Buy or lease?

[Anonymous]

I'm going to need a new car soon. My husband says I should look into leasing rather than buying. (I would buy used). I've never leased before. I drive to and from work, have 2 young kids, and a dog. Occasional longer drives to visit family, go on small trips, etc. If we go on longer trips then husband drives.

Would appreciate pros and cons of leasing. TIA.

[Anonymous]

Lease only makes sense if you have your heart set on driving a car that is more expensive than you can actually afford. Buying a used car is smarter.

[Anonymous]

Only lease if you plan to trade it in within 3 years.

[Anonymous]

Lease pros:

-Lower payments
-Very little maintenance cause it’s new

Lease cons:
-Have to stay within mileage limits (run your commit numbers and go from there)
-Can’t damage it or you’ll get dinged upon return

New cars and used cars are in high demand and very expensive. Not sure how that’s affected leases. Basically run the numbers and review your family needs and go from there. Sometimes it makes sense.

[Anonymous]

Lease if you plan to replace car in three-four years. Don’t buy used right now. Prices are so inflated. But new with low interest.

[Anonymous]

If you prefer to get new cars every few years, then leasing is the way to go. But if you don’t derive much value from getting a new car every few years, then buying is the smarter financial choice. Especially now, as there are automakers offering 0% financing.

[Anonymous]

I have a six year old car that I bought new in 2015. It's been paid off for the last year and that year of no payment has been fantastic. There's just something about those first couple months when you stop making payments that feel great. Now after a year, I don't even think about it any longer. We get in the car and go. No worries about anything. Sure it's got a few scratches after six years but I'm keeping it at least 10 years if not 12-15 years given the low mileage I'm putting on it now. If I can drive it for 10 years with no payment, think about the massive savings. If I planned to buy new cars constantly then I would definitely lease as others have mentioned. Buying and reselling every few years is a terrible financial decision. It's worse than leasing.

[Anonymous]

Anonymous wrote:Lease pros:

-Lower payments
-Very little maintenance cause it’s new

Lease cons:
-Have to stay within mileage limits (run your commit numbers and go from there)
-Can’t damage it or you’ll get dinged upon return

New cars and used cars are in high demand and very expensive. Not sure how that’s affected leases. Basically run the numbers and review your family needs and go from there. Sometimes it makes sense.

The damage part is not actually a con of leasing. If you damage a car that you purchased, you will also suffer diminished value to your vehicle. Mileage is a somewhat fair con, but if you drive a purchased car more you also cause a reduction in resale value. The same is true of the pros - you have little maintenance on a new car that you purchased, just like one that you leased. According to economic theory, there is no difference between leasing and buying, or at least there should not be. It all really comes down to the incentives offered by the dealer (sometimes leasing or purchasing with a loan will be offered at a more favorable rate)

[Anonymous]

Anonymous wrote:

Anonymous wrote:Lease pros:

-Lower payments
-Very little maintenance cause it’s new

Lease cons:
-Have to stay within mileage limits (run your commit numbers and go from there)
-Can’t damage it or you’ll get dinged upon return

New cars and used cars are in high demand and very expensive. Not sure how that’s affected leases. Basically run the numbers and review your family needs and go from there. Sometimes it makes sense.

The damage part is not actually a con of leasing. If you damage a car that you purchased, you will also suffer diminished value to your vehicle. Mileage is a somewhat fair con, but if you drive a purchased car more you also cause a reduction in resale value. The same is true of the pros - you have little maintenance on a new car that you purchased, just like one that you leased. According to economic theory, there is no difference between leasing and buying, or at least there should not be. It all really comes down to the incentives offered by the dealer (sometimes leasing or purchasing with a loan will be offered at a more favorable rate)

And before anyone comes in and says "durrrrr why purchase with a loan, that just means u too poor to afford the car," the answer is that the interest rate on the loan is lower than the return you can get on the money you invest in the market. Every loan I have gotten in the last 12 years has actually been at a rate below inflation, which means they are essentially paying me to take the loan

[Anonymous]

Anonymous wrote:Lease only makes sense if you have your heart set on driving a car that is more expensive than you can actually afford. Buying a used car is smarter.

Buying a used car right now is idiotic. Prices are extremely inflated. Only lease if your kids and dog won’t trash it. If you get a new car every three years, lease. If you will keep it for a long time buy, but buy new.

[Anonymous]

We drive about as much as you do, OP. Husband will drive 3 miles within DC to work and back, and we take 2-3 road trips to MA a year. I had been taking the bus to work (we have the one car). We never had an issue with our miles, since despite traffic, it's still mileage-based, and not time stranded commuting.

We found that leasing made the most sense for us. It was particularly nice when we moved from crappy-single people-ancient-used-car to we-have-kids! car, and we were able to see what size we really wanted, and then shift as we needed more space for their junk.

[Anonymous]

With leasing, try to put NOTHING down. There is no good reason to pay for depreciation in advance.

Yes, you can negotiate the sales price, residual value and the money factor.