To lease or to buy?

[Anonymous]

We finally need a new car. Both my spouse and I have old cars (2010 prius and 2013 Corolla) and we need to upgrade and want to get an suv. We can’t really decide which suv to get, or Atleast haven’t decided yet but we’d like for it to be no more than $45,000 if we buy and if we lease we want payment no more than $400. I know we have lots to figure out but just wondering for if you all had thought on leasing versus buying. If we buy we will likely buy brand new and we will likely keep it for 8 years or so. Thanks.

[Anonymous]

The lease vs. buy decision varies heavily from one brand to the next.

Generally if you're up for keeping a vehicle for 8 - 11 years like with your current prius and corolla, and are getting a brand known for reliability (Toyota, Mazda, etc.), buying is much better.

If you highly prioritize getting a new vehicle every 3 years and are willing to constantly have a payment until the end of time in exchange, AND/OR you are buying a complicated, high-end vehicle known to be less reliable and expensive to repair (BMW, Land Rover, Mercedes, etc.), leasing is a good option to consider.

Since you're in the exploratory stage and not immediately requiring a new vehicle tomorrow, I'd try to stretch your current cars out at least another 6 to 9 months. Use that time to do more research and maybe a few test drives. There are NO good deals on anything right now, regardless of lease or purchase since dealers are super thin on inventory due to supply chain issues and the chip shortage. If you can wait, you'll save quite a bit.

[Anonymous]

Good advice! ^^

[Anonymous]

But if you plan to keep it for 8 years. Your current cars are very old. You don’t seem like Leasing people.

[Anonymous]

To get a decent lease payment these days, you need a 3 or 4 thousand dollar down payment. Why do that? Makes more sese to buy.

[Anonymous]

Anonymous wrote:To get a decent lease payment these days, you need a 3 or 4 thousand dollar down payment. Why do that? Makes more sese to buy.

And on top of that, every few years you are paying a disposition fee for the privilege of turning in the car, extra charges for little dings and scratches, then upon leasing the next one you pay another doc fee, title, and registration fees, even an ACQUISITION fee (BMW's is $925) in most cases ...it's definitely not as cheap as the ads make it look when they show $399/mo* and in fine print there's a high down payment and a pile of fees.

Personally, I would only lease if:
--I had piles of disposable income and wanted a sexy, fun and insanely unreliable heavy depreciation vehicle (think: Range Rover) that I wanted to enjoy then get rid of in 36 months before that ticking time bomb blows up.
--I was doing it for business tax reasons
--I was in a life situation where I had to relocate to an area for a very specific timeframe (e.g. moving to LA for a 2-year nurse rotation then have no idea where you were moving after that) and needed a very predictable buy-and-turn-in arrangement.
--I was one of the leasing insider nerds who waits until a wild leasehacker.com lease deal comes up and jumps on it (not as easy as it sounds).
--I had a job where it was very important to drive clients around in a late-model vehicle (ultra high-dollar real estate).

[Anonymous]

We leased when we bought our electric car. This is the first time we've ever leased. We did so because we knew the technology of EVs was changing extremely rapidly. In 8-10 years, when we'd normally be ready to trade in or sell our car, no one would want to buy an EV a decade old.
IMHO, that is the only reason for us to lease. We have purchased all of our other gas and hybrid vehicles in the past. (FWIW, we have significant disposable income, but we're frugal.)

[Anonymous]

Anonymous wrote:The lease vs. buy decision varies heavily from one brand to the next.

Generally if you're up for keeping a vehicle for 8 - 11 years like with your current prius and corolla, and are getting a brand known for reliability (Toyota, Mazda, etc.), buying is much better.

If you highly prioritize getting a new vehicle every 3 years and are willing to constantly have a payment until the end of time in exchange, AND/OR you are buying a complicated, high-end vehicle known to be less reliable and expensive to repair (BMW, Land Rover, Mercedes, etc.), leasing is a good option to consider.

