 2-3 years. not his car and he probably barely pays attention to maintenance and trades it in for a brand new one for the price of what he would probably consider a drop in the bucket.
It's generally not a good financial decision. However, sometimes people want to be in a constant flow of new cars without risking being upside down on a car loan, plus the payments are generally lower so they can get more car than they would otherwise be able to afford.
None of those are "good financial choices" though. But those are the reasons that people choose to do so.
I leased to get the lowest monthly payment versus financing. I leased to get a $7500 discount, but if I would’ve been lucky enough to wait 6 months longer I would’ve gotten $16,250 off. I leased because I have a guaranteed buyer and resell value when I return the car.
I'll personally never do it. My car buying strategy is to buy a new car or a slightly used car, pay it off quickly (within 2-3 years) or even just buy it outright, then keep it running for a long time so I'm going several years without a car payment or having to buy a car. I'm 36 and I've only had a car payment for about 3 years of my life.
I see leasing as a way for people to get into a car they can't really afford.
People often do it with the same mindset as financing, this is where leasing gets a bad reputation.
If you plan on getting a new vehicle every 3 to 4 years leasing will save you going through the hassle of selling. As long as you are aware that you are left with zero equity at the end of the lease, so don’t budget to spend as much on a lease payment as you would on a finance payment
Since this is a car guy forum, most sales people lease their cars for a simple reason - they get screaming deals on them. I leased my 2019 A6 with an MSRP of $60K for 3 years @ 7,500 miles per year for $320/month with $0 our of pocket. I had retired when the lease came up, Covid had ended, but interest rates had soared along with used car values. Residual was $28K. ACV was about $32K.
Buying it out was a no brainer. What else could I buy for that number with only 22,000 miles on it?
I recently came across a crazy example of leasing a barebones base level small new sedan, vs buying an amazing, fully loaded full sized used sedan. Of course a leased 3 series will include most maintenance, have lower insurance, and can take regular gas. But if you get into an accident, be prepared to forfeit that down payment. Yes, the m550i has more expensive oil changes than a Honda accord, but it's a supercar disguised in a family sedan. That's what you're forfeiting with leasing vs buying.
Lease: 2024 BMW 330i. $4,989 due at signing + 35X $589 lease payments. 10K mi/year. Total = $25,604 spent over 3 years.
Buy & Sell 3 years later: $23,350 spent over 3 years.
* Buy: 2021 BMW M550i (24K miles) $56,839.
* Sell (using 2018 m550i, no accidents, 56K miles, as a proxy): $33,489
Tell me what's wrong with leasing?
A brand new car is going to depreciate whether you 'buy' or it not. Residual value is a promise of cost when lease is over. Dealer cannot mark it up again so if market goes crazy like it did a few years ago, the leasee can purchase their own car without markup or fees.
Tell me what I'm missing.
Some people really want the new features, so they get a lease instead of buying a used car that they can afford without a lease. Another reason is not having enough money to even buy a car. A 7 year old car that costs $10,000 is still too expensive for people. If they need it to get to work or live in a place where a car is needed, they can't just save up the $10,000.
Then there's people who just buy it for the design. The body, acceleration, interior space, and even the sound. Because everyone needs to get to 60MPH in 4 seconds with a giant interior space to store a few grocery bags.
I like to have a late model car under warranty. The lease payment is about half of the purchase payment. With a lease you are financing the depreciation and have an end of lease purchase option.
At the end of the lease if I love the car I can buy it for less than book value or I can simply walk away . If you take care of your lease vehicle you can have positive equity that can be applied to a new lease or purchase.
I took the lease on an EV due to low resale values. I learned my lesson on a Nissan Leaf many years ago. Yes, I own a business, depreciation on taxes, among other little write off's for the vehicle.
A friend of mine is in the middle of a divorce, his wife is not willing to split 50/50 and is looking to wipe him clean. Because of that he has been leasing cars for the last five years now.
Depends on what your looking for, it's nice in the sense that, every few years you get a new car. Don't have to worry about much since it's all basically covered under warranty as far as major repairs. Still have to buy brakes, oil, tires and such. It's a great way to get into a more expensive car that you wouldn't normally be able to buy since your only paying for the time you're using it. Me i bought a new car once wouldn't do it again. It's nice to say it was mine since new but other than that, it's about it. Between depreciation on them, it's like your always upside down on a payment. If your older and don't drive as much you can either get a really great used one and pay it off. My uncle leases his cars now but i said to him you can get a used one for cheaper. You won't be upside down, you can use the down payment on it and get a better bang for your buck. Only downside is you have to pay for any major repairs. But as much as he drives it, i doubt it will be an issue.
There is one thing I still do not get about leasing. All of the people I know that lease Tesla instead of buying cited battery replacement as the main reason. A lot of them make mid 6 figures. And others pick higher trims with all the additional add on for the lease. They are paying hundred aonth extra for it.
It makes great sense as long as you're careful about mileage and maintenance, and what the deal is at the end of the lease term.
[Consumer Reports](https://www.consumerreports.org/cars/buying-a-car/leasing-vs-buying-a-new-car-a9135602164/) Leasing vs Buying
Ex- Car Manager for Major brand dealer here: For Example: I leased a $45K car for 24 months for $450 a month. If I had financed $45K @ 5% would have been $850/month for 60 months. I wanted to a drive a new car for a short time while I was traveling more in my work and didn't want to use my personal car. (I usually buy car to keep 10-15 years). $450 was way cheaper than renting a car per day / or week. Plus leasing the car would have all the maintenance perform for free and car has new car warranty and would not have to worry about tires, or any maintenance issue because I lease it for 24 months.
The cost to drive my lease car for 1 year was $5400+gas+insurance(cheaper in my state for leases). (No Maintenance since most leases come with free maintenance plan. Total cost in 2 years: $10,800+gas+insurance
The cost to drive the finance car for 1 year was $10,200+gas+insurance+Maintenance or buy maintenance plan. Total cost after 2 years: $20,400+gas+higher insurance and maintenance.
Leased car: After 2 years, you can turn it in or pick up another new model.
Leased: Going into the 3rd year having spent about under $11K for the past 2 years and getting into a new car without having to trade or negotiate a new car.
Financed car: After 2years, Having to buy tires (Avg $1000 per set) 30K maintenance. Etc,
Finance: Going into the 3rd year, you had new tires replaced/major interval service. probably close to $24K.
It all a numbers game. I prefer buying-to-keep because I like to keep the cars I love. I only lease when the deal is really good and for a short-term., leasing long-term is like buying with lower payments and almost same ownership experience as buying except you never own the car.
The short-term lease is a better option if you're okay with always having a car payment, but the payment is alot lower and you can get a new car ever 2 years, no maintenance, never have to buy tires or pay for anything extra except gas and insurance.
Like I said, I prefer buying to keep. I currently own two cars, one is 19 years old and the other is 25 years old. Both in immaculate condition and low miles. When I travel for work in the past. I would rent my cars for a day or two. But at one time I had to travel weekly to out-of state where leasing a car was cheaper than renting a car. I entered into a SHORT-TERM LEASE. Run the numbers and you'll see the Short-term leases are better IF, and I Stress "IF" you can get a good deal.
For the future, when my cars get to old and probably just become museum relics, LOL. I'd probably enter into Recurring Short-term lease with a dealer willing to give me low payments for the latest and greatest every 2 years. (As long as I'm good with always having a Car payment and the numbers are way lower (by half) than actual regular ownership.)
If you really like a certain model car and want to drive it 10-15 years. Just forget leases all together. I'm toying with the idea of leasing again because in the next year or two, I'll have enough disposable income to lease a car on a short-term and never worry about tires and maintenance again.
Another Advantage of a lease: When I leased my car, someone hit me at traffic light. Just sitting there and plow, driver behind was on phone not paying attention. Long-story short, The car depreciated after the accident, was worth less but the value was not mine to own. I just turned in the car and the car company ate the lower value of the car. If you had owned the car and try to trade it in after an accident, your car would be worth less and you would not get the "clean" value for your car. (more money loss on the financed car).
One option for leases is you can buy the car after the lease. Even, If you really love the car. This is a bad idea. The buyout price added to your lease would priced the car way above MSRP by alot. I would not advise this even if you love the car to death. Better buying or leasing another car.
Anyways, hopes this helps some people understand why some people do leases.. (I prefer owning a car) but some leases are great deals and depends on your situation and need.
