Does it ever make sense to lease a vehicle?

[jgb]

We've always purchased our vehicles, and drive them forever. My husband has been driving his Explorer for 12 years now and is now looking for a replacement.

If we buy, we will either pay cash or finance some of it.

Many IRL people have been telling us to look into leasing. I've always thought leases were a poor deal/investment, but I'm wondering if there are advantages I'm missing here. Someone mentioned that you aren't responsible for maintenance costs when leasing. Is that even true?

If it matters, we are looking at either a 2013 Explorer (which we would buy, without a doubt), or a 2010 BMW X5 which is the vehicle that many have suggested we lease.

(note that we not considering the lease because we can't afford the vehicle. I just want to know what I'm missing here and why so many people are suggesting the lease option)

Thanks!

[niq]

If you are self employed or drive a lot for work, i think there are tax advantages to leasing. Like, your business can deduct all of the lease expenses, instead of just the depreciation. But consult a tax accountant for more details.

A friend of mine is in sales and he's required by his company to have a car that's no more than 3 years old (he gets an allowance to cover part of the payment). In that situation leasing can make sense.

Also if one is a douche and he/she just likes driving a new car to show off, leasing is cheaper. But not chapter than not being a douche!

Via mobile doohickey

[lys]

Leasing basically is penny wise and pound foolish. Monthly payments tend to be lower than if financing - but you are "renting" the vehicle and will not own it at the end of the lease. THe best financial way to owning a car is to buy slightly used (1-2 years old) with low mileage, pay cash or finance no longer than 3 years --- then drive until it is no longer safe or costs more to maintain than it is worth.
A brand new vehicle loses a great deal the minute it is driven off the lot. Why not let someone else take the depreciation hit?

[Deleted]

People suggest leasing because you can get "more car" for a lower monthly payment.

Look at your example - you'll either buy a Ford...or lease an older BMW. Leasing is generally always going to be cheaper, because the dealer is just lending you the car. They get the car back from you, and they can sell / lease it out again. And it's possible you'll purchase from that dealer again.

In my opinion, leasing is a fool's errand, because you are essentially paying a rental fee versus purchasing a (yes, depreciating) asset. There are several spreadsheets and calculators you can use online to give you a black and white / dollars and cents comparison. Check those out. If you plan to keep the car for a long time (more than 6 - 7 years) buying becomes much wiser, particularly if you are good with maintaining and treat your cars well.

Re: maintenance, yes, many leases include maintenance packages (they want to ensure the car comes back to them in good condition) - but so do many new and used cars.

[jgb]

Thanks for all your responses. I think that if we went with the BMW, we would only own it for 3 years because I'm not interested in owning a luxury vehicle off of its warranty. So, that's why we are even researching the leasing option, knowing that we have a 3 year life with it. If we went with the Explorer, we plan to keep it for a long time like he did with his current one.

The practical side of us says just go the easy and practical route with the Explorer, but I drive a minivan so there's part of us that's looking to do something a little more fun!

[Deleted]

The only benefit to leasing is that the monthly payments are usually lower than if you buy. But at the end of the lease, you either buy the car for more than it's worth or turn it in and start the whole cycle of payments over again. It's only a good idea if you have money to burn, want a new car every 3-4 years, and recognize that it's a luxury. I know one person who leases for those exact reasons. But if you want to drive a car for a long time like you states in your OP, then leasing makes not sense.

[jgb]

Jan 6, 2013 15:01:42 GMT -5 carrotsmakemefat said:

Also, if you plan to buy the car after the lease, I would just buy the damn thing. After re reading the OP I don't get why you really are considering it? There are no financial benefits that I can really assern unless this is a short term vehicle.

That's exactly my question - are there financial or non-financial benefits? I don't know of many (or any), but a number of our friends keep suggesting it since we are not looking to drive it once it's off warranty.

[jgb]

Jan 6, 2013 15:06:19 GMT -5 carrotsmakemefat said:

How many miles a year would you drive it? There are generally strict rules on mileage.

My husband's 2001 Explorer has just over 100k miles on it. So, less than 10k a year. We use my van for all family drives. He uses his to/from work (8 miles away).

[geneg]

Jan 6, 2013 14:42:06 GMT -5 niq said:

A friend of mine is in sales and he's required by his company to have a car that's no more than 3 years old (he gets an allowance to cover part of the payment). In that situation leasing can make sense.

Wow. Required? Really? What does he do?

I know some people who lease for business reasons. The car is basically a business expense and can be deducted, whereas a purchased car or loan payments cannot.

