topic Re: OMG Suze Orman says LEASE! in Auto Loans

OMG Suze Orman says LEASE!

Creditaddict — Sun, 02 Feb 2014 02:54:08 GMT

"If you buy a new car every 3 years there is no reason to buy it because you are taking all the loss right out the door but by not keeping it you loose that"

This is kind of how I thought it made sense but everyone has always been so clear on how horrible a lease is but I thought that was long term investment and if you were someone that bought the car after your lease was up... yes it's still a bad investment to turn over new car every 2-4 years because you always have a payment, it's like renting an apartment vs. buying a house... but some just do that so it makes more sense to lease in that case than to buy it!

Re: OMG Suze Orman says LEASE!

DaylightSlaving — Sun, 02 Feb 2014 04:55:05 GMT

Ehhh, I think it just depends on your situation and personality honestly.

Re: OMG Suze Orman says LEASE!

Creditaddict — Sun, 02 Feb 2014 04:58:37 GMT

@DaylightSlaving wrote:
Ehhh, I think it just depends on your situation and personality honestly.

yes of course.

But if you buy a car with no money down on finance and you sell it after just a year you don't "really" own anything... you probably OWE money to get out of the loan on it... so did you do better owning it vs renting it. that was point I think.

Re: OMG Suze Orman says LEASE!

DaylightSlaving — Sun, 02 Feb 2014 05:05:20 GMT

Frankly, you're renting until the finance agency mails you that sweet, sweet pink piece of paper in the mail.

Again, it comes down to your personality. Are you happy going through that hassle every year? Doubt it. Are you the type of person who'll be happy with the same car for 2-3+ years? Will you be happy with a car for 5+ years? Totally depends.

I don't think a lot of people put 0 down on a car and sell it back after a year, but that's just me. I could be totally wrong. It just sounds intensely irresponsible LOL.

Re: OMG Suze Orman says LEASE!

Creditaddict — Sun, 02 Feb 2014 05:10:14 GMT

@DaylightSlaving wrote:
Frankly, you're renting until the finance agency mails you that sweet, sweet pink piece of paper in the mail.

Again, it comes down to your personality. Are you happy going through that hassle every year? Doubt it. Are you the type of person who'll be happy with the same car for 2-3+ years? Will you be happy with a car for 5+ years? Totally depends.

I don't think a lot of people put 0 down on a car and sell it back after a year, but that's just me. I could be totally wrong. It just sounds intensely irresponsible LOL.

I have 2 personalities that I fight:

1. I wish I could have my Honda Accord back that was on a 24 month loan and would almost be paid off... it was a great car and in great shape.

2. I LOVED my Infiniti and it was only leased for 24 months, they are making so many changes with cars, i want the new one that is out... 24 months isn't to long to go before getting the latest.

long term I would like to be person 1 that is happy with a car for what it is and own it and put my cash elsewhere but honestly currently im person 2, rather i should be, can afford to be, i always want a different car... i practically want to buy a car each week as i drive on the road and see a new car, I want it!

Re: OMG Suze Orman says LEASE!

Anonymous — Sun, 02 Feb 2014 12:29:09 GMT

Why are people who can't afford down payments buying/leasing new cars every few years, anyway? Seems like they'll always be upside down or renting a vehicle.

Re: OMG Suze Orman says LEASE!

coterotie — Sun, 02 Feb 2014 18:38:00 GMT

There are a few more reasons that leasing makes sense for some people If you use your car for business purposes, leasing makes a lot of sense tax wise because you don't have to fool with depreciation/recapture and a whole bunch of other documentation. If you live in a higher sales tax area, by paying the taxes monthly with the lease payment (instead of rolling into the loan) you're not paying any interest on the sales tax. If you paid the tax up front in cash, you're not losing interest on that money. But rather paying the taxes as incurred on only the amount of the car you are using, not the whole amount.

Finally, there are cars that are fun to drive great looking but have reliability issues or are expensive to repair. By leasing, you match the warranty to the car and thus will not reach into your pocket for repairs EVER. Also, if you get a car that is a bit of a lemon, you are out of it with minimal damage.

Yes you don't "own" the car, but then sometimes ownership has some downside.

We used to lease one car and own the other car. Drive one until the wheels fell off and it had to be dragged to the graveyard. The other was the "nice" car which never had an expense and always looked new. As the family changed, that car changed. We're probably headed back in that direction as we move from a 2 car family to a 4 car family.