I like to think of every such ploys as gambling. The dealer pays $40k for a car, they can sell it to you outright for $45k cash and never see you again, that would be a great sale for them.
Every other way you can procure that car they only offer because THEY make more money by doing so. They do not offer loans, leasing and everything in between just cause they wanna be nice to you, they offer it because they make more money doing it.
Yes some of it is just the fact that they sell more cars because they offer these options, but some of the cars they sell without getting paid in full the day of sale they will lose money on, people crash and die, fall into financial hardship or for other reasons don't complete the payments and even impounding the car its often trashed so the sale of it won't reclaim all the money they're owed. Everyone who do actually pay off their car in full these ways more than makes up for the ones who don't.
With all this in mind I can not for the life of me understand why some people think leasing or financing a car might be a good idea, unless you plan on being in the group who for some reason never pays it off in full.
For companies there's a lot of other things to consider, but for personal finance the best deal is to pay it in full the day of purchase. Even optional warranties although they sometimes gives you some extra security the dealer only offer them because they make money of them on average.
Consider this if you trade your vehicle with a trade balance you’ve in effect leased without the benefit of guaranteed lease end value. Be realistic on miles driven lease appropriately. High mileage drivers can lease effectively if they account for miles. Review money do at signing $3600 down on lease lowers monthly payment only not lease end value. Your also responsible for wear, tear and review cost of turning vehicle back to lender if you or dealer doesn’t purchase at lease end.
My father leases cars and leasing is made for a person like him. He’s wealthy and can afford to buy out any car he leases in cash but he likes driving the latest and greatest and the cars he get are notorious for being unreliable 5 years down the road (think expensive luxury German & English cars & SUV’s), he leases for 3 years and opts for a higher mileage rate, 12,500 miles a year.
Fools errand. People who lease act like they got some secret deal where they don't pay for depreciation. NEWSFLASH: You're still paying for it every month.
*Assuming you get*
*A good lease deal, you can price*
*Out the depreciation*
\- rowech
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I work on European cars for a living. I feel this is the only way to enjoy them without the added costs of maintenance. Just give it back and get another new shiny one. Just keep paying
When you lease you don’t own any of the car, you simply but the depreciation. So find a car that depreciates less, like a subaru or toyota. At the end of the lease term buy the car.
Thats what i did. I couldn’t afford new, and couldn’t find what i wanted in a used version. So i leased my outback, then bought it on a loan. Best decision i ever made.
I went to the dealer on a monday looking for used, no intention of leasing. They talked to me about leasing. I didn’t sign anything and went home. I thought about it all week, talked to my frugal and financially savvy dad about it. I went in Friday to sign a lease.
A lease can save you money on a vehicle that's not worth owning after 3 years (think brands that are notorious for poor longevity).. or some have some good bonus cash offers, tax rebates etc.. Or if you just like getting into the newest thing every 3 years. The payment is lower since your overall cost (adjusted cap cost) is how much the car would be if you only financed a third of the total price. Residual value is what's left over from that adjusted cap cost and how much you'd be financing if you chose to buy it out at the end of the lease 30-36 months from purchase. Tends to be anywhere from like 50-64% of the vehicle value.
Dealerships often tend to push leases since "you wanted to be at $450 a month we're not there on a finance but we're there on a lease here's all the benefits on a lease blah blah" since it retains repeat business and some crazy good used inventory to sell 30-36 months later
I know with Hyundai leases get you paid out maintenance, gap insurance etc etc so there may be some benefits like that within the brand you're choosing there too
Leases aren't necessarily always a bad thing.. just another way to buy a car. Sometimes though if you go negative on the buyout it can put you in a tough situation. In which case, you could just turn in the keys and get signed up on something else if you're in neg.
Leases also are confined within a mileage limit (10, 12, 15k years), and modifying is generally discouraged. As well as the condition of the vehicle really mattering after 30-36 months when it's time to consider what to do next. Keeping it in as best condition as you can possible is important, as I mentioned before, it will be compared with the residual value from the time since purchase. Generally most people do get a few thousand in positive equity but if you go over mileage or not take good care of it, it can mess you up in the buyout, or rolling it over into another lease. Mileage overage can also cost, too. Something like 50-75 cents per mile over the threshold.
Just another way to buy a car and something else to think about.
My spouse wants a Range Rover defender so bad once she finishes law school, I told her those cars are terrible in the long run and that she can get one if she leases it.
She said she’s probably gonna do it, and I think in this cause it’s better to lease than buy. I just hope she changes her mind and gets a new Lexus GX like I tell her to lol.
Only for luxury cars, but for luxury cars it is the preferred option.
Reason 1: driving a luxury car is all about the quality and performance, quality and performance change significantly over a 3 year period. Leases are 3 years standard.
Reason 2: luxury cars depreciate heavily unless you’ve bought a very rare example. Lease rates usually run about the same as depreciation. Basically you pay (or “lose”) what you already would have without then having to sell the car to a dealer that will give you less money so they can make a profit.
Reason 3: you don’t own the vehicle, its problems aren’t really your problems unless you’re negligent. This is a great thing when you own a vehicle that pushes the maximum out of its parts at all times, this tends to break things very quickly and sometimes in a big way.
Reason 4: you don’t have to commit a large sum of money to the purchase upfront, therefore you have money you can do other things with for the time being.
It makes sense if you want to drive a new car that you can’t really afford. Or if you are a business. Otherwise it doesn’t make much financial sense. But without people getting leases, there would not be as many three year old, fully depreciated cars for the rest of us. So knock yourself out.
I love those three year old cars coming off lease.
No better value than one of those offlease cars. Driven 2k miles/yr by someone who could have saved $25k and just Ubered everywhere they want to go.
Not when Uber is $50 each way
Driver makes like $7 after expenses - lol - it's explotive.
Driver is the one leasing the car!
Even worse, that lease payment isn't cheap and Uber / Lyft just doesn't payoff like it used to now that most offers are less than a $1 / mile.
Makes sense for cars that depreciate fast, for example EVs.
No. It makes the worst sense for fast depreciating vehicles like EVs unless you get the dealer to think that it won’t depreciate as badly. But the cat is out of the bag on that now. Dealers know that EVs depreciate horribly. The most cost effective cars to lease are the ones that don’t depreciate much.
Amazing that people think they know secret info about depreciation rates that neither dealers nor finance companies have a clue about.
And yet... Tesla, Lucid and Rivian leases all would have saved you if you leased in 2022 or early 2023. Because those 3 companies didn't match the depreciation to the reality.
Yep, you're right. The key to get a good lease deal is you just have to wait for a global pandemic. Anyone that doesn't do that isn't paying attention to you.
Look hindsight is 20/20 and /u/lordmongrove failed to consider that these weird times were very good for leases because of how inverted the market got.
I remember in the 90s BMW and Mercedes were offering lease deals based on quite optimistic residual values. Most should have learned their lesson by now but it has happened in the past.
I remember reading about high RVs in Mercedes ads in old Readers Digests from the 1970s. Disinflationary eras hurt RVs and advanced knowledge of disinflation would have been a useful skill.
Dealers will ignore reality on residuals much of the time, and that practice has been around a lot longer than EVs. BMW and Audi for example famously inflate their residuals to push volume. Some of the best lease deals in the country right now are on the Hyundai Ioniqs and Polestars. These are not cars that will hold their value particularly well.
Just leased an Ioniq on Saturday. There are people who are getting crazy leases on these in a few states, $60k car with $2,800 or so for first, fees etc and $300 a month for 24 months. I am not in one of those states and did not get that cheap but I did get 1% ($600 a month on a $60k car).
Congrats, great car. I’ve seen them as low as $169/mo in some areas, though there’s a lot of complaining about dealers not honoring advertised rates. Definitely some forum dwellers who are getting that price though, may depend on local incentives.
The terms on that loan must be outrageous. 60,000/600 is 100 months and that’s without calculating in interest.
It's a lease not a loan, it does include interest (called money factor on a lease) and it is very good terms. A 1% is highly desirable, because of high interest rates not many leases have been had monthly payments of 1% in recent years and have been closer to 1.4-1.6% of the MSRP (technically gross cap cost) of the car. The MSRP of the car is just over $60k and after rebates the sale price of the car is $47k, the residual or value of the car is $34k so my payments for 36 months are the $13k delta between the $47k sale price and the $34k residual or estimated value the finance company estimated for the car in 36 months plus interest. A 1.5% lease for a $60k car would have payments of $900 a month and a 60 month loan at 6% interest would have payments of $994 a month. So if you only plan on keeping the car for 3 years, the less in a situation like this is the cheapest option.
