Car Delimma (Lease vs. Purchase)

[Anonymous]

Hey everyone... I'm stressed. I need a new car because my transmission is going out on my 2006 VW Jetta 2.5. I'm looking to pull the trigger on something this week but I need ykur help figuring out which is a good deal or am I being played. I don't know anything about leasing other than to get 15k miles instead of 10k.

Here is my delimma. I went to Acura & they offered me 1.9 % on 2013 ILX or I could lease it for $323 with $0 dwn. This does not include my trade which has yet to be factored into at this time. When I went to Acura, I wasn't in my car. However, I still have a high payoff to Santander on the VW at $6775.89. When I took my car into Carmax just to see what they would give me and they said $4700 because of the high mileage which is 124,497.

Now guys I'm in LOVE with the Volvo S60 T5. My husband wants me to get the Acura because its cheaper but quality wise it is no comparison to the Volvo. Volvo gave me a quote of $31,739. When you factor in sales tax at 6.25% ($1983), inventory tx .25% ($66.91), documentary fee $179, Title Inspection License fee $126 = $34,094.59 drive out with 1.9% on 60 months (mo. car pymt $596.11) or lease it for $399 w/$2500 dwn.

I don't want to put anything dwn, if I don't have too but I do want the better deal. I would like my notes $450 or less rather I purchase or lease. Can anyone advise as to what you think of the offers and how I should proceed. Any advice is greatly appreciated.

[boomhower]

Your going to have to compromise somewhere.  First issue is you at least $2k upside down, and that's considering they don't figure out the tranny has issues.  Cut that value if half if they do and your looking at $3k or better in the hole.  So you are either going to have to pay thise difference out of pocket or roll it into the new loan.  Getting  $30k+ car, rolling in $2k+ and keeping payments under $450 just isn't going to happen.  Leasing in general is not a sound financial decision, especially if you have to put money down.  I think you are going to have to find a cheaper car to keep your payments where you want, especially considering you are upside down on your current vehicle.

Some other questions to ask in regards to lease:

How many miles do you average a year?  Guess high.  You don't want to pay expensive overage or have to leave your car parked because your running out of miles,

How well do you take car of your car?  Wear and tear damages at lease end can be very costly.  That buggy scratch or door ding at the grocery store, the spilled coffee, etc. If you have kids or transport pets tread very carefully.

If the bumper to bumper warranty at least as long as the lease?  You do not want to have to put expensive repairs into a car you don't even own.  

Just some things to think about, I'd buy a cheaper car you buy to own.  

[MovingForward_2012]

Acura leases are great! You can buy a maintenance protection plan that covers dings and scratches and it pays for all of your oil changes/tire rotations. Any unused miles are rolled into your next lease. Negative Equity does not affect your monthly payment in a lease in the same way it does with financing. Once my 3 year lease is up, my negative equity is gone. Acura also has miles forgiveness where they will waive 50% overage up to 7500 miles. I have the Acura TL and I absolutely love it. But I have always been a big fan of Honda/Acura because of their high safety and reliability ratings. I have 15K miles per year and since Nov, I have driven 3800 miles.

[Anonymous]

Thank you both for responding... I went with the Acura ILX... When everything was said and done, the Volvo just wasn't in my budget this time around. I pulled the trigger on the Acura and leased it with 15k yearly with the maintenance protection pkg. Since I work less than 7 miles from my house, passing up several gas stations and three major grocery stores, I think I'll be ok on mileage. I'm not one to do a lot of driving and if so, I'll just use my husband vehicle.

Movingforward_12... Thxs for the tip regarding the mileage forgiveness. Hopefully, I won't need it but its good to have the knowledge. My finance guy did tell me about being able to roll the miles over, so I was informed about that. I'm just ecstatic to be rid of SANTANDER & the VW. No more worries wondering when the car was going to break down on me or paying 18%.
Its a wonderful feeling to look back at my credit struggles and now be in a position where I qualify for 1.9%. Thank you MyFico contributors for educating me on how to get control of my finances/credit.

[MovingForward_2012]

You're welcome! I'm glad you went with Acura. They have a fantastic leasing program. Luxury Car Dealerships treat their customers better especially with leasing, because they have the additional services that can be paid for up front in the loan, which lowers the possibility of failing their expectations regarding the car's condition at lease end. I'm glad you are away from Santander. My lease got me away from Prestige Financial and 17% interest. My car was also on its last leg at 106K miles. in Nov it died on me when i was out shopping...found out, there was more wrong than just the Alternator. Came up to about $2500 and i refused to put more money into a car that i have already babied enough. So i put $1467 down on a TL lease and cut the leash!I had about $2000 in negative equity as well when I traded in my other vehicle.

Acura Financial is one of the tougher ones to get approved through so you definitely did something amazing. Congrats!