Re: OMG Suze Orman says LEASE!

Creditaddict — Sun, 02 Feb 2014 19:17:31 GMT

@Anonymous wrote:
Why are people who can't afford down payments buying/leasing new cars every few years, anyway? Seems like they'll always be upside down or renting a vehicle.

I mean I don't totally disagree but what the last poster makes sense too.

for $300 I can "Purchase" about $14k or so plus a very high tax/title, etc. rate

or I can lease a new Infiniti G37, Kia Optima, Hyundai Sonata, BMW, close to a Mercedes C, the list is long for cars that are $40k+ that I can get for under $400 a month but if I wanted to drive one of those cars "owning it, it would range in the $600-$800/month... That's why I get drawn into leasing

Re: OMG Suze Orman says LEASE!

Anonymous — Sun, 02 Feb 2014 23:30:36 GMT

@Creditaddict wrote:
@Anonymous wrote:
Why are people who can't afford down payments buying/leasing new cars every few years, anyway? Seems like they'll always be upside down or renting a vehicle.
I mean I don't totally disagree but what the last poster makes sense too.

for $300 I can "Purchase" about $14k or so plus a very high tax/title, etc. rate
or I can lease a new Infiniti G37, Kia Optima, Hyundai Sonata, BMW, close to a Mercedes C, the list is long for cars that are $40k+ that I can get for under $400 a month but if I wanted to drive one of those cars "owning it, it would range in the $600-$800/month... That's why I get drawn into leasing

A lot of it comes down to long term goals and lifestyle.

Leasing isn't always throwing money away and there are times it makes financial sense.

Aside from driving upstate every few weekends (from Brooklyn), I barely use the car. By "barely" I mean the car gets 6-8 miles every two weeks between running a weekly errand and changing sides of the street to avoid tickets. For someone like me (who hates to drive) a new car would be a waste of money. Even if I liked cars, paying on one monthly wouldn't be worth it.

I just feel, on some weird level, that paying too much for vehicles is one of the reasons a lot of us can't get ahead. One of my closest friends is a multimillionaire... he actually drives vehicles into the ground, LOL! He just traded away a 99 Acura and 2000 Wrangler and would still be driving them if maintenance costs made sense.

When my 96 Saturn wagon finally dies something else cheap will come along. Just can't get behind the idea of a car payment with so many other obligations.

Re: OMG Suze Orman says LEASE!

RushXTC — Mon, 03 Feb 2014 04:17:12 GMT

I signed up for a lease, Thank god it didn't go through... Felt bad returning the car after 2 weeks, But at least it wasn't my fault and it didn't affect me.

Now I will NEVER lease a car for sure! I was going to end up paying $15,000 more than the car is worth TODAY, Imagine 4 years from now? When the car is only worth $20,000 ($41,000 car right now) and you STILL have to pay those $20,000 even though it's a 4 year old car... lol... not cool!

I say purchase is the best way to go...

Re: OMG Suze Orman says LEASE!

Creditaddict — Mon, 03 Feb 2014 04:47:40 GMT

1. That's the point of a lease that they are betting on the value down the road and you are renting for the term of the lease and you can turn it in at the end and walk away regardless if it's not worth what's left or not.
2. I'm mad at our 39 month Kia lease, I would never lease beyond 27 months in future... Love the 24 month Infiniti leases!!

Re: OMG Suze Orman says LEASE!

Shogun — Mon, 03 Feb 2014 06:13:42 GMT

I've thought about leasing, but I've never done it. I have 3 vehicles right now. My Cadillac and Chrysler 300, both of which are paid off. And then there's the Chevrolet Sonic I bought for my son this past summer

I guess both has its perks. You can lease a more expensive vehicle than buy. Plus when it's done, you can walk away.

But my Cadillac has been paid off for quite some time now. Still runs great, looks great. Every day I drive it, it's like putting money in my pocket. "No Payments".

The Chrysler 300 is paid off, and has just 22K miles on it. So I'm thinking it has some time to go before it's done and buried.

It's just up to the individual. But I have been looking at the Mercedes leases... I do like their cars.

Re: OMG Suze Orman says LEASE!

