Lease Vs. Finance

[TangoJuliet]

I know this could possibly go in the garage section....but its more of a purchase question then a general car question.

My wife and I decided to buy a 2007 Jetta Wolfsburg Edition. We were going to pick it up today but her college grad application was taking a little longer then expected. We had decided to take advantage of the low APR (2.9% for 48 months). The car's price came out to $21,200 + taxes, etc. I believe the OTD price was around $23,000.

So this was our plan:

$6600 down and finance the rest @ 2.9% for 48 months
Our payment came out to $361/m which we can easily afford.

However I just saw a commercial for the car that VW is advertising for $219/m with $2294 down plus taxes, tags, etc. for a 36 month lease.

Should we just go ahead and purchase the car or go with the lease and save some money? I am probably going to need a car in about 2-3 years or so (I hope but thats a whole other story) so I'm not sure if its a wise decision to have to buy 2 new cars in 3 years.

ATOT help me out!

 

[jlee]

If you buy it, you'll own a car in 48 months. If you lease it, you'll have nothing after 36 months.

I'm not a big fan of leasing - then again, where I live, it's not always easy to stay within the mileage terms..so it's not really practical for my area anyway.

 

[TangoJuliet]

yes, i know that I'll own it after the 48 months which is great....but I'll be saving atleast $3000 down and then another $150/m by leasing it over buying it.

I think the payments total out to about $7000 + taxes, fees, down payment I would be looking at about $10,000 or so as opposed to $23,000 if I purchase it.

 

[xanis]

Originally posted by: alkohoLiK
yes, i know that I'll own it after the 48 months which is great....but I'll be saving atleast $3000 down and then another $150/m by leasing it over buying it.

I think the payments total out to about $7000 + taxes, fees, down payment I would be looking at about $10,000 or so as opposed to $23,000 if I purchase it.

All that's good and well, but what are you going to do after the lease is up? Lease another car? That just seems absurd. You could actually save money down the road by buying it than leasing it and then spending money on another car.

 

[jlee]

Originally posted by: alkohoLiK
yes, i know that I'll own it after the 48 months which is great....but I'll be saving atleast $3000 down and then another $150/m by leasing it over buying it.

I think the payments total out to about $7000 + taxes, fees, down payment I would be looking at about $10,000 or so as opposed to $23,000 if I purchase it.

Is the car going to be worth $13k in 3 years?

 

[spacejamz]

if you pretty sure she is going to get a new car in three years and can keep within the mileage limits, then it will be pretty much a wash money wise (plus you won't have to haggle over the value of the car at the end of the lease)...

otherwise, just buy the car...leasing is only practical for people who can write off the payments or for those who regularly get a new car every few years...if you are not one of these people, then leasing is not for you...

 

[jdoggg12]

You kinda have to have an idea of what the value of the car will be in 3 years and evaluate on whether or not you'er coming ahead on depreciation and taxes over the 3 years. If you invest the money you would have otherwise spent, you'll come out ahead.

dont forget, you're starting with 4k extra to invest, plus 142/month to add to that. Put that in a 5+% interest account.....

 

[TangoJuliet]

I tend to generally keep my cars for 10 years or so. My wife had her car for 6 years before we just sold it. It broke down pretty rapidly the past couple years (it was a '98) and the repairs were making it costly hence the reason for the new car.

I'm guessing the car will be worth around the $13,000 after 3 years so yeah that'll be a wash. I also think she will be just at the mileage for the 3 years.

My only concern is if the car is a lemon and things start to break on it after the warranty (5 years - 60,000 miles powertrain) or if she just doesn't like the car. I could also be getting a new job that would cut my current salary in half so saving a couple bucks here and there would help.

 

[TangoJuliet]

Originally posted by: jdoggg12
dont forget, you're starting with 4k extra to invest, plus 142/month to add to that. Put that in a 5+% interest account.....

Yeah, my money market account is getting 5% right now

 

[spacejamz]

Originally posted by: alkohoLiK
I tend to generally keep my cars for 10 years or so. My wife had her car for 6 years before we just sold it. It broke down pretty rapidly the past couple years (it was a '98) and the repairs were making it costly hence the reason for the new car.

I'm guessing the car will be worth around the $13,000 after 3 years so yeah that'll be a wash. I also think she will be just at the mileage for the 3 years.

