Leasing a vehicle

[Leetahkin]

I have always purchased vehicles, but traded them in after having a short time (a couple years).
Does anyone know the ins and outs of leasing a car?

I currently have a car, but will be upside-down if traded in.
Can a dealership add the upside-down amt. to the lease payments?
Is there any way to get around the large up-front cost and end-of-lease payment?

I'm thinking leasing would be the best way to go for me, since I'm always updating to a newer car.
Plus, I only drove it 4800 miles the past year.

Any info. would be great.

[The Ponzzz]

Think of it in the same light as going to a Rentway and getting a couch(sofa).

I would suggest leasing a car to anyone under the age of 25 or if it was their 1st time looking to get a car.

After that I would never suggest it.

[Jorddyn]

I have always purchased vehicles, but traded them in after having a short time (a couple years).
Does anyone know the ins and outs of leasing a car?

Ins - You don't own the car. If it turns out to be a lemon, you turn it in in 2 or 3 years and are done with it.

Outs - You don't own the car. If you get a ding/dent/rust-spot, they'll ping you for it. If you drive over the miles, they'll ping you for it. If you breathe on it wrong, they'll ping you for it.



I currently have a car, but will be upside-down if traded in.
Can a dealership add the upside-down amt. to the lease payments?
Is there any way to get around the large up-front cost and end-of-lease payment?

I'm thinking leasing would be the best way to go for me, since I'm always updating to a newer car.
Plus, I only drove it 4800 miles the past year.

Any info. would be great.

Well, if you continually purchase new cars, drive them for a year or two, then trade them, it is very likely that you'll always be upside down on them if you buy on a 5 or 6 year note. Get the note down to 3 years and you're golden.

My best advice when buying a new car? Don't buy a new car. Cars lose at least 20 to 25% of their value during the first year, and close to half of their value over the first two years (depending, of course, on how much you drive). So buy one that is two years old on a three or four year note, get an extended warranty for an extra grand (if you feel the need) and you should be golden. Let some other schmuck pay half the value to get the first 30k miles.

The easiest way to think about it is this:

Q. Why do companies lease cars?
A. To make money.

So, they're buying the car, leasing it to you, then selling it, and making a profit. Take them out of the equation and that "profit" goes to you, as a savings.

Obviously, there are exceptions. I got my car on a lease, because GM was offering a 40% lease discount to get the cars on the road (it is a new model). That combined with my GM Family Members discount, and I pay less than $200 a month for my car. In the end, I'll pay around $19k total over 6 years for a $25k car.

Jorddyn

[Leetahkin]

I did buy this brand new last year. Good thing is the value should stay decently up there as long as I don't put a lot of miles on it, and should get out of being upside-down within a year-year & a half.

Problem I am having is my insurance rates keep going up for the make/model vehicle I have. I guess the friggen car keeps getting poor reviews during their crash testing.

I may just have to bite the bullet and trade this in for a cheap used car to get smaller monthly car pmts, and a lower insurance. I don't need a spiffy car at the moment because I only use it for errands - I pay for a monthly Metro train pass (to get to work) that keeps going up every year too. Think it's at $55 a month right now.

Sounds like leasing would be a bad idea.

[Warriorbird]

Unless you have a much higher income level or credit rating than I imagine you do... I wouldn't reccommend it. Then again, you were foolish enough to buy new at this point in life, so who knows.

[peam]

Buy an 80's Volvo/BMW/Mercedes for under $3000.

[Warriorbird]

Diesel do smell badly, but Peam has a point.

[Jorddyn]

I did buy this brand new last year. Good thing is the value should stay decently up there as long as I don't put a lot of miles on it, and should get out of being upside-down within a year-year & a half.

Mileage is a factor. In cars less than a couple years old, the fact that it has been owned is a much larger factor.


Problem I am having is my insurance rates keep going up for the make/model vehicle I have. I guess the friggen car keeps getting poor reviews during their crash testing.

Nissan Maxima?


I may just have to bite the bullet and trade this in for a cheap used car to get smaller monthly car pmts, and a lower insurance. I don't need a spiffy car at the moment because I only use it for errands - I pay for a monthly Metro train pass (to get to work) that keeps going up every year too. Think it's at $55 a month right now.

