Lease or buy?

Leasing a car is never a good idea. Clark Howard is a legend when it comes to personal finance advice. Before anyone leases are car they should read his chapter on leasing. Here is a link.

Get Clark Smart: The Ultimate Guide ... - Google Books

 

If you find value from his book you should buy it. It has alot of good advice.

 

I always LOL when I see this type of post . Any "financial advisor" out there is going to have his or her opinion on something, and may provide good points or what not, but you don't have to take everything they say to heart. Take it as another perspective on the subject, but ultimately you as the buyer, will know what you need and want out of the car and purchase.

 

I disagree. There are people like Dave Ramsey and Clark Howard that are financial advocates exposing bad deals and giving good advice on how to avoid scams. Clark Howard is on HLN the CNN channel giving advice.

I would agree that 95% of financial managers are out to make commission on financial advice. These two do not fall into that category. I suggest you do a little research before making LOL comments. Here are some links.

ClarkHoward.com Home: Save More, Spend Less and Avoid Rip-Offs on clarkhoward.com

Dave Ramsey Homepage - daveramsey.com

 

I read it and the problem with it is it caters to dumb/financially ignorant people, such as those who don't lease with $0 down, buy gap insurance, know how many miles they drive in a year, use a lease trader when necessary, or they buy more car than they could otherwise afford or lease for too long. Clark didn't say it's never a good idea, as he did mention two circumstances in which leasing a car makes sense (if you like to get new every 2-3 years and factory-subsidized leases).

 

I think you over estimate the average consumer’s knowledge of finance. The average American has over $10,000 in credit card debt and they are paying 20% APR.

A credit card is simple. Balancing, a down payment, residual value, mileage and a boat load of hidden fees is a lot more complex.

 

This is what I was thinking when I read the same article (or one written pretty much exactly the same way, with the same points) about 5 years ago when I leased my Audi. The article is more biased towards not leasing, rather than giving people different options or Pros/Cons if they do choose to lease vs purchase or finance.

I thought the "Tips on Leasing" points only provided one side of the story to steer consumers away from leasing, rather than providing additional information with alternative methods that show reasons from both sides. In my first post, a lot of what I said pretty much covers the situations given in the 'Tips' list.

The "average consumer" who doesn't have any knowledge on finance, most likely won't do any research on the numbers before buying a car, and also most likely won't bother to read those articles about leasing and will just go out and buy a car based on the 'lowest monthly payments.' However, with the internet being readily available to most 'average consumers' these days, they may or may not read the articles above and heed the advice, but they would probably do additional research on leasing if they were interested in doing so. This may include research on how lease payments are calculated, how much they plan to drive and how much it would cost them if they go over, additional costs factored in, how they should put down the least amount of money, how they can get out of a lease without any penalty, etc.

 

Because there are no pros. The only reason to lease is if you want a new car every 2 years. If your mortgage is paid off, you have zero debt and a fair amount of retirement money set aside this might be good option.

Most people in that situation did not buy new cars over the years, they let others buy or lease new cars and they pick them up after ½ their value is deprecated. Those people pay cash to avoid financial charges.

 

Boy PC is just full of people who think they know whats right for everyone today isn't it?

Whether or not leasing makes sense depends on the individual and their overall situation. For me, since I in general like driving a new car every 3-4 years (this time around being the exception) and can write the lease off as a business expense leasing makes a LOT of sense. For my vehicle I use for business (the Lexus) I would never consider purchasing a car...unless it was a pre-owned car or a car I was going to want to keep for a longer period of time.

Leasing may not be right for you...or even for most people...but it is right for me and others. For my age I consider myself fairly wealthy so I must be doing something right.

Why don't you worry about you and stop giving people unsolicited financial advice that you aren't qualified to be giving them in the first place. Clark Howard...Dave Ramsay...Suze Orman...I really don't care. I suppose they do all of this for free right? Since they aren't out to collect a commission or make money from me...I guess all their books and seminars are free...right? Clark Howard doesn't collect a salary from CNN for his contributions...right?

 

You're right. There are no pros with leasing a car, except for maybe driving a new car every few years & keeping up with the current technology, reducing your cash flow spent/wasted on a new car, write off and tax breaks (even if you don't own a business), subventing lease deals, and avoiding negative equity. A car, regardless if you lease it, finance it, or pay all cash for it, is always going to be a bad investment since it will depreciate everyday for the rest of its life (unless you pick up a classic or a highly desired car that is limited in production). I'm not saying that somebody should lease over buying a new car, but rather providing the facts from both sides so they can decide for themselves on what they want to do.

If your lifestyle and needs warrants the possiblity of leasing a car, then by all means look into that option and run some numbers. If you need a car to drive and plan on keeping it for the next 5+ years (like my mom, who puts a good 25k miles a year on her car), then for her buying would be a better option. But just saying "leasing is the worst idea" and posting up some biased articles that say the same thing isn't something I would consider as good advice. If you're completely set on that, which is seems like you are, then that's all good. I would still say to read the articles, but also to do addtional research and perform some calculations and see if it's still something that you would want to do.

