Buy vs Lease - Travel Car

[Idnar7]

We have a 7 yo SUV with 80k and a 17 yo truck with 150k. Now in retirement we are looking for a comfortable, reliable vehicle for road trips visiting grown children in CA, TN , and TX (we live in MN). This vehicle will be used primarily for this purpose. We are weighing the option of leasing (2 or 3 year) this vehicle for the following reasons:

1. Lower payments
2. Always having a late model/reliable vehicle
3. Minimal maintenance costs
4. Easy to live within mileage limits
5. Easy to re-lease at end of term
6. Once the vehicle is no longer needed it can just be turned in at end of lease

We had previously leased three different vehicles while putting daughters through college, and that worked well (monthly cost $250-350).

Don't recall any discussions about leasing cars on this forum. Anyone else done this? Does this sound reasonable or why not? Thanks for input

 

[pb4uski]

Could you really live within the mileage limits if you are taking such long trips?

Might a hybrid be economical for these long trips you are planning?

 

[JOHNNIE36]

We have leased our vehicles since 2000. It works for us for a number of reasons. I never have to drive a car out of warranty. This covers your concern about maintenance cost. I don't have to worry about selling the car at the end of three years. Sure I can trade it in but that's where the dealer makes his money. Big point for us is that we do low mile leases as we don't go over 10k per year. You pay sales taxes only on the time you use the car (it's prorated). You can also buy higher mileage protection. If you are driving 20k miles per year I would advise against leasing. Also, how hard are you on a car? If at the end of the lease you have to fix a bunch of dents and dings or replace the tires or the seats are damaged, you better think about just buying one, purchasing an extended warranty for about $1000 and driving it forever. Some cars have great warranty coverage. The Honda CRV we leased in 2011 has a lifetime warranty on the engine and drivetrain.

 

[travelover]

Have you compared the cost of a long term lease to just renting a car when you need to travel? Off airport rental fees are much lower.

 

[73ss454]

If you enjoy tossing money out the window be sure to lease instead of buy. If you lease you will be paying about 50% of the purchase price of the car every 3 years. It's nice to always have a new car but you'll be paying for it for sure. There are also other fees involved like disposition, acquisition fees and such.

 

[73ss454]

We have leased our vehicles since 2000. It works for us for a number of reasons. I never have to drive a car out of warranty. This covers your concern about maintenance cost. I don't have to worry about selling the car at the end of three years. Sure I can trade it in but that's where the dealer makes his money. Big point for us is that we do low mile leases as we don't go over 10k per year. You pay sales taxes only on the time you use the car (it's prorated). You can also buy higher mileage protection. If you are driving 20k miles per year I would advise against leasing. Also, how hard are you on a car? If at the end of the lease you have to fix a bunch of dents and dings or replace the tires or the seats are damaged, you better think about just buying one, purchasing an extended warranty for about $1000 and driving it forever. Some cars have great warranty coverage. The Honda CRV we leased in 2011 has a lifetime warranty on the engine and drivetrain.

Johnny, you sound like the type of customer we were waiting for at the dealer.
I guess it's good to have a life time warranty on something you'll be keeping for 3 years. By the way, that warranty is silly. Please read it if you get a chance. They are from the dealer only and not Honda or any other manufacturer. I'd like to bet if the dealer ever covered a claim out of the manufacturers warranty. I can tell you the answer would be no. They will always figure a way out of it, it just sounds good on advertising.

 

[rescueme]

If you enjoy tossing money out the window be sure to lease instead of buy. If you lease you will be paying about 50% of the purchase price of the car every 3 years. It's nice to always have a new car but you'll be paying for it for sure. There are also other fees involved like disposition, acquisition fees and such.

I agree.

"Leasing" is nothing more than creative financing, which works on one's emotions to get something more than they would purchase if they only were spending their own money on what they can actually afford to buy/upkeep.

DW worked for a guy way back in the 60's. He leased his car. The difference is that it was never titled to him nor pay for registration, he did not carry insurance on the value of the car, and the leasing company did all normal maintenance and state inspections (including pickup/dropoff of the car at his house/business).

That's a lease. Today's use of the term "lease"? Not even close to what it represents in the original use, IMHO.

I'm not saying that you should not do it (under todays use of the term); just be aware of what the "product" actually is, and what it represents from a financial POV.

 

[Midpack]

Could you really live within the mileage limits if you are taking such long trips?

Have you compared the cost of a long term lease to just renting a car when you need to travel? Off airport rental fees are much lower.

