What's better? To lease or to buy a car and pay monthly rates?

Question

I am thinking about a new car.

Answer 1

I would love to lease if it were not for the mileage limitations.  I drive like 25kmi per year!

If you can keep the miles down,,,,for sure without a doubt lease a car---forget the buying and losing.

Answer 2

Buy it. Leased cars is more expensive to insure cause it requires full coverage.

You can easily compare how your quotes will change in internet, for example here: http://carinsurance.yoll.net

Answer 3

buy

Answer 4

Leasing can be good for the right people.

Essentially, in a lease, you never "own" the car. You make payments for 2-3 years, then hand the car back. Think about it almost like a long-term rental.

There are some advantages to leasing under the right circumstances.

First, if you trade out of cars every 2-3 years, it might be right for you. In a lease, you have a contract for a fixed amount of time. I discourage leasing past 3yrs - 2 is better. In a 'loan', after 2 yrs, if you try to trade you will probably be upside down, and owe more than the car is worth. So, in order to get out of it, you have to have a lot of cash, or finance that negative on the next car.

The contract will tell you that your payments are $x per month plus tax. At the end of the term, you will have a residual value for the car. The lease company basically says "In three years, we feel this car will be worth $Y" You have the option to buy the car at the end of the lease for that amount. If you are in love with the car, or it is worth well above the residual, you may want to consider that. However, in most cases, you simply hand over the keys and walk away.

In a lease, there is a specified amount of mileage. Most leases are constructed around 12K or 15K miles per year. If you go over the mileage, there will be a per-mile penalty at the end of the lease. So, if you drive a lot, it may not be for you.

Leasing typically allows a person to get a nicer car for the same payment as a lower-end car on a loan. that is because of that residual. You are only "financing" the difference between sales price and residual. In a loan, you are financing the entire purchase price.

In other words, if a car has a sale price of $25,000. on a three year lease, lets say the residual is $12,500. You are only "financing" $12,500 for 3 yrs. If you were to buy that same car, you would finance $25,000 either for a longer term, or a much higher 36 month payment.

Lastly, in a lease you pay less sales tax. In a conventional purchase on that $25k car, you pay tax on the whole 25,000. In a lease, you pay sales tax on the monthly payment. In other words, your payment of $300/month is actually $300+sales tax. BUT you are only paying tax on the leased amount - in the earlier example you are only paying sales tax on $12,500.

To those who say "never lease" -- read this forum for 30 mintues.  For every lease 'horror story' you read,  you will see 20 people who are upside down on a 6 yr purchase and no way out.  The key is to be thoroughly informed about the pros and cons of both, and make an educated decision based on your needs and lifestyle.

Times leasing is good: You trade cars ever few years, you dont drive more than 12-15k per year, you want to put less down

Times it is bad: You like to keep cars a long time, you drive a lot, you want to put a lot of cash down.

Hope that helped some

Answer 5

The knee jerk answer is to buy, especially on these type of forums.

The reality is that leasing is great, for certain people. Ask yourself the following:

1)Do I like having a new car every 2-3 years

2)Am I certain that my driving requirements don't exceed 15k per year (ie no long commutes to work)

3)Do I have excellent credit

4)Do I take excellent care of my vehicles.

5)Am I comfortable with math and haggling with the dealer.

If you answer no to any of these questions then leasing is not right for you.

If you do lease, do TONS of research. Learn the basic formula used for leasing. Find out the money factor and residual for the vehicle you want. Look on the forums to see what others are paying. Know what the invoice price is.

It's a lot of work, but in the end, you can drive a much nicer car than you could afford to buy. Remember, until the car is paid off, the bank owns it anyway.

Answer 6

I find it better to buy. I leased a car once and the fees with the mileage were ridiculous. I will never lease again. It is always better to buy. Why pay the same every month to drive a car that you will never own!

Answer 7

The answer to your question depends alot on what you can afford each month. If price is not a concern than every thing else being equal  buying is the lower price long term most of the time. However in leasing it is important to know that everything is negotiable. People that are complaining about the leases do not realise they signed up on a bad lease that made the leasor rich, they do not know that there are many different types of leases. They sign on to the lowest cost advertised without knowing what they are getting into. Research your leases before you sign you need to know that everything is not etched in stone even though the dealer may tell you otherwise. They just may not offer what you want ,but someone else will if you know what you are looking for. A lease is a good way to get into a new car without the high  car payment that you will have if you buy without alot of money down. However you may have to pay in the end if your not careful with a lease. Just do your homework.

Answer 8

Leasing is just another name for LONG TERM RENTAL.  You do not even own the car - but you are fully responsible for it.

The way many dealers make huge amounts of money on a lease is that you are bound by lot of terms.  Any violation and you pay dearly (like upgrading components, etc.).

Good Luck...

P.S.  If you see the great amount of lease problems (here), you would not even consider a lease.

Answer 9

It truly depends on how much the car is in the first place.  If it is a car that is way over your budget but you have good credit it is better to lease than buy.  You can usually get a better lease deal in that case than if you were to buy the car outright and make payments on it for 6 years.  In a lease you can lease the vehicle for 3 or so years, and then at the end of the lease, once it has depreciated in value, you can buy it for that ammount.

If you are wisely buying in your price range I would vote to buy the car and make payments on it.  You will save more money in the long run on it.

Answer 10

It all depends on your mileage and how long you plan to keep the vehicle if you can stay under their mileage restrictions and arent going to keep the car for longer then 3 years or so then you would be better off leasing if you plan on keeping hte vehicle for a longer period of time then you should buy it