Buying vs. Leasing
#41
Instructor
Leasing is one of the those hot topics.
There’s more than few financial “experts” label them a fleeces. Those same experts love to show the math of the sales guy.
There are few case leases work for user .........but very few..........I personally don’t want a never ending $500-$800 per monthly payment with no equity gain.
Even if I trade every 3-4 years.......my vehicle is never out of warranty, trade values always seem competitive which is same as residual value.
The other issue is vehicle condition at turn in.........some companies are very lenient others every item is checked and charged. Like glass, paint, interior stains, tires and brakes ?
Last edited by Showkey; 05-18-2021 at 06:31 PM.
#42
After reading all these comments, just for fun, I did some quick numbers on lease vrs. buy on my last few cars. In every case, based on my personal situation, the cars would have cost me around $3,000 to $7,000 more to lease than buy. But again, this is based on the average time I keep my vehicles before selling or trading them. YMMV
#43
Racer
At the risk of beating this subject to death, here is another potential negative for a lease. If the lease payment were based on 12,000 miles/year for 3-years, and the lessee drove only 32,000 miles, that person paid for 4,000 miles he did not use. At 20¢/mile, that’s $800 of wasted money.
While the lower mileage implies that car’s value should now be higher than the residual value, how many people actually buy-out their lease just to sell it? If you use a dealership to buy-out the lease, the dealership will probably charge more than $800 for their involvement. The dealership will not do it for free. And while you can buy-out the lease directly from the lease company, that requires time, effort and money. You must pay for the car with money from savings or from a loan. Then you must invest more time and effort to sell the used car to pay off the loan or to replenish your savings. How many people actually do that? In my experience not many, at least for a mileage difference of less than 4,000 miles.
If the lessee drives fewer miles than the maximum allotment, to some degree the lease value diminishes for the lessee and the dealer captures that marginal profit at the lessee’s expense. If a person purchased the car and traded it after the same 3-years and 32,000 miles, the trade-in value would automatically reflect the lower mileage.
While the lower mileage implies that car’s value should now be higher than the residual value, how many people actually buy-out their lease just to sell it? If you use a dealership to buy-out the lease, the dealership will probably charge more than $800 for their involvement. The dealership will not do it for free. And while you can buy-out the lease directly from the lease company, that requires time, effort and money. You must pay for the car with money from savings or from a loan. Then you must invest more time and effort to sell the used car to pay off the loan or to replenish your savings. How many people actually do that? In my experience not many, at least for a mileage difference of less than 4,000 miles.
If the lessee drives fewer miles than the maximum allotment, to some degree the lease value diminishes for the lessee and the dealer captures that marginal profit at the lessee’s expense. If a person purchased the car and traded it after the same 3-years and 32,000 miles, the trade-in value would automatically reflect the lower mileage.
Last edited by Baldeagle; 05-19-2021 at 07:36 AM.
#44
Drifting
Join Date: Apr 2018
Location: New Yorkie, Hudson Valley
Posts: 3,001
Received 1,026 Likes
on
716 Posts
At the risk of beating this subject to death, here is another potential negative for a lease. If the lease payment were based on 12,000 miles/year for 3-years, and the lessee drove only 32,000 miles, that person paid for 4,000 miles he did not use. At 20¢/mile, that’s $800 of wasted money.
While the lower mileage implies that car’s value should now be higher than the residual value, how many people actually buy-out their lease just to sell it? If you use a dealership to buy-out the lease, the dealership will probably charge more than $800 for their involvement. The dealership will not do it for free. And while you can buy-out the lease directly from the lease company, that requires time, effort and money. You must pay for the car with money from savings or from a loan. Then you must invest more time and effort to sell the used car to pay off the loan or to replenish your savings. How many people actually do that? In my experience not many, at least for a mileage difference of less than 4,000 miles.
If the lessee drives fewer miles than the maximum allotment, to some degree the lease value diminishes for the lessee and the dealer captures that marginal profit at the lessee’s expense. If a person purchased the car and traded it after the same 3-years and 32,000 miles, the trade-in value would automatically reflect the lower mileage.