Anonymous — Mon, 03 Feb 2014 08:52:38 GMT

Sometimes I wish I could lease too, get a new car every two to three years. However, driving 25k miles a year automatically kicks me out of leasing, since would be crazy to pay the over milage fee after the 15k per year max on a leased vehicle. Another upside, if you ever want to mod the car, you can do so much more easily with a purchased vehicle than a leased one.

Re: OMG Suze Orman says LEASE!

coterotie — Mon, 03 Feb 2014 14:14:57 GMT

You're the guy who should take advantage of leases by buying the off lease low miler that has been well maintained. You let someone else take the new car depreciation and you pile the miles on for a year and flip it. Done right you probably drive the car for nearly free.

@Anonymous wrote:
Sometimes I wish I could lease too, get a new car every two to three years. However, driving 25k miles a year automatically kicks me out of leasing, since would be crazy to pay the over milage fee after the 15k per year max on a leased vehicle. Another upside, if you ever want to mod the car, you can do so much more easily with a purchased vehicle than a leased one.

Re: OMG Suze Orman says LEASE!

black_citi — Mon, 03 Feb 2014 15:33:34 GMT

Leasing isn't for everyone of course. It's basically determined by your personal needs. If you love owning a new car every 3 years and you have the finances to support it, go for it. I'm a car freak lol. I love cars but i'm not sure I would do another lease.

There are those that hate leases, those that love them and those that are in between. I'm the "in between" type. I leased a car in 06 and for the first 6 months I liked it. After that, however, I hated the car with everything I had lol. The lease was for 4 years but the car got repoed in 09. To be honest, I didn't care lol.

That repo is 5 years old now and the car I have now is financed. Although I would love to have a nicer more expensive car by leasing, I think I would stick to cars less than 20k by financing. Its easier for me.

Re: OMG Suze Orman says LEASE!

ScoreBooster — Mon, 03 Feb 2014 19:15:09 GMT

In December, I leased a 2013 Lincoln MKZ for 24 months. I put $1K down. Due to high manufacturer-rebates, the monthly payment was significantly less than financing.

I leased because I didn't want to be "bound" to an additional car-payment for too long. In addition to that, I can get a new car every two years without spending a dime on repairs, new tires or any kind of maintenance.

My second car is financed. That's my five year old "workhorse" and will be replaced by a new ride in about a year when the extended warranty expires and new tires would be due. The replacement will be financed, too.

This gets me a new car every two years while taking advantage of the positive aspects financing has to offer on the other which will be kept much longer.

There simply is no "it's always better to lease/finance"-scenario. You simply have to know how you are going to use a particular vehicle and how long you want to keep it.

If somebody tells you "It's ALWAYS better to...", you should be very careful. That individual probably doesn't know what he/she's talking about.

Re: OMG Suze Orman says LEASE!

ScoreBooster — Mon, 03 Feb 2014 19:25:16 GMT

@RushXTC wrote:

Now I will NEVER lease a car for sure! I was going to end up paying $15,000 more than the car is worth TODAY, Imagine 4 years from now? When the car is only worth $20,000 ($41,000 car right now) and you STILL have to pay those $20,000 even though it's a 4 year old car... lol... not cool!

I say purchase is the best way to go...

After a lease contract ends, you don't "HAVE TO" pay anything since you can return the car - and most people who lease do just that.

If you want to own the car free and clear at some point in time, leasing is most likely not the way to go in the first place.

Again, there is no "best way" because the right way can only be determined by the individual (and his/her circumstances) who has to make the decision. Plain and simple.

Re: OMG Suze Orman says LEASE!

ScoreBooster — Mon, 03 Feb 2014 19:55:27 GMT

@Anonymous wrote:
Why are people who can't afford down payments buying/leasing new cars every few years, anyway? Seems like they'll always be upside down or renting a vehicle.

Leasing has nothing to do with not being able to afford to buy. You will be surprised by how many BMWs, Mercedes' and other expensive cars are leased. Leasing a new BMW is actually the norm..

Another lease-advantage: My credit-report. Although I only put $1K down, my credit-reports show an account with a $14K-balance and only 23 payments left. That's all I'm committed to. In a few months, that balance will be below $10K.

When you are in the market for - let's say - a mortgage, having a $15K-balance and a $600-payment for 23 months certainly looks better than a $50K-balance with a $900-payment for 59 months. That's what I'd be looking at if I would have financed the same car with the same down-payment.

Re: OMG Suze Orman says LEASE!