My advice? Get rid of the car all together. If you have good enough public transportation, you can get anywhere you need to get with a bus or train. And you can pay for a hell of a lot of cab rides for what your car payment + maintenance + insurance + gas currently costs. Once you've gotten yourself out of the hole, buy a cheap POS (under $1000) that you can pay cash for, and carry only liability insurance. If cheap POS lasts 6 months, then dies, you're still ahead of the game. Buy another cheap POS. Once you've saved up enough to put down 20% or more, go buy a car that's a couple years old, and do not take out longer than a 3 year loan.

If getting rid of the car all together isn't an option, skip the no car step and go directly to the POS step. Of course, your payments on said POS car will probably suck as you'll have to catch up what you've already lost in value on your current car, but you'll get out of the hole much quicker.

Jorddyn

[Leetahkin]

Nissan Maxima?
Jorddyn


Sentra.

I'd probably go for the POS route. Even a 10k loan (5k car, 5k upside-down though it may be only 3k - I'd have to check) would drop my payments all-around.

[Jorddyn]

Sentra.

I'd probably go for the POS route. Even a 10k loan (5k car, 5k upside-down though it may be only 3k - I'd have to check) would drop my payments all-around.

$10k on a 3 year note at 10% is around $330. Just remember that means in 2 1/2 years, you'll be driving an even older POS and paying $330 a month :)

But good luck, whatever you decide.

Jorddyn

[Warriorbird]

Basically... you don't want to buy new or lease unless you could afford to drop the money flat out.

[The Ponzzz]

I had a brand new '99 Pontiac Grand AM, '02 Cheby Malibu and '04 Hyundai Accent. Had to trade the '99 in due to problems I was having in 2001 for the 2002 chevy, and then my ex wife totaled it into some guys truck. When i got my 2004 accent, my insurance(my record was clean though) for full coverage was 450 a month! GMAC said it was because if I hit someone everyone would die... That and I am under 25...

With leasing you need full coverage too. My opinion, is stick with buying and pay it off fast... An extra 20-50 a month on top of your payment can go a long ways...

[Leetahkin]

We're also required to have full coverage if we have a loan on the car, so I'm used to that.
I also know I can get well below 10%apr on a loan. I'll have to do some figuring and determine how high priced a car I can go. According to kelleybluebook, trade-in would be a few thousand less than what I owe. And I know, doesn't mean I'll be able to get that trade-in with a dealership.

[Sean of the Thread]

You're wasting your money.

[Warriorbird]

Yeah...it's hard when people don't listen when people who've worked at car dealerships and closely with finance managers tell them things. Using Kelley Blue Book as someone trading a vehicle is also a sign of insanity. Heck...trading a vehicle pretty much is. You should sell it yourself if you want a new vehicle. Never ever be upside down, either. If you're still upside down, you haven't driven it far enough.

[Jorddyn]

If you're still upside down, you haven't driven it far enough.

If you're upside down at all, you bought too new of a car with too little of a down payment.

Jorddyn

[Warriorbird]

I thought maybe the other way was slightly more polite.

;)

[Jorddyn]

I thought maybe the other way was slightly more polite.

;)

I R mean.

Jorddyn

[Wezas]

I have a Sentra as well, I take it you didn't opt for the ABS & Side Impact Airbag package? Tends to make the car a bit safer.

[Apathy]

Leasing is a great way to always own a new car! That's as far as I'll take my pitch.

From what it seems, you're young. DO NOT GET A NEW CAR PERIOD - IT IS A HORRIBLE INVESTMENT WITH THE LITTLE MONEY YOU HAVE.

Very few things in life depreciate so drastically as a new car, partially because a new car costs so much initially. Anyone who buys a new car every 5/6 years or less is pretty much a complete sucker. The only time it is worth it to buy new is when you are going to keep it for years and years and drive it into the ground. If not, you might as well use your money for toliet paper - car costs you twenty at the dealership, hit the road and its worth about twelve. It does not take half a brain to realize that is $8000 you will never, ever see again.

