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Getting off the leasing merry go-round

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Old 03-27-15, 11:12 PM   #1
frazierwa
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Default Getting off the leasing merry go-round

About 20 years ago I leased my first Lexus and I've leased seven consecutively since then. Can't remember why I decided to lease rather than buy; probably because I liked the idea of having a 'settled' transaction at the end of three years rather than haggling on both the purchase price and the trade-in value. Several times at the end of the lease (I've always done 'one pay' leases), I intended to purchase the next Lexus rather than lease it because they were always in perfect shape and I usually still enjoyed the car. I was always seduced into leasing a new model rather than buying my 'old' car. The logic of leasing a new car for +/- $25k rather than paying $40k to buy my current car made sense.

So I've only got 3 months left on my current lease, a 2013 GS350 F-Sport, so I went to a dealership and looked around for a replacement vehicle. The 2015 GS350 is too similar to my current ride so I nixed that option. I looked at the NX, but that seemed like a step down, which I'd be willing to take, except it's a first year for the model and the options list is thin. Bottom line, this year I think I'll just buy my current car at the end of the lease since nothing out there excites me and I still like my current car (only 10k miles).

Is there anything inherently wrong with this decision?

Thanks for any insight/discussion on the topic.

Any pitfalls I should avoid when paying off the lease.

Can I complete this transaction mostly with LFS or do I have to go to the dealer? I'd prefer to complete all the steps on-line with LFS... remember, I've fallen victim to "new care seduction" numerous time previously so I need to avoid that temptation.
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Last edited by frazierwa; 03-28-15 at 08:51 PM..
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Old 03-27-15, 11:27 PM   #2
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How much have you spent in the last 20 yrs leasing?
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Old 03-28-15, 12:05 PM   #3
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You really know how to hurt a guy! Seven cars over the last 20 years; I did a.' one pay' lease for each of them which varied from $20k to $25k. So between $140k and $175k. My cars have always been low mileage so I got good trade-in credit; well beyond the residual value.
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Old 03-28-15, 12:32 PM   #4
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dont ever lease again. Any vehicle is a bad investment,if you would have took the bus look how much money you would have in your pocket now lol
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Old 03-29-15, 07:19 AM   #5
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If you did the math on buying and trading cars even 5 years you'd be surprised to see your cost was very similar. $140k-$175k over 20 years to drive 7 new Lexus vehicles doesn't strike me as a lot.

Unless you're going to keep your 2013 GS for 10 more years, it doesn't make sense to buy it. I've done all the math myself because I really love my GS, I'm not going to keep it more than 2-3 more years and I will want newer tech at least, it's actually cheaper for me to just go lease an identical 2015/2016 GS vs buy out mine.

Just with the speed technology and safety are advancing, even outside of style and desire for newer cars I can't see myself keeping a car more than 5 years. Just look at the innovations in a 2015 luxury sedan vs a 2010 luxury sedan vs a 2005 luxury sedan. Imagine what we will have in 2020. I posted something on here a year ago maybe that outlined the math for purchasing and trading a GS every 5 years vs leasing every 3, and everybody was surprised to find out it was a wash. Plus the leased vehicle stays under warranty, may not need tires and brakes, etc...and the "wash" I calculated didn't even include those costs for the owned vehicle.

Unless you're content to own the car a long time past when its paid for, or in general a long time past 5 years old, or you're content buying used, leasing these cars really does make sense.
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Old 03-29-15, 07:25 AM   #6
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Dont listen to anyone, if you want to get a new car every few years do it. I l just like you lease every 2-3y and I love it. If you cant find another ride that is worth to lease now, wait till you are closer to the lease term is up and maybe you change your mind, no need to pay off the car now if you still have 3m left. If not keep GS and wait toll its worth leasing something else!
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Originally Posted by frazierwa View Post
About 20 years ago I leased my first Lexus and I've leased seven consecutively since then. Can't remember why I decided to lease rather than buy; probably because I liked the idea of having a 'settled' transaction at the end of three years rather than haggling on both the purchase price and the trade-in value. Several times at the end of the lease (I've always done 'one pay' leases), I intended to purchase the next Lexus rather than lease it because they were always in perfect shape and I usually still enjoyed the car. I was always seduced into leasing a new model rather than buying my 'old' car. The logic of leasing a new car for +/- $25k rather than paying $40k to buy my current car made sense.

So I've only got 3 months left on my current lease, a 2013 GS350 F-Sport, so I went to a dealership and looked around for a replacement vehicle. The 2015 GS350 is too similar to my current ride so I nixed that option. I looked at the NX, but that seemed like a step down, which I'd be willing to take, except it's a first year for the model and the options list is thin. Bottom line, this year I think I'll just buy my current car at the end of the lease since nothing out there excites me and I still like my current car (only 10k miles).

