I used to think leasing then buying was a waste of money for people that plan on keeping the vehicle for the long run. However, I'm looking at the acura.ca website and the interest rate for both financing and leasing is 1.9% for 36 months. Using the pricing chart on the acura.ca website (when you select RDX base model and the options etc.. You get to the last page providing you with leasing/financing options) for a base RDX no options total financing over 36 months no downpayment is = $ 50,171 CAD

While leasing for 36 months then buying = total cost upon deliver $808.42 + Monthly payments $661.58 x36months + buyout(residual value) of $23,809 = $48,434.3. To make the comparison of leasing to financing fair lets say the buyout of $23,809 is financed for 36 months at 1.9% it would then = $24,512.76 which would give a final leasing then buying price of $49138.06

To me obviously leasing then buying is the better deal, unless there is something hidden from the acura website that only comes up when you're signing the papers. e.g. I expected leasing interest % to be higher than financing but it seems to be the same at 1.9% in this case.

Any ideas anyone? am I missing something?

 

Good post.

In a similar dilemna....

I have a 08 TL-s. financed through Honda finance at 2.9%. Have
3.5yrs left before I own it. Currently at 81000km with a power train warranty
Expiring aug 2014 or 160000km ( whatever comes first ).
Once the term ends I estimate I'll have 140000km on the TL-s.

But it will be worth at least $15k assuming I keep it in good shape.

However, TLS maintenance is coming in the form of timing belt in about a
Year or so. So I have to factor in those costs.

I have a buyer who will take over the financing arrangement and this
Allows me to lease a 2013 rdx but leasing can create a cycle where you
Will always have payments.

So...am undecided on what to do... Does it make financial sense to sign
Away whatever equity I built into the TL-s and commit to a 4yr lease where
I'm renting the car and won't own it and if I wanted to own it, finance it
For another 4 yrs after the lease ends.

 

Viveno...I never buy my vehicles after my lease is up but thats because I like to lease another one. I wouldn't trust the numbers 100% that are on the Acura web site, they are there for a rough idea and there is no guarantee that you will be able to get 1.9% as a financing rate when your lease is up so keep that in mind too. The best thing would be to lease your vehicle and take your buyout value, add the tax and use that total amount as the following: If you lease for 36 months and your buyout is 24 000$ for example (with tax)....Try and put the 665$ extra a month away so that when your lease is up, you don't have to finance the balance at all. I know it seems like alot of money but if you have the money make the fiance payment, you should be able to put the money aside as long as you are disciplined.

The advantage with leasing the car at first is that if you discover you have a lemon, you are not stuck with the car. Also, if you ever get into an accident or the car gets vandalized when you lease, you are not the one taking the depreciation when you have to sell the vehicle

 

least it so you can beat the car up and get a new one . You can also claim tax if you have a "business" (tax write off)

 

here's an interesting article on leasing vs financing:


The reason leasing looks good to so many people is because they are thinking short term. You lease a car for three years, make a lower payment than if you had bought the car, turn the car back in at the end of the lease, and start another lease on your next car. Let's look at this situation both short term and long term assuming the life of a car is about 9 years (it's actually more like 10 years, but we'll use 9) and we're going to sign up for a three-year lease. We are looking at a car that sells for $23,000 new.

If we lease:
We have a lease payment of say $350 per month. We pay the lease company $1,100 in 'due at signing' costs and we drive the car for the entire three-year lease. During that 3 years, we have paid 36 payments of $350 which comes to $12,600. We add in the $1,100 we paid up front to bring it to $13,700. When we return the car, we pay the statistical average of $1,000 in mileage, wear and tear, cleaning fees. So, at the end of three years, we have paid a total of $14,700 to drive our leased car. At the end of the three years, we do it all again to lease another nice, new car. Using the same numbers we just calculated, over nine years of driving (three different car leases) we have spent $44,100 to have a car for nine years. We are averaging a cost of $4,900 per year to drive a leased car.

If we buy:
We can reasonably assume a payment of somewhere around $400 per month. That's $50 more per month than the lease payment, so at this point the lease is still looking pretty good. We drive that same car for it's entire nine year life. In six years, the loan is repaid and we have made $28,800 in payments. Lets say that during the nine years we've owned the car, we have put $6,000 into repairs. When we are done with the car at the end of our 9 years, we manage to sell it for $500. So, we made $28,800 in payments, paid out $6,000 in repairs, and got back $500 when we sold it. $28,800 + $6,000 - $500 = $34,300 we have paid to drive the car for nine years--an average cost of $3,811 per year. The leased car cost us $1,089 more per year.

In this example, in nine years we have paid $9,800 more to lease a car than to buy one. Yes, I understand that you got to drive a car no more than three years old with the lease, but for the first three years, you were doing the same when you bought the car. So, for six years, you paid $9,800 to be able to drive a car that is a few years younger. Also consider that when we bought the car and got the loan paid off, we got to drive about three years making no payments whatsoever; when you lease one car after another, you have payments for the rest of your life! Taking on those kinds of payments for the rest of your life makes it really hard to get ahead financially, and even harder to ever become wealthy.