Since you're in the exploratory stage and not immediately requiring a new vehicle tomorrow, I'd try to stretch your current cars out at least another 6 to 9 months. Use that time to do more research and maybe a few test drives. There are NO good deals on anything right now, regardless of lease or purchase since dealers are super thin on inventory due to supply chain issues and the chip shortage. If you can wait, you'll save quite a bit.

OP here - thank you so much for this explanation and level of detail. This is very helpful to us. We are still in research phase but have confirmed that we will buy not lease. Now we just need to see what to buy. We need a reliable suv but do not want to break the bank for it and not a gas guzzer. Thanks so much for your post!

[Anonymous]

Anonymous wrote:

Anonymous wrote:To get a decent lease payment these days, you need a 3 or 4 thousand dollar down payment. Why do that? Makes more sese to buy.

And on top of that, every few years you are paying a disposition fee for the privilege of turning in the car, extra charges for little dings and scratches, then upon leasing the next one you pay another doc fee, title, and registration fees, even an ACQUISITION fee (BMW's is $925) in most cases ...it's definitely not as cheap as the ads make it look when they show $399/mo* and in fine print there's a high down payment and a pile of fees.

Personally, I would only lease if:
--I had piles of disposable income and wanted a sexy, fun and insanely unreliable heavy depreciation vehicle (think: Range Rover) that I wanted to enjoy then get rid of in 36 months before that ticking time bomb blows up.
--I was doing it for business tax reasons
--I was in a life situation where I had to relocate to an area for a very specific timeframe (e.g. moving to LA for a 2-year nurse rotation then have no idea where you were moving after that) and needed a very predictable buy-and-turn-in arrangement.
--I was one of the leasing insider nerds who waits until a wild leasehacker.com lease deal comes up and jumps on it (not as easy as it sounds).
--I had a job where it was very important to drive clients around in a late-model vehicle (ultra high-dollar real estate).

Op here - thanks for this post you make very good point and your examples are on point and helpful. We’ve decided to buy. However, we are now on the search of trying to figure out what to buy as a reliable suv that’s no more than $45m but has all the bells and whistles. Thank you for these helpful examples.

[Anonymous]

Anonymous wrote:However, we are now on the search of trying to figure out what to buy as a reliable suv that’s no more than $45m but has all the bells and whistles. Thank you for these helpful examples.

2 or 3 row SUV?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:To get a decent lease payment these days, you need a 3 or 4 thousand dollar down payment. Why do that? Makes more sese to buy.

And on top of that, every few years you are paying a disposition fee for the privilege of turning in the car, extra charges for little dings and scratches, then upon leasing the next one you pay another doc fee, title, and registration fees, even an ACQUISITION fee (BMW's is $925) in most cases ...it's definitely not as cheap as the ads make it look when they show $399/mo* and in fine print there's a high down payment and a pile of fees.

Personally, I would only lease if:
--I had piles of disposable income and wanted a sexy, fun and insanely unreliable heavy depreciation vehicle (think: Range Rover) that I wanted to enjoy then get rid of in 36 months before that ticking time bomb blows up.
--I was doing it for business tax reasons
--I was in a life situation where I had to relocate to an area for a very specific timeframe (e.g. moving to LA for a 2-year nurse rotation then have no idea where you were moving after that) and needed a very predictable buy-and-turn-in arrangement.
--I was one of the leasing insider nerds who waits until a wild leasehacker.com lease deal comes up and jumps on it (not as easy as it sounds).
--I had a job where it was very important to drive clients around in a late-model vehicle (ultra high-dollar real estate).

Op here - thanks for this post you make very good point and your examples are on point and helpful. We’ve decided to buy. However, we are now on the search of trying to figure out what to buy as a reliable suv that’s no more than $45m but has all the bells and whistles. Thank you for these helpful examples.

I would get a Mazda. Top in reliability and has all the bells and whistles.