jaime1982

Ok, I have a question for you guys. Why do so many of you guys lease these cars vs just buying them? I know some people have a car pmt budget for every month and like new cars every 24 months. I get that. Is that the only benefit or is there something else?

I have never leased a vehicle so this is an honest question and not meaning any offense to anyone. Isnt this the same as renting it with an option to buy out after your term is up?

SW17LS

This has been discussed on here ad nauseum. There are a lot of reasons, for me I know I'm going to want a new car every 3 years or so, and the most cost effective way to accomplish that goal is to lease. There are business tax advantages I take advantage of too.

I've done the math, and unless you're going to keep it for longer than 5 years, leasing these sorts of cars really makes sense. Its no more expensive than buying and trading after 5 years, they stay under warranty, etc.

Thats exactly what it is.

dchar

That's pretty much it. Besides getting a new and updated car every few years, not needing to deal with out of warranty repairs (even though these cars are very reliable) or the hassle of selling/trading in the car are a few other reasons. It's basically paying for the time you use the car, but only works well for people who can stay somewhat within mileage limits.

There's nothing wrong with the GS, just the lease rates are too good to pass up. With how often they update (styling and tech) cars now, I like having the option of just getting a new car and making it part of my monthly expenses.

SW17LS

For instance I was going to buy our new Kia Sedona minivan, but the lease was the lowest money factor I had ever seen, 0.00001. Thats 0.024% interest...almost free money...so I leased it too.

jaime1982

Thanks for the responses. I get it and it makes sense if its in your budget to upgrade every few years. They brought up the lease the other day when I was at the dealer but I didnt even consider since I was there to buy.

faifai83

Leasing is more expensive in the long run. It's like renting an apartment vs. buying a house.

RyanC

iTrader: (1)

Amazingly - when I bought my GS350, because of the $2500 lease cash, first month's payment free and super low money factor - it was cheaper for me to lease the car for 27 months (10k miles) and buy it at the end than it would have been if I bought it outright and got a 60 month loan. Even if I take a loan out after 27 months, I still would end up breaking even - but with the advantage that I've freed up some extra cash during the 27 months and I have the option to walk away from the lease at the end of it.

I also recently bought my wife a 2014 MDX, we didn't lease it - we bought it and a guy ran a stop sign and hit her car 5 days after we bought it. Car had less than 1000 miles on it. If I had leased it - I could have walked away from it at the end of the lease and let the depreciated value from the accident be someone else's problem.

Or in the event that you really regret the purchase (the 2014 MDX is one of those - in 2015 they upgraded the NAV considerably, in 2016 they added the 9-speed auto and a bunch of other features) ... and my 2014 MDX is less than a year old and the 2016s are already out

In my case it just gives me more options on what I want to do. With technology changing so much (Apple Carplay and Android Auto comes to mind) - it makes sense to me to lease, but thats just me.

ItzFilyO

That's exactly why I lease mine too, plus I know I'm going to want to get a new car again after 2-3 years.

SW17LS

Its nothing like renting an apartment vs buying a house. Houses, in general, go up in value over time. They are also hedges against inflation, the interest and taxes on them are tax deductible. Cars depreciate in value and nothing about them is tax deductible, unless you have a business...and then if you do the tax benefits for renting may be better. Every day you drive a car it looses value.

Owning a home is the #1 source of wealth for Americans. Thats absolutely not the case with owning a car.

Its an expense, plain and simple. So, the question is how do you want to manage it and what are your priorities?

The cheapest way to drive a car is to buy a used car and keep it until it falls apart.

But, life isn't all about doing things the cheapest way possible. For me, I derive a a lot of enjoyment out of my car, and I want a new one with the latest style and technology every few years. Understanding that its a big expense, my goal is to fill that desire the least expensive way I can...and thats to lease.

jaime1982

Im not into making car pmts forever but I also dont get to have a new ride every 2 years. Leasing is not for everyone but I get it. You never really own anything in your life anyway, living on borrowed time.

SW17LS

Thats the thing, it doesn't only make sense for people who want a new car every 2 years. I've done the math, and the break even point is 5 years. If you buy the car, pay it off in 5 years and trade it in around the same time, the cost is about equal to leasing every 3 years, even when you factor in the trade value at the end of 5 years. If you keep them longer than 5 years thats one thing, but if you buy and keep them 5 years or less, you really should consider leasing.

Trek

My 2013 GS is my first ever lease. I did it for two reasons. First, I usually keep my cars for a long time, basically until they die. I still have my 2002 Altima V6 and my 2008 Acura RDX-Tech, both with over 100K miles. Second, I'd never owned a Lexus. I wasn't sure of the quality of the brand and have always been turned off by the idea of owning anything in the "Toyota" family. It was a personal bias. I've been so impressed by my experience with the 4GS that I'm seriously considering keeping it when my lease runs out this fall. I'm only wavering because the freedom of the coming end of my 27 month lease has left me vulnerable to temptation to try something different. I'm not a brand loyalist, which makes me even more vulnerable to sexy alternatives like the 2016 Jaguar XF AWD, and 2016 Porsche Macan. I'm even lusting after the leggy Dodge Charger Hellcat but they keep selling out before they're built, and most pimps...I mean dealers, keep charging a markup of 10-20K. Whatever I pick, I'll probably lease again. A short lease is almost like being a kid in a candy store.

BkFromBava

The reason why people lease is simple. For those who are not going to buy a Camry or an Accord and drive it till the wheels fall off, there is NO SENSE in paying for something that depreciates everyday. Some people call cars an "asset" once it's paid off. Well, it's really NOT because again, it continues to depreciate. I think the finance people call it a "depreciating asset". Why would you pour more money into something that loses value than exactly the depreciating amount?

mso4

iTrader: (1)

Even if I was going to buy a car, I would still lease the first three years assuming the interest rate is not over 2-3%. For me I get to deduct my lease payments as a tax write off. So my $600 payment ends up costing me $400. At the end of the lease if I decide to keep the car I just pay off the residual. This is significantly cheaper than payment the $50k up front. Other benefits include keeping cash in your pocket, you don't pay all the taxes all at once. If you're car is totaled after two years, you would loose all the tax money had you purchase with cash.

So as long as the interest rate is no more than 2-3%, I see no downside of leasing a car.

SW17LS

And if you buy out the car you get the depreciate it and deduct it again. Meaning leasing then buying gold extends the length and amount of your deductions.

No sales tax savings in some states though, including MD. We pay tax on the whole sales price