 

There has never been a doubt in my mind that leasing is not financially the best thing to do but again, its not for everyone. I do it because I love trading cars every 3 years, I don't like to be dealing with trying to get the best value for my cars or dealing with morons when trying to sell privately. I do it because I can afford the lease payment, I have zero maintenance costs (I can't recall last time I bought tires except for my hyundai) and it gives me the rush of getting a new car often. If I was doing it from a financial point of view, I'd keep my car till it died. I have no mortgae and no debt and lots of dispoable income...rather than putting it on booze, drugs, travel or other things, for me, car is my drug of choice *lol*

 

My wife's Passat SE lease was based upon a purchase price of $23k. The monthly payments are $315/month and we paid NOTHING out of pocket other than first month's payment and $100 for DMV. At the end of her previous Jetta lease, she paid $0.00. So those numbers are off by $35/month x 36 = $1,260, plus $1,100 up front, plus $1,000 at the end = $3,360 less than projected by that article. My wife's Passat costs $3,780 per year with NO maintenance costs, or $1,120 less than the article suggests.

 

I never lease but just leased a ILX. $2400 down, $259 per month for 36 months 10k miles per year $19000 buy out at the end of lease. So if I keep it for the entire lease and buy it at the end it ends up costing me around $2000 under the original MSRP. Which is about what I could of bought it for cash up front. To me that seemed like a great deal with a lot of options. If I don't want to buy it at the end I just give it back, or during the lease acura will try to up grade me to a RDX or MDX with another good deal or I just buy it and I have had a 3 year test drive and know how this used ILX has been taken care of. Is this unusual for a normal lease? I also looked at AT'S and it would of been about $3000 over MSRP at the end of the lease.

 

I have often thought of leasing but haven't done it yet. I tend to get a different vehicle about every 3 years; some are new and some are less than 2 years old. With CarMax around, it is a lot easier to sell a high priced used car these days even if there is still a loan balance. I have sold 3 cars to CarMax at an average selling price of $20k. It's a smooth stress free process unlike the days I would let people test drive the car I'm selling and then count out a bunch of hundreds wondering if there are any fakes.

 

It is well known that leasing will cost more in the long run, simply put you'll be leasing for the rest of your life rather than paying something off and saving money.

However, my point is regarding leasing then buying which as noted in my post#1 seems to be the better deal according to the acura website. Since leasing payments are lower than financing I can use that money to invest it and then when leasing is up I can pay the car off in full as weather noted. I'll have to investigate some more, maybe I'll give my dealer a visit soon.

 

I belive the difference lies in the deferred tax with the leasing option.

When you finance you pay all of your taxes on the day you take delivery, which means you are also financing the whole tax bill (not inconsiderable in Canada!).

Where as for leasing, you pay the tax as you go. I am guessing the that the difference you are noting is the interest on the tax.

Then if you pay with your own cash, Acura Canada will give you a $4K factory rebate, making cash by far the best option!

 

Als, did you include sales tax on the lease buy out price of $23,809?

 

Can you elaborate on this? I never heard of it. How do you apply for the rebate?

 

Tax laws are different, certainly in different countries, and in different states within the U.S.. In Illinois one has to pay the tax on the total cost of the car(not the total of the lease payments like some states) up front. If one wants to roll them into the lease payment it is possible just like it is possible to "roll" them into loan repayments. Either way you are going to pay a finance charge on them. I've never leased and certainly wouldn't lease in Chicago and pay 9.5% tax on $40k every 3 years. If you can write it off as a business expense it helps but to the average person it's crazy IMO.

 

I wouldn't call it investing these days, interest rates are a complete joke in the US , especially for the amounts we're talking here. It's more like saving

 

rdxm - got my info from carcostcanada, but if you do a build on the acura.ca website it will give you 2 prices "Cash Purchase" and "Selling Price" with "Cash Purchase" being -$4K if you bring your own cash.

Talk to your dealer, this is what I got (plus dealer discount) on my RDX which I pick up tomorrow.

 

There is no application required, it will happen automatically. Its an incentive for Acura in not carrying the financial burden. So you get the $$$ discount but you have to find your own financial institution, either a bank, a credit union or is you have money saved up to pay the car cash.

 

Has anyone here done a 1 pay 36 month lease? Pay the entire amount up front.

 

I'm not sure about the 36 mo. one pay...my question is what if your vehicle were in an accident and totaled prior to the end of the lease would you get any money back? I do know leasing experts don't recommend putting any additional money down for this reason. Maybe things have changed over the years but it's something to consider.

 

^^ That is what I heard too. The only thing I did was a MSD which is not a damage deposit per se and would be refunded in its entirety. This is only on my TL as the RDX was a purchase.

