DogLady

Just curious - how many people lease and how many purchase. Apparently right now they have some great rates on leases, although I have never leased a car. What do you think?

xfirechief

We leased for 3 years & then purchased our lease. For what we paid after the 3 years we saved over 5K from what it was selling for on the lot from the dealer. It least it looked that way for us.

khairsuk

I leased my vehicle because I own a business and I calimed it under the business. Plus I get the GST back. I will buy-back at the end of the 4-year lease.

Lex2000TL

This is not good idea to buy your lease.
- You pay taxes twice (for full priced car when at lease start and on residual value, when you buy it),
- You pay through lease more than your car depreciation over lease time.

The only benefit of buying leased car is that you know who drove it and car condition, and if this car is in high demand so you can arrange selling it for profit to you. E.g. I knew somebody who leased BMW that after its lease expired was worth on the market a lot more then residual value. That fellow advertized the car through craigslist.com and found buyer for it. The guy bought my friend’s BMW through the dealer and both (dealer and my friend) made some dough.

I leased cars, but I bought 08 RX350 this time. I go by simple rule: If I plan to change the vehicle in 3-4 years and don’t want to handle its disposal, I lease it. If I want to keep it for longer (5-6+ years), I buy it.

19psi

if you don't drive a ton of miles per year and typically change cars every 3 or 4 years, a lease is the way to go. it's the same car for less money. if you buy it, you'll end up paying the whole thing off and by the time you actually own it, it's a 5 year old 60k mile car taht you either have to keep or try to trade.

Lex2000TL

I have to disagree with that. If you look at monthly payments, than “yes” it is less money per month. However, it is cheaper to buy and sell the car even after 3 years, than to lease it. Car depreciation with payments, also significant, is far less then total of lease payments over that period of time.
The problem is that it is a lot of headaches to get rid of even nice car now days.

andreys

That is exactly right. Leasing car is actually way more expensive than purchasing the car and selling it afterwards. Here is the simple math to illustrate the bigger picture (numbers are rounded to make the math simpler):

RX330/350 Initial Value with taxes = $50,000
Lease $600 per month for 4 years with zero down = $28,800 + fees = $30,000

Based on the above, you end up with $20,000 in value. On top of that, Lexus now will allow you to buy the car back for $30,000 or so.

At the same time, if you would bought the car in the beginning, RX330/RX350 could be sold for about the same $30,000 after the same 4 years, so the difference is roughly $10,000 vs. leasing. Now, of course, leasing is marginally more convinient, but it is not cheaper by any means.

-- Andrey

inspired

that is why i never lease

javanutsy

Purchased all our cars...

jamesfabin

Here is my advice:

If you KNOW you want this car, buy it.

If you THINK you want this car, lease it. Work out a great deal on the selling price and make sure to get the highest residual. Then when your lease is up, you have the option to buy it if you now KNOW you want it. If you don't want it, walk away.

Sometimes there is extra back-end money available for leases, letting you get an even better deal then buying it up front, so check that out. But the majority of time, the best deal will be to buy it up front...if you KNOW you want it. I get bored of cars easily, so even keeping one 2 years is difficult for me. I'm perfect for leasing. Also (though I know numerous people will disagree), it's a LUXURY car, you're paying extra for that. The Hyundai Veracruz is a great alternative to save money - and has a great warranty.

01001GS

There's alot more involved than just this simplified math. You may save a few thousand but not that much these days. For those who want to see the difference in number, you can check this out. I find leasing more convenient for several reasons: I want a new vehicle every few years, I don't want to deal with car problems, I don't want to deal with selling a car when I want a new one, with the same amount I pay out each month I can lease a better car.

AM1

iTrader: (6)

my rx330 is leased through my company. it only makes sense from a stirctly financial point of view to lease it through a company. otherwise financing is almost always better. But then again leasing is ok if you dont care that much about getting the most from your money and like the idea of having a new car every few years and other things...

19psi

that's true assuming one doesn't just give the leased car back after the lease is up. the advantge to leasing is that you get to make lower payments and drive the same car while having the option to just give the car back after th lease is up. thn you don't have to deal with tryng to sell a used car or gttin screwed on your trade in value.

of course that is the ONLY time i recommend leasing; when one intends to just give the car back and lease another one. any other outcome will cost extra over just buying it from the beginning.

jfelbab

Since cars depreciate in value, wouldn't it be great if you could tap into that fact and deduct the depreciation from your taxes? Well here is a legal way to do just that. The following info came from my business professor at Wharton.

According to the current tax law, if you buy a car and lease it to someone, you, as the lessor, get to deduct the depreciation on that vehicle from your tax burden. This is a significant tax advantage for the lessor.

So lets say you and a friend or family member (but not spouse) are both in the market for a $50k vehicle. You buy the car the other party wants and lease it back to them. The other party does the same. You both wind up in the vehicle each of you wanted and suddenly and legally get to deduct the depreciation on the vehicles you own, thereby saving thousands of dollars over the life of the lease. You both must pay typical market value lease payments and the terms must be similar to other commercial lease agreements.

While this is a perfectly legal strategy according to my professor, I'd advise anyone who might consider using this advice to consult a tax lawyer prior to jumping into this so that you understand what the tax implications are for your entire tax and financial situation.

salimshah

The following explanation has made sense to me [does not mean it is correct].

By shear existence (and expanding business), the leasing companies are making money. It is either by purchasing vehicles (dealership/manufacturer/supplier) at reduced rate or charging the purchaser (for some convenience ... low payments, hassle of selling etc). When the customer uses the vehicle for business, they can get additional tax break. The risk carried by the leasing company is reduced by high fees (return condition, early termination etc).

What gives?

Salim