Leasing vs Buying a Car?

[lynn07]

We unfortunately have to get a new car. We’ve always bought used cars, but right now is not an ideal to finance a car with how high interest rates are and how high car prices for both new and used cars are. We’ll be getting a plug in hybrid, so we’ll qualify for tax credits either way, because we’re picking a car that qualifies. Both dealerships we’ve been to have floated leasing, which I’ve never really looked in to before. Now that I’m reading up on it, I wonder if it would make sense in our current situation. We’re getting a plug in van because that’s what we’re replacing and we have 3 kids. However, our older two are only a couple of years away from driving (2 and 3 years, respectively). We won’t need a van anymore once they aren’t riding in our car all the time, every day. Neither of us have overly long commutes (about 25 mins each way). Does it make more sense to lease in this situation?

[Jalapeñomel]

I asked this a couple years ago, and overwhelmingly people commented that leasing is not the good financial option.

[deadwing]

I don't know anything about leasing, but I have a deposit on a new car. Historically, I've bought used but used aren't nearly as discounted vs new as they used to be. Dealerships are also offering some very appealing interest rates on new models that you can't get for used.

[lilafowler]

My FIL was a bank VP in charge of lending and mortgages before he retired and he said two of the worst options financially is to leave or finance a car or purchases a brand new car. He has only bought moderately priced cars or slightly used outright. He’s got $$$$$$$$$$$ stashed around so I tend to believe him in these matters.

H and I bought our last car in cash. Our requirements were that it was safe with low mileage. It’s a 2012 Chevy Malibu with only 30,000 on it, one previous owner and we paid $12,000. I know most people feel like they NEED a giant car with bells and whistles so our system may not work for you.

Anyways leases and financing=bad

[lilafowler]

I just realized that sounded very know it all and judgemental. I’m sorry, cats are a stressor for me so I’m an extreme negator.

[sproctopus]

Sept 17, 2023 7:38:26 GMT -5 lilafowler said:

I’m sorry, cats are a stressor for me so I’m an extreme negator.

Did Big Dog send you here?

[tealblue]

I’ve never leased but I follow the Car Mom on IG and leasing now isn’t as great of a deal as it used to be.

From what I see- you still put down a down payment, your payments are still reasonably high and at the end of your term you can buy it out or get a new car. So basically you don’t have anything to show at the end of the term. I think now the lease payments and down payment are really much higher than they had been years ago. So I don’t think it makes sense often (unless maybe you have a business and can deduct the lease payments and like new cars every few years).

Used cars are often close in price to the new ones and interest rates are a bit lower on new cars. I think you just have to look and see what’s out there and price it out. We were always used car buyers but 4 years ago I bought a brand new SUV and (at the time) interest rates were basically nothing so next year I’ll have a paid off car that’s still got a ton of life and value left.

[wildrice]

Leasing is almost never a better financial option.

I think you may be surprised that you still want the van once the kids can drive, anyway. I grew up in a family with 3 kids and my parents kept a van until my sister had kids. It was super convenient to be able to have the whole family ride together when we went places - dinner, to visit extended family, other fun or social stuff. I guess we could have squeezed into the back of a sedan, but it would have been really tight with 3 adult bodies. With 7 seats, a couple of us could even bring along a SO. It was also helpful for moving us to college, to new apartments after college, etc.

[rubytue]

Sept 17, 2023 8:19:15 GMT -5 wildrice said:

Leasing is almost never a better financial option.

I think you may be surprised that you still want the van once the kids can drive, anyway. I grew up in a family with 3 kids and my parents kept a van until my sister had kids. It was super convenient to be able to have the whole family ride together when we went places - dinner, to visit extended family, other fun or social stuff. I guess we could have squeezed into the back of a sedan, but it would have been really tight with 3 adult bodies. With 7 seats, a couple of us could even bring along a SO. It was also helpful for moving us to college, to new apartments after college, etc.