 

I never leased before, normally I just purchase. But if your car got totaled prior to the lease's end wouldn't your own insurance cover that?

 

Take the extreme case of totaling your new vehicle one month after the delivery date. The insurance company isn't likely to cover the retail price of the vehicle plus taxes. So-called 'gap' insurance 'might' cover the difference between the 'value' of the vehicle and the amount owed; but it's not likely to cover the thousands of dollars in sales tax. All sorts of exposure with a pre-paid lease. At today's interest rates, the financial benefit of pre-payment is nearly zero.

 

Don't think GAP Insurance has any application to a lease?? If you totaled your car driving it off the lot, your insurance would pay the tab and you get another vehicle of equal value just as if you had paid cash. There should not be any loss other than the inconvienence encountered. One day, one month, one year, it's all the same. Things may be different in Canada so don't bet the farm on what I just said.

 

When you return the car from a lease are there not inspections and resulting penalties that are likely to change your analysis? Also you assume you will pay MSRP for the car instead of a lower price.

 

My experience with leasing is that you negotiate the best price possible and then either buy it, or lease it. There's probably some back door stuff that I don't know about but I don't think it's to big as the dealer is either selling to you for cash, selling to a bank for cash or selling it to a leasing compnay for cash. One way or another the dealer gets his money. As for return inspections they are usually quite liberal these days. Tire wear, windshield cracks or chips along with excess milage are all considered. My daughter who leased a Honda in 2010 was going to turn it in last month but she decided to buy it instead. I think there was a $1,500 forgiveness allowance for small items that would have needed attention before it would be resold at a Honda dealer.

 

I was under the impression that if you total a leased car, the insurance company gets you out of the lease (i.e. you don't have to make any more lease payments and there's no penalty for not being able to return the car when the lease is up). You don't lose money unless you put money down since you pay for the car as you go. I don't believe the insurance company does anything to help you get into a new car.

 

Well, it didn't happen to me and the dealer never mentioned anything like this to me. Maybe this wasn't in effect a year ago when I bought mine. I'll have to check with the dealer.

Thanks for the information.

 

rdxm, your frsh out of luck if you purchased a year ago. I have had my eye on a RDX since they were released last year. The first factory rebate in Canada came on last month - $2500 on the tech package for cash purchase. This was increased to $4,000 across the range in April, partly to make way for the 2014s I guess.

That was enough to make me pull the trigger. These days I wont buy a car without some sort of factory incentive - savings from factory incentives are typically much more than a dealer can offer, plus you still negotiate the dealer discount.

 

Well obviously if your car is insured against theft your going to get either a replacement car or cash. Nothing unusual about that.

 

Cash for a leased vehicle? Not to the individual...the leasing company owns the vehicle, not the person paying the monthly lease payments.

 

Think your wrong Coach. Called State Fram and posed the question. If my car was a total loss today and my buy out/pay off at the end of a one pay lease was, say $22,500 they would pay State Farm the full value of the car. Lets say after depreciation the car was worth $35,000. The $21,500 would go to State Farm and the balance would go to me and that would come from Acura Finance. Called them as well for a 2nd opinion and that's what they are saying as of this hour.

 

You didn't happen to be drinking before you made that call were you? What you're saying makes no sense at all. Why would State Farm pay State Farm? You made one lease payment and Acura Finance is going to pay you??? Maybe you just need to rephrase everything as I don't think you meant how this is coming across.

 

I'll try not to repsond to your insult. Give it a rest and move on.

 

Don't know what you're problem is but I certainly was not trying to insult anybody. I was just making a joke and that's why I used the emoticon. Again, I don't think you meant exactly what you wrote or I am just absolutely reading it wrong. What you wrote just did not make any sense to me. Sorry you were offended but I didn't mean it as an insult.

 

What geocord is trying to say is that the leasing company isn't going to pay you one cent. They own the title to the car. You are just renting it and have no claim to the property. Not much different than if you rented an apartment and the building burned down. You're not getting any payment from the insurance company for the value of the building.

One of two conditions will happen...

1 - The insurance company pays the leasing company a reasonable value for the car and the leasing company is satisfied and releases you from the lease. If there was a payment that was somehow higher than the book value of the car the leasing company is going to keep it. You have no claim to it. It was never your car. The insurance company doesn't care what the 'residual' value is, that is only related to the terms of the lease. The insurance company is not a party to the lease. That is between you and the leasing company.

2 - The insurance company pays the leasing company less than the value they believe they are owed. Then the leasing company may not release you from the lease until they feel they are paid the fair value of the car. Then you are either going to have to pay the leasing company, or convince your insurance company to pay more.

 

Your both wrong but why waste a nice Sunday arguing. If your leasing the car or financing the car. Same result, you will recover your loss and that's according to Acura Finance and State Farm. End of story.

 

no problem... best of luck.

 

Maybe they have a "special deal for you Texans"