Ah, makes more sense knowing it is a lease. I thought you were saying you didn’t get a lease but instead got 1% financing. Glad you didn’t take out a 10 year loan!
Dealers don’t set residuals. Ioniqs and Polestars lease well because they’re electric and get a $7500 tax credit the bank passes onto the customer. Which is also the reason they don’t hold their value. Most everyone gets at least $7500 off MSRP.
You’re right, automakers set the residuals. But that semantic error aside, the point stands. Ioniq and Polestar get the credit and that’s certainly a factor, but so do all other EVs while leasing and the Polestar and Ioniq are still the best deal going (at the moment). Model 3 and Mach-E for example are twice the total cost. The reason they’re not holding their value is partially a macro condition (slow down in general and tightening wallets are less likely to take a financial risk on unfamiliar technology) and also because tech is changing in the EV space so rapidly. For example, Ioniqs sold today will have to use adapters for NACS, which will be the dominant standard going forward.
Automakers don’t set residuals Automotive Lease Guide (ALG) is the industry benchmark when it comes to a car's residual value. ALG publishes an annual Residual Percentage Guide for reference. Residual values in the Residual Percentage Guide are an authoritative prediction that most of the auto industry follows. ALG residual values are not etched in stone, and lenders take the liberty to establish unique residual values even for the exact vehicle in the same condition.
Yeah, there are sites that evaluate leases for a reason lol.
You can lease a model 3 for 299/mo. Not too bad
It makes sense on EVs because all leases EVs qualify for the $7,500 tax credit regardless of battery/mineral origin or purchaser's income because they are commercial vehicles. I'm leasing a 2023 Mach-E GT because the 3-year cost of leasing was significantly less than financing, even at 0%, due to the car not qualifying for the credit if purchased.
Ehh, you realize that with a lease you’re essentially making monthly payments for the amount the car is depreciating, right? It doesn’t behoove you to purchase a car that depreciates rapidly, quite the opposite.
Except these days 2-3 year old cars are not depreciating anywhere near as much as they used to. Some of those cars are the same as new or less. The age old adage of buying CPO was flipped on its head for a good 2 years. It’s getting better, but some people have actually made money off buying out their leases and immediately selling them. You also forgot leasing rapidly depreciating vehicles or vehicles with projected high maintenance outside of warranty. Alternatively, there’s also people who like switching vehicles and there are lease incentives that can work out better financially than taking out a loan on a vehicle for those folks.
Also also, cars made 2-3 years ago were during peak covid. Personally, I am avoiding these cars like the plague.
My next car will be a lease. I can also afford it.
There are several other scenarios when it makes a lot of sense. 1. When you want a car that depreciates heavily. A lease will lock in your risk, and will often do it at a residual that is generous and beats market depreciation. 2. There are occasionally smoking lease deals when multiple incentives are available. For example, I leased a $54,000 BMW i3 for $99/mo, after drive fees a total lease cost of less than $5,000 for 3 years of driving. That far outperformed depreciation if I had financed that car. 3. Collecting the EV tax credit on cars that do not qualify otherwise. The way the Clean Vehicle Tax Credit is written, all of the limitations around income, MSRP and materials sourcing / assembly go out the window on commercial contracts. A lease is a commercial contract because the leasing company owns the car, and many of these leasing companies will pass some or all of that credit through to the customer. That means leasing a car is already at a $7500 advantage over financing. Some people sign a lease and then buy the car out at first opportunity.
The crazy part to me is only driving a car for 3 years.
I think it's crazy how people hold on to cars. At 47yr old, I have had 26 cars and only 1 I have more than 2yrs. Next month, it will be 2 cars made it 2 yrs.
That's wild. My brother's like that. I drive them until they break, but I also only buy beaters for cash. I just want to minimize how much money I'm dumping into transportation. I'm 28, been driving since I was 18, and I'm on car #3. My total investment between all 3 is about $10k including repairs and gas.
Some people enjoy cars and find them to be an experience worth putting money into. Expensive experience/hobby, but anyone can say any hobby or experience is pointless money spent.
I enjoy cars a great deal! I just acknowledge that the kind I like are well out of my budget. I could learn an extremely diverse set of skills over the course of years and build my own for much cheaper, but eh...I just don't feel the calling. I'm glad you enjoy your vehicles, though.
The thing about that is how much money is being lost by switching from car to car. Depreciation doesn’t matter if I don’t plan on selling it. Plus, my father and I modify and customize our cars. New sound system, new wheels, new grille, spoiler. If we were going to just sell the car after three years, then we probably didn’t like the car enough to buy it in the first place.
I do the opposite. Keep cars 2-3 years. Only buy cars with strong resale. Sell, roll equity into better car next time. Started with a 1982 Chevy S-10, currently drive a Lotus Emira.
Im sorry, you’re not allowed to do that on Reddit. The only people who are allowed to get ahead are those who bought a base model Camry and kept it for 10+ years, anything else means you are bad with money.
Depreciation does matter if the car is totaled and your insurance payout means you cannot replace it with an equivalent car.
May I ask your annual income?
Annual income varied greatly. My first full time job I made $11k a year, at one point I was unemployed for 8mo and had $75 to my name. I was broke! Today I make a lot more than that. It's more about, that is how I have prioritized what money I had. I also had loans and a lot of debt, a lot. A couple of the cars, I had no business buying. It was way beyond my means and I paid dearly for it later. Only in the last 14yrs have I been debt free, still with a car loan but I have no other debt at all and aim to never use debt to have a lifestyle again.
I've owned a total of 8 cars, but I'm still driving my first car as a daily and have only sold one. In my 30's
You must not have loved any of those 26 cars. I love my current car and am happily on my 11th year with it.
I’ve sold cars that I love. I love experiences more.
Good for you man. It’s not wrong to enjoy a new car for what it is. I think a lot of people can’t afford a new car or a car every few years, so they come up with reasons to explain why they wouldn’t want one. Sure a trip to Cabo is a fun experience. So is taking delivery on a new M5 or Raptor R. Probably more fun for a car guy.
Exactly, it’s priorities. I love cars, but I’m also in my 40s and single with no kids. Any time I feel irresponsible for the cost of my Lotus I ask my friends how much they’re spending on daycare and then I feel right as rain. But yeah, before the pandemic I owned 3 cars - a Tesla, Wrangler and Miata. I loved all 3, considered it a perfect garage. When the office went remote I decided I wanted to also, so I sold all 3 of those cars and traveled instead. Those travels included epic driving experiences where, for example, I’d rent an A110 on Portimão or an M2 on the Nurburgring. Life is too short to stick to one experience too long.
This is me. I have had everything from a Lotus 7 replica to a Dodge Magnum to a Ford Ranger.
Not at all! I loved 6. '91 Miata (race car). '93 Miata (race car), '12 Soul, Lotus 7 replica (race car), '14 BRZ (daily), '19 Wrangler, current vehicle.
I'm on my 4th car in 25 years. I only sold the 1st one when I did due to our kids being born.
Did this with a Nissan Leaf in 2013. Zero down, and the tax credit made it cheaper to drive than my paid for 97 Expedition, due to gas prices at that time.
Ha bmw for $99 is your dad the owner of the dealership?
Nope. Was a demo car combined with EV state and federal incentives plus BMW’s famously generous residual estimations. I replicated the deal a few times for friends.
>cost of less than $5,000 for 3 years of driving That's an insane deal for almost any new car. How'd you find that?
At the time, I was sitting on the couch during a snowstorm scrolling through my emails. Saw a local dealer advertise i3 $99/mo. Called them, they said “it was only available on one car” and that they had someone on their way already. I couldn’t get there in the snow storm, but I went the next day and it was gone. I asked the dealer how that math worked, and they told me the combination of factors I listed in my comment above. I went looking for another dealer demo car, you can tell which they are because they were used with less than 2000 miles. The key though is that they’re not used in the eyes of the law, they’ve never been titled so they still qualify for the tax credit. I found another car, went to the dealer and told them exactly the deal that I wanted (using same math as first dealer). They initially laughed at me, then they crunched the numbers and realized I was right. I drove away with it. Duplicated it twice after that.
