about to lease a new 2010 Prius... need help

Re: hmm

It is the same car that sells for $30,000 with zero down

The leasing part is a 3 year lease, after the lease you give the car back and lease again. This is what is bad about a lease.

Purchasing is a 60 month lease at 4.5% APR

The totals are over a 10 year period.

What part do you not understand???

It is dollar for dollar. It is the same car that sells for $30,000.

 

Sorry but this is untrue and far too broad to be applicable to the general population. In fact IMOHO leasing is far better than buying..I've done both many times.

For me the reasons for leasing as opposed to buying:

1. Buying an asset that in the foreseeable future is going to be worth nothing is a waste of money - for me.
2. In my wife's case she will get a new vehicle every three years. No vehicle will satisfy her for more than three years. Buying one is too risky.
3. The market value of a leased vehicle is protected against all extraneous economic factors such as the world's banking industry imploding causing massive worldwide depression thus driving down the value of assets that can't be sold/traded ( houses, cars, boats, etc etc )

As long as the 'cost of ownership per mile driven' is about the same then the above factors weigh in favor of leasing IMOHO.... YMMV.

 

My comments added in red.

 

Good post.

All generalizations are wrong.

 

My guess is that you haven't had much experience in these matters. I've done all of them over 45 yrs of driving. I've

• purchased many vehicles, kept them til they dropped dead
• purchased them for a short time, then sold or traded them
• leased and turned in at the end of the lease
• leased and purchased during the term of the lease
• leased, then sold the vehicle before the term was reached.

There's nothing special about one or the other. Trust me there are no hidden monsters lurking in the dark depths. Inform yourself beforehand and everything is easy to navigate and negotiate.

 

This is a perfect example of bad financial advice. If you cannot afford the payments maybe it’s more car then you should be buying.

There are fees that you pay up front.

If you lease a car for three years you get zero after three years. If you finance a car for three years, the car is 100% yours and you can sell it at fair market value. We are talking $15,000 to $20,000 on a Prius. That is a lot more than zero.

He is saying spend 100 a month more and the car will be yours. It might be worth $10,000 to $20,000 at the end. That is way better then getting zero.

Tell her you can get a new car every three years now and eat dog food later in life, or make good financial decisions and have to suffer later.

 

How do you sell a leased car you do not own?

I admit it is easy to get out of a lease if you are going to lease a car from the same lease company or manufacture. They take care of everthing for you.

Are saying in the middle of the lease you told them you want out and they said ok, no problem?

 

Use the $199 lease Toyota had last month. Don't use some simplistic calculation. Use NPV.

 

I would not call the spread sheet that stream put together in this thread ‘simplistic calculation’ I used his sheet for my numbers. And an amortizationtable for the purchase figures.

http://priuschat.com/forums/dealers...ase-new-2010-prius-need-help.html#post1162435

It lists the true cost of leasing. I compared two Prius's that cost $30,000 each with zero down.

It does not matter if the payments are $199, $500 or $1000. Over time buying or leasing a new car every three years is a bad deal. Leasing make people do this.

 

Re: Leasing

Do you ever explain to people that buy/leasing a new car every three years is a horrible use of money? I am sure the answer is no. Because that is not what you are paid to do.

You are paid to find the best monthly payment that the end customer can afford. You are doing your job.

If people realized the savings of not buying/leasing a new car every three years would never lease. If you showed them the numbers over their life time they would be shocked.

 

Well you've certainly gotten lots of advice on leasing as well as the desirability of your plans for vehicle options. Please let us know if :
adriana likes leases or purchases more than beagles :cheer2::welcome:

 

I haven't seen that spread sheet. I'm calling the numbers you listed simplistic.

No they don't. You can buy the car at the end of the lease and keep running it for 10 years.

You can't compare getting a new car every 3 years with running a car for 10 years. Obviously using new cars is going to cost you more - whether you lease or buy. Duh.

 

Since we're on the topic, leases are sometimes heavily subsidized by manufacturers in order to generate more sales. This happens by artificially inflating the residual values, thus making the lease cheaper. At lease return time, the manufacturer takes a hit for the difference between residual and actual value.

Obviously, this is a scenario where leasing is better than financing, provided that you fit the lease requirements (credit rating, mileage, etc).

On the other hand, if you grow attached to cars and like to keep them for 10 years, financing is the way to go.

Exactly!

 

After three years of leasing a car, 99.99% of the people return the old car and lease a new car. They are forced to either come up with the money to buy the leased car or sign a new lease agreement for a new car. Signing a new lease is so much easier.

Most people that purchase a car keep driving it after it is paid for.

Again, spending money leasing or buying a new car every three years is a huge waste of money. When people lease they tend to do this.

 

My Prius is more than 4 years old. It is still in great condition inside out. It has 131k miles and it is running great.

I wouldn't want to sell it and buy a new Prius because I am still so satisfied with my current ride. I believe on average, a person keep the car for 5 years.