While the lower mileage implies that car’s value should now be higher than the residual value, how many people actually buy-out their lease just to sell it? If you use a dealership to buy-out the lease, the dealership will probably charge more than $800 for their involvement. The dealership will not do it for free. And while you can buy-out the lease directly from the lease company, that requires time, effort and money. You must pay for the car with money from savings or from a loan. Then you must invest more time and effort to sell the used car to pay off the loan or to replenish your savings. How many people actually do that? In my experience not many, at least for a mileage difference of less than 4,000 miles.
If the lessee drives fewer miles than the maximum allotment, to some degree the lease value diminishes for the lessee and the dealer captures that marginal profit at the lessee’s expense. If a person purchased the car and traded it after the same 3-years and 32,000 miles, the trade-in value would automatically reflect the lower mileage.
Like I said, they have plenty of money, so it is not an affordable question, but it is a poke in the eye.
The following users liked this post:
Baldeagle (05-19-2021)
The following users liked this post:
Baldeagle (05-19-2021)
#46
Hmmm...what kind of oil is best for a leased car?
![Big Grin](https://acurazine.com/forums/images/smilies/biggrin.gif)
Please note the smiley...
![Big Grin](https://acurazine.com/forums/images/smilies/biggrin.gif)
Please note the smiley...
#47
Cruisin'
At the risk of beating this subject to death, here is another potential negative for a lease. If the lease payment were based on 12,000 miles/year for 3-years, and the lessee drove only 32,000 miles, that person paid for 4,000 miles he did not use. At 20¢/mile, that’s $800 of wasted money.
While the lower mileage implies that car’s value should now be higher than the residual value, how many people actually buy-out their lease just to sell it? If you use a dealership to buy-out the lease, the dealership will probably charge more than $800 for their involvement. The dealership will not do it for free. And while you can buy-out the lease directly from the lease company, that requires time, effort and money. You must pay for the car with money from savings or from a loan. Then you must invest more time and effort to sell the used car to pay off the loan or to replenish your savings. How many people actually do that? In my experience not many, at least for a mileage difference of less than 4,000 miles.
If the lessee drives fewer miles than the maximum allotment, to some degree the lease value diminishes for the lessee and the dealer captures that marginal profit at the lessee’s expense. If a person purchased the car and traded it after the same 3-years and 32,000 miles, the trade-in value would automatically reflect the lower mileage.
While the lower mileage implies that car’s value should now be higher than the residual value, how many people actually buy-out their lease just to sell it? If you use a dealership to buy-out the lease, the dealership will probably charge more than $800 for their involvement. The dealership will not do it for free. And while you can buy-out the lease directly from the lease company, that requires time, effort and money. You must pay for the car with money from savings or from a loan. Then you must invest more time and effort to sell the used car to pay off the loan or to replenish your savings. How many people actually do that? In my experience not many, at least for a mileage difference of less than 4,000 miles.
If the lessee drives fewer miles than the maximum allotment, to some degree the lease value diminishes for the lessee and the dealer captures that marginal profit at the lessee’s expense. If a person purchased the car and traded it after the same 3-years and 32,000 miles, the trade-in value would automatically reflect the lower mileage.
Note, if you lease with Honda Finance, and go from one Acura lease into another, Acura will roll your unused miles into your new lease. Because of COVID, I had 11k miles left on my 2019 TLX that I rolled into a new 2021 RDX lease. Sometimes this perk will allow you to only need a 10k lease instead of 12 or 15 which lowers the monthly payment. Also, Acura will forgive up to 7k miles over the purchased lease mileage so the .25 a mile over doesn't apply as long as you get into another Acura vehicle. The main kicker here is that you HAVE to lease with Honda Finance, not a 3rd party or dealer arranged financing outside of Honda Finance. Sometimes the dealer has "arrangements" with 3rd party leasing companies and they steer your business towards them.
If you want to purchase a leased vehicle, you don't deal with the dealer, you deal with the Financing company as the dealer doesn't own the vehicle. If it's Honda Financing, there's no fees to purchase the vehicle off lease but you do have to pay the taxes on the residual value. Acura front loads their leases so the residual value is high. But, this helps if you want to turn in your current lease early because the value of the vehicle is high, it covers the remaining payments and they aren't rolled into the new lease. The other secret with Honda Finance is that once your lease is up, you don't necessarily have to turn it in, i.e. I have a 36 month lease and it's the 36th month. You can continue to go month to month for up to a year (with Honda Finance) until you are ready to lease or purchase something else.