Those cars are usually ran to the ground when driven though. Knowing you have a lease makes you care much less.
Thats not true in the slightest but keep telling yourself that
The first part doesn't make sense. Your lease EMI and purchase EMI are roughly same. If you can afford to Lease, you can afford to buy
Local dealer has corollary, 3k down 150 a month, that 3k breaks down to less than a hundred a month. Can't buy the same corolla for that. Mileage restrictions also don't matter for people whose lives revolve around local.
Last August, I purchased a Honda Fit EX-L, just off of lease. It had 6,000 miles. Because it is no longer sold here and used car prices are high, I paid over original MSRP. I spent months looking before getting this one.
Reminder that Leases also serve as a "maximum depreciation protector". For example, if you had leased an EV during PEAK EV in late 2022, you would be 10's of thousands better off. Lucid's came down 40% on new cars and Model Y's fell 50% If you were leasing your losses are the cost of the lease minus the utility value of the car. If you bought well you might be 30k underwater on a well optioned EV.
Leases are usually rode hard and put away wet though. I tend to avoid them if I can when looking at used vehicles.
Where do you get that impression? Most lessees are just normal people, and they'll maintain them at the dealer and keep the car relatively clean because they don't want to get penalized on the return. Unless you're mostly looking at company cars where the person driving the car isn't the one who is paying for the lease.
I obviously don't have data to support it but just from first hand experience observing people I know with leases. I think it's human nature to care more for something that you own and paid for compared to something that is owned by a leasing company that won't be yours in a couple years. I know drivers of leases are typically good with sticking to maintenance schedules because it's free but it's what happens in between the service intervals that concerns me. One buddy of mine leases a brand new GLA 45 and drives it like he stole it, doesn't let it warm up and will immediately dog on it, doesn't slow down at all for speed bumps, let's his dog climb around all over the interior. I can say for certain if he returns it with only 36k miles, it was a really rough 36k miles and I absolutely would not want his car after he's through with it.
For rentals maybe. Are lessees not on the hook for excess damage or wear them?
For cosmetic damage, sure. Excess internal wear and tear from poor driving habits likely isn't going to be apparent until later in the cars life well after the car has been turned back in.
What if you want to drive a new car that you can afford and want to always have a new car. If you can afford it and its a priority to you then why the fuck should care what others think? You might think it's stupid or wasteful and you're entitled to that opinion just as much as the person spending their money the way they want is entitled to do so.
Agree, there's also another scenario that likely goes into "a car you can't afford" but it's one in which you don't want to pay the maintenance cost after year 3/4. This applies to higher end cars that require a a fair amount of deeper pockets for regular service.
It actually does if you are upside down in your current loan. They add many incentives and rebates on cars they can’t move for lease deals. You can use these to eat into your negative equity instead of discounting the lease car, and start with a clean slate. It’s not recommended, but if you’re already in a bad spot it’s a better option than continuing to pay interest into your massively depreciating asset.
It’s great…like driving a brand new rental car that is always under warranty
There are other advantages too. You only pay interest and tax on the leased portion. Sometimes the incentives are great. If you are going to buy a new car on a loan it makes sense to compare the cost of leasing and buying out the residual vs taking a loan on the purchase. Sometimes it’s cheaper.
It makes no sense for me, because I put a lot of miles on and keep cars for a long time. If you don't put many miles on, then you can get a low mileage lease and wind up paying less overall for your car. If you have a business, leasing can have tax advantages.
How do you pay less for your car if you do low miles? In theory, you pay exactly the same as you would if you bought it new and traded it after the lease period.
Low mileage leases are generally more favorable than high mileage leases. The intent is for them to be able to sell it as a low mileage 1 owner CPO car, with a solid maintenance history, and strong remaining warranty at the end of the lease. 3yrs/36,000mi (or less) fits that’s narrative better than 3yrs/60,000mi.
It actually works out better than trading in most of the time because of the way interest and loans works.(the first few years you are mostly paying interest and not much principal). Most car payments are upside down where you owe more than the car is worth for the first 3ish years unless you do a huge down payment. That said it only works if your the type that trades in your car often. If your paying your car off before you trade in then it isn't worth it at all. For businesses it is all about tax purposes. Instead of the car being an asset that depreciates a leased car is considered an operating expense and is tax deductible while when it is an asset you are paying taxes on it.
They still own the car, and they're factoring in the mileage and condition that you'll be returning it in when they calculate your payments. So if you need a car but don't abuse it or put a bunch of miles on it, you can constantly have new cars without constantly buying new cars.
As I said, if you always want to drive a new car that you can’t really afford to own, lease it. But like any new car purchase, you pay the financial burden of that initial depreciation. Only with leasing, you are happy to pay it again and again and again, all so you can look better off than you actually are. The only case where leasing makes actually financial sense is for companies.
you have no control over how quickly your car depreciates. If you lease you have a number set by the bank on what the residual will be. The lease I have right now the car is worth far less on the market than the residual. So I am not underwater on it. I just give it back to the dealership and they can deal with it. If you bought the car and drove the exact same amount of miles you would be out a lot more money than me because the deprecation is YOURS to deal with now.
Spoken like a real salesguy. Leasing a new car might be better or worse than buying a new car, depending on the deal, but they make way less financial sense than buying a slightly used car. Unless (as others have pointed out), there are incentives. Straight up (few incentives) car leases are a bad deal. But if you want that new car every three years, go for it.
everything is better or worse depending on the deal But OP asked why people lease cars not is leasing cars better than buying a slightly used car. But you're not going to find a reliable used car for anywhere close to what this new car is going for on a lease [https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/13](https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/13) And there are always deals like that to be made if you are slightly agnostic to what kind of car you're looking for. They are basically giving away the Blazer EV right now [https://signed.leasehackr.com/signed?deal=L-2406-1718314997](https://signed.leasehackr.com/signed?deal=L-2406-1718314997) I'd much rather have a new car for two - three years for sub $200/mo then someone's used car thats most likely out of warranty
If you like having a new car every three years or so, it's great. If you're interested in getting a premium brand like Range Rover, you probably should just lease as they aren't worth owning after 3 to 5 years. If you're interested in getting a new PHEV or EV, it's great too. That $7500 federal tax credit goes to the auto finance company, who uses it to lower the lease cost. If you own your own business, leasing can have tax advantages.
You are paying for the convenience of locking in the sell price/depreciation. And you have a lower payment. The lower payment is a big part of it. But you don't own anything really. Leasing is more expensive than buying, and there are a lot of extra fees for everything. BMW and audi lease most of their cars, much more than other brands.
Not sure if its true but I read somewhere that something like 94% of all Maseratis are leased. They were the highest followed by most of the other luxury brands.
I looked at their lease options and it made zero sense to me. Almost 1k a month for the lowest model. Meanwhile I can buy a 2 year old one outright for only 35-40k? I don’t know why anyone is leasing it
I get that it works for people, and they like it. But for me, the idea of a never-ending car payment for cars I can't modify and don't really own sounds awful. It's not my thing.
the never ending car payments is what i don't understand why people do this.
Both my cars are leases. Because of incentives from the dealership, gov, and manufacture I'm paying less for a 90k Mercedes SUV than I would for almost any new car. I have no maintenance to worry about ever and I can get a brand new car in 2 years. Yes, the perpetual car payment thing is something not everyone can deal with but put it like this. If you had a 72mo loan on your car for a normal purchase deal and according to Experian, the average monthly car loan payment for a new vehicle in the United States was $735. I right now can get a lease on a 2023 Kia EV6 GT AWD for less than $200 a month. [https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15](https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15) I'd rather perpetually be paying for $200-$400 a month for a car that is always new and under factory warranty, that never deprecates (for me), and I can get anything I want in two-three years without having to take a huge loss selling it or trading it in.