Is there anything inherently wrong with this decision?

Thanks for any insight/discussion on the topic.

Any pitfalls I should avoid when paying off the lease.

Can I complete this transaction mostly with LFS or do I have to go to the dealer? I'd prefer to complete all the steps on-line with LFS... remember, I've fallen victim to "new care seduction" numerous time previously so I need to avoid that temptation.
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Old 03-29-15, 07:39 AM   #7
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The bottom line is, in general if you're going to buy...buy from the start. Leasing and then buying it out seldom makes sense, because you're always faced with that value proposition, do I keep mine for a price thats probably more than its worth, even though its nearer the end of the warranty, may need tires, brakes, etc...or do I lease something new for basically the same cost?

For the OP, since he has only driven 10k miles in nearly 3 years, leasing is a very expensive option vs buying and keeping from the get go, but now you're in this spot already.

Lets say you bought the car out for $40k, and then traded it in 3 years later. Whats it going to be worth? $20,000? So its cost you $20,000 to drive it three more years. Could you lease another one for that $20,000 for the same 3 years? Yes, perhaps less because the leases are so good now. So there it is, you could drive your 2013, or a new 2015 for the same cost for the next 3 years.

If you truly will keep it longer, the value proposition gets better, but you have to really ask yourself after having leased for 20 years, and being accustomed to a new car every 3 years, will you do that? Will you be just as happy with the car in 2018? If not, its not going to save you money buying yours over leasing a new one.
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Old 03-29-15, 10:05 AM   #8
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Quote:
Originally Posted by SW13GS View Post
The bottom line is, in general if you're going to buy...buy from the start. Leasing and then buying it out seldom makes sense, because you're always faced with that value proposition, do I keep mine for a price thats probably more than its worth, even though its nearer the end of the warranty, may need tires, brakes, etc...or do I lease something new for basically the same cost?

For the OP, since he has only driven 10k miles in nearly 3 years, leasing is a very expensive option vs buying and keeping from the get go, but now you're in this spot already.

Lets say you bought the car out for $40k, and then traded it in 3 years later. Whats it going to be worth? $20,000? So its cost you $20,000 to drive it three more years. Could you lease another one for that $20,000 for the same 3 years? Yes, perhaps less because the leases are so good now. So there it is, you could drive your 2013, or a new 2015 for the same cost for the next 3 years.

If you truly will keep it longer, the value proposition gets better, but you have to really ask yourself after having leased for 20 years, and being accustomed to a new car every 3 years, will you do that? Will you be just as happy with the car in 2018? If not, its not going to save you money buying yours over leasing a new one.
Wow... you've raised some really good points... especially about the cost of depreciation over the next 3 years or so; which is probably when I'll be looking for my next car. If it really would depreciate approximately the same amount as the lease cost for a new car, then it would be foolish to drive the older car with the potential of more expensive repair/maintenance items. This dilemma may be more driven by the lack of excitement I have for anything new out there right now, coupled with my (false) calculation that it would be cheaper.

FYI, the residual on my current car is about $36k plus whatever tax will be due. The fair market value is about $41k. I know that a Lexus dealer will apply at least part of that excess value to a new lease. There is higher registration fees to consider. Colorado bases their registration fee on the value of the vehicle so registration costs will be about $1,200 in year one vs. about $600 for my 2013 'beater'. Also, insurance costs for a new care will be marginally higher with a higher value car. On the other hand, I would probably buy an extended warranty if I kept my existing car since I wouldn't want to bear the risk of a major expense such as an engine or transmission failure.

Too many variables... makes my head hurt. Someone must have created a spreadsheet to work through this.
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Old 03-29-15, 11:03 AM   #9
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You're in the same boat as me. The only replacement that really intrigues me is upgrading to an LS, and only that if its not a tremendous some more than I'm paying for the GS. If I really can get into one for under $900 per month I would do it, but then the other issue is a new GS will likely cost me $100 less than I'm paying now, so I'd still be paying $300 more a month for the LS...which I'm not sure is worthwhile when the GS is so great. We'll see, I have to wait until the end of the lease on the GS because the residual is so high, I can't get out early...which is fine.

When you do the numbers, if you're going to want a new car in 3 years, just lease another GS when yours is up instead of buying it out. Like I said, even if you got the identical car the numbers are still better and the downside risk is lower.

Also don't be too sure fair market for yours is $41k, the resale on these is a little soft. Mine right now is only worth about 34k trade in and 37k retail. More miles than yours, but how much is that worth? Hard to say.

