Anyone have a positive experience leasing a car?

[ESRwannabe]

I believe my current car may be done for. Its in the shop and I'm not entirely sure what the diagnoses will be yet. I bought it brand new in late 2005 and its been descent. Not really any major issues until recently, but it did have several nuisance problems that I was never able to get fixed properly despite multiple attempts.

Anyway, I had my current car for about 11 years. I bought it new and drove it into the ground. I have had new car envy many many times over the years, but stood firm as I wanted to get my moneys worth...

Now that I may need to get a new car again I don't feel like making a long-term decision on one vehicle for another decade plus. I'm thinking of leasing a car this time for the next 2-3 years.

As for buying a used car, that's not something I want to do. I hate dealing with car issues, but if I'm going to have them I prefer it be on a car I bought new and drove a long time. So my choices are buy new again, or try leasing this time. I'm leaning towards leasing and if I don't like it after 3 years, then I'll go back to buying new.

So, I know financially leasing is the worst option, which is fine. I would always expect that renting is worse than owning. I've rented my housing the past 15+ years as an example, and I pay a lot more than I would with a mortgage. I know the pros and cons, and I'm fine with it. So, I hope this does not turn into a thread about how much more expensive it is to lease. I would instead like to know if anybody else has leased a car before and what the pros and cons were outside of the added expense.

 

[COcheesehead]

I lease a new car every 3 years or so. You negotiate the price just like any other car transaction. Watch the miles so you don't go over. They may also ding you at lease end for unusual wear and tear so make sure you understand the contract. Otherwise, I like leasing and will continue to do so until I FIRE.

 

[ESRwannabe]

I've been watching youtube videos about leasing cars and this is what I learned so far:

* A normal driver drives 15k miles per year. When leasing a car it is beneficial to get as close as possible to the number of miles you drive as you get no reimbursement on unused miles. Typically miles are sold in increments of 1,500.

* If you lease a car, get "gap insurance" with your insurance company.

* The interest rate is called the "money factor". The typical money factor is .00162 which is the same as 3.89%. You can calculate the interest rate by multiplying the money factor by 2,400.

* When negotiating get the money factor nailed down first in writing. The work on lowering the price. Otherwise they will just modify the money factor to make up for any price lowering you manage to haggle out of them.

* There is usually no benefit to putting any money down upfront. You pay the same price. Also if you put money down and total the car the insurance company will not re-imburse you on your down payment. They will just pay off the lease and the residual.

* The residual is the guesstimate on the value of the car at the end of the lease period. It is best to get the residual as high as possible. Typical is 55% to 60% of msrp. If you haggle a high residual is almost always to your benefit to hand the car back after lease is up and not buy it out.

* Typically acquisition fee of $800 and disposition fee of $400.

* Try to get $1,500 or so in repairs waived to avoid nickel and dimeing on minor issues when you return it.

* Some states will screw you over and tax you on the entire amount of the car instead of just the lease period. Unfortunately I have not been able to figure out if my state does this. I suspect they do.

 

[Ready]

I've leased cars for many years and always found the experience to be very positive. The most important thing to be aware of when leasing a car is to know your numbers. You need to negotiate the sale price just like you would a purchase. And you need to know the money factor and residual that the banks and dealer financing are using.

Once you know the purchase price, residual, money factor, and down payment (if any), there is only one monthly payment that can be calculated with these figures. The dealers don't want you to know this because anything they can get you to pay above this number is extra profit for them. And if they can get you to pay a higher money factor than what the financing arm is charging, they keep the difference.

On the positive side, many manufacturers offer ultra low money factors and very high residuals to move cars that are not selling aggressively. At one point, GM was offering a deal to existing GM car owners to lease a Chevy Cruze for $12/month. I don't remember all of the restrictions, but it really was an amazing deal when I looked it over.

There are web sites that post great lease deals being offered during the month and go through the numbers for you. If you're willing to be a bit flexible on what type of vehicle you buy and you find a great promotion, it can be an outstanding deal.

Just make sure that before you agree to the monthly payment you have identified all of the key figures, and then plug the figures into an online lease calculator to determine the monthly amount, before you enter into discussions with the sales guys.

Feel free to post the deals you are evaluating and I'm sure the board will chime in and give you their thoughts.

 

[ESRwannabe]

Thanks for the replies.

So I haven't looked much so far but one that I'm interested in is a Chevrolet 2016 trax 1LT. All I know is the website says it is $199 for 39 months. Making the very big assumption that is accurate excluding taxes.

