I really need some advise

[skoop]

I am trying to decide if this a good deal or not. Talked with Honda dealership yesterday, got to the finance part of a lease agreement and got cold feet. These are the terms:
2013 Civic Sedan, EX with navigation, lease for 230 a month. My trade was a Scion XB which they gave me 9k for, and I have a pay off of 4500 so actually half of that is down pymt. The selling price of car is 23,132. Plus tax of 1111.15, and they are giving me 500 cash down from Honda. My question is, how do they arrive at a lease amount? They also said that the residual at 36 months would be 13,863. The figures confuse me.

And, is a lease the right thing for me. I am a senior, still working, but what happens to a lease agreement when all of a sudden you are sick, can't pay the note, bam, the car is gone, and you have nothing! At least, if you are buying, you still have that equity, and can trade it down, or sell it, and not lose everything. Does that make sense? Am I crazy for even considering a lease?

Bottom line, I love this car! And I don't want a 300 dollar note for 6 years to get it.

I think the price on the car for the lease is too high. Should be around 22,205. I guess I need a level head to tell me what I guess I already know.

[StartingOver10]

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@skoop wrote:
I

And, is a lease the right thing for me. I am a senior, still working, but what happens to a lease agreement when all of a sudden you are sick, can't pay the note, bam, the car is gone, and you have nothing! At least, if you are buying, you still have that equity, and can trade it down, or sell it, and not lose everything. Does that make sense? Am I crazy for even considering a lease?


I think the price on the car for the lease is too high. Should be around 22,205. I guess I need a level head to tell me what I guess I already know.

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You answered your own question above ^^^. Leases are confusing. They are deliberately set up to be confusing and for the consumer to pay too much in the buy out portion.

To be fair, I am not a fan of leases at all because all you are doing is picking up a liability and not an asset. If you have a problem, there is no fix on a lease since you are signing up for a payment stream for a given period of time. You don't own anything other than the obligation for a payment when you have a lease.

With a purchase you have the ability to sell or refi if things get tough. Where did the $300 payment come from? The same guy giving you the figures for the lease? If so, he is biased toward leasing because he is trying to put you in a lease which has a tremendous profit for the dealership and the individual sales person and F&I guy. Get your new financing figures from a CU to compare and see if the dealer can beat those figures. Leases always come out with a lower payment because of their structure, but you are actually paying more for the vehicle.Then at the end you don't actually have a vehicle because you have to turn it in or buy it out at a much higher rate.

[boomhower]

Payment to buy should only be about $100 more on a five year loan.  You have a lot of equity built up in your current car that you are essentially throwing away by getting into a lease.  If you can't float the extra $100 I'd look into a cheaper model with less equipment or even a different car all together.   For example you can get a loaded Elantra for $19.3k sticker.  Take your $4500 equity and you'd be at $260 on your payment to buy.  If you really want to lease they have a special for $169 with $2k down.  Just a suggestion.  Reviews and reliability on the newer Elentra's have been outstanding.  Kia Forte also has been getting great reviews and available for a similar amount. The Honda premium has eroded in value a lot over the last couple of years.  Honda has been lax and the Koreans have seriously stepped up their game, your just get more for your money.  Just my $.02.

[annebythesea]

Just wanted to point out that I currently drive a 2012 Honda Civic Sedan  that I bought in Dec of 2011 and I put $6000 down and got 0.9%APR for 60 months and my payment is only $287/month (it would have been smaller, closer to your $230 but I added the 7 years/70,000 miles package to mine and I think something else as well). So payment wise, my monthly payment to own is comparable to yours to lease. 

[skoop]

Everyone has pretty much confirmed what I had already been thinking. And to complicate things even more, I have had my scion up for sale for a few weeks and someone called me today and wanted to look at it. He offered me 1000 less than what I wanted, but I am still considering it. Then I would pay off what I owe and walk in with 5000 cash to negotiate with. Is there any advantage to that, I wonder? I just don't want a 300 note for a kazillion years and that's why the lease appealed to me. Three years at a lower note, but...if something happens, I have nada as far as equity. Ugggg,,,,what to do.

[skoop]

Actually Honda had a lease for 169 a month as well but it's on the really basic low end model. I don't want to give up my scion for a car that just doesn't excite me. I do like the look of the Elantra and the Forte. May check those out. Thanks. I do just love the look of this particular Civic though.

[skoop]

Interesting view point. A lease is a liability and not an asset. Had not looked at it in that way. What is appealing is a three year commitment instead of 5 or six years. But food for thought.

[boomhower]

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@skoop wrote:
Everyone has pretty much confirmed what I had already been thinking. And to complicate things even more, I have had my scion up for sale for a few weeks and someone called me today and wanted to look at it. He offered me 1000 less than what I wanted, but I am still considering it. Then I would pay off what I owe and walk in with 5000 cash to negotiate with. Is there any advantage to that, I wonder? I just don't want a 300 note for a kazillion years and that's why the lease appealed to me. Three years at a lower note, but...if something happens, I have nada as far as equity. Ugggg,,,,what to do.

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With a lease you'll always have a payment as you'll never own anything.  Selling outright will almost always get you more than you can get with a trade-in.  If it's a fair offer take it and use the cash as a DP.

[Dustink]

How about putting $5000 down on a used car? Or finding a better deal. Market price on a 2013 civic ex with nav is right around $20k.

I don't think it would be good for you to lease.

I purchased my car with a 36 month loan. I would much rather be making $450 payment to own my 2013 Legacy Sport, instead of $2xx to rent a civic. I have equity at any point if I ever need to get out of the vehicle.

I would advise against buying a korean car like another poster suggested. Might be safe to lease one, but in general leasing seems like a bad idea.

[ImprovingYouth]

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@skoop wrote:
Interesting view point. A lease is a liability and not an asset. Had not looked at it in that way. What is appealing is a three year commitment instead of 5 or six years. But food for thought.

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Doesn't matter as all cars (non-collector cars) are depreciating assets. Leasing is of value particularly to cars with low depreciation in the first 2-3 years as the lower the depreciation during this time the lower the total lease cost, and lower payments overall. This pertains to economy class vehicles, as most luxury vehicles will depreciate MUCH faster, loading the depriciation to the leasee. Honda, Hyundai, etc. are all good cars to lease IMO.