Lease Vs. Purchase
05-08-13, 05:57 AM
#1
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Lease Vs. Purchase
Hey Guys,
I'm sort of new here, been lurking a while. I purchased my SP/Black 2013 GS350 F sport RWD about 7 months ago. I have noticed that most people on this forum lease their vehicles, rather than purchase. I was just wondering if you purchase a new car every 4 to 5 years and average 14k miles a year, is lease better than purchase? Thanks in advance for your replies.
I'm sort of new here, been lurking a while. I purchased my SP/Black 2013 GS350 F sport RWD about 7 months ago. I have noticed that most people on this forum lease their vehicles, rather than purchase. I was just wondering if you purchase a new car every 4 to 5 years and average 14k miles a year, is lease better than purchase? Thanks in advance for your replies.
05-08-13, 06:10 AM
#2
Hey Guys,
I'm sort of new here, been lurking a while. I purchased my SP/Black 2013 GS350 F sport RWD about 7 months ago. I have noticed that most people on this forum lease their vehicles, rather than purchase. I was just wondering if you purchase a new car every 4 to 5 years and average 14k miles a year, is lease better than purchase? Thanks in advance for your replies.
I'm sort of new here, been lurking a while. I purchased my SP/Black 2013 GS350 F sport RWD about 7 months ago. I have noticed that most people on this forum lease their vehicles, rather than purchase. I was just wondering if you purchase a new car every 4 to 5 years and average 14k miles a year, is lease better than purchase? Thanks in advance for your replies.
05-08-13, 06:21 AM
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its all dependent on the vehicle itself or the brand. With the higher end brand vehicles that retain their value, it is sometimes better to lease in hopes that the buy back will be significantly cheaper than buying it used. With lower end vehicles or ones who do not retain value very well it is almost always better to buy certified pre-owned or new before leasing because the leasing company will try to make up the cost on those particular cars.
I'd say with a lexus it is still on the fence. I do know that doing a lease on an audi is almost a guaranteed better buy, Im not so sure how the resale market on newer lexi is at this time.
For example
leasing a ford fusion for 3 years will give you a buy back at almost twice the used value of the car vs the buy back on a bmw being comparable to a used car.
I'd say with a lexus it is still on the fence. I do know that doing a lease on an audi is almost a guaranteed better buy, Im not so sure how the resale market on newer lexi is at this time.
For example
leasing a ford fusion for 3 years will give you a buy back at almost twice the used value of the car vs the buy back on a bmw being comparable to a used car.
05-08-13, 08:21 AM
#5
05-08-13, 04:11 PM
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It depends on how long you like to hold on to your cars and if you have a better use the$30K - $50K you would use to buy a car. If you change cars every 3 years or even 4-5, I think lease is a better option as long as the car has a high residual and the leases have decent money factors. BMWs and to some extent Lexus are decent to lease but Audi does not have good residuals and money factors and are very expensive to lease. Probably best is to buy a 1-2 year old certified.
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05-08-13, 05:32 PM
#8
Lexus Fanatic
Originally Posted by 2013F
I'm sort of new here, been lurking a while. I purchased my SP/Black 2013 GS350 F sport RWD about 7 months ago. I have noticed that most people on this forum lease their vehicles, rather than purchase. I was just wondering if you purchase a new car every 4 to 5 years and average 14k miles a year, is lease better than purchase? Thanks in advance for your replies.
The cheapest way to own a vehicle is to drive it until its fully depreciated, or even better to buy a used car that has already had a lot of depreciation and drive that until its fully depreciated. For many of us though thats not the experience with cars we want to have.
All these things are financial management tools, as long as you aren't leasing because its the only way you can afford the thing its a matter of looking at the least expensive way to have the car for the length of time you want to have it. For me, I know I will want a new car in 3 years or so, I can deduct for business, and I personally would never pay cash for a car when I can finance it for less than 1%, so leasing is a no brainer for me.
05-08-13, 05:56 PM
#9
Who is Dave Ramsy?
05-08-13, 06:27 PM
#11
BTW, my accountant always said cash is king, so leasing always adds a premium to the price over the long haul. Mind you David Ramsey is right, buying second hand will be the correct thing,
Last edited by zicogold; 05-08-13 at 07:00 PM.
05-08-13, 07:56 PM
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I would say talk to your accountant. If you don't have / need one, buy and keep for the long run. "Generally" BMWs lease better. BTW, I heard a Dave Ramsey podcast and I lasted all of 15 min. I don't get it.
05-09-13, 05:58 AM
#13
Most people today RENT (lease) their cars because their payments are lower. At the end of the lease they own nothing. Here is Dave Ramsey's opinion on leasing. Judge for yourself:
"Explain How A Car Lease Works
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car."
"Explain How A Car Lease Works
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car."
05-09-13, 06:51 AM
#14
Lead Lap
I debated this same thing when I bought my GS last February. My 2011 GS was essentially paid off, so I was either going to pull all the equity out and stuff it in the bank, or give it all to Lexus for a lease. Realizing that was incredibly stupid, I put all the equity into the new one and still ended up with a much lower payment, and at the end of my loan, I will own the car.
If you have no equity, leasing would be a good idea.
If you have no equity, leasing would be a good idea.
05-09-13, 07:06 AM
#15
Most people today RENT (lease) their cars because their payments are lower. At the end of the lease they own nothing. Here is Dave Ramsey's opinion on leasing. Judge for yourself:
"Explain How A Car Lease Works
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car."
"Explain How A Car Lease Works
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car."
Who leases for 5 years?
You can figure out the money factor and interest rate percentage.