I'm interested in trying a small SUV this time. There is a Chevrolet/Cadillac dealer very conveniently located near my employer. So I'm looking at those first.


Edit: Looks like it is a nation wide deal. Info below. Has an acquisition fee of $1,619 (-$500 if you are a current Chevrolet lessee). Disposition fee of $395. Mileage cap for 39 months is 32,500 which means 10,000 miles per year. Tax, title, license, dealer fees and optional equipment extra.

Its really $250.64 per month after adding in acquisition and disposition fees.



http://www.chevrolet.com/current-deals.html

Lease
Chevrolet National Lease Offers

Ultra Low-Mileage Lease for Qualified Lessees
$199/month for 39 months. $1,619 due at signing (after all offers).

$1,119 due at signing for Current Lessees of GM vehicles (after all offers).

Tax, title, license, dealer fees and optional equipment extra. $0 security deposit due at signing.
Mileage charge of $0.25/mile over 32,500 miles.

Example based on national average selling vehicle price. Each dealer sets own price. Your payments may vary. Payments are for a 2016 CHEVROLET Trax 1LT Preferred Equipment Group with an MSRP of $23,540. 39 monthly payments total $7,761. Option to purchase at lease end for an amount to be determined at lease signing. Lessor must approve lease. Current Lessees of GM vehicles must show proof of ownership. Take delivery by 08-31-2016. Lessee pays for maintenance, repair, excess wear and disposition fee of $395 or less at end of lease. Payments may be higher in some states. Not available with other offers. Residency restrictions apply.

 

[ESRwannabe]

This appears to be the best nation wide lease deal available at my local dealership. This comes out to $201.95 for 39 months including acq/disp fees. I will definitely give this one a test drive and see if I like it. I'm not dead set on anything in particular.



2016 CHEVROLET Cruze Limited 1LT Exterior View Image Lease
Chevrolet National Lease Offers

Ultra Low-Mileage Lease for Qualified Lessees
$179/month for 39 months. $500 due at signing (after all offers).

$0 down payment / $0 first month payment / $0 security deposit for Current Lessees of GM vehicles (after all offers).

Tax, title, license, dealer fees and optional equipment extra. $0 security deposit due at signing.
Mileage charge of $0.25/mile over 32,500 miles.


Example based on national average selling vehicle price. Each dealer sets own price. Your payments may vary. Payments are for a 2016 CHEVROLET Cruze Limited 1LT with an MSRP of $21,020. 39 monthly payments total $6,981. 38 monthly payments total $6,802. Option to purchase at lease end for an amount to be determined at lease signing. Lessor must approve lease. Current Lessees of GM vehicles must show proof of ownership. Take delivery by 08-31-2016. Lessee pays for maintenance, repair, excess wear and disposition fee of $395 or less at end of lease. Payments may be higher in some states. Not available with other offers. Residency restrictions apply.

 

[rayinpenn]

I have never leased as I find it to be too expensive

We have driven our Honda CR-V for 116,000 miles and have only recently put a $800 alternator in it. Sure oil changes, tires and breaks... With the quality and durability of a car like a Camry not sure why would you ever lease? But I can't argue with the quotes lease as it has very low cost per mile.

What I don't like is 'excessive wear' is very subjective.

 

[Totoro]

So, I know financially leasing is the worst option, which is fine. I would always expect that renting is worse than owning.

Not necessarily. If you find a great deal it can even be cheaper.

I would instead like to know if anybody else has leased a car before and what the pros and cons were outside of the added expense.

I'm setting up a lease car company as we speak (In Europe, details may differ), and have negotiated (corporate) lease contracts before.

Things to consider:

• You have a fixed payment every month. With an owned car you can delay or shift maintenance expenses.
• No risk on residual value - that's the lease car company's problem
• No risk on out of guarantee breakdowns
• You get pooled (partially) with everyone else in terms of pricing. This means that if you took good care of the car and drive safely, you're subsidizing others who don't, and vice versa.
• Hit by a diesel scandal? Not you! The lease car company eats the losses (on residual value), or gets it reimbursed from the producer.

Most of your car cost is depreciation. As a car gets older the maintenance part starts going up. This part is typically unpredictable and comes in bulk. With a lease company these costs are spread out.


Gotchas to look out for: Deviation from agreed-on mileage can get expensive. In Europe at least you can get money back if you stay under the agreed mileage. Best deal is making it symmetrical: higher or lower mileage is the same rate. And any deductibles on the insurance is always a big deal. End of contract can be a bit of a surprise if you haven't leased before, there will be an invoice which can be substantial if you don't understand what you signed.



