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Seems like a lot of folks here lease their cars (Q inside)

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Valued Contributor

Seems like a lot of folks here lease their cars (Q inside)

I'm genuinely curious here because it seems a decent amount of myFICO'ers lease their cars.

 

So if you lease do you mine sharing your reason(s) why?  Why does leasing work better for you than a purchase to eventually own?

 

I may not have the right impression here but for some reason it seems so.



10 REPLIES 10
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Regular Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)

I just leased my first car last month. The main reason I wanted to lease was I financed my previous vehicle and was ready for a newer model after the 3 year mark. At that time I would have had to roll over the amount owed vs the trade in value if I were to trade it in. I decided that I would keep my current vehicle till it was paid off or I got to the point where my balance and trade in value were equal. For me I like that in general repair costs are kept to a minimum and I like the fact I can get a new car after 2 to 3 years. Knowing that I was ready for a newer car after 3 years and more than likely would continue to want one every 2-3 years it didn't make sense to buy another vehicle. I would have had higher monthly payments and worry if I would be able to get what I owed if trading it in. 

Message 2 of 11
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Established Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)


@MissingCalifornia wrote:

I'm genuinely curious here because it seems a decent amount of myFICO'ers lease their cars.

 

So if you lease do you mine sharing your reason(s) why?  Why does leasing work better for you than a purchase to eventually own?

 

I may not have the right impression here but for some reason it seems so.


Leasing typically requires better credit than buying.  I think it would be fair to say people on these boards have higher than average credit if they have been here for any length of time.  If you can qualify for top tier financing and you like a new ride every few years leasing is an attractive option. 

Message 3 of 11
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Valued Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)


@Chris679 wrote:

@MissingCalifornia wrote:

I'm genuinely curious here because it seems a decent amount of myFICO'ers lease their cars.

 

So if you lease do you mine sharing your reason(s) why?  Why does leasing work better for you than a purchase to eventually own?

 

I may not have the right impression here but for some reason it seems so.


Leasing typically requires better credit than buying.  I think it would be fair to say people on these boards have higher than average credit if they have been here for any length of time.  If you can qualify for top tier financing and you like a new ride every few years leasing is an attractive option. 


Sure, I'm already more than aware of credit requirements for a lease versus a purchase.  But my point is does anyone who likes to lease ever get tired of making a monthly payment?  Why continuously "rent" cars like that?  Is the desire to be in a newer car that much more precious than simply buying a car, paying it off and continue to enjoy it monthly payment free? 



Message 4 of 11
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Valued Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)


@rebuilder85 wrote:

I just leased my first car last month. The main reason I wanted to lease was I financed my previous vehicle and was ready for a newer model after the 3 year mark. At that time I would have had to roll over the amount owed vs the trade in value if I were to trade it in. I decided that I would keep my current vehicle till it was paid off or I got to the point where my balance and trade in value were equal. For me I like that in general repair costs are kept to a minimum and I like the fact I can get a new car after 2 to 3 years. Knowing that I was ready for a newer car after 3 years and more than likely would continue to want one every 2-3 years it didn't make sense to buy another vehicle. I would have had higher monthly payments and worry if I would be able to get what I owed if trading it in. 


......worry if I would be able to get what I owed if trading in.  <-- So you are looking at a potentially negative equity situation as you infer.  Why not put cash down and work towards paying the car off early?  What do you view as average car repair costs for a car/truck at 5 years having avearged 18,000 miles a year.

 

It just seems that many mention "lower payment" on the lease option and that tends to sound like a possible scenario of getting into more car than can ideally be afforded.



Message 5 of 11
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New Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)

Let me prefix this by saying that I have never leased a vechicle never thought I would . However, my wife has already stated that she would like her next vehicle to be MB CLA 250 AMG and she wants to lease it.  Her reason for wanting to lease vs buying is that she already know that she wants to get out into something else after 3 years. 

 

I never thought I would be the type to lease a car but it looks like one may be in my future within the next couple of year. 

In the garden until June 2018

Message 6 of 11
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Super Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)

With all that is mentioned above thus wanting a new car every few years, lower payments for new cars where as if financed one wouldn't be able to afford it etc. are all good points.

 

But for someone who has a business, leasing cars are tax writeoffs in addition to other benefits.  In my case specifically, I like the tax writeoff, I like a new car every few years and with a business lease, it doesn't even show up on your credit report.

 

If one gets tired of the car or bored, you can sell it to pay off the loan or have the new place you are leasing from take it and give you a good deal while paying the loan off your old car also.

 

If one knows what they are doing when it comes to leasing, you can drive all your dream cars on your bucket listSmiley Happy..