My only concern is if the car is a lemon and things start to break on it after the warranty (5 years - 60,000 miles powertrain) or if she just doesn't like the car. I could also be getting a new job that would cut my current salary in half so saving a couple bucks here and there would help.

it is not very smart to lease a car if you plan on buying it from the dealer once the lease is up...typically, you would be better off getting another new car than negotiating a price for that car at the end of the lease...

If you really plan on keep that car for 6+ years, you really are better off buy just buying it...

 

[TangoJuliet]

Originally posted by: spacejamz

Originally posted by: alkohoLiK
I tend to generally keep my cars for 10 years or so. My wife had her car for 6 years before we just sold it. It broke down pretty rapidly the past couple years (it was a '98) and the repairs were making it costly hence the reason for the new car.

I'm guessing the car will be worth around the $13,000 after 3 years so yeah that'll be a wash. I also think she will be just at the mileage for the 3 years.

My only concern is if the car is a lemon and things start to break on it after the warranty (5 years - 60,000 miles powertrain) or if she just doesn't like the car. I could also be getting a new job that would cut my current salary in half so saving a couple bucks here and there would help.

it is not very smart to lease a car if you plan on buying it from the dealer once the lease is up...typically, you would be better off getting another new car than negotiating a price for that car at the end of the lease...

If you really plan on keep that car for 6+ years, you really are better off buy just buying it...

if we did decide to lease it then it would only be for the 3 years and then either lease again or buy something new. we wouldnt buy the leased car.

im just saying we would save around $3000 upfront and then another $150/m. If we put aside that $150/m in a savings account ($5400 + $3000 = $8400 * 5.0% interest) then we could use that as a down payment for a new car or just lease another car. hope that makes sense cause its late

 

[Googer]

Leasing is the same as tossing lots of money in a garbage can. Smart people buy then have something to show for it. Even smarter people buy used cars and have tons of cash left over for their retirement.

 

[spacejamz]

Originally posted by: Googer
Leasing is the same as tossing lots of money in a garbage can. Smart people buy then have something to show for it. Even smarter people buy used cars and have tons of cash left over for their retirement.

some people want the satisfaction and enjoyment of getting a new car every few years...they don't have to worry about expensive repairs or breaking down on the side of the road or bumming rides from co workers to get their car out of the shop.

some dumb people finance to own a car and then trade it in 3 years later and roll whatever they owe onto the new loan...

so I take it that you must by typing on a Pentium II MMX machine with 32 MB of memory on a 15" monochrome screen so you can maximize your retirement savings then...

 

[montanafan]

Keep in mind that when you return the car at the end of the lease, if it has any damage you have to pay for it, probably have to replace the tires or pay, gotta stay under the mileage or pay, plus you still have to pay the personal property tax on it while you have it even though it isn't really your property. If you decide you really like it and want to keep it, it'll end up costing you more if have to finance instead of paying cash. If leasing, you'd better get GAP insurance or an accident could cost you big time.

 

[Dunbar]

Make sure to compare apples to apples. I bet the Jetta in the ad is a base model, whereas your Wolfsburg is optioned up. I don't think VW has pariticularly good lease deals (residual and money factors). I would bet that if you calculated the lease deal for the Wolfsburg edition it won't be that great. In general though if you tend to get a new car every 3 years lease , every 4-5+ years buy.

 

[Dunbar]

Originally posted by: jdoggg12
dont forget, you're starting with 4k extra to invest, plus 142/month to add to that. Put that in a 5+% interest account.....

Wow, about $300 average a year in taxable interest. He'll basically be keeping up with inflation after he pays taxes. Plus, getting a new car every 3 years is more expensive than holding onto it for 4-5 years.

 

[AznAnarchy99]

The only cars I would ever lease would be high end luxury cars such as MB S-Class or BMW 7-Series... and thats because your usually rich enough to want the new model when it comes out.

 

[Googer]

Originally posted by: spacejamz

Originally posted by: Googer
Leasing is the same as tossing lots of money in a garbage can. Smart people buy then have something to show for it. Even smarter people buy used cars and have tons of cash left over for their retirement.

some people want the satisfaction and enjoyment of getting a new car every few years...they don't have to worry about expensive repairs or breaking down on the side of the road or bumming rides from co workers to get their car out of the shop.

some dumb people finance to own a car and then trade it in 3 years later and roll whatever they owe onto the new loan...

so I take it that you must by typing on a Pentium II MMX machine with 32 MB of memory on a 15" monochrome screen so you can maximize your retirement savings then...

