Lease buyout tips/tricks?

Usually leases cost *more* money, but sometimes less per month.

Off hand I'd guess that a 6 six year simple loan is about the same monthly payment as a lease. Perhaps less, since you are not paying lease financing fees.

 

You have no clue what you are talking about. I paid my house off 8 years ago. I paid cash 13 years ago for that 4Runner. I paid cash for my Prius. I have zero debt except for my work American Express and my personal credit card that is always paid in full monthy. The "Credit Score" is a reflection of how you manage money. Mine is 830 for a reason. I predict yours is very low, based on your views of leasing.

 

Sage I agree 100% with you. He will never get it. He is the type of person that never understands why he can never get out of debt. I know alot of people like that. It has nothing to do with how much you make. It has a lot to do with logic. People that live for the day never think long term.

 

As I said earlier, it is a reflection of whether you have paid your contractual financial obligations in the past, and your current ability to repay any new loans. Over simplified, but the history says whether to offer credit, and the income/debt says how much credit to offer.

I agree that there is a correlation between the above and money management, but they are not the same.

 

There you go...debt is king for credit scores. Without debt, you get low scores. The "credit" scores are run by the credit industry to encourage debt.

 

OK genius, answer me this: why do people like Judgeless have high credit scores even though they cost the credit card company (CCC) money ?

Don't answer vendor fees, because any smart credit card user with a good score receives rebates from the CCC higher than the vendor fees. E.g., all my credit use gives me rebates between 2 - 3%. That does not include the $250 - $500 I usually receive as a promotional gift when I open a card.

The other thing you do not realize, is that credit card use as it affects the score is not dependent on amount. Spend $1 every month on the card or $1B, the effect on the score is the same. If you repay the loan as the terms dictate you will have excellent credit as time passes. In fact, if you take out a credit card and never use it, over time that card will improve your score. You can see this is true by looking at a credit report: The unused card is reported each month as 'met obligations' (or equivalent meaning), just like a card you spend $1000 on a month and pay in full by the due date, or a card you pay the minimum required on the carried debt.

Your contention that high credit score = high debt is simply wrong.
Lastly, the credit score is not to encourage debt, it is a tool for lenders to decide who to offer loans to, and at what interest rates. The score attempts to quantify default risk.

 

My personal credit card is the Chase card. It gives me 1-3% return on most purchases and 5% on the special of the quarter. I make out big time.

Dave Ramsey – “If you will live like no one else, later you can live like no one else.”

That is how I live my life. I work hard and make good money. I never waste money so later in life I can retire early and live an amazing life. That is one of the reasons I own (not lease) a Prius instead of a Lexus.

 

Ditto. I did pretty well in the last quarter.

 

May I politely suggest you are full of ****. With all due respect, of course.

 

Instead of resorting to name calling why don’t you give an example of where it makes sense to lease a Prius? Of course outside of lower monthly payments.

 

Why do people like Judgeless take out debt just to get the reward of a high "credit" score from the lending industry's debt encouragement promotions.

One has to give the credit industry...ahem...credit for creating a system that encourages debt even by those who would normally avoid it. Even to the point of paying them, as Judegless says he does, to get reports on their "credit score".

 

I have zero debt and I do not take out debt. I use my credit card instead of cash and I get rewarded 1-5%. I pay 100% of the balance when I receive my bill.

I do not do it to get a higher credit score. My score is high because of good decisions I have made over the years.

I feel leasing a car is a poor choice because it forces you to get a new car every three years. I feel that extended warranties are a waste of money on the most reliable car brand in the world “Toyota”.

 

Credit cards are debt and you note you incur debt on a regular basis. You pay the lending industry money to buy their "credit" score products which you say you don't need. You are a trained consumer of debt products.

 

I am unclear what you mean by debt. Judgeless has said many times he does not carry a loan past the grace period. Most people use the word 'debt' to mean a carried loan associated with interest payments.

I receive an electric bill once a month, and pay it before the company says it is due. Have I taken on debt ? In one sense yes, because for a few weeks I have not paid for the service already used. Most people would say no. Judgeless' handling of the credit line offered him by the CCC is analogous.