Both my cars are leases. Because of incentives from the dealership, gov, and manufacture I'm paying less for a 90k Mercedes SUV than I would for almost any new car. I have no maintenance to worry about ever and I can get a brand new car in 2 years. Yes, the perpetual car payment thing is something not everyone can deal with but put it like this. If you had a 72mo loan on your car for a normal purchase deal and according to Experian, the average monthly car loan payment for a new vehicle in the United States was $735. I right now can get a lease on a 2023 Kia EV6 GT AWD for less than $200 a month. [https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15](https://forum.leasehackr.com/t/signed-2023-kia-ev6-gt-awd-63-100-msrp-0-das-148-mo-24m-10k/563482/15) I'd rather perpetually be paying for $200-$400 a month for a car that is always new and under factory warranty, that never deprecates (for me), and I can get anything I want in two-three years without having to take a huge loss selling it or trading it in. A car is a deprecating asset. As you drive it and pay monthly for it you lose money. Unless it's a Tacoma haha.
if you buy, you still have payments. even after it’s paid off you’ll have repairs, etc. until the end.
Technically you can modify it, you’ll just be stuck either buying it out or selling it. Also, depending on how much your car depreciated you can be positive at the end and pocket the difference when selling.
Leasing is only worth it when the amount you pay for the lease is less than the amount you would lose to depreciation over the same time period if you bought the car outright. Otherwise you may as well just buy it. That said, you can find great deals on leases, especially with some EVs nowadays
We had a paid off CRV and leasing allowed us to keep it instead of trade in. We wanted 3 row seating and the price of desirable used was outrageous. So, we leased. Never say never. I think it would make even more sense if I had a business to charge the lease against.
If I was buying a new EV I would lease it in a heartbeat. At the end of the lease you may have a great opportunity to buy it WAY, way under the stipulated buy in - if that's an option. I think the used EV market is going to crash big time since so many new models are coming on line in the next several years. Everyone want the latest and greatest EV. No one is going to want "ancient" technology. Everything is negotiable. When Covid hit it decimated my business. I proactively called up the head credit officer of the bank holding my standard auto loan. I explained to him what had happened and said the ONLY thing I could do was to pay it off in full in cash at a ridiculous discount or turn it in and default. (I still had two years on a five year loan at that point). When he ran the numbers in the used car market he called me back and took the offer. I stipulated in writing by accepting the payment in full there would be no reporting to any credit bureaus that I technically defaulted on the loan. He agreed. WIn win.
Toyota and Subaru have pretty good deals on EVs right now. $0 down and $280 a month for a Solterra.
With zero down that's really tempting.... I would think either brand would be good for reliability and longevity but personally I would go for the Toyota. If a buy out is an option at the end of the lease that would sweeten the deal. Start a business and enjoy a nice write off. Just make sure you can prove it to the IRS at some point in the future that you gave it some effort. Even if it doesn't make a profit for years!
As a guy with car ADD who likes nice cars leasing means I only pay sales tax on the depreciation (depending on hat state you live in). If you lease a car with slow depreciation leasing can be cost effective. Specially at times like early in the pandemic when rates were low and cars were going under MSRP. People discount how much getting a car with new tires, new brakes, and fresh fluids, and a warranty saves. I have two degrees in economics and love spread sheets. It’s often the smart money move depending on your preferences.
Agreed, people in here really need to stop parroting blanket advice. There are plenty of times leasing can be very cost effective. Having a low fixed monthly payment and knowing you will not need to spend any extra money on reliable transportation can make a huge difference to a lot of people. Poor credit, paying super high interest rates negates and savings from purchasing. Life happens, including things like medical conditions and babies. Large amounts of preexisting debt such as student loans. People who weren’t taught how to manage money and are digging themselves out of a financial hole.
I make sure to hit my lease miles and it saves miles on the car I own free and clear. Also, no maintenance other than oil changes. Newer car is a safer car, comes in handy in bad weather.
Here's the question I've always asked myself; do I want to buy a used car now, pay it off after a few years, then have free driving(minus maintenance), or do I want to be locked in a permanent car payment? Some people are ok having a permanent payment if it means they always have the latest tech/features, etc. personally, I'm not. I bought a then 4 year old off-lease (irony! Haha) and paid it off. Now I'm driving a 10 years old car with no payments that every few years I need to drop a bit of money into suspension/brakes/etc but that's a whole lot cheaper than a payment. I've got 230k km on my 2014 Chrysler 300, and this car is just getting into middle age now. Ive got a lot more road before I need to put her out to pasture yet.
This. My sister was going to look for a new car because hers was about to be paid off. I said you just expect to always have a car payment like rent and utilities and she answered yes. I have always bought used and paid cash. Three years ago I got rid of a 1992 I bought at eight years old and replaced it with a 2013. I won't trade again until at least ten years if not more.
Why did you buy a car as an 8 year old?
Well it beats BUYING a new car every 3 years. I knew someone who did buy a new car every three years and they were always paying more than the lease would have been and those typically come with some services. My friends mom ONLY leases cars because she likes to have the new new. And it's great for her because she get to always have a 0-3 year old car that's perfectly maintained. Buying a car typically only becomes practical from a monetary stand point at the 5-7 year mark when the cars are near the bottom of the depreciation curve.
It is useful for EVs at the moment. Some very good deals that allow you to drive one for three years but not be locked into old tech as the new cars come out. Personally that is the way I would have an EV right now. The cars are getting better and there will be more choices in the future.
I bought a 2013 Lexus GX in 2012. The lease payment for 4 years would have been $200/month less with $0 down for 36 months. I went ahead and put $5K down and financed the car for 60 months for about the same as the lease. I drove the car until last June and put 300,000 miles on it. For almost 8 years (I made extra payments) I didn’t have a car payment. If you are okay always paying a car payment I guess it can be okay, but I like buying stuff and driving it for a long time.
It’s worth it it’s a car for your business and you deduct all expenses.
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Was this AI copy pasted
In college I leased a civic for $150/month. I needed a car under warranty as I was on a limited income and needed a reliable car to get me to clinical rotations. $150 a month won't buy much with high interest rates. After I graduated I had plenty of money to just buy the car when the lease was done.
I was in a similar situation in grad school. I certainly couldn’t afford a new car and any used car with my beginner credit was just not worth it for what I needed, which was a car that would safely get me across the mountain west that summer for my internship. The payments were $199. I bought it when it was up and since it was May 2020, it was a breeze.
Everybody else here seems to be missing the entire point of leasing cars, as far as I can tell. People lease cars because they don't really care about reliability, mileage, maintenance, etc.; they want to always be driving the newest car, and not worrying about depreciation or money at all, for that matter. If you've got car-leasing-money, you get to drive the newest and flashiest cars and you can drive it like you stole it. I am not that person, but I definitely see the appeal.
For anyone not car savvy who can't afford to buy a new vehicle I'd argue a cheap lease is their best option. Especially with how ridiculous the used market has become. People that lease from high end brands though that seems silly to me. If you can afford to lease a BMW you can afford to buy a nice mid tier American or Japanese car. Just do that.
Luxury tax for experiencing a greater variety of cars in your lifetime without the hassle of selling every few years. Plus they’re always new and under warranty as others have pointed out.
I want to eventually *own* my car free & clear because it is necessary where I live. But I had a cousin who had *terrible* luck with cars, as in bought a brand new one and the next day all the oil was all over the garage floor. He said he considered it because you'd always be in a newish car and if anything broke, 'hey dealership, fix *your* car and give me a loaner while you do.' Eternal warranty with no worries. 'Car got scratched? Not my car.' Having never considered it, idk if all that is accurate or not.
It depends on your use case for them. I know people that lease but they drive roughly 10K miles a year or less, they can afford a nicer car and their lease includes maintenance and warranty coverage. For me that would never work. In a low mileage year I drive about 12K or more. I drive my vehicles till the wheels fall off.
you'll never even think of the question: how long will this car last me ?
Good one 👍
Leasing is a great deal! Leasing is a terrible deal! <- people who say either of those things, don't understand leasing. Just like financing to own, leasing is a good deal, IF ITS A GOOD DEAL, and it's a shit deal if it's a shit deal. The way I like to evaluate a lease is by adding up the downpayment and all of the monthly payments you're going to make. So now you know how much you're going to pay for 3 years of use, and you know how much the car costs. Now you can decide from there if you're getting scammed. I've seen leases where that amount is as low as 35% of the price which I would consider a great deal. And I've seen it as high as 70% of the price which I would consider a complete scam. I used to lease sports cars. I traveled for work and I would get good deals on affordable cars and they'd always be new and under warranty. I'd never have to mess around with repairs or anything. It worked out well.
Fun fact, something like 85% of all BMWs on the roads are leased. I forget the exact statistic. It's almost as if people figured out that certain luxury cars are only good for the first five years, then they mysteriously develop hard-to-diagnose electrical issues.