Last but not least: a lease car sometimes (usually) has restrictions on things like pets, other drivers etc .. so a bit less flexibility.


If you want a newer car (not always new-new) and the convenience of not having to deal with details in terms of maintenance, insurance, selling at end-of-life etc .. leasing can be great.


If you want lowest cost per mile, DIY and don't mind a bit of unpredictable behavior, go used and drive it into the ground.

 

[DrRoy]

As you said, leasing is more expensive than buying, so it is not for me. I have never done it and likely never will. I buy a car and keep it to 180,000 miles or so. That being said, my last purchase was in Jan 2015 of a new Chevy Malibu. I have previously had similarly sized Chevys and Pontiacs. I am very happy with this car and thought it had nice features plus was the best value I could find. I also test drove VW and Honda at the time, but bought the Chevy. You could look into Malibu, although the Cruze is close, being a little smaller. I think the Malibu would have a quieter ride.

 

[panacea]

I leased my first "real" car out of college because the payment was affordable. But I haven't leased since and never will because it's too expensive overall. I hate payments and leasing means you'll always have one. My philosophy has been to spend lots of time figuring out the kind of car that will fit my needs for many years, pay cash for it and hold it for 10+ years. Paying cash isn't easy... but it you keep your car for a really long time it's not a big deal to set aside a little bit every month into a car fund. Having said that, interest rates have been so low we haven't been using our car fund. The last car we bought was 2 years old and financed it at .9%. The one before that was 4 years old and financed it at 1.9%. I still hate those payments but it's also nice to hold onto that cash!! I will say this though... it's much harder to choose a vehicle when you plan to keep it a long time. Feels like a pretty big commitment compared to a 2-3 year lease.

 

[ESRwannabe]

Thanks everyone for the replies.

So my current car I paid cash for it and I drove it for around 11 years. It worked fine money wise. I didn't have any major issues until now. I do think this is the way to go to get the most bang for your buck, but there are cons to it as well.

The problem is over the years I found nuisance issues with my car which I tried to get fixed 4-5 times and nobody could fix it. The most annoying one being that when it was hot outside, the key release would not release my key right away after stopping the car. I always had to mess with it (restart it and let it sit there, jiggle steering wheel around, put back in drive then park, etc.). I always got my key out, but it *really* pissed me off for many years. I was basically mad every day I had to drive it in the summer.

That problem was not there the first 2 years when I bought the car and I could never get it fixed. I feel now like when you buy a car you never truly know what you are going to get over the long term. You are making an impossible decision trying to decide how well this car will function over the next decade plus.

The other issue is even though I did research on what I wanted, new cars come out every year, and what you liked three years ago may not be what you want anymore. In my case, I bought a normal car and over time I really wish I had gotten something that sat up a little higher, was roomier, etc. basically a small suv or a truck. Unfortunately, I already paid cash for the car and I now intend to drive it until it dies because I am stubborn.

I'm also cheap which is why I will consider the 2016 Chevrolet Cruze Limited 1LT even though what I really want is a small SUV or small truck... I have this inner battle going on between my stinginess and my laziness. I think I actually must be more lazy than stingy, otherwise I would not have stuck with renting an apt all these years. Actually based on the data it looks like it must go: stubbornness > laziness > stinginess.

 

[ShokWaveRider]

I lease a car every 3 years also. Nothing but good things to say. Would not go any other way in today's digital tracking of every accident that occurs. No contest IMHO. Unless you like keeping your cars till they drop. I do not. In the last 30 years I owned one car till it failed, a mistake I made that will never happen again.


Oh and leasing a car is NOT too expensive. If you choose wisely and do the math well, it can save you a bundle. Especially if like me you like a better than average car.

Being able to ER has it's benefits......

 

[ShokWaveRider]

* If you lease a car, get "gap insurance" with your insurance company.

Gap is included with any reputable car lease, if it is NOT, go to another company.

My last 3 leased cars ALWAYS included Gap insurance.

 

[jerryo]

As someone said, you have to work the numbers. Sometimes I've bought my cars and sometimes I've leased them -- and a couple of time I bought my cars off the end of a lease at a lower cost than if I'd bought them initially!

My experience with leases has generally been very good! If you want an essentially maintenance free car that you turn over every 2-4 years than buying is USUALLY cheaper, but not always. Several times, for example, when I was negotiating with dealers, the manufacturer offered rebates or preferential interest rates on leases that weren't available on purchases. And (see below) if you want to keep the car longer, you can often buy it off the lease at preferential terms.