Anonymous — Sun, 20 Mar 2016 23:15:37 GMT

How Does Leasing Affect my Credit Score

First, you must understand the components that constitute your FICO score. There are five elements that are used to determine that all-important number: 35% of your score is weighted towards your payment history,30% is weighted towards the amounts owed on your credit cards, 15% is devoted to length of credit history, 10% is generated by new credit and 10% comes from types of credit used.

There are also four categories of debt financing. Revolving, Installment, Mortgage, and Government. Financing of a vehicle falls under the component category of Installment Debt. So, the question to ask yourself is how do I use a vehicle to raise my credit score? Experts like Forbes, MyFICO, Experian, TransUnion and Capital One Bank says the No. 1 indicator of good credit is a long history of on-time payments. In fact, MyFICO estimates 30 percent of your score is your payment history. You want your established accounts to be open for a good period of time with no derogatory information on your report. Paying off your car loan early shortens the amount of payment history entered on your credit report, which does not increase your credit score. So, how does leasing increase your credit score? By leasing your vehicle for 2 or 3 years and making punctual payments, not only will you have a lower payment as indicated in the last month article, but you will increase your credit score. Here’s how: If we use a 2016 Toyota Camry SE with a MSRP of $24,675 and a sale price of $20,877 with a 60% residual and 3% interest your payment will be $233 per month for 3 years. Now, if you were to lease two different vehicle for two terms you would have an indication on your credit report under the Installment category of $20,788 times two. So, in your vehicle installment history you would have a total of $41,576 in six years. Leasing your vehicle would improve your credit score dramatically. Improving your credit scores, will allow you to purchase future big ticket items for far less, based on the lower finance charge for purchases. Leasing becomes a financial tool in helping you take a depreciating liability and turn it into an appreciating asset.

Final thought: Retail financing your vehicle for 60, 72, or 84 months and paying it off, does NOT constitute your credit score will increase. Actually, Experian says, it will decrease. The most cost effective process to spike your installment credit score, is to Lease your new vehicle for 2 or 3 year terms.

Re: OMG Suze Orman says LEASE!

Creditaddict — Sun, 20 Mar 2016 23:27:15 GMT

@Anonymous wrote:
How Does Leasing Affect my Credit Score
First, you must understand the components that constitute your FICO score. There are five elements that are used to determine that all-important number: 35% of your score is weighted towards your payment history,30% is weighted towards the amounts owed on your credit cards, 15% is devoted to length of credit history, 10% is generated by new credit and 10% comes from types of credit used.
There are also four categories of debt financing. Revolving, Installment, Mortgage, and Government. Financing of a vehicle falls under the component category of Installment Debt. So, the question to ask yourself is how do I use a vehicle to raise my credit score? Experts like Forbes, MyFICO, Experian, TransUnion and Capital One Bank says the No. 1 indicator of good credit is a long history of on-time payments. In fact, MyFICO estimates 30 percent of your score is your payment history. You want your established accounts to be open for a good period of time with no derogatory information on your report. Paying off your car loan early shortens the amount of payment history entered on your credit report, which does not increase your credit score. So, how does leasing increase your credit score? By leasing your vehicle for 2 or 3 years and making punctual payments, not only will you have a lower payment as indicated in the last month article, but you will increase your credit score. Here’s how: If we use a 2016 Toyota Camry SE with a MSRP of $24,675 and a sale price of $20,877 with a 60% residual and 3% interest your payment will be $233 per month for 3 years. Now, if you were to lease two different vehicle for two terms you would have an indication on your credit report under the Installment category of $20,788 times two. So, in your vehicle installment history you would have a total of $41,576 in six years. Leasing your vehicle would improve your credit score dramatically. Improving your credit scores, will allow you to purchase future big ticket items for far less, based on the lower finance charge for purchases. Leasing becomes a financial tool in helping you take a depreciating liability and turn it into an appreciating asset.
Final thought: Retail financing your vehicle for 60, 72, or 84 months and paying it off, does NOT constitute your credit score will increase. Actually, Experian says, it will decrease. The most cost effective process to spike your installment credit score, is to Lease your new vehicle for 2 or 3 year terms.

It's incorrect what you are stating will report as installment debt when you are leasing vs traditional finance.

When you lease only the TOTAL of your lease payments over the term are what is reported as your total installment debt... So in this case, your $21k sales price with only 40% being covered during your 3-year lease payment would report or under $9k total!