Buy -vs- Lease

Smart money says buy, especially on a car that holds its value as well as Priuses do.

This isn't so much a hybrid question as it is a finance question, and there are a lot of moving parts in owning an automobile.
How much do you drive?
Where do you live?
What do you use your car for?
What is your income level?
Married or Single?
One car, two or three?

Probably 94 people out of 100 who lease should really be buying, which is why there is an entire industry built abound obfuscating the leasing process.....but I'm in the "buy" camp....so I'm somewhat jaded about the lease industry.

If you want money advice?
Look at folks who do that for a living...like the Clark Howards of the world.
Or…do a detailed search on the internet about the lease-versus-buy question....and by detailed I mean go to several sites that advocate each position....NOT and let me repeat this....NOT at a car dealership.

Good Luck!

 

Clark Howard is never going to recommend leasing...and I can't see how that is ever a great deal anyway. If you don't want to buy a car, get the Chevy Volt because they make you lease it. Ends up working out better because of the deals they have. But, the Prius has great resale and with how much gas prices tend to fluctuate, that can only mean good things for all of us who drive them.

 

What limited research I have done indicates that in almost every case it is better to buy and hang on to the car for 5 to 7 years. If you are not going to pay cash be sure to shop for interest rates, credit unions are usually pretty good.

 

Wow, you can't beat 0%.

 

Dealers like fLeasing their cars to customers. Most dealers LOVE leasing because it allows them to make more profit than a traditional car purchase. Here's more about it. How Dealers Make Money on Leasing

 

Leasing is only lucrative to those who drive less than 12k miles a year and are OCD about car care. If you drive a lot or are one who doesn't mind the greasy leftovers from last Tuesday's drive-thru visit soaking into your floorboard or likes to park as closely as possible to your destination, then buying might be a better option for you.

 

This is not at all relates to hybrid ... what would you do if this was any other car.

If money is not an issue .. lease .. and you can enjoy driving a new car in every 3 years ... thats all.

If you try to make a deceison on the financial front just take out the hybrid question and decide on the numbers.

I personally think lease is paying premium on driving a new car ... in every 3 years. If you lease, your car payment NEVER ends with a loan (or paying for it outright) you will have a few years when NO car payment but driving a 4-5 years old car.

Also how much do you drive .. if you drive less than the lease allows you are OK but then you do not really "save" enough for the hybrid benefit ... NEVER really get back the difference btw a similar NOT hybrid.

Simple as that not a hybrid issue.

 

They dont' "make people lease" volts, you can (and maybe should) buy them just like I did. I usually recommend buying but it also depends on your ability to take the tax credits (why many people lease the volt) as well as the incentives for leasing. Every now and then leasing is a better deal, if you normally keep a car only 3 years. Personally I aim for 12-15 years per car. The answer on the "cost" is is about running the numbers and factoring in your expected milage, usage and ownership year.. do the math yourself.

The Prius is extremely reliable, and the hybrid battery is, in general, not a issue to worry about. As other say, the prius also has great resale value.

Will there there be better tech/deals.. probably but the opportunity costs of waiting are also real.

 

When we looked at the Volt, they were only allowing leases, so they must have opened up the purchase options later on.

 

Well you must have had a bad dealer trying to twist it somehow to get more money.. I bought mine in Aug 2011, and started looking in Dec 2010 and both time buying was all I considered. (I decided to wait until August since my local delaer was not certified until then.. Volts were not sold in Colorado until Oct/Nov 2011 so they had longer to get people trained than Cali or TX). I usually keep my cars for 10-15 yeras and absolutely did not my Volt going back to the Crusher -- if it was lease only I would not have gotten one since it would not have shown a long term commitment on GM's part.

 

I don't think it had anything to do with a bad dealer, but this was when they still had the waitlist for the car. I think we would have only considered a lease if we decided on that car. I don't think it had anything to do with GM's commitment with the car. It hasn't had the demand that they had hoped, so I don't see this being a long term car anyway. That was part of the reason I chose the Prius.

 

GM never had an official wait-list (though some dealers did, as I was on one in Cali). I was number 157/54,000 on the GM-volt wait-list which never became official so again never been a lease only. The very first volt to Jeff Kaffe was sold, not leased.

No car had the demand that people though it would in the summer 2007 (when the fabled GM 45,000/year was announced). It was probably an optimistic estimate back then the economy and the company were in good shape.. now the price is higher because the company cannot underwrite it as much as it might have (like Toyota did the Prius) and fewer people can afford 30K card let alone 35K net prices.

Here is a plot of Sales


the market has still not recovered to 2007 levels, and that is not looking at prices.

Many don't trust GM or the to survive, that is a personal decision and clearly if one is unsure about he viability of the company a lease makes more sense.

