Financing vs leasing

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

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  1. millermagic

    millermagic Rockin the pinktop

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    New cars lose most of their value in the first few years ... you're taking a huge loss.
     
  2. booboo12

    booboo12 Notebook Prophet

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    I owned a Saturn SL for 5 years with nary a problem, only thing that did it in was a accident.

    Properly done, buying a used car can be a great value.

    That said, there are some people who really want the higher probability of reliability that a new car will bring.
     
  3. masterchef341

    masterchef341 The guy from The Notebook

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    A few basic concepts about car buying:

    1. Loans from the dealership are not necessarily optimal, it's worth shopping around if you intend to take a loan.

    2. Leasing can be more economical than buying new cars every year or two and selling the previous car back to the dealership. If you want to be permanently driving a new-ish car, it can make sense, but it is significantly more expensive than buying a car and maintaining it for a long time (of course, you won't have a new car all the time using this method).

    3. Buying a new car from a dealership for 15,000-20,000 and maintaining it for as long as possible is reasonably economical.

    4. Buying a similar make/model 2-3 year old used car in excellent condition for 8000-12500 or so from a private party and maintaining it for many years is extremely economical. If you go this route, you can either get more car for your initial buying budget, or invest the extra money, or take a smaller loan. You could also accept an even older car than 3 years in excellent condition, but then you start to assume significant repair cost risks in exchange for even lower initial purchase costs.
     
  4. houstoned

    houstoned Yoga Pants Connoisseur.

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    u can roll the dice with a few thousand if u want. i only do that when i'm drunk and don't give 2 *bleeps* :p

    i'd rather put that $2000-$3000 down on something i can actually be proud of. something more worth it.

    @masterchef: good advice. all of those buying options exist because there are so many different people in different financial conditions. the last thing u want to do while buying any car, new or used, is to rush the process. u'll oftentimes miss your best options.

    1) consider your living situation, marital status, and siblings.
    2) determine how much money u have to work with.
    3) pick a car that fits your criteria.
    4) choose the right financial plan that best fits your current status.
     
  5. KPot2004

    KPot2004 Notebook Evangelist

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    I leased my 2011 Civic and couldn't be happier. I only pay $215 a month and insurance is about $100 a month. Cant beat driving a brand new car for only $315 a month. I was always a used car guy but I'm sold on new cars now. You get it and everything just works, you never have to worry about anything going wrong or a part failing. Also, a big plus for me is the AC actually works, unlike some used cars I've had. March 11th was 1 year I've had my civic and during that time the only maintenance I've had to do was 2 oil changes, both done at the Honda dealer for $14. $28 in maintenance costs over the course of a year. My last used car it seemed like I was replacing something every other week.

    It seems like most people I know that buy a new car end up wanting to trade it in and buy something new after 5-6 years. If you're going to do that you might as well just lease and have a lower payment.
     
  6. masterchef341

    masterchef341 The guy from The Notebook

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    It all just depends on what is important to you. Leasing car(s) for 5 years will cost about as much out of pocket as buying a new car. The difference is that if you buy a car, you own it in the end, and you can extract value out of it from that point on (but not during the loan period) by continuing to drive it or by selling it. With a leased car, you trade that economic benefit for the lifestyle benefit of constantly having access to a relatively new car. At the end of 5 years of ownership, you'll be driving the same car. At the end of 5 years of leasing, you'll probably be on your second car, almost on your third.
     
  7. millermagic

    millermagic Rockin the pinktop

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    I only pay $220 a month for my Focus and around $75 a month insurance on it. The difference is, when you are turning in your lease and having nothing to show for it, I will own my Focus outright. At that point, I won't have to buy / lease / finance another car in order to have transportation.

    If you want to rent a car forever and never own anything - leasing is good.

     
  8. KPot2004

    KPot2004 Notebook Evangelist

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    What length of time? Did you buy new or used? Like I said, very few people actually buy a car and once the loans paid off keep driving it for a long time. (If you buy and finance over 5 years once you pay it off you now own a used car with 100,000 miles) A lot of people I know think leasing is stupid yet they buy a new car every 4 years. If you do that and always have a payment, you might as well make it lower and drive a nicer car. There are obviously cons to leasing but the pluses for me at least is that I am always driving a new car and I can afford a lot more by leasing. Also you're trading it in about the time where you would have to start investing more in the maintenance.
     
  9. Thaenatos

    Thaenatos Zero Cool

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    Leasing is not a good idea in my opinion. Limited miles + not owning the car + them having the right to take the car away at ANY time. Financing isnt the best idea but like stated you have a car that you own to show for it. To give you an idea I bought a jeep a few years ago and with a great interest rate (both the wife and I have awesome credit) if I would have paid all 5 years I would have spent $14,500 for a $13,000 jeep. Not absolutely terrible, but still I would have paid the bank an extra 1500 just to pay off my vehicle.

    The best option is always to buy outright, and buying new is never a good deal in most cases as the price the vehicle is the next year is significantly lower (very few cases where this is not the case). Honestly if savings are really good for you then financing is the best option IMHO, but I would look for a moderately used vehicle that is in good condition you can afford to pay off over the next 3-5 years.

    A new car loses thousands of dollars in value driving it off the lot after buying it. Its almost the largest loss in value behind hitting 100k miles.
     
  10. KPot2004

    KPot2004 Notebook Evangelist

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    My problem with buying is even when financed over 5 years, the day I made my last payment I'd own the car outright but I'd have a car with over 100,000 miles.

    I have no problem with buying if you can afford to write a check and pay it off right then.

    Last car I bought was a 1998 Chevrolet Blazer. I made the last payment (108,000 miles) and within the next 3 months after that I had to have the wheel bearing and water pump replaced. Maybe your luck is better then mine, IDK, but if what I have to show for my payments is a car with 100,000+ plus miles that I have to put $500 in maintenance in every couple months then I'd rather lease.

    To each his own etc, etc. What works for you might not be good for others.
     
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