As to why he uses that line -- ask him. I can tell you why I use mine:
1. Rebates
2. Promotions
3. Warranty
4. Consumer Protection
5. Record keeping
6. Convenience
7. Avoidance of cash that may be stolen or lost

Frankly, it is a no brainer to take advantage of what credit cards offer. You should learn to separate out the advantages, from the possible (but avoidable) pitfall of carrying debt at a high interest rate. Now, of course you individually may succumb to the temptation of carrying debt and will have to decide if a credit card freeze is the best way to handle your lack of discipline.

One last point about credit scores: they are used by more than CCC to assess loan default risk. E.g., my car insurance company (Amica) uses the score as one measure to set premium risk; it is common for landlords to use the score as a measure of a potential renter; and many HR departments use the score in their hiring evaluation, particularly in the finance industry. The list is much more extensive than the few examples I gave.

Is Judgeless right that *in aggregate*, the group that leases cars has lower credit scores than the group that does not ? I don't know, although my guess is no. What can be said though is that a person who chooses a non-business lease based on the monthly payment likely deserves all the criticism Judgeless heaps on them.

 

I priced a Prius III ($26,360 msrp) on the Toyota website, where you can compare costs of lease vs purchase.

The 36 month lease costs $390 a month, in addition to a $650 acquisition fee at signing. The acquisition fee works out to $18 a month. Toyota also charges a $350 disposition fee, waived if you buy or lease another Toyota. So average monthly payment is $408 a month if the return fee is waived, $418 a month otherwise.

A 6 year installment loan costs $407 a month.

So even the crappy argument of choosing a lease to keep monthly payments low may be wrong. This example shows why Judgeless is quick to disparage leases. After 6 years a purchaser has paid out of pocket the same amount as a leasor (sp?), but now owns a paid off car too. If you figure that a Toyota can comfortably last 12 years, the lease ends up costing about twice as much. The argument that the owner pays more for years 6 - 12 in maintenance and repairs is true, but that is easily balanced by paying less insurance since there is little reason to carry comp and collision.

 

Borrowing money which Judgeless says he does regularly on his credit card.

 

On that Toyota lease, what is the residual at the end of the 36 months? That is the price the vehicle can be purchased for at the end of the lease. Leasing does not force one into a new car every 36 months, if used properly it allows you to finance the eventual purchase on more favorable terms than an outright purchase. When you finance a new car purchase it is not unusual for the amount owed to be more than the car is worth during the first few years, a risk you carry with additional insurance costs, which can be mitigated with a proper lease.

Like any purchase, you can overpay for lease as easily as you can overpay for a title.

 

ProximalSuns you are not the sharpest marble in the world. There is a big difference between dept and paying a credit card off during the grace period.

- A person in debt carries a balance month to month and pays interests up to 28% or more monthly on that debt. For every $10,000 in debt they pay $2,800 a year because they are idiots.

- A person paying off their credit card during the grace period pays ZERO interest and often collects benefits of 1% to 5% of what they spend. A person that spends $30,000 a year can make upwards of $1,500 a year.

You do not understand the basics of finance so I do expect you to comprehend the difference of the two. I also think you will never understand why leasing or buying a car every three years is a horrible finical decision.

 

No difference at all. You are borrowing money, going into debt and paying it off.

 

The residual was calculated by Toyota finance when you bought the car. It is a calculated number that you might beat by a couple hundred dollars or lose by a couple hundred dollars, it is a gamble that people take.

Most people (99.999%) take the car back with the view that they can get a shiny new one for the same monthly payment that they have been paying and they do it. This is how leasing makes people get a new car every 3 years.

You are right that you can buy the car at the end of the lease for a little more or a little less then it is worth and finance it again. When you do this, you eat the cost and interest of the lease, and the interest and cost of the loan. This will cost you a lot more money compared to just buying the car out right from the start.

It does not matter if you lease or purchase a car. It is not unusual for the amount owed to be more than the car is worth during the first few years. A lease predicts the residual value after 3 years within a few hundred dollars. You pay the same insurance with a lease or a loan.

That is true but it has nothing to do with leasing or buying a car. People will get the same bad deal when negotiating a lease or loan if the do not do research up front. People that lease are looking for the lowest monthly payment. Dealers love to play games with numbers and will always take advantage of someone buying a car based on how much they can spend a month.