Those are the questions that came to my mind too. I'd lean toward a rental unless you are going to make so many trips that it would actually be cheaper to lease a car, simply financial analysis. Don't forget to include insurance, registration, plates, etc. (whatever is not included in lease cost).

 

[W2R]

Pardon me if I "crow", but I have to tell you that I eliminated all future car acquisition dilemmas in retirement, forever!

How did I do this, you may ask?

I bought a brand new 2010 Toyota Venza in cash when I retired, at age 61. Toyotas last a long time for me, so by the time this one craters I'll probably be too old to drive.

I doubt I will tire of it. My Venza is big enough to carry anything I might want to carry, and with the bigger engine it has enough power to launch me into space should I ever floor it. It has all the luxury bells and whistles other than GPS.

So, no lease vs cash purchase vs payments for me to ponder... forever.

 

[brewer12345]

Pardon me if I "crow", but I have to tell you that I eliminated all future car acquisition dilemmas in retirement, forever!

How did I do this, you may ask?

I bought a brand new 2010 Toyota Venza in cash when I retired, at age 61. Toyotas last a long time for me, so by the time this one craters I'll probably be too old to drive.

I doubt I will tire of it. My Venza is big enough to carry anything I might want to carry, and with the bigger engine it has enough power to launch me into space should I ever floor it. It has all the luxury bells and whistles other than GPS.

So, no lease vs cash purchase vs payments for me to ponder... forever.

Funny, I came to about the same cpnclusion. By the time my new truck is about done I will be cresting 50 and likely have very different tastes than I do now. Problem solved for another decade plus.

 

[yakers]

I think there are some conditions where leasing makes sense. It is usually cheaper to buy and even better to buy used but what is your time worth and how much do you want the 'new car smell'? DW & I leased a car for her a 1997 Mazda Miata in 1998 for real cheap, like $1K down and $100 a month, they were trying to get rid of them as there was a new model coming out in 1999. We were not sure if a 2 seater would work as we still had one child at home. We called it our one year test drive. Only had one time when we had a problem with it being a 2 seater. DW said I could turn it in when I pried it out of her cold, dead hands. So I tried to negotiate buying it and ran into a stupid bureaucracy, turned it in and bought a new 1997 Miata in 1999 for way under MSRP, like 30% off as it was an unsold 97. Still have the car.
Now, if I were to lease today I would use our main car, a Jeep, for longer trips, towing & off roading and lease an around town car. It doesn't make sense to lease a car for easy highway use, let it get used for all the short trips running around town.
Oh, and I remember when I lived in Europe, I was interested in a beautiful used Alpha Romeo Junior. an older, wiser friend advised that these were the cars to lease, *never* own one more than three years old.

 

[samclem]

Thoughts that occur to me:
1) Why not drive the SUV you already own? Is it that uncomfortable? Surely it's still reliable with just 7 years/100K miles on it. Even if it's not the ideal vehicle, do the math on what a lease or purchase of a car is going to cost and see if there's not some way to spend that money that would give you more happiness.

2) If these road trips are of less then about 4 months per year, I'm sure you'd come out well ahead by renting rather than leasing. No mileage worries, you can custom-pick the vehicle based on what you'll be carrying/doing on each trip, and the novelty of trying out different vehicles would be fun.

 

[JOHNNIE36]

I agree with all the previous posts where the advantages of buying are better than leasing. However, these posts don't take in to account that not everyone is trying to save money when they buy a car. I just want a new car every three years, no out of pocket money required, no maintenance to worry about, no buying tires or batteries, always being able to have the latest and greatest. I know that if I bought a new car and paid cash, three years later I could sell it and get another new car and maybe not have to lay out anything but three years depreciation. But, I don't want that hassle.

 

[samclem]

Might a hybrid be economical for these long trips you are planning?

Probably not. Hybrids provide gains in typical city driving, but little/no MPG advantages in long-range highway driving.

 

[73ss454]

For you folks who think leasing is a viable option, trust me the #'s don't work. Plain and simple over the long haul it cost a lot of money to lease. Now for the folks who don't care about $, lease away, the dealers love it.

Trying to justify it makes me laugh.

 

[Meadbh]

73ss454 should know, having been in the auto business.

What about doing a corporate lease? That way, the cost could be expensed. Compared to paying for a car out of after tax personal funds, the math would be a little different.

 

[73ss454]

73ss454 should know, having been in the auto business.

What about doing a corporate lease? That way, the cost could be expensed. Compared to paying for a car out of after tax personal funds, the math would be a little different.

Yup, I tried the Car Biz out for 35 years but it didn't work out.

