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Better to buy or lease then buy?

I am leasing a 2011 Toyota Rav 4 Sport and my lease is up in November. Is it better to buy something new with probably a higher monthly payment or lease an automobile for the 3 years at maybe a lower monthly payment and buy it out after the 3 years? I am looking for a mid-size suv like the Jeep Wrangler or something similar. Or with the thought of buying a used suv, how many years is to far to go before it couldn’t be a money pit? Thanks.

Leasing gets you a good vehicle for a lower monthly payment, but you never own it. Buying a vehicle after leasing it for 3 years means you pay more for it overall before you own it outright (3 years of leasing and then 3-4 years of loan payments). If you want to own the car eventually, but it from the start. If you want the lowest monthly payments, then lease.

This is my second time leasing and I am trying to figure out if it would save any money by leasing then buying. Thanks for the comment.

how long would you finance the car after you leased it?

Also, I wouldn’t wish a Jeep(or any mopar car for that matter) on anyone I know.

Leasing is seldom cheaper over the life of the car unless you can write the cost off or get it reimbursed. Just buy it and extend the payments to 3, 4, 5 years if you have to instead.

Financially speaking…As Bing said…unless you own a business and write the monthly payments off then leasing is by far more expensive then buying. One and ONLY ONE person on this forum thinks leasing is cheaper. But then again every car he’s owned over 3 years old he always seems to be dumping THOUSANDS of dollars in repairs every year.

Unless you own a business and can write it off…leasing is by far the MOST EXPENSIVE option.

The cheapest option is to buy a decent vehicle and run it til the wheels fall off. Then buy another one. Buying and keeping if for years will save you THOUSANDS over the years.

The OP needs to define “money pit”? The term means different things to different people. Some folks see a car as a money pit when they have to start replacing tires, and brakes, a timing belt, when in fact these are simply parts that wear out due to using the car. Most modern cars can go thorough several sets of tires and brakes without major repairs to the motor and transmission and don’t show any rust or cosmetic problems. At about 10 years old and 150K miles you had better start getting ready for some major repairs on most cars. Some fall apart sooner than others but generally a decently built car will get you into the 10 year and 150K area before it becomes a money pit.

However if you really don’t like driving a car that is over 5 years old. Replacing tires, brakes, and a battery, are things you consider major bills making the car a money pit; then you might be better of leasing your car. People that replace a car every 3 years should consider leasing. The monthly payment is less which is a plus. The minus is you are limited to about 12 to 15K miles per year on most leases. Driving more miles than the lease agreement calls for means heavy financial penalties hit you at the end of the lease period when you turn the car back over to the leasing comapny.

Ask your accountant. What is the best financial choice for you, may not be for the rest of us.

One thing I find amusing about this era: Back in the 1960s and '70s, when it was really hard to get a car to go much over five years and 100,000 was considered pretty well shot, people would buy a car and try to get as much out of it as they could. Now we have cars that can run 100,000 miles with little more than oil changes and, in most cases, could go another 100,000 with a bit of TLC, we lease so we can have a new one every 2 or 3 years. Seems kind of silly.

Why not just buy the Rav4 when it goes off lease?

Back in the 1960s and '70s, when it was really hard to get a car to go much over five years and 100,000 was considered pretty well shot

The car I learned how to drive on (67 Malibu SS 327 and 2-speed powerglide)…finally died at 325k miles. The timing chain broke and wasn’t worth putting the money into fixing it. Which I had though.

You are trading in a low mileage reliable Toyota CUV that gets 28 mpg for a truck-based 16mpg fuel swilling Wrangler that will likely be significantly less reliable, and you are worried about whether buying or leasing is cheaper?

Unless you really need that body-on-frame 4X4 for something your RAV4 can’t do, you are making a financial mistake by dumping it, whether you lease or not.

The cheapest way to do this is to take advantage of the first few years of steep depreciations and buy low mileage off-lease vehicles. Like the RAV4 you have sitting in your driveway now.

Leasing will basically never save you money over buying. However, if you go into this with a plan of leasing then buying the vehicle, it may not be a bad deal. Toyota’s lease payments on a 2012 Rav4 AWD would total $9,443 over the lease, with a purchase option of $14,871. That brings the total cost to $24.314. Edmunds’ true market value for that vehicle is $23,959. So you’re overpaying by about $355, which isn’t too bad.

Just make sure before you go in that if you exercise the purchase option they won’t still insist on charging you for damages or mileage overages. THAT is where the price could blow out of proportion.

And by all means, do NOT just turn around and lease another vehicle at the end of the lease - leasing one after another is a financial nightmare.

Personally, I think that leasing makes little or no sense unless you are leasing a vehicle for a business that you own, and thereby can write-off the lease expenses on your business tax return. Others may differ, but that is my belief.

As to that Jeep Wrangler, the most important quesion to ask yourself is:
Will I be doing a significant amount of off-road driving with this vehicle?
If the answer is, “yes”, then you would be hard-put to find a better vehicle for your usage.

On the other hand, if most of your driving is done on paved roads, it would be hard to find a worse vehicle than a Jeep Wrangler.
Why do I say that?
Because vehicle design is fraught with compromises, and when a vehicle is designed to excel in off-road conditions, it will almost always not be good on paved roads.

Just as nobody would expect a Cadillac DeVille sedan to do well in off-road conditions, it is also unrealistic to think that a purpose-built off-road vehicle like the Wrangler will perform well on paved roads.

Specifically, Consumer Reports had the following comments regarding the newly redesigned Wrangler when they tested it a few months ago:

Unsettled ride
Pervasive Wind Noise
Clumsy Handling
Very long braking distances
(about 20-25 feet longer [from 60 mph] than most other modern vehicles, which is enough of a difference to translate into hitting something that could otherwise be avoided)
Difficult access
Impaired visibility
Unsupportive seats
Poor fuel economy
Poor fit and finish

The only postive factors that they noted were that the vehicle’s reliability has now improved to average–as compared to its former very poor rating–and that it excelled in off-road conditions.
Does that sound like a vehicle that you want to drive on the highway on a daily basis?

In your situation, I would recommend buying the Rav at the end of the lease.

Just a couple observations. If the cost to purchase after lease is $14K but the value is $24K, that would be highly unusual. Usually the cost at the end should be about what the value is. Also when you turn around and buy it after leasing, you have to add in any additional finance costs to pay off the $14K and if finance costs are not an issue, then why lease in the first place?

So just pick a reasonable period of time like six years and do the quick math. Purchase cost plus finance cost over the five years, minus the value of the car at the end. Compared to same lease cost over 5 or 6 years plus the repair costs at the end.