 

leasing

You are pulling those numbers out of thin air.
That's absolutely untrue.
In no way do 99.9% of leased vehicle owners turn the car in at the end and walk off or just get a new one.
I re-fi 3 in 10 at their lease end because they choose to keep the car or it will go to a family member. I take in on trade at least 3 in 10 because the residual is lower than the car's value, and equity can be applied to a new car if they are swapping out.
The rest may walk away, or even trade to a different or same car.
Leasing makes sense with these subvented rates and aggressive residuals. And, right now, it makes great sense with the Prius plug in coming in 2+ years... it enables someone to pay about $.50 cents a month in interest and small car payments, and giving them the right to walk away from the 2010 models in 3 years regardless of the car's value. BUT -- if the car in 3 years has equity, it's all yours. At least, it is with me... I can't speak for a bazillion other dealers who don't do things as transparently as I do.

Judgeless, frankly, play devil's advocate as much as you want. Till you have statistics and facts square, please flail away at whatever twisted logic you need to use.

As for being in the automotive industry, yes, I have been for 30+ years. There are cars and trucks that I will advise folks NOT to lease when it's a stupid lease or stupid plan financially. I'm with many of my buyers long term. If it's dumb, I will tell them all the time, but some folks do dumb things anyway... and it's awful when I am the one trying to fix the problem in a few years and get them out of the dumb thing they did. I do have a little stake in their crazy decision and in their good ones. It's far more pleasant to come to someone in 2.5 years and show them some extra bucks in equity than to come to them with a shake of the head and bad news about negative equity because of the way they decided to buy vs pay.

The one thing about leasing I will share that's important: PAY FOR the miles you expect to drive. Buying up from 12K to 15K can be cheap. You get the extra 9000 miles for about 6 cents a mile vs. a 15 cent a mile penalty. The spread between 15K miles and 20K can be covered at 10 cents a mile... cheaper than a 15 cent a mile penalty. You are only mind-f-ing yourself with a 12K annual lease and a cheap payment when you drive 15K or more, and askin' for trouble at lease end. I'm a "better safe than sorry" person when it comes to mileage.

BTW: when it comes to lease end, and you're buying out your old car, that's what you pay interest on. The amount you are financing at that time. I'd rather pay 50 cents a month interest at these subvented rates (.00001) ... reality wise about $18 a month when you add TFS' bank fee and split it 36 ways... I'd rather pay that small an amount for the first 3 years, and then pay regular interest on a loan based on the car's residual. It's far less interest over time. But -- unless lease rates are super aggressive like these are for Prius, and a few other car models, my advice to lease first, and then buy out would sure vary. Each car and deal stands on its own because rates vary... your annual mileage, and how your last car looks to me sure affects my own advice!

Dianne

 

Re: leasing

Your numbers are way off. There is no way that 30% of the people that lease a car purchase it at the end. I know a lot of people that lease cars. None of them keep the car. They stay in the endless loop of getting a new car ever three years and eating a large part of the depreciation of the vehicle.

DianneWhitmire, leases only benefit people like you. The people selling the car!!! You prey on people that have one goal. Buying a car with zero money down and the lowest possible monthly payment. This is the worse way for a consumer to buy a car.

 

Re: leasing

The averages I gave you are true. They are from my own data, and my own records. They are true for me.
What are your numbers true for? Your guess? Your hopes? Certainly not your research.

And, if someone wants a car, they will get one. Whether they write a check, finance thru their CU or own bank, use Toyota's financing, or use Toyota lease rates, it's no correlation -- once they decide to GET a car, how they PAY is up to them. I think that's where we are communicating differently. You assume that someone HAS to get a car after 3 years is up - no they do not - they have their old one and their options are many. They can even extend their current lease another 6 months! It doesn't make a bit of difference to me HOW they decide to pay once they have decided on the car. The deal CAN sell the car in some cases, but they have to want or need a car to begin with... so regardless of how they pay, my results are the same. A car is sold. Cash, leased, financed... doesn't change what I make.

 

Re: leasing

We all know dealers do whatever it takes to sell as many cars as possible. I believe you when you say it does not matter how they buy it.

If an uneducated consumer comes into a dealer and tells the sales person he can afford $200 a month and they have a trade in that is paid off a dealer will say a lease is perfect for you. They will use the trade in as the down payment on the lease. After 3 years the customer has nothing.

I hear so many horrible stories were people trade in their car that they still owe money on. The dealer gives the customer a horrible trade-in price on their trade in and roll the money owed into the new car loan. The dealer will tell this customer a lease is not good for you. They do not explain it is because you cannot roll negative equity into a new lease.

Dealers will do whatever it takes to sell cars. They do not have your best financial interest in mind.

 

I got a 3 yr 15,000 mile a year lease for 2,000 down and $250 a month,
but that was after I got the same quote from three dealers.

I chose a lease to have a $100 lower pymt, because I don't mind
a payment if I always have a newer car, and I too like the option
of getting something else at the end of lease.