2 lease or own a vehicle....pros/cons

[warhawk]

in less than 2 years.... i should b finished paying off my wife's car. we r keeping my wife's car & more than likely selling my old trusty honda. i am contemplating on either buying or leasing a car or a suv.  i have never leased a vehicle b4 but i've heard that it can have its benefits.  anyways.... i was curious on your opinions of this subject & if u lease or own your vehicles. 

looking 4ward 2 hearing your responses,

WARHAWK

[Tyler]

I found a good blog post on this once but I can't find it    It basically pointed out the positives and negatives of leasing and how leasing can often work out to be better.  I myself have never leased a car, so I can't really help you buddy.

[wpruitt]

Clark Howard, an Atlanta Consumer Affairs Advocate, says leasing is a good deal .....AS LONG AS SOMEONE ELSE PAYS THE LEASE!!

www.clarkhoward.com

[R o b 6]

Clark Howard, an Atlanta Consumer Affairs Advocate, says leasing is a good deal .....AS LONG AS SOMEONE ELSE PAYS THE LEASE!!

www.clarkhoward.com

Clark Howard rocks. I'm a big fan of Dave Ramsey, too. You can subscribe to their podcasts free on iTunes. Great, straightforward advice.

[SLYinKC]

Warhawk, Leasing can be a good deal depending on your driving habits.  For me, I drive way too many miles for leasing to work.  Most leases have built-in mileage limits and you get hit with some heafty penalties if you exceed them.  Also, remember that leases, like loans, have an imputed interest rate.  You need to ask alot of questions about the lease to find out all the details before you sign on the dotted line.  I have done one lease in my lifetime, about 10 years ago, and I got burned on the deal.  Hopefully a whole lot older and wiser now.

[Koaa2]

I  have never leased. I am a fan of Suze Orman who doesn't advocate leasing a vehicle and goes for always buying a 2-3 year old car, because of the immediate depreciation on a new one.

[JDog]

Hello Warhawk,

Man to be frank with you I would say definetley steer clear of leases. Like SLYinKC said, there are a lot of rules and mileage limits attached to lease agreements and can cost you additional money and hassle if you break them.

I'd say ,take your time and sell the other cars and buy one of your own.

Jesse

[Robmeister]

I'll tell ya probably the BEST way to buy a car....but it takes forethought, a LONG-TERM perspective (i.e. delayed gratification) and patience...

If you can get yerself in a position to do this you'll pay WAY less for any car you purchase.

Let's assume no money down and say you get a 7-year loan for a $40,000 car @ 8% = payments of $620.00 per month

At the end of 7 years, you end up paying about $52,500 for that car......$12,500 in interest.

But if you can COMPLETELY REVERSE that process and SAVE for a $40,000 car in a safe and conservative vehicle that yields 6-8%...

Paying the same $620 per month into the account and earning interest along the way, you can buy that $40,000 car in 4.5 years and only pay $33,500 for it outa yer pocket....the other $6,500 is paid for in interest PAID TO YOU by the institution you saved with.  Not only that, when you walk into a dealership with CASH....you got'm by the cajones, man...and will pay way less right there too.

Now, before you start quibbling about interest rates, the time value of money or what can earn 6-8%--they are out there----it's the STRATEGY that is the crux.

I knew a nurse who did this and completey switched around the process that 99% of people use to buy cars.

She had a car that was paid for, that she hung onto while saving for her new car....every four to five years she bought a new car..... CASH. 

Instead of paying tens of thousands extra in interest.....1) she EARNED tens of thousands in interest that helped pay for her cars in a shorter time period. 2) she paid less out of pocket for her cars because of that earned interest. And 3) Walking in with Cash put HER in charge, man.....I actually saw her reach down and grab hold of the salesman's cajones.

But, ALAS, we Americans (Myself included) want INSTANT gradification.....I want it NOW ---  pay later.  ****sigh****

[JohnMont]

i leased my current car (honda civic) when I was in a tight income situation four years ago; got it for only $160 per month.  They said you have the option to buy at the end, which is what I'm doing.  So it has worked for me.  However, what one of the guys (slyKC ? ) said about the milage limits  is true.  I have put WAY more miles on mine than the limit, but then again, it doesn't matter, 'cause i'm buying it.  Also, if you are a somewhat careless type driver (like me) and put a few dings in it  (like I have) that's an added expense at the end too.  But again, I'm buying the car, and don't care too much about a few dents. ....

John

[Sooner Steve]

I personally have never leased.  However, my in laws did it and got burned big time.  They were way over mileage on a van.  Then the surrender costs were nearly what they would have to pay if they bought it at the end of the lease.  It just was not a good idea.

I think Robmeister has the best advice.  Now, if I could just be disciplined enough to follow it.   

[Tyler]

Another thing that you can do is start a small business that won't take but a couple hours a week and is set forth to earn you $500 or $600 a month, or just enough to pay for the car that you want.  I recommend picking a car that would still be in your budget in case your new income dwindles or goes away.  I've seen a couple of friends do this and the best part is that it can sometimes take off and become much more than you thought it would be.  Check with your tax guy, but you might even be able to write off the car as a business expense and you wouldn't have to pay much, if any tax on that new income.

[Sooner Steve]

Another thing that you can do is start a small business that won't take but a couple hours a week and is set forth to earn you $500 or $600 a month, or just enough to pay for the car that you want.  I recommend picking a car that would still be in your budget in case your new income dwindles or goes away.  I've seen a couple of friends do this and the best part is that it can sometimes take off and become much more than you thought it would be.  Check with your tax guy, but you might even be able to write off the car as a business expense and you wouldn't have to pay much, if any tax on that new income.

Also, check with your CPA. Some vehicles like SUV's or pickups, can be depreciated out as an expense for an even better value.