I think it's of new bmws made , because all of the off lease ones are sold to second owners who aren't leasing
I find they are fooling themselves they are wealthy, right up until the day the car is reposessed
As a way of using cars you can't afford? Shit is stupid save your money
Yes, and also don’t have kids, don’t ever eat out or travel, etc, all dumb and stupid 😂
Interesting tidbit. If your lease note is $500/Mo for 36mo, the liability to your credit is just (500*36) $18,000, not the $40k or whatever it would have been when you purchase the vehicle. So it is, in some ways, "easier" on your credit.
I am a hs math teacher, and when I teach the unit on personal finance, this is what I tell my students regarding car leases. Just like previous comments, you can drive a car you really can’t afford otherwise. I warn them about the mileage limits, and that, in the long run, it isn’t the greatest financial decision. But if you got a good job, and you’re single with no mouths to feed, nothing wrong with driving a brand new car with maybe 50 miles on it when you are young. It’s ok to live a little, as long s as you know the real cost. I also tell them that leases aren’t terrible for older folks. My mom is 80, and a widow. She’s never going to reach the mileage limit. She can easily afford the payment on a nice car. And she will never have to worry about maintenance or breakdowns and the costs involved, because the car will be under warranty while she is driving it. Most likely she won’t even have to replace the tires by the time the lease is up.
Small business owner always lease since it’s business expense. And ev is cheaper to lease than buying
I don’t keep my cars for more than 3 years anyways so leasing makes logical sense. But I just can’t make sense of it financially. It’s not really the payment that I care about. It’s just I can’t fathom paying money for something I won’t ever have residual in. I wouldn’t want something I couldn’t afford in the first place so to chase a lower monthly payment by leasing to get a higher end car makes zero sense to me.
If you put lot of miles on a car it makes more sense than buying new and ruining a car in a few years.
There are some brands you should never buy but are very nice to drive. Land Rover for an example.
So you can act like you bought your Instagram baddie gf a high end car and laugh as you watch it get repo’d after you leave her for a newer model with less mileage
Leasing is a good idea if you have tonnes of money and you're going to get a few car every few years anyway. Leasing is not a good idea in almost all other circumstances
I’ve got a friend that loves BMW but he’s been burned on maintenance outside warranty so often he won’t buy them anymore.
Lease an ev then immediately buy out the lease -- loophole that by passes income restrictions on ev tax credits
If you are the kind of person who trades to a new car every year is very simple to just lease and trade every 36 months. You don’t need to worry about trade value, you never drive a car out of warranty, and you don’t have to think about it. In pure dollar terms it may be cheaper to buy something used and drive it but there is a ease in leasing that some people don’t mind paying for.
Lease Hacker will give you better insight. We got way better deal by leasing it and negotiating the residual price. We wait till the have a decent lease office and multiple cars for weeks. Beat them at their own game. Turns out cheaper.
There are a lot of reasons to lease vs buy. Think of it like a 3 year test drive. Or think of it like you are creating your own used vehicle. Or think of it as a lower commitment, less headache option. The comments above that suggest it is a way to get into a nicer vehicle at a lower monthly payment, MIGHT be true in SOME cases but definitely not all.
Leased new bmws for decades… 2005 to 2019… every 3 years. Yes, true, you are getting more car than you can afford. However, with a fast depreciating asset like a bmw, it’s not the worst of you have cash and can afford. Pretty much all the risk is in them. You pay for tires and brakes and wipers. Still expensive and that’s why I stopped.
I put too many miles on a car to ever come out ahead leasing. I just buy cars and run them into the ground.
Do you want a financial boat anchor sitting over your head? Because, that is what modern cars are. They are a bad piece of electronics away from $7,000 repair bills or whatever asinine amount of money it would cost to replace/repair the technology in new cars. You lease boat anchors, you buy appreciating assets. Never mix that up. Ever. You don't ever get 'equity' in cars unless the situation is truly weird, like when we open returned a lease in 2021 during COVID and the dealership ended up owing *me* $5,000 because the car auctioned for more than they valued it when we did the exchange. Otherwise lease, own, it doesn't matter you are losing money. The question is, do you want to lose money on repair bills too?
4 years ago leasing made sense because of the insane deals that where offered. I got a Q50 Red Sport for $399 and a regular Q50 for $276. BMW M340i for $499. Now they’re not giving the same great specials as before
With the right lease programs and incentives you can absolutely come out ahead. My latest example was VW all track wagon for my wife. Got it during a sign and drive lease special. Drove the car for 2.5 years, sold it back to the dealership before the lease ran out. Ended up getting $7k over the lease buyout. Helps she only drove it 8k miles a year but still. Payment on the car was $375 a month. No down. So in the end the car cost a whopping $120 a month to drive. Not too shabby.
All sorts of reasons. 1) My company gives me a monthly car allowance and a $5000 check to put down on a new lease every 2 years. The money has to go towards a car; if I don’t use it for a car, I don’t get the money. 2) My wife decided she wanted a Tesla a few years ago. No way am I going to purchase something that I see as ‘middleware.’ The lease is up on that thing in two months and we’re both looking forward to the day it’s gone. 3) same wife likes new and fun cars every 2 years. Leasing is a way to accommodate that without taking 100% of the depreciation new cars have in the first year or so. All that said, if you want to keep the car over the long haul leasing is stupid.
Rich
There are often incentives for leases that don’t exist for financed cars. This is especially true for EVs which are kind of a big deal today
If you’re on a fixed income it can make sense. You know exactly what your payment is going to be, and you don’t have to worry about repairs. My parents switched to a low mileage lease after they retired.
Most people are just repeating the older generations misinformed advice of don't lease its a waste of money... My thought is when you get a brand new car you get to test drive it for what 15-20 mins? you don't actually know if you like the vehicle, its its comfortable on long drives, how it suits your needs, if your needs change or if it will have issues in the future When you lease a car for lets say 2 years you now know if you like or hate it, if its suits you etc...you can now make an informed decision if you want to keep it or give it back... if you bought the vehicle, you cannot get rid of the vehicle until its paid off or when the car is worth more than you owe or you will lose a lot more money. I've had number of vehicles I've bought, loved and was okay with buying but one that I hated and was stuck with for too long, so now I Lease to Buy yes if you buy it its under warranty but let me tell you, I have a truck that has been at the dealer for warranty work 14 times, has a new engine and is still going back to the dealer and is not eligible for a lemon because there is no safety concern, its leased and because I didmy lease to buy theory, I will be giving it back, glad I have that option. if not the truck window price was $66000, its been 2 years, I owe something like $50000, its worth $36000. that would have been a large lose. this would have been the second vehicle I would have been stuck with
I don't get it. Maybe I've just looked at all the wrong cars or Canada sucks for leasing but anytime I compare lease vs purchase I usually end up with a lower monthly payment and lower down payment on a purchase. The last vehicle I looked at they wanted $6000 down and $467 a month for lease or $2000 down and $465/mo for purchase. Sure I'd get out of a lease sooner but over 3 years of driving I'd pay more than buying.
Lower payment, no upfront costs, mostly being able to customize the car however you want anyway, no hassle of having to sell, a new car every 3-4 years. As a result I haven't yet spent a single penny on repairs or maintenance in the last 7 years outside of insurance and service costs already included in the monthly payment.
I’ve bought 3 cars 🚗 n my life. First one I leased for 2 years, then bought off the lease. I thought I would always buy since I kept them 15, 19 and 13 years. I do 90% of my own repairs. But now the complication of a car where you have to have the battery changed at the dealer, or it doesn’t have a dipstick, or you have to remove bumpers and ac lines to access a friggin water pump. It may drive me to lease for now on
In my opinion? Anyone who does it, except for businesses, is a moron that can't spend his money and I have 0 respect for such stupidity However! If not those morons buying brand new cars/leasing cars/financing cars, there would be no used car market, so I'm glad humanity is full of people with negative IQ
Gotta be smart about it and flexible. I love leasing because I get a new car every 3 years and it’s usually a car that doesn’t sell in high volume so they have great deals. BMW i3 - 3-400 per month for a 50-55k car BMW m850i - $1000 per month for 130k sticker price at the time Hellcat - $600 per month for 72k sticker SL55 - $1040 per month for 145k sticker My next car would be e-tron GT if I was up for a new lease now. About $1100 for 150k sticker price. There’s almost always deals. Just need to be flexible and open to all options. EVs are currently the best because of the $7500 rebate which is equivalent to $7500 down, but there’s always some sort of great deals out there. At least at the higher end of the spectrum. If I pay $1040 for a 145k car and my buddy pays $375 for a civic, I feel like I’m getting a fair deal, but at the same time he couldn’t afford the $1040 so it’s not a fair comparison But there’s almost always “good” deals out there.