The following users liked this post:
Vince D (05-19-2021)
#48
Drifting
Note, if you lease with Honda Finance, and go from one Acura lease into another, Acura will roll your unused miles into your new lease. Because of COVID, I had 11k miles left on my 2019 TLX that I rolled into a new 2021 RDX lease. Sometimes this perk will allow you to only need a 10k lease instead of 12 or 15 which lowers the monthly payment. Also, Acura will forgive up to 7k miles over the purchased lease mileage so the .25 a mile over doesn't apply as long as you get into another Acura vehicle. The main kicker here is that you HAVE to lease with Honda Finance, not a 3rd party or dealer arranged financing outside of Honda Finance. Sometimes the dealer has "arrangements" with 3rd party leasing companies and they steer your business towards them.
If you want to purchase a leased vehicle, you don't deal with the dealer, you deal with the Financing company as the dealer doesn't own the vehicle. If it's Honda Financing, there's no fees to purchase the vehicle off lease but you do have to pay the taxes on the residual value. Acura front loads their leases so the residual value is high. But, this helps if you want to turn in your current lease early because the value of the vehicle is high, it covers the remaining payments and they aren't rolled into the new lease. The other secret with Honda Finance is that once your lease is up, you don't necessarily have to turn it in, i.e. I have a 36 month lease and it's the 36th month. You can continue to go month to month for up to a year (with Honda Finance) until you are ready to lease or purchase something else.
If you want to purchase a leased vehicle, you don't deal with the dealer, you deal with the Financing company as the dealer doesn't own the vehicle. If it's Honda Financing, there's no fees to purchase the vehicle off lease but you do have to pay the taxes on the residual value. Acura front loads their leases so the residual value is high. But, this helps if you want to turn in your current lease early because the value of the vehicle is high, it covers the remaining payments and they aren't rolled into the new lease. The other secret with Honda Finance is that once your lease is up, you don't necessarily have to turn it in, i.e. I have a 36 month lease and it's the 36th month. You can continue to go month to month for up to a year (with Honda Finance) until you are ready to lease or purchase something else.
#49
RDX ILX TSX
Note, if you lease with Honda Finance, and go from one Acura lease into another, Acura will roll your unused miles into your new lease. Because of COVID, I had 11k miles left on my 2019 TLX that I rolled into a new 2021 RDX lease. Sometimes this perk will allow you to only need a 10k lease instead of 12 or 15 which lowers the monthly payment. Also, Acura will forgive up to 7k miles over the purchased lease mileage so the .25 a mile over doesn't apply as long as you get into another Acura vehicle. The main kicker here is that you HAVE to lease with Honda Finance, not a 3rd party or dealer arranged financing outside of Honda Finance. Sometimes the dealer has "arrangements" with 3rd party leasing companies and they steer your business towards them.
If you want to purchase a leased vehicle, you don't deal with the dealer, you deal with the Financing company as the dealer doesn't own the vehicle. If it's Honda Financing, there's no fees to purchase the vehicle off lease but you do have to pay the taxes on the residual value. Acura front loads their leases so the residual value is high. But, this helps if you want to turn in your current lease early because the value of the vehicle is high, it covers the remaining payments and they aren't rolled into the new lease. The other secret with Honda Finance is that once your lease is up, you don't necessarily have to turn it in, i.e. I have a 36 month lease and it's the 36th month. You can continue to go month to month for up to a year (with Honda Finance) until you are ready to lease or purchase something else.
If you want to purchase a leased vehicle, you don't deal with the dealer, you deal with the Financing company as the dealer doesn't own the vehicle. If it's Honda Financing, there's no fees to purchase the vehicle off lease but you do have to pay the taxes on the residual value. Acura front loads their leases so the residual value is high. But, this helps if you want to turn in your current lease early because the value of the vehicle is high, it covers the remaining payments and they aren't rolled into the new lease. The other secret with Honda Finance is that once your lease is up, you don't necessarily have to turn it in, i.e. I have a 36 month lease and it's the 36th month. You can continue to go month to month for up to a year (with Honda Finance) until you are ready to lease or purchase something else.
Good info, jdorio.