I also agree with the observation that it's usually best to roll all your costs (and make no down payment) into the lease (at least if you've got a zero or close to zero interest rate), since you're going to pay for things like taxes and prep and whatever anyway. The monthly cost is pretty much irrelevant (although the total cost and financing cost are important), since dealers can easily manipulate this by varying lease length, down payments, mileage allowances, etc. I've also found that it's usually advantageous to take a shorter (24-36 month lease) and buy the car off the lease if you want to keep it.

At the end of the lease you have the option to walk away, but you can usually purchase your car too, and often for less than the contract residual. So, if you can get (negotiate) a high residual (say 60% on a 3 year lease) and the actual value after 3 years is 50% you make out like a bandit. Twice lease companies sold me my leased car for the wholesale auction price plus $250, which was several thousand less than the residual or the retail price (and I KNEW and loved the car). Twice they insisted on my paying the residual price in the contract (which was more than market and much more than auction), so I walked away. And, with buying you have the hassle of re-selling yourself, if you want to maximize your value.

So.... you pays your money and you makes your choice...and when the lease is less expensive that's certainly the way to go. But make sure you understand what you're signing! The only lease I was disappointed in was my first when I agree to 10k miles a year and had to pay fairly dearly for my overage!

 

[RockyMtn]

I used to get a car allowance at my former employer. They had also arranged an agreement with Ford and a couple other manufacturers whereby we would lease a car for a flat monthly fee (no upfront payment, no mileage limitations, etc) for one year and then return it to the manufacturer.

Great deal. Always drove the latest model. Never had to deal with repairs. Wide variety of models to choose from. Never even had to change the oil given I drove the car very little.

Alas, once I knew I was going to ER I bought a low mileage car and started pocketing the car allowance $$ the last couple of years.

 

[RunningBum]

I tend to drive cars most of the way into the ground because I hate the car buying and car selling experiences. I've never leased but it appeals to me in that I could get the newest in safety features and new car reliability more often. I don't like the idea of guesstimating miles and trying to stay under them, and worrying about dings, plus there's still the car buying experience complicated by figuring out all the numbers in the lease terms.

 

[marko]

I've leased cars for over 20 years. Just as the tires start to wear out, you're off on another car.

Mileage: I lease higher end cars so my experience might be different.

My sales guy is quite predictable: I have a 3 year lease but after about 20 months, he starts calling offering to buy the balance of the lease and "don't worry about the miles" if I get a new car... so while I have a cheaper 15K per year limit (15X3=45), I can drive as much as 40K miles over 2 years and not get dinged for the overage.

 

[Cobra9777]

Our 3 vehicles are 10, 15, and 20 years old. The 10 year-old has 65K miles. The other 2 are at 160K. Since retiring, DW and I each drive about 5K/yr and that's distributed across 3 vehicles. So we expect they'll last a long time. We have a local shop that takes care of all maintenance and repairs. He keeps them running reliably at a fair price. This approach is ultra-low-cost and we love the cars.

Many years ago with kids, we changed vehicles more frequently to accommodate their activities. We had one lease which was a complete disaster at the end. The charge for excess wear and tear started at $2400. After a month of negotiating, and emailing photos back and forth, I paid $250. From then on we just bought. Too much hassle. And now in retirement, our car-related needs and wants are quite modest.

 

[ShokWaveRider]

Leasing also makes sense when Money is cheap from an Interest rate perspective. I usually lease cars valued between $50 & $70k range.

Here are my reasons for leasing vs buying my previous lease being an example as I still have the paperwork:

1) You only Pay for the Lease & Depreciation and interest on the balance. the Balance is in Your Pocket. Depreciation is based on Retail NOT the negotiated price. Sales Tax is only on the lease payment Not Total Value.
2) I always pay the complete lease up front for the whole period.

Here are my numbers (ALL of which are negotiable with the dealer) for the lease in question rounded for convenience. Mercedes Benz E350D 2012

MSRP as Equipped: $69,000
Neg. Price: $55,000

Lease Fee: $500

Residual: $44,160

APR: .001 (2.4%)
Lease Term: 36 Months

Depreciation: $11,340
Finance/Rent Charge: $3,587
Tax: $895

Total Lease cost: $15,823 (Works out $5,724 Per Year)


Monthly Payment: $439 + Tax


Note 1: I pay the Whole lease up front that does save some Tax and rental charges that I have not factored in.

OK the Biggie:
The Residual value of the car at lease end was $44,160. You could buy them all day at $32,000. That means I saved $12,160 right there if I sold the car after 3 years. I was 10k miles under the total allowed.