 

Depends on your location, many 0% APR finance & lease deals in NorCal. See link:

Buyatoyota.com

 

I don't think that GM will ever again offer an EV as a lease-only vehicle. Too many eco-weenies are still pissed at them for not letting people buy an EV-1 and that was over fifteen years ago....
Interesting enough Honda's Fit-EV is lease-only, IIRC.
No grumbling yet from the eco-chic crowd.

The reason that EV's are leased more than gassers is that they are generally very expensive, low mileage vehicles. No....that's not a dig on the EV set. That's just how it usually shakes out. You don't see many EVs pulling farm duty in Nebraska (yet.)
A pure EV is probably a good candidate for leasing.
A PHEV on the other hand is better if bought and driven, rather than leased and pampered.

It'll be good news for me in a few years after all of the wanna-be's blow through their leases and get brutalized at the end of their contracts.... Their batteries have eight years warranties. Once the market is flooded with off-lease Pips and Volts, and the eco-weenies move on to worship another kinda green car then it will put downward pressure on PHEVs and work-a-day folks like me can roll green too.
No not that kind. The $$$$ kind.

You can get a pretty darn good 'Droid for less than 200 bucks...and if you HAVE to have a 'real' Mac product....they're getting cheaper too.

Same principle.

EDIT: If you have good credit you'll want to really consider getting a loan at a CU or a regional bank rather than do the "Zero-percent" financing thing through the manufacturer's credit arm. Money is CHEAP now...and my cat can get approved for a car loan. If you qualify for the teaser-rate, then you qualify for a very low interest loan from a CU, and you can haggle your way into a REAL good deal, instead of just a good deal for the dealer.

 

You can also consider lease to own. If you have the ability to buy the car at the end of your lease with cash (about $15K) The amount you would pay to lease or to finance @ 2.9% for 36 months is almost the same. If you don't like the car, you walk away and lose less than when you own the car and want to trade for something else.
The car dealership makes money in different ways, if they give 0% then purchase price would be more or they would give you less for trade-in. Don't let them distract you on just the 0%, because there are many other places they can take $ from you. You can gain the 1000 dollars you lost in interest over 3 years from bargaining for a 1000 discount in 20 minutes

 

I think that it really depends on the deal, vehicle, and driving habits. Take a Prius II for example. The average selling price here in California is about $22k. The lease on that same vehicle is about $500 down with $245/mo. Excluding taxes (paying tax on selling price if buying or tax on monthly payment if leasing) leasing would be a little cheaper over 2 leases at 36 months. This only works if the owner can stay within the 12k mileage limit.

Lease:
$500 down
$8820 36 payments of $245
$9320 total excluding taxes

$18640 total over 2 lease periods assuming that the buyer can get a similar deal on the second lease.

Buy:
$21999

Then one also has to consider the maintenance costs (albeit not very much for Prius). New vehicles come with 2 yrs of free maintenance up to 25k miles. With lease the lessee only has to pay for maintenance for 2 service years where the buyer has to pay for about 4 years of maintenance (over 6 year term).

The average time an American keeps their cars is about 6 years. So when it comes time to trade in, there is still some equity left in the car (about 30% of purchase price).

Let me state that I buy my vehicles, but I do like to play devils advocate at times. In the end, it comes down to your preferences, driving habits, how you keep your vehicles and your money situation.

Car buyers hold vehicles longer - Los Angeles Times




iPad ? HD

 

Some good data there, but in addition to having to be constrained to 12k miles per year, you also have to keep the vehicle in near showroom condition to avoid some pretty nasty charges at the end of the leasing period.
Instead of getting pissed at door dings, and then pretty much getting over them.....you have to get them fixed. One way or the other.
Same with the interior. It may sound trivial, but insurance rates and deductibles start to take another bite out of the lease arrangement. You're either going to have high deductibles or higher rates. Maybe both in Caly.

If you keep your car for the 6 years, as you pointed out, you're getting to keep the vehicle's residual value, which for a 2006 G2 with 100,000 miles on the clock is about $10,000.
Decidedly not a trivial return on buying and driving for 6 years instead of leasing 2 vehicles.

Besides....if you're only driving 12-k per year?
You may want to investigate other vehicles if we're just talking about money because despite what the eco-weenies are insisting about there not being a 'hybrid premium'....you know what?
There's a hybrid premium.
That's why an 06 G2 with 100k on the clock is worth about $10,000 and a comparable 6 year old 5 seat hatchback is worth sometimes MUCH less. If you lease the vehicle you're making a lot of cabbage......for the leasing company!
12,000 miles in a year?
You can do that in an EV.

 

i'd actually rather lease than buy, but mileage limits make me sad.