Right now I'm leaning towards a nebula/grey luxury package GS, or a nebula/grey LS.
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Old 03-29-15, 11:17 AM   #10
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Ofcourse he did, he is my brother from another mother!
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Originally Posted by frazierwa View Post
Wow... you've raised some really good points... especially about the cost of depreciation over the next 3 years or so; which is probably when I'll be looking for my next car. If it really would depreciate approximately the same amount as the lease cost for a new car, then it would be foolish to drive the older car with the potential of more expensive repair/maintenance items. This dilemma may be more driven by the lack of excitement I have for anything new out there right now, coupled with my (false) calculation that it would be cheaper.

FYI, the residual on my current car is about $36k plus whatever tax will be due. The fair market value is about $41k. I know that a Lexus dealer will apply at least part of that excess value to a new lease. There is higher registration fees to consider. Colorado bases their registration fee on the value of the vehicle so registration costs will be about $1,200 in year one vs. about $600 for my 2013 'beater'. Also, insurance costs for a new care will be marginally higher with a higher value car. On the other hand, I would probably buy an extended warranty if I kept my existing car since I wouldn't want to bear the risk of a major expense such as an engine or transmission failure.

Too many variables... makes my head hurt. Someone must have created a spreadsheet to work through this.
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Old 03-29-15, 11:19 AM   #11
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Ofcourse he did, he is my brother from another mother!
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Old 03-29-15, 12:08 PM   #12
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You're in the same boat as me. The only replacement that really intrigues me is upgrading to an LS, and only that if its not a tremendous some more than I'm paying for the GS. If I really can get into one for under $900 per month I would do it, but then the other issue is a new GS will likely cost me $100 less than I'm paying now, so I'd still be paying $300 more a month for the LS...which I'm not sure is worthwhile when the GS is so great. We'll see, I have to wait until the end of the lease on the GS because the residual is so high, I can't get out early...which is fine.

When you do the numbers, if you're going to want a new car in 3 years, just lease another GS when yours is up instead of buying it out. Like I said, even if you got the identical car the numbers are still better and the downside risk is lower.

Also don't be too sure fair market for yours is $41k, the resale on these is a little soft. Mine right now is only worth about 34k trade in and 37k retail. More miles than yours, but how much is that worth? Hard to say.

Right now I'm leaning towards a nebula/grey luxury package GS, or a nebula/grey LS.
Are you holding out till the fall? GS is due for a minor refresh and isn't the LS due a major one?
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Old 03-29-15, 12:15 PM   #13
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I'm interested to see what conclusion you come to! Because as you stated its a complex and dynamic situation.

I started leasing many moons ago after getting a lemon ( no lemon laws back then). Then buying the car out after the lease was up and the car was still to my liking. Bought all of them after the lemon lol
This has served me well and I've usually kept the vehicles for 4-10 years depending on the situation. Selling them afterwards was never an issue as I take good care of my vehicles.

My 2005 Acura TL was my last lease and again I bought it out. Could have turned around and sold it for much more than residual value.
But it's a great vehicle, in good shape with 80k miles on it now. So after 10 years of driving it's worth about $10k, paid $40k for it all said and done. It's getting old ( but so am I ) but it's a darn good car and has NEVER let me down and has everything I need in a vehicle! Even the technology in the car is great to this day!

But I got it in my head I wanted to buy a new vehicle before I retire sometime in the next year, so I figured I would just pay cash, buy the GS350 AWD luxury with the 10 year warranty that covers everything, sell the Acura TL and call it a day.

But I still like my Acura TL ! Sure it has a few beauty marks, but the interior is pristine and mechanically very sound. Now I'm having a hard time deciding to sell it lol
Took Collision off the ins. so now it's $181 a yr. to insure as well.

What to do Is always the million $$ question LOL
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Old 03-29-15, 12:16 PM   #14
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Does he have to go to the dealership to pay the lease off or can Lexus Financial do it over the phone?

I am in the same boat, but I am keeping mine (13 ES/7K miles) as the lease deal was actually better than buying. I did the one pay lease and zero payments for 36 months. This is my first lease and I plan on not leasing again, but I couldn't pass on the incentives at the time I was purchasing.
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Old 03-29-15, 12:17 PM   #15
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Are you holding out till the fall? GS is due for a minor refresh and isn't the LS due a major one?
Yeah mine is not up until the end of November, so I'm going to wait and see the GS refresh, I likely will have to wait at least until September. The LS my guess is we won't see it until 2017. Haven't been any test mules out there or buzz, its not coming in 6 months.
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