11-03-2012 12:19 AM
I'm in a situation where I have to get rid of my car before it nickel and dimes me to death, so I have set my sights on a well equipped 2012 Ford Fusion SEL for $28K but being a leftover has alot of incentives to make the car a good deal.
I'm putting down $8000 between trade ins and cash, and I have it figured out that I can afford $300/month car payment comfortably so here are my offers:
Option A: Finance the car at 5.9% for 72 Months at $322.
Option B: Lease the car for 36 Months at $322, but I get to keep my down payment of $1K and they'll cut me a check for $2K, so I'll have a total of $3,000
If you divide that $3,000 over 36 months you can subtract that from $322 payment and you could theoretically say that you're only paying $250/month which is easily do able.
That being said, the dealership I'm dealing with currently has 8 model 2012 fusions left on their lot. 6 of which are similarly equipped, so I'm thinking I could probably talk them down and get them to my $300/month payment target.
Either way, my biggest concern is my credit and rebuilding it. I once had a score at around 400 and I worked hard to get here and I don't want to go back. I have a pretty good idea of what I can afford and I'm comfortable with $300, but no more than that. Obviously these arent exactly spectacular deals, but theyre about as good as they get when considering my credit.
So should I finance or lease?
11-04-2012 07:43 AM
I've never done a lease, however I"ve actually been looking into it for DW's next vehicle. What's the redisual after the 3 years? Would you want to keep the vehicle after that the lease is up? Leasing ususally gets you into a bit more vehicle a little cheaper, however you have no equity in the vehicle. You would also look at how much you drive and ensure you don't go over the miles of the lease, that could get expensive.
11-04-2012 01:23 PM
11-05-2012 05:53 PM
Be careful on money back from a car purchase. USUALLY they will send you a 1099 form at the end of the year. THUS what is really happening is, you are overpaying for the car, then they are giving you some of your own money back. Your better bet is to bargain for the lowest sale price. It lowers your sales taxes, valuation, insurance,and your payment. Win, Win, Win, Win
11-05-2012 07:31 PM
I would go with option A since you at least have equity on the car vs the lease(hopefully car is worth more than 16k on its third year). In this time you could improve your credit if it isn't enough to get the best rates at the moment and hopefully refi to lower payment/interest paid. If I were you and my ceiling payment was $300 (with no wiggle room) I would either a) save more for the downpayment, b) choose a less expensive car, c) buy slightly used . Some dealers are sketchy and that $322 may go slightly higher once you have gone through F&I. You don't want to risk losing the credit you worked so hard to rebuild.
11-26-2012 06:30 PM
I was in your situation just a few weeks ago - and I chose lease. I was 3 months out of bankruptcy (4 now), and I didn't want to be in the position to mess my credit up again, so I chose to lease. Why? Because I won't go over my miles - and if I start to get close (I too chose to not give such a hefty down payment since I got good incentives), I put my money back into my investments and said "If I get too close to the max miles, I'll buy a hoopty to get me through and drive the car less.
To me, this gives me time to figure out if I like my car and also gives you the ability to buy a more expensive car and get a new one more often than financing, without taking the hit for depreciation. For me, I used it as a tool to get my credit back in order so that I could get what I really want in a few years. A three year lease is perfect timing to me. You're always covered under warranty for the duration of the lease. Most times, the manufacturer will negotiate the price at the end of the term if you want to buy it at lease end. If you buy it at lease end though, you will be without a warranty....one disadvantage. Or you turn it in, and re-buy it after the dealer re-certifies it and drops the price some more....i.e. the lease purchase price at the end is set when you sign the original lease...mine is at 12.5K I think. I can walk away if I want it at the end if they don't budge on that price...it's off lease, they will recertify it, and more than likely drop the price some more...so I go back and buy it for say..10.5K and it's certified so its back under warranty again. I saved the depreciation, I got the car under warranty again without buying the add-on warranty they often try to sell you at thousands of dollars, but more importantly, when the lease is up - I have an established relationship with that manufacturer to lease or bu again when a better model comes out...even if my credit did not jump that much during the lease. Most manufacturer finance companies give you top tier financing for life despite any credit hurdles you have down the road since you established that you at least pay them on-time....just food for thought. In my case, I got in with Toyota since they own Lexus, when this lease is up, I plan to just port over to Lexus and get what I really want. So in essense, I used the finance company to not only repair my credit, but I get to drive a brand new car and not have the headache of being upside down when I want to buy my Lexus, because they won't be able to low ball me on a trade since I won't have one.
No you won't have a trade for next vehicle, but my payments went from mid 400's to the 230's....I pay them their 230 during the lease, and pay my savings account the difference since I am used to that high payment as a guaranteed downpayment to use in three years, so in reality I have lost nothing. With credit issues, and given an approval to lease, I always recommend people lease since that gives you time to reestablish good auto history for future purchases virtually for free. Oh and did I mention, I got two years Toyota Care? So for two of those three years, they are repairing my credit, giving me a car to use, and paying for the maintenance...doesn't get sweeter than that!
11-27-2012 12:10 PM
I would go with the lease, I love leasing cars.
After 3 years I turn it in and get a brand new toy.
Only problem is that you have to be extra careful with your new toy as it has to be turned back in and you have to watch your mileage...
11-27-2012 04:45 PM
ithinking also am thinking about leading a luxury car BMW. I want to use my credit union for the financing. Do you think it would be better to use the
manufacturer finance companies? Especially in terms of establishing a relationship, does it matter?
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions based on Experian or Equifax data (additional FICO® Score versions based on TransUnion data are not currently available on myFICO.com). Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.