I’ve decided to lease a car and wonder how/if that changes my shopping priorities. Buying a car I’d almost certainly go with Subaru, Honda, or Toyota for reliability/‘true cost of ownership’. But leasing for 3 years, is reliability/TCO a much less significant issue? Surely I don’t care about statistically likely repair costs in years 5 through 10, right? Or is this not correct?
Are there are differences that are big for buying but are relatively unimportant for leasing? Or vise versa?
In case it is relevant to your response, I am not a luxury leaser; cost is a large factor for me. My business is cash-dependent and over the course of time it is much cheaper for me to lease than buy.
First, I would focus on the vehicle that meets your needs and that you enjoy driving.
Next, I’d suggest talking to your accountant asking them which make more financial sense. Pretty much every Japanese car will have good reliability. Buy the one that fits you best. If you were considering a Jaguar or Land Rover, it would be a different discussion.
First, chose the car you like, second, chose the financing the makes the most economic sense.
Does leasing actually offer any advantage beyond quick access to more automobile than could be obtained in a traditional financed purchase? Can I infer that you see leasing as an opportunity to overlook long term reliability in favor of some subjective qualities you desire? Certainly, leasing is a good way to take the uncertainty out of acquiring a Land Rover.
You’ve already decided to lease. Yeah I’ve known people that like to lease but mainly because they can get a new car every few years at a lower monthly cost. Whether cheaper in the long run is debatable. At any rate the main unknowns are what damage you will be charged for at the end of the lease that are beyond “normal wear and tear”. The other is what non-covered repairs and maintenance you will be required to pay for during the lease. What happens if the car is totaled, you ruin an engine due to your own fault, and so on. Repairs will need to be done at the dealer to bring the car back to normal condition. What if you decide the car is a total dog in a year? Your options are very limited in all these cases. I just like to have more control.
I’ll ignore the lease/buy decision, now that you’re leasing. I would look around for ‘subvented’ leases, where they’re giving a special deal based on manufacturer support. Those actually can make more sense than buying in some cases. As long as it meets your needs, and the lease term equals/exceeds the warranty, that’s what I’d do.
You invest in a lease, or repairs and depreciation. Mileage per year is probably the biggest factor. Looking at a Traverse, for $2100 and $260 per month I can lease, or but for 28 k and pay $500 per month for 5 years. I usually keep a car 10, pay it off in 5 and drive it for 5 min, and do whatever repairs I am capable of. I have put $500 in parts in my current car, thermostat, starter motor, stabelizer links, outside of routine maintenance. 15k a year at 4 years average figure tires, and bakes at a minimum.
10 year leasing a car 12k miles per year assuming you stay at 12k per year, probably $31k, no repair worries.
I might look into it as at 0 interest, 28k in 5 years, and a couple of years of repair possibilities, probably 3k resale,I did not think I would consider leasing before looking at the options. Run your own numbers.
so over 10 years 31k for lease, bought figuring 3k trade in and 0% financing, 25k. that is an extra $50 per month and no repair worries or costs. So 6 Grand in repairs and maintenance, tires, brakes, cooloant , trans timing belt etc., I break even, less repairs and maint I win. Sloppy math, jus ball park numbers more or less.
If I leased a car, it would be for convenience. Therefore, I would lease a car that has a good reliability reputation. I don’t like to be inconvenienced by a car that either breaks down or has to make repeated trips to the shop.
You are somewhat correct that you don’t care much about reliability when leasing. But short-term still hurts, esp since most people who lease, want the convenience and any down time with the car is a major negative.
What makes certain models a better lease is their higher retained value. So if the car depreciates less in the 1st 3 years of ownership, the lease is going to be cheaper. So that’s why a Honda lease could be cheaper than a less desired make. Also, when some manufacturers run specials on leases, they usually inflate the residual to make it work.
I have a few friends who only lease. They have their own business and get the tax write off (you can still do that with a purchase too), but they know they are going to change the car in 2-3 years anyway. Another one, buys the car at the end of the lease IF they like it and IF they still need a car of the same size.
I am told, not to pay any down for the lease and just distribute the payments over the life of the lease. This is because if the car gets totaled in the 1st month, you are out the down-payment.
Make sure you know the cost for the miles you expect to put on during the lease. Miles over the agreed maximum can be expensive. If you expect to use your car for business travel and put on more than 10,000 to 12,000 per year, it could cost a ton in back end fees. Do you drive with customers in your car? If so, some luxury, and a spacious back seat, might be worthwhile investments. Normally, cars aren’t investments. But spending a little more to build relationships with your customers might be considered an investment. You know your business best and can best determine how that applies to your choices.
When you lease you need to look at the scheduled maintenance for the car. The leaser is responsible for the maintenance. Toyota’s and Honda’s in general have good resale value and retain their value longer, meaning they can offer some good deals on leases. I don’t think you’ll have any major issues with any car over the 2-3 year period of most leases, so get the best deal you can and take it.
Yes, @Mike. I have seen large corporations open leasing corporations under their corporate charter. They do so to remove liability from the parent corporation. It’s a matter of taking money out of one pocket and putting it in the other in order to limit tort liability. They own the vehicles on one desk and lease them to another desk.
Large companies also own property that they lease to their divisions. M company does it. That was a big help when business was tight in 2008/2010. My unit used one or two fewer buildings. We consolidated in the buildings we needed and stopped paying the home office for them. Now that business is better, we moved back into those buildings and 3 more.