Well that's all good for them, and those types of people won't mind driving the same car for the next 10+ years. But this thread is about getting a new car now, either by leasing or buying (financing or paying all cash).

 

I am sure everyone would like to get a new car every 3-4 years but it is a waste of money leasing or buying. You will get the same tax write off if you lease or buy.

This is a thread called ‘Lease or Buy’. The person that created this thread is soliciting advice from other Prius chat users. There are many people that will defended their extended warranties and leasing a car at all cost. Those people like wasting money. To each is own.

 

Its a waste of money TO YOU. I work very hard for my living and I have accomplished a lot. If I want to drive a nice car that I enjoy and my clients can enjoy riding around in and replace it every 3-4 years...I am going to do that. There is more to life than just getting through it spending as little money as possible. I'm going to do the things I enjoy...I'm going to live in a nice house, drive a nice car, eat good food and take my family on nice vacations as long as I can afford to do those things and still invest for my and my family's future. Maybe you'll have a few more dollars than me when they put you in the ground...but I really don't care. What good is having money if all you do is deny yourself the things that you want to have and do in life?

Do I agree that driving a car in this way is much more expensive than keeping cars 10+ years? Yes. Do I care? No.

And while the new tax laws have made it so leasing is not as great a deal as it once was you do not get the same tax benefits when you buy. You can write of the loan interest but in a lease you can write off the entire lease payment as an expense, as well as all the operating costs. If you buy it in cash all you get is the depreciation...

It depends on the situation...but when you factor in the benefits of leasing for taxes and the hassle free disposition of the car after 3 years for me its a no-brainer.

You have to learn to say the words "to me" or "in my opinion" instead of preaching to people when you really don't know their individual situation.

 

What is the name of this thread? I forgot.

 

I have bought 8 cars new (3 paid in cash) and leased 1 before in my lifetime. The Prius became my 2nd leased vehicle...

I pulled my comment below from another thread:
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I went for the lease because I rather deal with the residual option at the end instead of either a huge down payment or huge monthly payment when financing.

My payoff amount is $22692 so with the $1,900 drive off and first month's payment of $267.69 the OTD price looks like $24,859. So it's pretty much the same as buying the car for $22,900 + tax (9.75% in Los Angeles County) and license.
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On MY Prius deal the bottom line costs are about the same. It just came down to a decision on how I wanted to spend the money...up front for financing or defer the bulk to later date with the lease. I have every intention of buying my Prius at the end of term or even paying it off early if I can scrape the cash. Besides I'm driving the snot of out this car, way past the pace of the mileage allowance

 

I'm not sure I see your point...

The OP wanted a discussion about leasing vs buying...and thats what he is getting. He didn't only ask for your opinion.

 

I count 35 options here. Not just mine.

 

Another good article.

Compare the Costs: Buying vs. Leasing vs. Buying a Used Car

 

I worked for a guy years ago who had a saying whenever one of those "MBA types" would present an analysis he didn't like:
figures lie, and liars figure

The analysis in that article is flawed, in part because they assume a 36 month lease, followed by a 24 month lease. A true apples-to-apples would be a 60 month lease (which would be much less expensive, due to lower lease rate, insurance, etc.). Plus, they don't say how they came up with the lease rates (what was the residual, etc.).

Oversimplifying, from an economic perspective (putting aside tax issues, which can significantly favor a lease if you own a business), if the interest rate on a car loan is the same as on a lease (multiply the money factor by 2400), the lease residual is reasonable, and the down payment is the same, it should be a toss up.

I've never leased a car before, and for the last 20 years have paid cash, but I did lease my Prius. The main reason was I decided to let TFS assume the residual risk, given the rapidly changing automotive landscape. At the end of 3 years, I can decide if I want to keep it (assuming the residual is at or below market), or move on to a marshmallow powered car (or whatever exists then).

 

Clark Howard, Dave Ramsey and Suze Orman might have MBA's but they are not accountants. They are financial advocates that do research and discuses the best ways to remain finically stable. They expose scams and make recommendations on ways to save money.

A lease contains many built in fees in addition to the APR. A lease will always cost more.

If you plan on buying the car after the lease you have to gamble on the residual value of the car? What if you were in a bad accident caused by someone else?

You are stuck with a preset of about of miles. What if lose your job and have to take a new job that requires double the millage?

Your view of standard maintenance might be different the lease company. You might have to pay for new brakes or new tires at the end of the lease. If you spill coffee on the carpet it might cost you $1,000 when you turn the car in. Or other little things like those 4 dings on the door. I hear about lease nightmare all the time.

Most reports show that amortizing a car over time saves more in taxes the writing off the money lease interest. It is easier to write off the lease (less paper work). I would rather spend a little more time and save more money.

Another thing really bad about a lease is the way the dealer roles all those expenses you get when you return the car into your new lease. They make it hassle free for you but not your wallet.

There are many risks in leasing a car. The house always wins.

 

Comments in bold below.

It's clear you're predisposed to be against leasing. Prior to this car, I wouldn't have considered leasing, but did for the reasons I've previously stated. Plus when I sold my previous car (BMW) I found the lease quote I got at the time I purchased it, and it cost me a lot more money to own/sell the car than had I leased it.