I also know people in the US for only a short period of time (2-3 years for training) and don't want to bother with the hassle of selling the car before they leave, so they lease.

And, in theory, if you get a new car every 2-3 years (NOT MM to begin with), leasing a car might make sense.

Otherwise, I just buy new (usually Toyotas, etc that keep their value) and keep them for a decade. DH's Subie is almost 11 years old and has less than 60K miles (worked from home). My Prius is 6-7 years old. We might have trade in one car (ugh) if we decide to have a third kid (three carseats will NOT fit in the Subie).

[Balki.Bartokomous]

Jan 6, 2013 15:06:03 GMT -5 jgb said:

Jan 6, 2013 15:01:42 GMT -5 carrotsmakemefat said:

Also, if you plan to buy the car after the lease, I would just buy the damn thing. After re reading the OP I don't get why you really are considering it? There are no financial benefits that I can really assern unless this is a short term vehicle.

That's exactly my question - are there financial or non-financial benefits? I don't know of many (or any), but a number of our friends keep suggesting it since we are not looking to drive it once it's off warranty.

Why would you not drive it once it's off warranty? Have you done the math to figure out what the additional maintenance would cost you?

Yes, the monthly payments if you lease are lower, but you'll always have that payment (and possibly be hit with additional fees when you turn it in), whereas if you buy, the monthly payments will be higher, but you'll only have payments for roughly half the life of the car.

[callie]

Being self employed, my DH has better tax advantages with leasing. Coupled that with he gets bored with his cars every few years, it saves us the hassle of having to sell it when he wants another one.

[jgb]

Jan 6, 2013 15:46:27 GMT -5 Balki.Bartokomous said:

Jan 6, 2013 15:06:03 GMT -5 jgb said:

That's exactly my question - are there financial or non-financial benefits? I don't know of many (or any), but a number of our friends keep suggesting it since we are not looking to drive it once it's off warranty.

Why would you not drive it once it's off warranty? Have you done the math to figure out what the additional maintenance would cost you?

Yes, the monthly payments if you lease are lower, but you'll always have that payment (and possibly be hit with additional fees when you turn it in), whereas if you buy, the monthly payments will be higher, but you'll only have payments for roughly half the life of the car.

The maintenance costs are the issue, its the rumored repair costs to a BMW once it's not under warranty.

[Norticprincess]

Jan 6, 2013 15:09:15 GMT -5 geneg said:

Jan 6, 2013 14:42:06 GMT -5 niq said:

A friend of mine is in sales and he's required by his company to have a car that's no more than 3 years old (he gets an allowance to cover part of the payment). In that situation leasing can make sense.

Wow. Required? Really? What does he do?

I know some people who lease for business reasons. The car is basically a business expense and can be deducted, whereas a purchased car or loan payments cannot.

I also know people in the US for only a short period of time (2-3 years for training) and don't want to bother with the hassle of selling the car before they leave, so they lease.

And, in theory, if you get a new car every 2-3 years (NOT MM to begin with), leasing a car might make sense.

Otherwise, I just buy new (usually Toyotas, etc that keep their value) and keep them for a decade. DH's Subie is almost 11 years old and has less than 60K miles (worked from home). My Prius is 6-7 years old. We might have trade in one car (ugh) if we decide to have a third kid (three carseats will NOT fit in the Subie).

When DH was pondering a sales job, the less than three years old and an SUv/van/wagon were a requirements. It was microscopes. They covered up to X amount a lot a month. They had the details (extra mileage etc) already worked out with several dealers, you just had to pick one. If you picked one over the amount they said they'd cover (if you went with the bigger luxury ones) you paid the difference.

[Balki.Bartokomous]

Jan 6, 2013 15:55:56 GMT -5 jgb said:

Jan 6, 2013 15:46:27 GMT -5 Balki.Bartokomous said:

Why would you not drive it once it's off warranty? Have you done the math to figure out what the additional maintenance would cost you?

Yes, the monthly payments if you lease are lower, but you'll always have that payment (and possibly be hit with additional fees when you turn it in), whereas if you buy, the monthly payments will be higher, but you'll only have payments for roughly half the life of the car.

The maintenance costs are the issue, its the rumored repair costs to a BMW once it's not under warranty.

That's what I meant. Have you done the math? Is it worse than the rumored fees that people are hit with when they return a leased car? Keep in mind you'll turn in a leased car about three times during the same time frame you'll likely have a BMW if you buy it.