Lease or Finance

[Anonymous]

I've been leasing for years. I'm wondering if I should continue or think about financing.? We don't do a lot of long distance driving (right now on a 36 month lease I have 15,000 miles). Our car is a Honda RAV4 and we would either lease or finance the same car or something similar (Honda, Subaru, Nissan). We live in the city and have a garage and street parking. I like a having low monthly payments but wonder what makes sense financially and in the long run? What is your advice?

[Anonymous]

Just pay cash.

[Anonymous]

The most financially prudent advice is to buy used (ideally 2-4 years) with cash and run into the ground.

If you do not want to tie up the cash, I would recommend taking advantage of falling used car prices and seeing if you can score a deal on a 2014 or 2015 model and then financing it with a credit union or internet lender (they tend to have the lowest rate on used).

For your reference here is what is going on in the used car market (glut of supply) and dealers are supposedly cutting deals:

https://www.edmunds.com/car-news/auto-industry/its-a-buyers-market-for-used-cars-edmunds-report-finds.html

[Anonymous]

You are wasting a lot of money by leasing and not using the miles. Toyota is RAV4, btw. Honda is CRV. Anyway, both hold their value well. So, you could stretch the payments over a long period of time to get lower payments, and then sell the car for pretty close to what you bought it for when you want to.

[Anonymous]

IS it worth buying the car I'm leasing now or try and buy a different used car?

[Anonymous]

Anonymous wrote:The most financially prudent advice is to buy used (ideally 2-4 years) with cash and run into the ground.

If you do not want to tie up the cash, I would recommend taking advantage of falling used car prices and seeing if you can score a deal on a 2014 or 2015 model and then financing it with a credit union or internet lender (they tend to have the lowest rate on used).

For your reference here is what is going on in the used car market (glut of supply) and dealers are supposedly cutting deals:

https://www.edmunds.com/car-news/auto-industry/its-a-buyers-market-for-used-cars-edmunds-report-finds.html

OP here -- it's interesting because our dealership called and asked if we can turn our leased car in now - 4 months before the lease is up) because they said it's in high demand.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The most financially prudent advice is to buy used (ideally 2-4 years) with cash and run into the ground.

If you do not want to tie up the cash, I would recommend taking advantage of falling used car prices and seeing if you can score a deal on a 2014 or 2015 model and then financing it with a credit union or internet lender (they tend to have the lowest rate on used).

For your reference here is what is going on in the used car market (glut of supply) and dealers are supposedly cutting deals:

https://www.edmunds.com/car-news/auto-industry/its-a-buyers-market-for-used-cars-edmunds-report-finds.html

OP here -- it's interesting because our dealership called and asked if we can turn our leased car in now - 4 months before the lease is up) because they said it's in high demand.

Every car dealership does this - it is a sales pitch to get you into the dealership sooner and spend more $$ with them.

[Anonymous]

Anonymous wrote:You are wasting a lot of money by leasing and not using the miles. Toyota is RAV4, btw. Honda is CRV. Anyway, both hold their value well. So, you could stretch the payments over a long period of time to get lower payments, and then sell the car for pretty close to what you bought it for when you want to.

Agree, but wouldn't say that you'll sell for pretty close to what you bought it for if you own for more than a few years. These cars hold their value well, but there is still depreciation.

[Anonymous]

Anonymous wrote:IS it worth buying the car I'm leasing now or try and buy a different used car?

No, don't buy the car you are leasing now unless it's a really good deal. There is a set price, and you can compare it to the selling prices of other similar cars.

[Anonymous]

I just looked at a 2014 vs 2017 CRV EX on KBB.com. The 2014 buying from a private party would be around $16k. The 2017 new from a dealer is around $25k. That's a pretty good bargain to drive a new, pretty nice car, for $9k for three years.

[Anonymous]

Is it really? because if you drove the older model for 3 years the amount of depreciation you would pay for would be 3 to 4k and even if your maintenance is higher you would still save money.

The choice is lease new and pay - 3K depreciation a year or buy old and pay 1K depreciation a year and some extra maintenance.

The financial logic is clear but there could be other reasons why paying the extra might be worth it to you including: peace of mind, vanity, time saving on maintenance.

I myself lease but I recognize that is not the most frugal decision it just fits my lifestyle better.

[Anonymous]

Anonymous wrote:

Anonymous wrote:IS it worth buying the car I'm leasing now or try and buy a different used car?

No, don't buy the car you are leasing now unless it's a really good deal. There is a set price, and you can compare it to the selling prices of other similar cars.

+1

Don't buy your car now unless the buyout price is below market price. I doubt that is the case as the buyout price assumptions set 3 year ago were probably not taking into account the glut of used cars we are seeing.

[Anonymous]

Anonymous wrote:Just pay cash.

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:The most financially prudent advice is to buy used (ideally 2-4 years) with cash and run into the ground.

If you do not want to tie up the cash, I would recommend taking advantage of falling used car prices and seeing if you can score a deal on a 2014 or 2015 model and then financing it with a credit union or internet lender (they tend to have the lowest rate on used).

For your reference here is what is going on in the used car market (glut of supply) and dealers are supposedly cutting deals:

https://www.edmunds.com/car-news/auto-industry/its-a-buyers-market-for-used-cars-edmunds-report-finds.html

OP here -- it's interesting because our dealership called and asked if we can turn our leased car in now - 4 months before the lease is up) because they said it's in high demand.

OP, the same is happening to me right now--they do that to everyone, because they want to make sure they lock you into a new lease before you start considering your options.

I leased my current car three years ago and kind of wish I hadn't. But it was in a major accident and now I'm relieved that I just get to turn it in and walk away, and not have to worry about impending problems with the car later down the line, or selling it when it doesn't have a clean carfax.

I'm buying my next car though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just pay cash.

+1

Question for pp who says "pay cash." Do you mean pay for the entire car outright? Why? What is the advantage other than no car payment? I also don't want to part with $25-$29k upfront (unless there is some great financial reason to do so that I'm overlooking). I would rather use extra cash for $529, investment opportunities and paying down my mortgage.