Reply
Valued Contributor
maiden_girl
Posts: 2,106
Registered: ‎12-29-2011
0

Re: Buy vs. Lease?

If you know you are keeping the car, finance it. If you know you don't want to keep it for a long period of time, lease it and get another one or finance the next. Me personally, I never liked leases. If you do decide to keep the car, you have to complete a lease buyout and basically start your loan over again.

The truth is out there...
FICO scores: 764 (EQ) 732 (EX) 757 (TU) 9/14 | Goal score: 750+ (all 3)
Tradelines: Capital One QS NPSL (5.0k) | Discover IT (6.0k) | Walmart Mastercard (5.0k) | Chase Freedom NPSL (7.3k) | Citi Simplicity (9.3k)






Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
0

Re: Buy vs. Lease?

You don't start the loan all over again, its like doing a refi.

 

Leasing is like have a ballon payment at the end of the term, you can just pay it off when its up or refi.

Established Contributor
electra
Posts: 573
Registered: ‎10-21-2012
0

Re: Buy vs. Lease?

Hi Tooleman,

Do you have to refi or buy it out? I thought you could just turn the car in to the dealer?



Starting Score: TU:584 | EQ 584
Current Score: TU FICO: 711 | EQ FICO 713 | EX (USAA FAKO) 779
Goal Score: 780 across the board


Take the FICO Fitness Challenge
Regular Contributor
princechristian
Posts: 203
Registered: ‎07-20-2012
0

Re: Buy vs. Lease?

Buy if you can, if you can't, save up and BUY! Lol..

 

Would REALLY depend on your personal interests though. If you are not attempting to keep up with the Jones' or if you aren't subject to 'wanting' an expensive vehicle or a brand NEW vehicle, then it would be wiser to buy. 

Revolvers: FP Gold $300, FP Platinum $300, Applied Bank Business $500, Kay Jewelers $500, Fingerhut $400, Gettington $300

Installers: KHEAA student loan, Dealer Funding LLC auto loan x2, Crescent Bank auto loan, Acceptance Loan Co personal loan x2

Negatives: 1 collection - 2010 $307, Auto lates - 2 30 days, 60 day, 2009 / 3 30 days, 60 day, 2012

Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
0

Re: Buy vs. Lease?

You don't have to buyout your lease. If you want a brand new luxury car, leasing is very attractive if you really want a new luxury car without the high end payments. Leasing is also attractive if you are looking to buy a house soon and absolutely need a car but don't want to have all the debt show up on your credit report. Only the total amount of monthly payments over the lease period shows up on your credit report. The residual value does not. Leasing a 15K car is okay too but not as attractive because your residual value is typically higher than the car is worth at the end of the lease and if you buy it out, your upside down with negative equity. It is the opposite with luxury cars, typically. If you are considering leasing, look for a close ended lease that locks in your buyout amount when you sign. This protects you against depreciation. Acura leases are very attractive because they offer GAP coverage standard (you don't have to pay extra), they offer up to 15K miles per year with an option to buy more miles up front if needed), and they have a miles forgiveness program where they will waive 50% of your overage up to 7500 miles. They will also roll your unused miles into your next lease. I just did my first lease last month with Acura Financial and I am happy I did. I couldn't imagine throwing away cash flow for a $661 car payment if I chose to buy. Another thing about leases is you want to go in there and negotiate the price first (don't tell them you want to lease). Once you are satisfied with the price, ask to lease. You will end up paying less. I read that 75% of luxury cars are leased. Leasing isn't for everyone. If you are looking at prices around 25K or lower, buying is your best option if you aren't planning to continue to lease. If the car price is $35K and up, leasing to buy or just leasing are great options to keep the car payments below $600 per month. Buying out a lease comes with longer terms (48-72 months split between leasing and financing) but you have reliability on your side. Acuras typically run past 200K miles if you take care of it. So I would only buy the lease out if you are going to be happy with the car for a long time. If you want to buy out a lease on a car that has an MSRP of 25K or less, as another poster mentioned, it is better to turn the car in and finance a similar car used as the price of that used car is likely cheaper than your residual value. Also, if you tend to be rough on cars, a lease is not for you as they will charge you for dings, scratches, burn holes etc. and to not be charged, you have to fix those items before your end of lease inspection. A good way around this is to buy a maintenance protection plan. I bought one for my Acura and any dings, scratches, blown out tires will be fixed by the dealership at no additional cost. There are options to lease certain brands of CPO used cars too. I have financed all my life but I tend to get tired of the car after 3 years or so and I ended up trapped most of the time due to negative equity. Leasing allows me to switch out cars free and clear.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
0

Re: Buy vs. Lease?

I misspoke. Locking in your buyout amount at the beginning of the lease protects you against inflation not depreciation.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Established Contributor
electra
Posts: 573
Registered: ‎10-21-2012
0

Re: Buy vs. Lease?

Hi MovingForward,  wow, great info....THANKS!!

 

So, I guess I'm looking at luxury type cars.  I'm pretty sure I either want an Audi Q5 (either the 3.0 Prestige or the Hybrid) or a Volvo XC90.  It does seem like a cheaper way to get these cars but I've never leased and it seems complicated. Makes me nervous.  



Starting Score: TU:584 | EQ 584
Current Score: TU FICO: 711 | EQ FICO 713 | EX (USAA FAKO) 779
Goal Score: 780 across the board


Take the FICO Fitness Challenge
Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
0

Re: Buy vs. Lease?

You're very welcome. Glad i could help! I was nervous too at first but I am happy with lower car payments for the luxury brand and the ability to change cars if I want to at the end of the lease.

It is a little confusing at first but after googling buying vs leasing and studying it, it began to make sense.

Read up on it by googling "buying vs leasing" and a lot of good articles come up. Some websites ask you some questions and based on your answers determines if you are a good lease candidate or not.

Be sure to evaluate stabilization of your finances. Make sure everything is solidified in your life and weigh the pros and cons and make your decision after that.

If you are looking to lease an Audi and want to reserve more cash flow than the monthly payment to buy allows, that is a plus towards leasing. If your unsure about your job then leasing is probably not the best choice but you sound very stable to me. :smileyhappy:
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}