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I want to switch from a finance to a lease, what are the pros and cons

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ezdriver
Senior Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons


@6speed8 wrote:

I was a service guy, not in the financial end so those who are more in the know please correct me if I'm wrong. I was under the impression that other lenders, say a mortgage lender, look at a leased car as more of a liability than a financed car. I was told that it's a negative asset where a financed car, depending on amount owed of course, is a positive asset in a sense, if you have equity in it.

 

From a service perspective, I leased once and will never do it again. I tend to keep my cars forever lol. And having been a service advisor for VW,Audi,Land Rover and Benz, I wouldn't want to own one once the warranty is up, short of an 82-85 Mercedes diesel (owned two 1983's and would buy another right now in a heartbeat). Nor would I ever purchase an "off lease" one as they most likely weren't maintained worth a damn.


As a former mortgage broker, my experience is that lenders only care about the payments [for DTI calculation] and could not care less if the auto owner owes more or less than a vehicle is worth.

 

I don't agree with your general statemends about off-lease vehicles not having been maintained. Many lease agreement require that all manufacturer's maintainance recommendations be done during the life of the lease. There can be significant penalty for failure to do the maintenance. Also, premium vehicles, leased by older owners, tend to be very well maintained. I have purchased two CPO cars and I'm currently negotiating a CPO Porsche 911 [one older owner who can no long press the clutch] and I have had great experiences with them. I currently own a 2007 CPO off-lease Mercedes E350 that I've had for a few years with zero issues.

 

Leasing is simply an alternative financing mechanism to own vehicles. With a lease, one pays for the portion of the original vehicle cost "used". With a purchase, one owns what is left of the vehicle after paying off the loan. Both types have applicability to certain buyer profiles. I'd never say that one is bad and the other good.

 

Message 11 of 13
Anonymous
Not applicable

Re: I want to switch from a finance to a lease, what are the pros and cons


@ezdriver wrote:

@6speed8 wrote:

I was a service guy, not in the financial end so those who are more in the know please correct me if I'm wrong. I was under the impression that other lenders, say a mortgage lender, look at a leased car as more of a liability than a financed car. I was told that it's a negative asset where a financed car, depending on amount owed of course, is a positive asset in a sense, if you have equity in it.

 

From a service perspective, I leased once and will never do it again. I tend to keep my cars forever lol. And having been a service advisor for VW,Audi,Land Rover and Benz, I wouldn't want to own one once the warranty is up, short of an 82-85 Mercedes diesel (owned two 1983's and would buy another right now in a heartbeat). Nor would I ever purchase an "off lease" one as they most likely weren't maintained worth a damn.


As a former mortgage broker, my experience is that lenders only care about the payments [for DTI calculation] and could not care less if the auto owner owes more or less than a vehicle is worth.

 

I don't agree with your general statemends about off-lease vehicles not having been maintained. Many lease agreement require that all manufacturer's maintainance recommendations be done during the life of the lease. There can be significant penalty for failure to do the maintenance. Also, premium vehicles, leased by older owners, tend to be very well maintained. I have purchased two CPO cars and I'm currently negotiating a CPO Porsche 911 [one older owner who can no long press the clutch] and I have had great experiences with them. I currently own a 2007 CPO off-lease Mercedes E350 that I've had for a few years with zero issues.

 

Leasing is simply an alternative financing mechanism to own vehicles. With a lease, one pays for the portion of the original vehicle cost "used". With a purchase, one owns what is left of the vehicle after paying off the loan. Both types have applicability to certain buyer profiles. I'd never say that one is bad and the other good.

 


This ..^^^^^

Message 12 of 13
6speed8
Regular Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons

Thanks for clarifying the financial aspects but after 25 years+ experience, I still disagree on the service end. I too have had very good luck with the last two used cars I purchased. True, a "CPO" requires the cars be in great shape to be CPO'd, but I've seen far more issues than I can count. And to be fair, leasing has become more stringent when it comes to servicing the car, right down to the car being returned with "equivelent or better" tires that came originally. So even if I got a great deal on a CPO'd car, I'd dump it once that CPO expires. When it comes to a "luxury" brand anyway.

CH 7 Discharged 6/10/15
T/U - 643
EQ - 588
Ex - 647 as of 6/14/15
Message 13 of 13
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