When (if ever) is it better to lease a car rather than buying?
Never for an individual, rarely for a business (depending how you handle the expenses).
The only time it is better to lease is if someone else is paying. That means, occasionally for a corporation or business that can deduct the lease cost it might be a good idea, but even then not always. For an individual, it is never a good idea. I can imagine some really rare circumstance might make it better, but so rare that we might as well just say never.
Leasing has many down sides. Usually it cost more in the long run, even if it sounds like it will cost less. It traps you into what you originally agreed on. Any changes are going to cost you. You never have any equity. You can end up owning money on the lease even after you turn it back in. Now that is no fun.
Buy. Unless you’re a business and your accountant says otherwise.
Also, if the car has any problems or you run into financial difficulties, you cannot trade or sell a leased vehicle. You’re stuck.
I’ve yet to hear any VALID explination why Leasing is better then buying. Leasing a vehicle is probably the dumbest financial decission you can do.
All the judges seem to say “looser” to the one who leases… It depends also on how much money you don’t care about!
If your company wants you to have a new car every 3 years, leasing oftem makes sense, if they pay enough per mile or they pay the leasing costs plus operating costs. I cannot think of any other circumstances where you come out ahead as an individual.
I believe in owning vehicles for as long as possible. That said, I can only think of one (non-financial) reason to lease over buying: if you want to own a new car every two years. It’s a poor decision financially, because you pay almost the same amount you would if you were purchasing the car but gain no equity in the car. It’s like renting instead of owning your home. At the end of your lease, you’re out of your car (or apartment) with nothing to show for all your payments.
I wonder, if someone who always wants a new car bought one every two years and traded the old one in, whether they would really spend much more if you factor in the lost depreciation and the added expense of car loans. I’m assuming that if you would lease you couldn’t afford to buy the car outright, although that may not always be true. Anyone want to do some math or correct me?
I agree, the only way to buy any car (new or used) is to pay cash. If you cannot afford to buy a car for cash, you need to buy the cheapest used car that meets your needs and borrow the minimum amount possible. There is no reason for a broke person to buy any new car, certainly not a new car every two years.
If you can afford to pay cash for your car and are taking out a loan or leasing, you need a better financial adviser.
When you have too much money and don’t need the hassle of pinching pennies. If you are making $150,000 a year in Steubenville then go for the lease, but if you’re doing it in Manhattan, there could be problems. Then again, I never had problems trading a car when I got done with it. The way I do things, I can’t really tell.
But if you have a problem with the vehicle you’re s####ed.
And if you lose your job and find you need to commute to your new one…the mileage just may bankrupt you!
Naw, I can’t see a single benefit to leasing for an individual…but I see real risks.
If you “have too much money” just pay cash for whatever you want.
The only possible case I could see for leasing when you are using it as a business vehicle and you would prefer to cash flow the lease payments. Personally, I keep business vehicles as my private vehicles and use the standard mileage rate for (untaxed) reimbursement for their use. Talk to your accountant.
I’ve leased for over 20 years – 87 Maxima, 89 BMW 325, 94 Acura Legend, 96 Grand Cherokee, 00 BMW 525, 03 Infiniti QX, 05 Cadillac CTS. I can lease a more expensive car than I could afford to buy. I get tired of cars after 2 years and am ready for a new one in 3. I’ll always have a car payment so why not drive something I enjoy? The car is under warranty the entire time. I don’t do more than 3 years, I don’t do a down payment (capital cost reduction) and I make sure there’s gap insurance and the lease is with a reputable credit company like GM or BMW; not some unknown bank. Yes, a change of circumstance (say, employment or commute) can be a risk. Other than that, I’m OK with it…it’s like renting a new luxury vehicle every few years.
“I can lease a more expensive car than I could afford to buy. I get tired of cars after 2 years and am ready for a new one in 3. I’ll always have a car payment so why not drive something I enjoy?”
Well jaxlw1; if that statement doesn’t convince you that it’s a horrible idea to lease a car, I just don’t know what else we can say. Unfortunately, leasing has become a way for broke people to drive cars they simply can’t afford. It’s just about one step above “payday loans.”
I’m hardly broke, my dear. I can afford an ongoing car payment and many folks in my salary range lease. I didn’t say it was “better” to lease, I just said I’ve done it for years and it works for me. If you choose to drive an old-a** paid-off car, that’s your choice.
You should do what you like, you’re obviously not going to change your mind after 20 years. It took me one car lease (many years ago) to figure out that I was getting hosed. I could also pay $1000 per month to indefinitely rent a car, but I understand why that’s not a very good deal.
I was just trying to point out to the OP why many (misguided) people lease cars. IMHO, it’s a very bad idea, even worse that borrowing money and making payments.
You’re only getting hosed if you (I mean anyone) don’t understand the concept. You’re paying to use the car over the term of the lease. They subtract the pre-determined value of the car at the end of the lease, and the remainder is what you are paying monthly payments on. Yes, the monthly payments plus buyout figure is usually way more than the original cost of the car, so it’s usually not worth it to buy the car at the end of the lease. And yes, there can be penalties if you don’t take care of the car. But whoever said you pay just as much leasing as you do buying is just wrong. I’m paying out about $20K over 3 years for a $45K car. I didn’t tie up money with a cash down payment. I could never afford a $45K car otherwise. The fact that I have nothing in the end just means I go lease another vehicle. But I know this really bothers some people who want to OWN something at the end of the 3 years.
As I said, you should do what you want, I just don’t want to see the OP get bad advice.