I'm no CPA so I don't know how to write off a corporate lease. I did speak to a friend who's a CPA and he said the write off is the same whether you buy or lease.

 

[harley]

Could you really live within the mileage limits if you are taking such long trips?

Might a hybrid be economical for these long trips you are planning?

Hybrids are not so great on long trips. They get most of their gas savings in-city.

Get a used diesel VW Jetta if that's big enough for you to travel in. 50 mpg highway easy, and the engine will last close enough to forever that it makes no difference. The body should last fairly well, they make them better than they used to. Our 2002 diesel bug still has it's floorboards. Big improvement over the old days when you could see the road going by if you moved the floor mats.

 

[JOHNNIE36]

For all you folks that are saying leasing is a bad investment and the only way to save money is to either buy new and if not that, at least a good used car. And for all you folks that insist on driving a car till the wheels fall off, just to save some money, I'll say this for one last time, I'M NOT TRYING TO SAVE MONEY WHEN I BUY A CAR. I'M EXPECTING TO SPEND MONEY.

 

[rmark]

'I was interested in a beautiful used Alpha Romeo'

We had a neighbor with an Alpha back around 1979- nice purple 2 door, very sporty, always garaged. What he actually drove was a 1958 chevy biscayne, sorta white with rust. He said the Biscayne always ran, the alpha did occasionally. But it looked good in the garage.

 

[73ss454]

For all you folks that are saying leasing is a bad investment and the only way to save money is to either buy new and if not that, at least a good used car. And for all you folks that insist on driving a car till the wheels fall off, just to save some money, I'll say this for one last time, I'M NOT TRYING TO SAVE MONEY WHEN I BUY A CAR. I'M EXPECTING TO SPEND MONEY.

OK Johnnie, no need to yell. As long as you know your spending more than you should, I'm happy.

 

[noelm]

I am close to what many others say. Why not just rent a car and drop off when you reach your destination (Honestly not too sure if such thing exists in the US but have done many a times in Europe), unless you plan to use it during your stay.
So far with my limited research, everyone tells me that leasing is becoming more and more of a sham and you ALWAYS end up paying more than what they tell you. Also, some dealers are notorious about squeezing money out at the end of lease with various tricks. For me, its just too much of headache to deal with.

Hybrids do not offer any advantage on highway driving but if you do go that route, do check on car repairs on the parts those are new to the industry like battery and battery related engine issues etc. NY Times ran an article that essentially said that the cost of these repairs defeats the savings you make by using a hybrid vehicle (unless you go for something like Nissan Leaf, still its not too economical)

 

[eytonxav]

I think 73SS said it in another post with respect to a car deal, and this probably could apply to leasing or buying as well, as long as your happy, thats all that matters.

As for me, I do love my cars, but my days of changing exotic cars like a pair of pants are over. But being the big kid that I am, I wouldn't mind having a new ZL-1 Camaro in my garage.

 

[pb4uski]

OK Johnnie, no need to yell. As long as you know your spending more than you should, I'm happy.

+1 We get it Johnnie - you know what you want and you don't care so much about the difference in cost. Most of us are not in that boat yet. I'm glad that you are.

 

[Midpack]

Hybrids are not so great on long trips. They get most of their gas savings in-city.

Get a used diesel VW Jetta if that's big enough for you to travel in.

Hybrids do not offer any advantage on highway driving but if you do go that route, do check on car repairs on the parts those are new to the industry like battery and battery related engine issues etc. NY Times ran an article that essentially said that the cost of these repairs defeats the savings you make by using a hybrid vehicle (unless you go for something like Nissan Leaf, still its not too economical)

While it's true that hybrids really excel in city mpg, they also generally get higher highway mpg than gas ICE cars. Where there are models that are sold in hybrid and gas powered (ie, Fusion, Camry, Civic) city and highway mpg are significantly higher. I'm not aware of any gas car that can match a Prius or a Civic Hybrid among others on the highway or city. OTOH diesels CAN match hybrids on the highway, but gas powered cars don't all else equal. Not only EPA ratings, but the various real world mpg sites confirm relatively better mpg for hybrids (and diesels), see for yourself.

However, though I own a hybrid, even with our current high gas prices the payback to offset the upfront cost of a hybrid takes 5 to 10 years to break even.

The battery, maintenance and resale concerns are proving to be less of a concern than many thought, now that modern production hybrids have been mainstream for more than 14 years - Toyota passed the 2 million mark in 2010 with Prius and 3 million in 2011 for all their hybrid models worldwide, so there is some track record now.

There are still articles filled with hyperbole regarding hybrids, pro and con...