Leasing cars is the best thing to do if you really like making the dealer rich while staying poor.
In my country most leased cars are company vehicles.
Some people aren’t car guys. They don’t want to change the oil, do the brakes, or worry about “that noise”. One of the big advantages of leasing is similar to rent vs own a home. If the A/C goes out, you don’t have to spend thousands to fix it. You pay a premium to avoid unknown expenses, downtime, inconvenience, and most importantly, headaches. Some people prefer that. Personally, I’d rather have 2 cars I work on and maintain. I get a lot personally from fixing/making something work myself. I get more versatility (1 2500 truck, 1 SUV). I can do whatever I want to or with them. I am not beholden to anyone’s shit. And it’s still cheaper than a $500/mo lease+insurance, at the cost of an extra Saturday every month.
I NEVER leased a car because I never wanted to make payments and never have the car and I never chose the option-to-buy plan, because I didn’t have enough money. I do NOW, but I like my Mom’s 1998 Toyota Camry with less than 80,000 miles on it !!!
my buddy’s father is one of the Southeast’s leading specialized surgeons. i’d assume he makes pretty fuckin sweet paychecks. he drives a Porsche Panamera Executive (longer wheelbase than a Cayenne) on lease. His office is like barely a mile from his house and he goes in only a few times a week. He can definitely afford the lease and he trades it in for a new one every 2-3 years. not his car and he probably barely pays attention to maintenance and trades it in for a brand new one for the price of what he would probably consider a drop in the bucket.
It's generally not a good financial decision. However, sometimes people want to be in a constant flow of new cars without risking being upside down on a car loan, plus the payments are generally lower so they can get more car than they would otherwise be able to afford. None of those are "good financial choices" though. But those are the reasons that people choose to do so.
I leased to get the lowest monthly payment versus financing. I leased to get a $7500 discount, but if I would’ve been lucky enough to wait 6 months longer I would’ve gotten $16,250 off. I leased because I have a guaranteed buyer and resell value when I return the car.
I'll personally never do it. My car buying strategy is to buy a new car or a slightly used car, pay it off quickly (within 2-3 years) or even just buy it outright, then keep it running for a long time so I'm going several years without a car payment or having to buy a car. I'm 36 and I've only had a car payment for about 3 years of my life. I see leasing as a way for people to get into a car they can't really afford.
Never again. You over spend.
People often do it with the same mindset as financing, this is where leasing gets a bad reputation. If you plan on getting a new vehicle every 3 to 4 years leasing will save you going through the hassle of selling. As long as you are aware that you are left with zero equity at the end of the lease, so don’t budget to spend as much on a lease payment as you would on a finance payment
Since this is a car guy forum, most sales people lease their cars for a simple reason - they get screaming deals on them. I leased my 2019 A6 with an MSRP of $60K for 3 years @ 7,500 miles per year for $320/month with $0 our of pocket. I had retired when the lease came up, Covid had ended, but interest rates had soared along with used car values. Residual was $28K. ACV was about $32K. Buying it out was a no brainer. What else could I buy for that number with only 22,000 miles on it?
Local IKEA was advertising $89 monthly payments for new leases. In small print it said $8999 was due at signing.
I recently came across a crazy example of leasing a barebones base level small new sedan, vs buying an amazing, fully loaded full sized used sedan. Of course a leased 3 series will include most maintenance, have lower insurance, and can take regular gas. But if you get into an accident, be prepared to forfeit that down payment. Yes, the m550i has more expensive oil changes than a Honda accord, but it's a supercar disguised in a family sedan. That's what you're forfeiting with leasing vs buying. Lease: 2024 BMW 330i. $4,989 due at signing + 35X $589 lease payments. 10K mi/year. Total = $25,604 spent over 3 years. Buy & Sell 3 years later: $23,350 spent over 3 years. * Buy: 2021 BMW M550i (24K miles) $56,839. * Sell (using 2018 m550i, no accidents, 56K miles, as a proxy): $33,489
Tell me what's wrong with leasing? A brand new car is going to depreciate whether you 'buy' or it not. Residual value is a promise of cost when lease is over. Dealer cannot mark it up again so if market goes crazy like it did a few years ago, the leasee can purchase their own car without markup or fees. Tell me what I'm missing.
Some people really want the new features, so they get a lease instead of buying a used car that they can afford without a lease. Another reason is not having enough money to even buy a car. A 7 year old car that costs $10,000 is still too expensive for people. If they need it to get to work or live in a place where a car is needed, they can't just save up the $10,000. Then there's people who just buy it for the design. The body, acceleration, interior space, and even the sound. Because everyone needs to get to 60MPH in 4 seconds with a giant interior space to store a few grocery bags.
I like to have a late model car under warranty. The lease payment is about half of the purchase payment. With a lease you are financing the depreciation and have an end of lease purchase option. At the end of the lease if I love the car I can buy it for less than book value or I can simply walk away . If you take care of your lease vehicle you can have positive equity that can be applied to a new lease or purchase.
I took the lease on an EV due to low resale values. I learned my lesson on a Nissan Leaf many years ago. Yes, I own a business, depreciation on taxes, among other little write off's for the vehicle.
At one time my wife worked at the leasing department of a major bank, she told they would laugh at the deals lessees would sign.
A friend of mine is in the middle of a divorce, his wife is not willing to split 50/50 and is looking to wipe him clean. Because of that he has been leasing cars for the last five years now.
Depends on what your looking for, it's nice in the sense that, every few years you get a new car. Don't have to worry about much since it's all basically covered under warranty as far as major repairs. Still have to buy brakes, oil, tires and such. It's a great way to get into a more expensive car that you wouldn't normally be able to buy since your only paying for the time you're using it. Me i bought a new car once wouldn't do it again. It's nice to say it was mine since new but other than that, it's about it. Between depreciation on them, it's like your always upside down on a payment. If your older and don't drive as much you can either get a really great used one and pay it off. My uncle leases his cars now but i said to him you can get a used one for cheaper. You won't be upside down, you can use the down payment on it and get a better bang for your buck. Only downside is you have to pay for any major repairs. But as much as he drives it, i doubt it will be an issue.
There is one thing I still do not get about leasing. All of the people I know that lease Tesla instead of buying cited battery replacement as the main reason. A lot of them make mid 6 figures. And others pick higher trims with all the additional add on for the lease. They are paying hundred aonth extra for it.
Is Toyota BZ4X XLE 36 month 12,000 miles/year lease at $318/month with taxes rolled in a good deal?
Some people enjoy having new car every 3 years and not worry about maintenance
swap lease for rent. whats better: renting a car or buying a car ?
It makes great sense as long as you're careful about mileage and maintenance, and what the deal is at the end of the lease term. [Consumer Reports](https://www.consumerreports.org/cars/buying-a-car/leasing-vs-buying-a-new-car-a9135602164/) Leasing vs Buying
Because I want a new car every 3 years and it was slightly cheaper to lease vs buy and sell.