![Thumbs Up](https://acurazine.com/forums/images/smilies/thumbsup.gif)
Currently leasing a RED 2019 ILX on a 3-year lease, but after test driving the
![Too Cool](https://acurazine.com/forums/images/smilies/toocool.gif)
#50
#51
Instructor
#52
#53
Three Wheelin'
As an Economics major with an MBA and someone who is probably way too frugal, I can tell you a lease is not a fleece. Factor taxes in your equations (which many of you have not) and the desirability of new technology and engineering. Now if you're the kind of person that buys a Civic and drives it into the ground for 10 years, then leasing was never for you. In fact, as I stated in my previous post, if you drive too little, too much, or plan on keeping your vehicle for more than 5 years, you should not be leasing. Generally you should not be leasing unless you know what you are doing (what to ask, how to negotiate, etc.).
As someone who has leased for the past 20 years, I do appreciate the varying opinions because the leasing infrastructure requires customers to purchase new and especially pre-owned cars (the 3-year old previously leased cars). If everyone leased, money factors and residuals would be skewed and the transaction imbalance would make leasing too costly.
So in that regard, thank you for thinking that leasing sucks.![Thumbs Up](https://acurazine.com/forums/images/smilies/thumbsup.gif)
As someone who has leased for the past 20 years, I do appreciate the varying opinions because the leasing infrastructure requires customers to purchase new and especially pre-owned cars (the 3-year old previously leased cars). If everyone leased, money factors and residuals would be skewed and the transaction imbalance would make leasing too costly.
So in that regard, thank you for thinking that leasing sucks.
![Thumbs Up](https://acurazine.com/forums/images/smilies/thumbsup.gif)
![Tomato](https://acurazine.com/forums/images/smilies/tomato.gif)
The following users liked this post:
ESHBG (05-21-2021)
#54
Drifting
As an Economics major with an MBA and someone who is probably way too frugal, I can tell you a lease is not a fleece. Factor taxes in your equations (which many of you have not) and the desirability of new technology and engineering. Now if you're the kind of person that buys a Civic and drives it into the ground for 10 years, then leasing was never for you. In fact, as I stated in my previous post, if you drive too little, too much, or plan on keeping your vehicle for more than 5 years, you should not be leasing. Generally you should not be leasing unless you know what you are doing (what to ask, how to negotiate, etc.).
As someone who has leased for the past 20 years, I do appreciate the varying opinions because the leasing infrastructure requires customers to purchase new and especially pre-owned cars (the 3-year old previously leased cars). If everyone leased, money factors and residuals would be skewed and the transaction imbalance would make leasing too costly.
So in that regard, thank you for thinking that leasing sucks.![Thumbs Up](https://acurazine.com/forums/images/smilies/thumbsup.gif)
![Tomato](https://acurazine.com/forums/images/smilies/tomato.gif)
As someone who has leased for the past 20 years, I do appreciate the varying opinions because the leasing infrastructure requires customers to purchase new and especially pre-owned cars (the 3-year old previously leased cars). If everyone leased, money factors and residuals would be skewed and the transaction imbalance would make leasing too costly.
So in that regard, thank you for thinking that leasing sucks.
![Thumbs Up](https://acurazine.com/forums/images/smilies/thumbsup.gif)
![Tomato](https://acurazine.com/forums/images/smilies/tomato.gif)
#55
Racer
But if the business buys the car, it can deduct 56¢/mile, also very simple. (That also applies to a lease if the 56¢ creates a larger deduction than the lease payment itself.) Or, a business can deduct 100% of the full purchase cost of that car (for federal tax) in the first year. And in each year of ownership, the business can further deduct all other costs such as gasoline, tolls, any repairs not covered under warranty, oil changes, brakes, tires (if tires cost more than $600, I think they are supposed to be depreciated), car washes, detailing costs, wiper blades, etc. When the car is sold, that sale value must be recaptured as income. But in the end, the business can itemize the same dollar-deduction as the lease. As I understand it, leases have no tax advantage. If you can provide anything specific that supports your statement, I'd really like to learn about it. Thanks.
The following users liked this post:
Showkey (05-19-2021)
#56
RDX ILX TSX
Only 3 months into it. It was the only 2019 on the lot and I'm sure the dealer was licking his chops and thanking his lucky stars someone came and took it away. My wife and I had zero intention of leasing any car that day, but after seeing how cool that RED color was and it was a blast to drive, it became our leased beater...
#57
Drifting
Only 3 months into it. It was the only 2019 on the lot and I'm sure the dealer was licking his chops and thanking his lucky stars someone came and took it away. My wife and I had zero intention of leasing any car that day, but after seeing how cool that RED color was and it was a blast to drive, it became our leased beater...