I drive a 1993 Ford and it has never once failed to start. Your average millionaire drives a 3-5 year old car (and sometimes older). The belief that used cars are unreliable is mostly a misconception. Modern cars can run more than 125,000 miles with out trouble. My dad got over 600,000 miles out of his Ford Diesel and it never once failed him. Last time I saw the guy who had it after him, the thing was still running. You can get a used vehicle with warranties that exceed that of that same cars new warranty and still have tons money to burn or eh-hem invest.

I can guarantee you that if you buy a car in the area of $5,000 it will leave you will $25,000 in the bank and that you will never need to put $25,000 towards repairing the car.


As for my computer, Nine months ago I paid $20 for a 2.4GHz Northwood core Pentium 4 with motherboard and 1GB of DDR500 for $40. I used my old PSU, case, and drives. However, recently I did add a brand new Raptor 150 that I paid $100 for.

Trust me my friend, my fiscal future looks sweet. As I often say, rich people try to live like poor people while the poor try to impress their friends in to thinking they are rich. Good job keeping up with the neighborhood Jones' that you don't even like. Yep, Mr. Jones sure is impressed with your car but too bad he never talks to you.

 

[FoBoT]

buy it
no lease for you

 

[Turin39789]

Originally posted by: Googer

Originally posted by: spacejamz

Originally posted by: Googer
Leasing is the same as tossing lots of money in a garbage can. Smart people buy then have something to show for it. Even smarter people buy used cars and have tons of cash left over for their retirement.

some people want the satisfaction and enjoyment of getting a new car every few years...they don't have to worry about expensive repairs or breaking down on the side of the road or bumming rides from co workers to get their car out of the shop.

some dumb people finance to own a car and then trade it in 3 years later and roll whatever they owe onto the new loan...

so I take it that you must by typing on a Pentium II MMX machine with 32 MB of memory on a 15" monochrome screen so you can maximize your retirement savings then...

I drive a 1993 Ford and it has never once failed to start. Your average millionaire drives a 3-5 year old car (and sometimes older). The belief that used cars are unreliable is mostly a misconception. Modern cars can run more than 125,000 miles with out trouble. My dad got over 600,000 miles out of his Ford Diesel and it never once failed him. Last time I saw the guy who had it after him, the thing was still running. You can get a used vehicle with warranties that exceed that of that same cars new warranty and still have tons money to burn or eh-hem invest.

I can guarantee you that if you buy a car in the area of $5,000 it will leave you will $25,000 in the bank and that you will never need to put $25,000 towards repairing the car.


As for my computer, Nine months ago I paid $20 for a 2.4GHz Northwood core Pentium 4 with motherboard and 1GB of DDR500 for $40. I used my old PSU, case, and drives. However, recently I did add a brand new Raptor 150 that I paid $100 for.

Trust me my friend, my fiscal future looks sweet. As I often say, rich people try to live like poor people while the poor try to impress their friends in to thinking they are rich. Good job keeping up with the neighborhood Jones' that you don't even like. Yep, Mr. Jones sure is impressed with your car but too bad he never talks to you.

mmm conspicuous consumption! Thank you Vablen!

 

[Colt45]

paid in full, cash.

 

[Deeko]

A lot of uninformed people here when it comes to leasing, I can say that much at least.

 

[iamwiz82]

I would never put money down on a lease. It's basically thrown away if something where to happen as you drove off the lot. I also don't like the idea of 3 year leases, because then you are getting into tire replacement and 30,000 mile maintenance, which looks to cost ~$400.

 

[jlee]

Originally posted by: Deeko
A lot of uninformed people here when it comes to leasing, I can say that much at least.

So you're not going to inform anyone, then?

 

[Gibson486]

Originally posted by: Deeko
A lot of uninformed people here when it comes to leasing, I can say that much at least.

Lots of people are. It's amazing that they do not take time to see what leasing really is. It can be a benefit to the ocmsumer as well as the dealer.