The Best time to lease is at the end of the model year when the new cars are arriving or are already on the lot. (September - December) Negotiate on a car they have on the lot or they can get easily from another dealer with no shipping charges.

Note 2:
Always check a Carfax when buying a leased car from a web site or dealer, as a lot have been crashed, repaired and placed up for sale.

There is no penalty for returning you car if it has a bad Carfax. Try Selling one that has!

 

[JohnT]

I now lease instead of purchase. My thinking is that the traditional assumption that you will want to own your car for 10-15years is changing. This is due to the fact that cars are becoming essentially computers that can transport you around, and changes in computer technology is accelerating (no pun intended). I leased an 2016 Acura MDX a few months ago - it was my second time leasing, after my 2013 BMW came off lease. I have to say the difference in the amount of technology in the new 2016 vehicle even compared to one 3 years ago was striking. It's entirely believable that in 3-4 years, self driving cars will become mainstream. So building an investment decision around a 10-15 useful life is to be questioned. You will want to take advantage of these technological improvements, if only for safety reasons.

 

[Music Lover]

I don't lease and I've also never had to "deal" with major repairs. Vehicles are built very well these days and swapping every 3 years to avoid a potential repair makes little sense considering that most warranties last 5 years and that most major car brands will go well over 100k before a major repair is needed.

All a lease guarantees is monthly payments forever and for that privilege you will paying over 40% of the car's value to use it for less than a quarter of it's useful life.

 

[Pilot2013]

I've thought about this option for a single vehicle for DW. We have other cars that have anywhere from 25k to 198k miles, so this would be a luxury item in my book and have to evaluate as such. Might be ok since if we had to, can rely on one of the other vehicles that are paid for. What are early turn-in penalties like for Leases?

 

[ShokWaveRider]

I don't lease and I've also never had to "deal" with major repairs. Vehicles are built very well these days and swapping every 3 years to avoid a potential repair makes little sense considering that most warranties last 5 years and that most major car brands will go well over 100k before a major repair is needed.

All a lease guarantees is monthly payments forever and for that privilege you will paying over 40% of the car's value to use it for less than a quarter of it's useful life.

I will be dead before I do 100k in any car LOL.

Your numbers fail a little. For a $70k car in the example I listed in an above post. It costs you 23% of the total to drive it for 3 years. If you buy it out at the end of the lease, you are not so bad off. In addition you have had a 3 year test drive, and the use of the balance of the funds for 3 years. If you owned it and choose to sell it after 3 years, you will most likely be worse off.

NEWSFLASH! You lose more in the above scenario if you purchased the car.

As I will NEVER own another car for more than 3 - 4 years before replacing it, you have to base all the math on that Scenario. Basing it on the assumption you will drive the car till it drops is a losing proposition.

Also the math works better for more expensive cars. Again, as I have never driven a car in the last 25 years that A) is not new, B) has cost less than $45k (in todays dollars). It works well.

IMHO, it is one of the things I have earned in addition to being FiRED at 55 (62 Now). Some people eat Caviar and Lobster, I like to drive a nice car (at least what I consider to be one) and like filet mignon and Lobster (Do not like Caviar) Hopefully you take the last sentence a little tongue in cheek)

 

[ShokWaveRider]

I've thought about this option for a single vehicle for DW. We have other cars that have anywhere from 25k to 198k miles, so this would be a luxury item in my book and have to evaluate as such. Might be ok since if we had to, can rely on one of the other vehicles that are paid for. What are early turn-in penalties like for Leases?

You can always lease for 24 months. I do not think it would be a good idea to return the car before lease end.

I have sold many lease cars 90% through the lease, but I typically do 50% of the allowed mileage. Another reason why leasing works for some.

I sold my Jeep for the Lease Buyout + $3000 8 months before it was due. But it had only done 4000 miles in 2.25 years.

 

[JOHNNIE36]

I've leased cars for years and never thought I screwed up by not just buying outright. Now that I'm turning 80 and my financial situation is changing I decided to purchase this time. Bought what I think is one of the best cars out there, a 2016 Toyota Camry XLE. Got it for 0% interest, nothing down. I'm paying Toyota $500/month and figure in four years it will be paid off and then that $500 payment will be like supplementing my income. We drive about 9k miles a year so it should last me the rest of my life. Can'r remember the last time I "bought" a car.

There are those our there that will argue that leasing for some number like $300/mo forever would work out the same but I have to consider my wife. She wouldn't know the first thing about leasing/buying a car so she was all for doing it this way. Tell me I'm wrong.