Since your already in the lease the best way out in most cases is to buy the car because the worst part of the deprecation is done.
My advise at your age would be to buy a used one of the cars your looking at. Forget about leasing if your not already in it. Leasing can be tricky if your not paying attention. Do a Carfax and make sure the car is ligit and hasn't been wrecked.
Then drive the car till the wheels fall off.
Car buying, 101.
Ditto, plus I would suggest seriously looking at Toyotas and Hondas, because they have scored so high in reliability in Consumer Reports for the past few years. If you get a Toyota (or Honda) in decent shape, you are pretty much set and won't have to buy another for many years unless you want to.
I did that. I leased a BMW 3 series for 3 years. I bought it out for $24K. Because I was well under mileage usage, Blue book said it was worth $32K. I did it because the company could write off the entire lease, as opposed to depreciating the car.
Black Book survey personnel attend approximately 50 dealer-only wholesale auctions each week to collect up-to-the-minute information on market values of used cars and light trucks. Our editorial staff reviews the data and determines the vehicle values to be published in the next edition. Our used vehicle value guides are available through a variety of channels including online, PDA, and print formats.
Has anyone here leased a car with the intention of buying it at the end of the lease? How did you calculate whether it was a good deal?
............. Another trend I've noticed is that cars seem to depreciate in more of a straight line than they used to. The conventional wisdom says that new cars lose 20-30% of value when you drive them off the lot. When was the last time you were able to get an ultra-low mileage used for 20-30% below new car price -- especially Hondas or Toyotas? That strategy worked so well that too many people started doing it, and the demand for "almost new" cars rose to the point where they sold for very nearly the same price as new. By all means, if you can find a nice 1-2 years old car for at least
30% below new car price, go for it. I suspect you'll come up empty-handed.
I'm not sure how much the depreciation curve has changed for Toyotas and Hondas, but it still seems to be steep for American cars. Here in the rust belt, where everyone gets a new car discount, one can get used Detroit iron for a song.
Because the quality gap has closed so much, you may find good value in a used American car.
About the only time a lease really ends well for an average consumer is if the car is worth more than the lease payoff amount at the end of the lease. If the lessee has an option to buy for $12K and the car is worth $15K, that can work to your advantage. (If, on the other hand, it's worth $9K, send it back.)
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That is the case for us. We chose to lease a new honda pilot. The lease is up in Jan of 2009. We pay $317/month with taxes...the purchase price is $16k on the lease contract.
So at the end of the contract we will have paid $13,400 (including $2k up front). If we purchase at the time, we will pay the $16k - which means we pretty much paid sticker price (which isn't the best thing) but we could turn around and sell it for about $19-20k at that time since it will be a 3 year old holda with less than 40k miles on it. For example, 2004 pilots with 40-50k miles are selling above $20k now.
We did it because we didn't want to commit to a car yet and thought there would be better options in 3 years (and looks like there will be) and the resale of honda is great so it didn't hurt us too much in the end. Also, we got low monthly payments (the diff went into my Roth!), vs higher monthly w/ a purchase...it still seems like a reasonable decision.