I dated a guy in college who parents sent him back one year with their minivan, so his brother could use the BFs little beater car. Man that van got so much use, not just moving in an out, but road trips, collecting pallets for bonfires, etc etc. A vehicle that can haul will always be useful. Not that buying a vehicle for hauling makes sense generally, but if you have it, it doesn’t always make sense to get rid of it. If that makes sense. 

also, don’t lease. It rarely the good financial option. 

[lynn07]

Sept 17, 2023 7:38:26 GMT -5 lilafowler said:

I just realized that sounded very know it all and judgemental. I’m sorry, cats are a stressor for me so I’m an extreme negator.

Ha, I love this autocorrect. Trust me, we are usually huge believers in low priced used cars (our other car is a used Nissan Leaf that we bought for $12k), but with 3 kids plus their friends and all their things, we just can’t do a small car. And used SUV’s and vans are basically the same price as new cars right now. I’ve been looking for hours upon hours. It’s a sucky time to buy a used car.

[ny96]

We leased both of our cars and it really made sense for us. Ultimately it was a bit more expensive than buying, but we weren’t sure we wanted these cars for the long-term and after the down payment our lease amounts were pretty low. At the end of our lease period we both bought our cars. H just sold his for about 80% of the original price and I’m still driving my car and plan to for another year or so. I don’t think leasing is a bad idea if you don’t think you’ll keep the car for more than a few years.

[sonrisa]

The dealerships are pushing leasing because that’s best for them. In addition to being worse financially, leasing comes with rules, just like any other rental. If you drive too many miles during your lease or do other things, you can incur additional fees. Leasing is the perfect answer for someone who wants/needs the car now but expects a large financial windfall in the future and is willing to pay extra overall to get it today. A medical resident who doesn’t want to wait until they graduate to get the car they want , for example

[origami]

It all depends on the model you want and what the incentives are. Most times, leasing or buying new are not better than buying a slightly used car. But that’s not always the case (esp if you’re financing). If you can grab a model the dealers need to get off the lot, there are sometimes deals that even the playing field. If you want a popular model then you’ll pay more. That said, if I wasn’t ready to buy a new(ish) car, I’d probably just buy an older one and bide my time til I saved more.

[fiddles]

We’ve leased my car for the last few years. We recently got a grand Cherokee 4xe lease as I’m hoping in the next few years the electric battery has a longer range.

Leasing is similar to purchasing. You can negotiate everything. We bought ours with no money down. Get the lowest amount of miles. You do not have to turn it in at the end. We have never done that and always traded it in for a new vehicle. Each time we have gotten a nice return on the lease.

[blondemoment123]

Sept 17, 2023 7:38:26 GMT -5 lilafowler said:

I just realized that sounded very know it all and judgemental. I’m sorry, cats are a stressor for me so I’m an extreme negator.

What did the cat do to you?!

[ProfessorArtNerd]

I’m just jumping in to say that my oldest is 15, and I feel like we need a van now, for the first time. I’d love to be able to have the two older kids bring friends when we go places. I have a cr-v, and we’re a family of five. No extra seats at all. Imkind of can’t wait to get a minivan tbh

[hbomdiggity]

When you lease you are still financing your use of the car over x years, so interest rates will still factor in.

There was a time when the gov incentives for hybrids/electrics made leasing good deal because they covered the payment and you weren’t stuck with old technology at the end of the term. No idea what current incentives look like, if any, but something to consider.

Dealerships push a lease because a lot of people walk in with “I can afford $x/month” and leasing typically gets them a nicer car for that payment.

[Jalapeñomel]

Sept 17, 2023 17:11:11 GMT -5 hbomdiggity said:

When you lease you are still financing your use of the car over x years, so interest rates will still factor in.

There was a time when the gov incentives for hybrids/electrics made leasing good deal because they covered the payment and you weren’t stuck with old technology at the end of the term. No idea what current incentives look like, if any, but something to consider.

Dealerships push a lease because a lot of people walk in with “I can afford $x/month” and leasing typically gets them a nicer car for that payment.

They also still own the car, and if people choose to buy it at the end of the lease, it’s often way over the price they would’ve paid for it new.