Message 7 of 11
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Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)

I leased one car 13 years ago. It wasn't a good fit because of the amount I drove. I was over the mileage and couldn't get a good deal to buy it out. That was around the time they started underwriting residual values. Insuring them basically. My case:

2003 VW Passat W8 6spd manual. Residual was $19,500. Thought I could deal at maybe $15K on the buy out. Nope. I could have pushed the car back to them on fire and at auction, they got $10G for it. Not only would I have gotten a bill for wear and tear.etc, they also got paid on the auction sale price to agreed residual difference from insurance. That was my one and only lease. These days since I no longer commute, I could very well lease but I generally don't look to be in a new car every three years.

 

There's pros and cons to leasing vs purchasing. There's pros and cons to a "new" car every three years vs owning one til it drops. Care for your car is the route I plan on sticking to. My sister's car is a fair example of long term ownership costs.

 

2005 Jetta. 150,000 miles. Owned since new. Extended warranty up at 100,000 miles. In the last 50,000 miles, not including regular maintainence, she's spent $5200 in repairs: Trans conductor plate, cooling fan module, water and vacuum pumps and drivers door harness. All dealer prices because I'm not in the business anymore. I could have done all that for half. Sounds like a lot but: That's still 10 cents a mile. Add in regular maintainence/wear and tear items, that's still barely 15 cents a mile. PLUS $0 car payment since 2007. If she'd been leasing for the past 10 years @ $300 a month, that's $36,000 gone with zero equity - plus maintainence. At the very least, she has $5000 sitting outside right now not to mention having spent roughly $10G vs $36G.

 

LEASING. You are still responsible for maintaining the car. Responsible for "other than normal wear and tear". As mentioned above, perpetual car payments, BUT you get a new car every three years. Whatever works for you I guess.

-

CH 7 Discharged 6/10/15
T/U - 643
EQ - 588
Ex - 647 as of 6/14/15
Message 8 of 11
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Established Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)


@MissingCalifornia wrote:

@Chris679 wrote:

@MissingCalifornia wrote:

I'm genuinely curious here because it seems a decent amount of myFICO'ers lease their cars.

 

So if you lease do you mine sharing your reason(s) why?  Why does leasing work better for you than a purchase to eventually own?

 

I may not have the right impression here but for some reason it seems so.


Leasing typically requires better credit than buying.  I think it would be fair to say people on these boards have higher than average credit if they have been here for any length of time.  If you can qualify for top tier financing and you like a new ride every few years leasing is an attractive option. 


Sure, I'm already more than aware of credit requirements for a lease versus a purchase.  But my point is does anyone who likes to lease ever get tired of making a monthly payment?  Why continuously "rent" cars like that?  Is the desire to be in a newer car that much more precious than simply buying a car, paying it off and continue to enjoy it monthly payment free? 


I should say up front that I have never leased by know people who do and have looked into it extensively.  For the people that do the new car every three years is absolutely more important than never having a payment.  They also argue that they can still buy the car at the residule if they want and have already paid for the depreciation up to that point.  In a way they get the best of both worlds.  If they don't want it, they don't have to keep it and have already agreed on a sale price, if they want to keep it they can. 

 

 

Message 9 of 11
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Regular Contributor

Re: Seems like a lot of folks here lease their cars (Q inside)


@MissingCalifornia wrote:

@rebuilder85 wrote:

I just leased my first car last month. The main reason I wanted to lease was I financed my previous vehicle and was ready for a newer model after the 3 year mark. At that time I would have had to roll over the amount owed vs the trade in value if I were to trade it in. I decided that I would keep my current vehicle till it was paid off or I got to the point where my balance and trade in value were equal. For me I like that in general repair costs are kept to a minimum and I like the fact I can get a new car after 2 to 3 years. Knowing that I was ready for a newer car after 3 years and more than likely would continue to want one every 2-3 years it didn't make sense to buy another vehicle. I would have had higher monthly payments and worry if I would be able to get what I owed if trading it in. 


......worry if I would be able to get what I owed if trading in.  <-- So you are looking at a potentially negative equity situation as you infer.  Why not put cash down and work towards paying the car off early?  What do you view as average car repair costs for a car/truck at 5 years having avearged 18,000 miles a year.

 

It just seems that many mention "lower payment" on the lease option and that tends to sound like a possible scenario of getting into more car than can ideally be afforded.


You asked why not put more money down to help alleviate the worry to potential negative equity at trade in. For me it didn't make sense to put a larger down payment on a vehicle I would be trading in after 2 or 3 years. As far as people leasing to get into a car they otherwise couldn't afford I would have been able to comfortably afford the monthly payments had I bought it but the $200 per month I'm saving on a lease can be used to increase my 401k and other retirement savings. As far as my estimated repair bills after almost 5 years of owning my previous vehicle were approx $3k. That included brakes, tires, alignments and 2 other misilanious repairs. That was in addition to still having my monthly payment. After weighing my options for both it made more sense for me to lease. I may be spending more than some in the long run but having a newer vehicle and being able get a new vehicle before the more costly repairs that normally come along as a vehicle ages is worth it to me.

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