The following users liked this post:
Vince D (05-20-2021)
#59
RDX ILX TSX
Our ILX A-Spec is not my first red car, and one of my favorites was a brand new red 1980 Honda Civic DX 1500 5-speed 4 banger I bought before I joined the Navy. I think I paid $5K out the door. ![Big Grin](https://acurazine.com/forums/images/smilies/biggrin.gif)
Of course, the car was ALL RED exterior and interior. Drove it into the ground with over 200K miles traveling the country and had it transported to Hawaii when I was stationed there for a time, but it was a great car for a sailor.
![Big Grin](https://acurazine.com/forums/images/smilies/biggrin.gif)
Of course, the car was ALL RED exterior and interior. Drove it into the ground with over 200K miles traveling the country and had it transported to Hawaii when I was stationed there for a time, but it was a great car for a sailor.
#60
Drifting
Join Date: Apr 2018
Location: New Yorkie, Hudson Valley
Posts: 3,001
Received 1,026 Likes
on
716 Posts
I still miss that red EX MT. My wife made me sell it for a new Accord, but I didn’t really want to. Her logic was impeccable, so I gave in.
It only had about 125K miles, but the AC went out, and it was of the old type for which there were no more recharges available. I would have had to convert the AC system to the new freon, and it just did not make sense to put all that money into an old car.
It only had about 125K miles, but the AC went out, and it was of the old type for which there were no more recharges available. I would have had to convert the AC system to the new freon, and it just did not make sense to put all that money into an old car.
#61
Three Wheelin'
Forgetting about all other concerns or advantages of leasing for a moment....When you say "Factor taxes in your equations"... I did, and I think your math may be wrong in states that only charge sales tax on the difference between the new vehicle and the trade-in. (CA is not one of those states) I recently traded in a 2 year old RDX on a 2021 car. The RDX was worth around $30,000 so I saved 8.6% of $30,000 ($2,580) by purchasing. If I had leased, I would have lost that tax savings. Right? If I had traded in a 10 year old beater with little value, the lease might have made more sense. That is not going to happen for me. I acknowledge that I am not versed in leasing, and have never leased. I DID seriously consider it on my most recent "acquisition".
- California
- District of Columbia
- Hawaii
- Kentucky
- Michigan
- Montana
- Virginia
I know this is a Coke/Pepsi debate and you're either on one end of the argument or the other, so just do what best works for your family, for where you currently live, and call it a day.
![Big Grin](https://acurazine.com/forums/images/smilies/biggrin.gif)
#62
Drifting
Join Date: Apr 2018
Location: New Yorkie, Hudson Valley
Posts: 3,001
Received 1,026 Likes
on
716 Posts
Over at the BMW board, we have done the math several times. Shortly after the third lease, say 6 years and two months after the first lease, had you bought that first lease car, this is where you would be at about 75 months: A paid off car worth several thousand dollars (a 2014 335i with 75K miles has a KBB of $14K-$17K trade in value.). You would pay maintenance of course, but can easily get another 2 years without major service. At that 75 month time you would have paid out the same total dollars that two full leases and starting a third would have cost you. The same Total dollars, and that assumes no lease increase payments for lease 2 or lease 3. The ‘break even’ point comes in the middle of lease two somewhere if you factor in the equity in the car.
It would not be the current model, it would have no driving aids, but it wouldn’t cost you car payments, and a 6 year old or so car is still a good car.
It definitely costs more to lease and re-lease as opposed to buy and hold. OTOH, how long do you buy and hold a nice dinner for two? You pays your money and you takes your choice.
You want to see some real depreciation? Take a Danube River cruise. It definitely costs more than two weeks at the shore.
It would not be the current model, it would have no driving aids, but it wouldn’t cost you car payments, and a 6 year old or so car is still a good car.
It definitely costs more to lease and re-lease as opposed to buy and hold. OTOH, how long do you buy and hold a nice dinner for two? You pays your money and you takes your choice.
You want to see some real depreciation? Take a Danube River cruise. It definitely costs more than two weeks at the shore.
Last edited by Madd Dog; 05-20-2021 at 01:13 PM.
The following users liked this post:
Type34 (05-20-2021)
Thread
Thread Starter
Forum
Replies
Last Post