Financing vs leasing

Discussion in 'Motorized Vehicles' started by Mastershroom, Mar 17, 2012.

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  1. Mastershroom

    Mastershroom wat

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    Long story short, my car is about to stop being useful in about a month; I can't register it without $1,500 of repairs, and frankly, I'm just not about to drop that on a 1999 Jetta.

    So, I've been looking into a new car. I bring home about $1,100 per month after taxes, and about 300 of that goes to rent and electricity, my only paid utility. I don't have the cash to buy a car outright, so I'd have to lease or finance. Which option would be better? Leasing seems to be a little less money per month than a financing loan, but there's the disadvantage of never truly owning it, and I'd have to do it all again in a couple years when the lease is up.
     
  2. MidnightSun

    MidnightSun Emodicon

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    Do you have enough to look into a used car? Getting a nice, economical used car might be a better option than tying yourself to a loan/lease.
     
  3. Mastershroom

    Mastershroom wat

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    I'm sure I could certainly afford one...problem is, I don't have much in savings right this minute, which is when I would really need some. :p And I've heard financing for used cars typically involves significantly higher interest rates than for new cars.

    Ideally, I'd like to do something like what my mother did with her Audi; she bought the dealer's loaner car. It had just a couple thousand miles on it, and was in pretty much new condition, having only been driven by people for a couple days at a time. It even smelled like new car, and she got a few thousand dollars off the price of the same car brand new.
     
  4. booboo12

    booboo12 Notebook Prophet

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    I would go to your bank and just get an idea for the rates for new and used. It might work in your favor.

    Leasing's good if you're one who might want to change cars more often. A lot of buyers who choose higher end models/brands go with leases for this reason: they aren't stuck with technology that's left behind ages ago. People who tend to buy European also lease because the lease period usually ends before the car could potentially end up showing some problems that can be very expensive. Finally, you can usually get more car for your monthly payment with a lease.

    A big downside to leasing is that the car isn't ever "yours" at the end of the lease period. You have to account for wear and tear, mileage overages and other factors. If you lease for a long time, it could be more expensive than buying one car and keeping it for a while.

    This is a good read: http://www.edmunds.com/car-leasing/should-you-lease-or-buy-your-car.html

    A loaner isn't a bad idea. Its been serviced by the dealer and are usually treated well.

    Are there any specific models your considering?
     
  5. houstoned

    houstoned Yoga Pants Connoisseur.

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    i think leasing is a great idea. the main concern about leasing has got to be the monthly mileage cap. if u have no problems working with the amount of miles they provide u each month then it's a great choice. especially if u are low on money NOW, but plan on keeping the car for passed your leasing agreement. u can always refinance the remaining amount left on the car if u choose to keep it later down the road.
     
  6. millermagic

    millermagic Rockin the pinktop

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    Neither are a good option.

    With leasing, you're "renting" the car and are limited to certain mileage per year. Any dings and dents and extra mileage you have to pay a premium for after the lease is up, unless you plan to buy the car at the end ... in which case you're going to have to have $10k on hand or finance it again, for a second time.

    When financing, after the period is up, you will own the car and at least have something to show for it. Downside is finance charges and interest.

    I got a good deal on a new car and I have a pretty low payment. There's a good chance I will own the car outright by this time next year (and it'll only be two years old).

    The car gets great mileage and I really like it. However, it was a horrible financial decision.

    The best solution is to save up $2000, buy something and run it for a year, sell it for $1000. Then take saved up money and buy something that's $4000-5000 ...
     
  7. houstoned

    houstoned Yoga Pants Connoisseur.

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    honestly, that's a horrible idea. i wouldn't recommend ANYONE to go out and buy a hunk of rolling (probably rusty) metal for a couple of thousand bucks. if u had $2000 saved up, why would u not go and take over an existing lease or put that down on a much more reliable car.

    if u don't have access to your own body shop/garage or have very limited mechanic knowledge then stay away from any $2000 car. that's just a disastrous money pit waiting to happen. u'll end up spending 2+ more thousand just to get the thing up and running correctly.

    @the ShroomBus: u looked into taking over a lease before, bro? my GF actually did that with her Lexus ES350. we needed a temp car for about 6-9 months, so the situation was perfect. at the end of the lease, we actually could've bought the car out for much lower than market price or had the choice to trade the car in and get about $1000-$2000 trade-in credit. we chose to trade the car in and pick up a fully loaded Infinity M35. the ES350 basically paid for our tax, title, destination charges, etc. there are different options out there for u. just don't settle unless u have to.
     
  8. johnw91498

    johnw91498 Notebook Consultant

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    Do you know any mechanics? Sometimes they run into really good deals.

    A good friend of mine works part time for a Toyota dealership and an independant shop. About a year back, a guy brought in a 2009 Honda Civic to my buddy's shop and he completely neglected the car. There was almost no oil left in the engine and the tranny didn't have any service done to it. The buddy quoated him $9,500 for a new engine and rebuilt tranny. They guy balked at that and said he'd rather go out and buy a new car. My buddy offerd him a grand for a 2009 car and the guy took it. :eek: My bud then rebuilt the engine and rebuilt the tranny as the parts costs way less than the labor. He turned around and sold the car to me for $6,500. I then gave it to my niece who started college last August. We were going to get her a 3 year old used car, but this was a better deal.
     
  9. Kaelang

    Kaelang Requires more Witcher.

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    Not necessarily. My first car was a 1993 Camry that I bought for $2500, and it wasn't unreliable. I ended up selling it for $1300 2 years later to my sister's boyfriend (at a F&F discount of course). Not a bad deal.
     
  10. MidnightSun

    MidnightSun Emodicon

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    Yeah, not necessarily. Sometimes, you can get a reliable, albeit relatively old Japanese car for a couple thousand. The key there is to be patient and not to get enticed by bells and whistles (and jump on a less-than-reliable car). And, obviously, unless you're willing to put in a lot of work, avoid the super-cheap cars in poor mechanical condition.
     
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