leasing vs buying
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Anonymous
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Someone explain to me why buying is better than leasing a car -- here are some numbers:
I have owned a minivan for the last three years. Bought it used for $26k plus $2k in taxes It is now worth about $10k (dealer estimate aligns more or less with KBB) That means it cost me $18k to have that car for three years, plus the cost of new tires, brake pads, and other maintenance. So, cost of well over $6k per year to drive a used minivan. Now I'm looking for a different car -- a three-row SUV (because even though I have lots of kids I'm a little cooler now than I was three years ago). A new Honda Pilot costs ~$38k. A new Ford Explorer costs ~$32k. BUT, I can lease a Ford Explorer for about $270/month plus taxes. and $3500 down That means my 3-year cost to own would be somewhere around $15500 ($300/month plus $3500), less than the $18+ I just spent on three years of a beater minivan. Everyone always says buying is better than leasing, but I'm not seeing it this time. Thoughts? I obviously would have the $10k from my minivan trade-in and probably another $5k to put on the down payment on something new, and then would finance the rest. I have excellent credit. |
Anonymous
Well, you'll pay taxes (and maintenance, usually). So that stuff is a wash. The main difference is at the end of three years and $15,500, you don't have a car. At the end of your car payments on your minivan, you own a car that has some value. I have to think a "used" minivan that cost you $26,000 had to have been late model. So, say it's a 2013 or something. Say you finish paying that off in 2019. You have a car that's probably still worth in the neighborhood of $12,000-$15,000. |
Anonymous
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$26k for a used minivan?
Was it just slightly used? Like less than a year or two old? That seems very high for used. The main difference is that at the end of your lease period when you turn the car back in, you have nothing to show for all you paid into it. You still have to factor in taxes and maintenance with the lease. Also, read the fine print for maintenance. My neighbor can only get the car serviced at a specific dealership, so he has to pay their prices. So any ideas of just taking the leased car to crappy Jiffy Lube type places since it's not yours may not pan out to save money. |
Anonymous
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It's not quite a fair comparison because your bought your minivan used so the depreciation hit was taken by the person who bought it new. You can't generally lease a used vehicle.
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Anonymous
| Most keep their cars longer than 3 years. |
Anonymous
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Most people will drive a car for longer than three years. So the money you spent on that car should really be spread out over the entire time you could own the car. If you drove it for 10 years, it would be $2,600/year (plus repairs, etc.)
Leasing is probably good for people who only plan to drive a car for 2-3 years and don't expect to have money for a down payment at the end of it. I would consider leasing if I was short on money now, needed a newer car and knew my income would be higher (or other expenses lower) in 3 years. (I'm a person who buys nice cars and drives them forever. I'm still driving my 2004 Acura.) |
Anonymous
| Are you in VA? If so there is another reason to lease, you do not pay the personal property tax every year. Leasing does have advantages as long as you are OK with having a payment. Your only expense is the payment and insurance if you choose the right car as maintenance is covered on many makes for the first few years. I have leased cars for the last 10 years, I have not paid for an oil change, brakes, tires, etc. in that time. |
Anonymous
| We always lease. Even if it is not dollar for dollar better than buying (and as you pointed out, it might not be) we like not having to worry about it and getting a new car every 3 years is really nice. |
Anonymous
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I bought a new Honda minivan in 2011 for $33k (with leather and rear DVD) and traded it in 40 months (3.5 years) later for $24k. Paid for nothing but gas and oil changes during that time.
So the real question is how on earth did your van depreciate $16k in 3 years? Either you paid too much for it, or you were low balled on the trade in, or both. Was it a Dodge/Chrysler? Those don't tend to hold value as well as Honda/Toyota. And neither will a Ford Explorer. To a different PP, you absolutely pay Personal Property Tax on leased vehicles in VA. |
Anonymous
Not according to the VA Dept. of Motor vehicles. If it is a personal lease, you don't. https://www.dmv.virginia.gov/vehicles/#leased.asp
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Anonymous
You must not live in VA. “Tax relief” is the discount you get off of the “full” tax rate. Everyone is eligible for tax relief based upon their vehicle value. It is simply a discount but you still pay. “Tax relief” does not mean no tax. |
Anonymous
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Tax relief explained here.
https://taxes.arlingtonva.us/vehicles/tax-relief/ |
Anonymous
LOL do you live in VA? Car tax relief is not the full amount of the personal property tax- it's a discounted amount of tax! I have a leased car and have lived in VA for the past few years....! |
Anonymous
Actually if you lease, the personal property tax will be higher because the vehicle is likely to be newer and have a higher assessed vehicle than a used vehicle. By the time your car is 10 years old, the personal property tax could be under $100 a year. If you lease a new one every three years, that tax will always be $500-$800 a year depending on what it is. |
Anonymous
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the other dilemma with a lease is the mileage.
a lot of leases are 10K miles a year.. 200 work days a year with a 20 mile commute one way will eat up 8000 miles. |