vehicle leasing - pros and cons?

[ray1970]

Some good responses so far. Rooskibar probably has the best advice since he is in the business on some higher end vehicles. I'll toss my two cents in anyways.

If you plan on buying the vehicle outright and having it for the next ten years or more, probably best not to lease. In the end you'll end up paying more than if you just bought the damn thing.

Leasing can get you into a pretty nice vehicle for a reasonable amount of money. And if you are the type of guy who wants to drive a new vehicle every few years then leasing makes more sense to me than buying.

When I met my wife she had a car that was leased. The monthly payments were cheap. About three months before the lease was up, she was in an accident that did $13,000 worth of damage. When the lease was up we turned it in and walked away.

Most of our vehicles have been purchased brand new and financed. We usually pay them off early and then drive them for a couple of years after that and then buy another one.

My most recent vehicle was bought used. I'm thinking this might be the way I go from now on. The original sticker price on the one I bought was $42,000 and I got it four years later for $20,000. It has all the bells and whistles and was just about as clean as a new one and I got it for less than half of what the original owner paid for it.

I was in your shoes. My last truck was in pretty decent shape but was 15 years old and was about to need tires and some front end work. I could have dumped a couple of thousand dollars into it and made it all good but then I'd still have an old, outdated, 200,000 mile truck that I just put more money into than it was worth.

[Irving]

Well, it's money or time, isn't it? Just for example, I could take the light rail to work every day and save a fair amount of money (I've already crunched the numbers.)

What it would cost me, though, is probably 1 1/2 to 2 hours per day in commuting as well as the flexibility of leaving to and from work on my own time rather than on RTD's time. Ultimately like most of us (judging from traffic, anyway) I've determined that my time is worth the money it costs.

A few years back the wife and I took a weekend trip to Glenwood Springs. We decided it would be fun to take the train rather than drive. And it was fun, that's a gorgeous train ride. But the train left Denver at 8:00 AM and we got into Glenwood around 2:30, 6 1/2 hours later.

Driving would have taken 3 hours AND we would have had a car when we were there, as opposed to having to rely on the hotel to pick us up from the train station and being on foot to go to dinner and such (which, in a town as small as Glenwood Springs, isn't that bad.) And of course that doesn't even take into account the fact that we had to get a ride to the light rail station and leave our house by 6am. So what would have been 3 - 3.5 hours in the car became a full day of travel.

It's always money or time.

EDITED TO ADD: We also didn't save any money taking the train, quite the contrary. I want to say it was at least $75 for each of us and of course we had to buy two tickets. Even at $4.00/gallon and driving my gas guzzling Suburban at 15 MPG (IOW absolute worst-case scenarios cost wise) we would have used 24 gallons of gas to drive 360 miles (180 miles each way) which works out to $96 travel costs and obviously that's the cost for both of us and all the crap we can carry.

I guess my point with all of this is that while it's true that cars cost money, what they save us in terms of time, convenience and freedom of mobility is what makes it worth it.

This is true for people who live more than 10 miles from work, which is most people. I personally didn't want to move closer to my job back when I worked in an office, and I wasted hours, days, and weeks sitting in traffic on I-25 because of it. That is getting into a different discussion all together though, especially since Ron already revealed his big plans.

Personally, I enjoy the convenience of having more vehicles than I need, but only because they are paid off and don't really cost me anything just sitting around at my house. It is a luxury though, and I try to treat it as such.

[HoneyBadger]

Some good responses so far. Rooskibar probably has the best advice since he is in the business on some higher end vehicles. I'll toss my two cents in anyways.

Best advice? More like "most biased advice". He's one of the few people here who has something to gain by "selling" a lease as a good product. It's not. It's an awful product. Sorry Rooski.

Most of our vehicles have been purchased brand new and financed. We usually pay them off early and then drive them for a couple of years after that and then buy another one.

Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.

Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".

[spqrzilla]

I think automobile leases are a bad idea. Here's the basic point: do leasing companies lose money? If not, where did their profit come from?

[mackbamf]

I think automobile leases are a bad idea. Here's the basic point: do leasing companies lose money? If not, where did their profit come from?

That logic applies to any business not just automobile leasing companies.

[Irving]

Best advice? More like "most biased advice". He's one of the few people here who has something to gain by "selling" a lease as a good product. It's not. It's an awful product. Sorry Rooski.

Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.

Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".

While that's true, this isn't really a financial advice thread. Also, he was just asking about the difference between buying and leasing. If instead he had asked, "I'm interested in learning more about the relationship between spending money for the explicit purpose of appearing well off to others while briefly enjoying a nearly immeasurable increase in luxury at the expense of requiring that I voluntarily enslave myself into unnecessary additional years of working life," them you nailed it.

[HoneyBadger]

While that's true, this isn't really a financial advice thread. Also, he was just asking about the difference between buying and leasing. If instead he had asked, "I'm interested in learning more about the relationship between spending money for the explicit purpose of appearing well off to others while briefly enjoying a nearly immeasurable increase in luxury at the expense of requiring that I voluntarily enslave myself into unnecessary additional years of working life," them you nailed it.

[ray1970]

Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.

Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".

Eh. To each their own.

For me it is worth it to have vehicles that are reliable and under warranty so that I don't have to worry about the wheels falling off, my wife being stranded somewhere, or me having to dish out money for repairs.

Vehicles are kind of like firearms. Some people don't mind dropping big coin on a high end rifle or handgun and other people are perfectly content buying lower cost firearms.

[Irving]

Eh. To each their own.

For me it is worth it to have vehicles that are reliable and under warranty so that I don't have to worry about the wheels falling off, my wife being stranded somewhere, or me having to dish out money for repairs.

Vehicles are kind of like firearms. Some people don't mind dropping big coin on a high end rifle or handgun and other people are perfectly content buying lower cost firearms.

Agreed. I also think leasing certainly has a place, just not for most people.

[brutal]

Eh. To each their own.

For me it is worth it to have vehicles that are reliable and under warranty so that I don't have to worry about the wheels falling off, my wife being stranded somewhere, or me having to dish out money for repairs.

Vehicles are kind of like firearms. Some people don't mind dropping big coin on a high end rifle or handgun and other people are perfectly content buying lower cost firearms.

I feel like I'm driving an old Singer 1911.

And I love it.