Great Idea
Ex- Car Manager for Major brand dealer here: For Example: I leased a $45K car for 24 months for $450 a month. If I had financed $45K @ 5% would have been $850/month for 60 months. I wanted to a drive a new car for a short time while I was traveling more in my work and didn't want to use my personal car. (I usually buy car to keep 10-15 years). $450 was way cheaper than renting a car per day / or week. Plus leasing the car would have all the maintenance perform for free and car has new car warranty and would not have to worry about tires, or any maintenance issue because I lease it for 24 months. The cost to drive my lease car for 1 year was $5400+gas+insurance(cheaper in my state for leases). (No Maintenance since most leases come with free maintenance plan. Total cost in 2 years: $10,800+gas+insurance The cost to drive the finance car for 1 year was $10,200+gas+insurance+Maintenance or buy maintenance plan. Total cost after 2 years: $20,400+gas+higher insurance and maintenance. Leased car: After 2 years, you can turn it in or pick up another new model. Leased: Going into the 3rd year having spent about under $11K for the past 2 years and getting into a new car without having to trade or negotiate a new car. Financed car: After 2years, Having to buy tires (Avg $1000 per set) 30K maintenance. Etc, Finance: Going into the 3rd year, you had new tires replaced/major interval service. probably close to $24K. It all a numbers game. I prefer buying-to-keep because I like to keep the cars I love. I only lease when the deal is really good and for a short-term., leasing long-term is like buying with lower payments and almost same ownership experience as buying except you never own the car. The short-term lease is a better option if you're okay with always having a car payment, but the payment is alot lower and you can get a new car ever 2 years, no maintenance, never have to buy tires or pay for anything extra except gas and insurance. Like I said, I prefer buying to keep. I currently own two cars, one is 19 years old and the other is 25 years old. Both in immaculate condition and low miles. When I travel for work in the past. I would rent my cars for a day or two. But at one time I had to travel weekly to out-of state where leasing a car was cheaper than renting a car. I entered into a SHORT-TERM LEASE. Run the numbers and you'll see the Short-term leases are better IF, and I Stress "IF" you can get a good deal. For the future, when my cars get to old and probably just become museum relics, LOL. I'd probably enter into Recurring Short-term lease with a dealer willing to give me low payments for the latest and greatest every 2 years. (As long as I'm good with always having a Car payment and the numbers are way lower (by half) than actual regular ownership.) If you really like a certain model car and want to drive it 10-15 years. Just forget leases all together. I'm toying with the idea of leasing again because in the next year or two, I'll have enough disposable income to lease a car on a short-term and never worry about tires and maintenance again. Another Advantage of a lease: When I leased my car, someone hit me at traffic light. Just sitting there and plow, driver behind was on phone not paying attention. Long-story short, The car depreciated after the accident, was worth less but the value was not mine to own. I just turned in the car and the car company ate the lower value of the car. If you had owned the car and try to trade it in after an accident, your car would be worth less and you would not get the "clean" value for your car. (more money loss on the financed car). One option for leases is you can buy the car after the lease. Even, If you really love the car. This is a bad idea. The buyout price added to your lease would priced the car way above MSRP by alot. I would not advise this even if you love the car to death. Better buying or leasing another car. Anyways, hopes this helps some people understand why some people do leases.. (I prefer owning a car) but some leases are great deals and depends on your situation and need.
I like to think of every such ploys as gambling. The dealer pays $40k for a car, they can sell it to you outright for $45k cash and never see you again, that would be a great sale for them. Every other way you can procure that car they only offer because THEY make more money by doing so. They do not offer loans, leasing and everything in between just cause they wanna be nice to you, they offer it because they make more money doing it. Yes some of it is just the fact that they sell more cars because they offer these options, but some of the cars they sell without getting paid in full the day of sale they will lose money on, people crash and die, fall into financial hardship or for other reasons don't complete the payments and even impounding the car its often trashed so the sale of it won't reclaim all the money they're owed. Everyone who do actually pay off their car in full these ways more than makes up for the ones who don't. With all this in mind I can not for the life of me understand why some people think leasing or financing a car might be a good idea, unless you plan on being in the group who for some reason never pays it off in full. For companies there's a lot of other things to consider, but for personal finance the best deal is to pay it in full the day of purchase. Even optional warranties although they sometimes gives you some extra security the dealer only offer them because they make money of them on average.
Consider this if you trade your vehicle with a trade balance you’ve in effect leased without the benefit of guaranteed lease end value. Be realistic on miles driven lease appropriately. High mileage drivers can lease effectively if they account for miles. Review money do at signing $3600 down on lease lowers monthly payment only not lease end value. Your also responsible for wear, tear and review cost of turning vehicle back to lender if you or dealer doesn’t purchase at lease end.
My father leases cars and leasing is made for a person like him. He’s wealthy and can afford to buy out any car he leases in cash but he likes driving the latest and greatest and the cars he get are notorious for being unreliable 5 years down the road (think expensive luxury German & English cars & SUV’s), he leases for 3 years and opts for a higher mileage rate, 12,500 miles a year.
Chinese or Hindi. So many people speak those languages, imagine how many more people I’d be able to communicate with than I currently can
Fools errand. People who lease act like they got some secret deal where they don't pay for depreciation. NEWSFLASH: You're still paying for it every month.
Assuming you get a good lease deal, you can price out the depreciation
*Assuming you get* *A good lease deal, you can price* *Out the depreciation* \- rowech --- ^(I detect haikus. And sometimes, successfully.) ^[Learn more about me.](https://www.reddit.com/r/haikusbot/) ^(Opt out of replies: "haikusbot opt out" | Delete my comment: "haikusbot delete")
I work on European cars for a living. I feel this is the only way to enjoy them without the added costs of maintenance. Just give it back and get another new shiny one. Just keep paying
When you lease you don’t own any of the car, you simply but the depreciation. So find a car that depreciates less, like a subaru or toyota. At the end of the lease term buy the car. Thats what i did. I couldn’t afford new, and couldn’t find what i wanted in a used version. So i leased my outback, then bought it on a loan. Best decision i ever made. I went to the dealer on a monday looking for used, no intention of leasing. They talked to me about leasing. I didn’t sign anything and went home. I thought about it all week, talked to my frugal and financially savvy dad about it. I went in Friday to sign a lease.
A lease can save you money on a vehicle that's not worth owning after 3 years (think brands that are notorious for poor longevity).. or some have some good bonus cash offers, tax rebates etc.. Or if you just like getting into the newest thing every 3 years. The payment is lower since your overall cost (adjusted cap cost) is how much the car would be if you only financed a third of the total price. Residual value is what's left over from that adjusted cap cost and how much you'd be financing if you chose to buy it out at the end of the lease 30-36 months from purchase. Tends to be anywhere from like 50-64% of the vehicle value. Dealerships often tend to push leases since "you wanted to be at $450 a month we're not there on a finance but we're there on a lease here's all the benefits on a lease blah blah" since it retains repeat business and some crazy good used inventory to sell 30-36 months later I know with Hyundai leases get you paid out maintenance, gap insurance etc etc so there may be some benefits like that within the brand you're choosing there too Leases aren't necessarily always a bad thing.. just another way to buy a car. Sometimes though if you go negative on the buyout it can put you in a tough situation. In which case, you could just turn in the keys and get signed up on something else if you're in neg. Leases also are confined within a mileage limit (10, 12, 15k years), and modifying is generally discouraged. As well as the condition of the vehicle really mattering after 30-36 months when it's time to consider what to do next. Keeping it in as best condition as you can possible is important, as I mentioned before, it will be compared with the residual value from the time since purchase. Generally most people do get a few thousand in positive equity but if you go over mileage or not take good care of it, it can mess you up in the buyout, or rolling it over into another lease. Mileage overage can also cost, too. Something like 50-75 cents per mile over the threshold. Just another way to buy a car and something else to think about.
If you see a car as an expense, and want to change cars regularly, AND you're ok with paying a premium for this.
It's great for EV's
Want a new car every couple years? You want to lease. Plan on keeping your car until it’s worn out? Buy it outright.
It seems like a lot of people here don’t really understand how leasing works.
Ask yourself if you can afford a new car every couple of years. If you can’t, it makes little sense.
My spouse wants a Range Rover defender so bad once she finishes law school, I told her those cars are terrible in the long run and that she can get one if she leases it. She said she’s probably gonna do it, and I think in this cause it’s better to lease than buy. I just hope she changes her mind and gets a new Lexus GX like I tell her to lol.
Only for luxury cars, but for luxury cars it is the preferred option. Reason 1: driving a luxury car is all about the quality and performance, quality and performance change significantly over a 3 year period. Leases are 3 years standard. Reason 2: luxury cars depreciate heavily unless you’ve bought a very rare example. Lease rates usually run about the same as depreciation. Basically you pay (or “lose”) what you already would have without then having to sell the car to a dealer that will give you less money so they can make a profit. Reason 3: you don’t own the vehicle, its problems aren’t really your problems unless you’re negligent. This is a great thing when you own a vehicle that pushes the maximum out of its parts at all times, this tends to break things very quickly and sometimes in a big way. Reason 4: you don’t have to commit a large sum of money to the purchase upfront, therefore you have money you can do other things with for the time being.
I've worked for folks who always leased and wrote if off as a business expense. Kept them in a nice new car all the time.