Now, if you still have your head too far up your ass with this notion of status that is Americana and the car - fine. Lease. It's only bad to people who don't know what it is and people who drive a lot and/or very shittily. Basically you pay for the portion of the car you will be using. The rest is called a residual value. The interest can be calculated by multiplying the "money factor" by 2400. Here's something to know. The selling price is the vehicle on the lease is negotiable. Usually only people who have leased a few times before will know this. If the dealer isn't willing to budge, leave. They can't sell you a car if you're not there. Better yet, negotiate price on the vehicle like it was a sale - then say you want to lease it after you get the price down. Your salesman will hate you and probably pay the porters to scratch your car, but at least you save money.

Also, don't think it is easy to shave $100 off of a lease payment. That translates to a lot of money in the car.

Don't lease if you don't have a 680+ credit score. Even then, I would say hold off until you're over 720. I'm guessing you won't be either of those with an open car loan on your credit score - debt to income is hurting you right now.

In your particular situation, suck it up, continue payments on the car until you get some equity, unless you're a total moron and bought a Dodge Neon or something like that. If you only drive about 5000/year - Get a used vehicle. Hell pick up an old honda or an old toyota, read up about common problems for the model so you know what to look for first. Those mid 90's imports are bulletproof. Now that I think about it, get a Buick. Best reliability rating in used cars, better than honda, better than toyota.

[Sean]

Just an interesting link (in my opinion) that I noticed when I was reading during lunch.

http://www.cnn.com/2006/AUTOS/03/23/expensive_insure/index.html

[Jazuela]

An older couple I know insist that leasing is the only way for them. They get two brand new cars every three years and absolutely love it. I don't know anything about leasing, only what their lease agreements are because I asked them about it one day. They said: For the little amount of mileage they drive per year, it's cost-efficient to lease. They pay no car tax, because they don't own the vehicles. If they need any mechanical service done on the vehicles, it doesn't cost them a cent, -and- their dealership gives them a free loaner if the repairs take more than a couple of hours. Tune-ups, oil changes, transmission, tires, anything that needs repair, that is -not- caused by an accident or anything else involving a police report, is 100% covered in the lease. The only thing they pay for is gas, and their monthly fee. And if there's an accident caused by someone else, their insurance covers the end-cost of the lease. If they cause the accident, they're SOL, just as they'd be SOL if they bought a car and were making loan payments on it. If it's no-fault, well our state requires no-fault insurance so that's covered too.

I pay cash for my vehicles and haven't ever bought a brand new one, and I usually run them into the ground (I had my 1993 Ford Explorer from 1994 until 2005). That's why I don't know diddly about leasing or loan payments. I never have either. I just write out a check and give it to the guy for the full amount. I -almost- bought a sweet Jaguar the last time around, it was only 5 years old and they only wanted $24,000 for it. But it was blue. I hate blue. If I could find a "money-green" Jag like that, heh - oh well.

[Leetahkin]

I R mean.

Jorddyn


I thought Jorddyn's explanation was better, actually!

But yeah, I bought it before I could save up a decent amount for down-payment. I wanted out of my manual a year ago!

Still lots to think about. I may just keep this one and deal with the payments like I have for a year.

[Sean of the Thread]

I may just keep this one and deal with the payments like I have for a year.

Smartest thing you have ever posted here.

[Warriorbird]

"An older couple I know insist that leasing is the only way for them. "

Older couple generally equals high credit score and saved cash.

[Tsa`ah]

Most of my "piers" in their 40s and 50s are going the lease route.

1. They have no one to impress
2. They care about comfort
3. Speed limit isn't a problem
4. Maintenance is routine in their lives
5. They don't travel any further than they have to

They find a car they're comfortable with and drive it for 2 years, rinse and repeat. For them it's driving a new car up until the point where you will need to invest more than 30 bucks a month for oil. They make over 50k a year, they have good credit, they own their homes, the kids are on their way out or approaching that point.

You're young. Unless you make in excess of 35 a year, I wouldn't suggest a new vehicle of any type.

Hunt the adds for a decent 90s car in the 1-2k range. 4 cylinders would be preferable ... and something common. Have it inspected, have it serviced if you buy it, have any leaks taken care of (gasket replacement), have the hoses and belts changed .... have everything done to it (maintenance wise) that needs to be or can be done ... and drive it for the next 2-5 years.

Instead of making a car payment, start a "fund". Open an account and drop a c-note into the account every month. Any maintenance done after purchase should come out of this account (which should be oil, tune ups, trans, breaks, tires, bearings at the most .... and maybe not even all of that). In 2-5 years you'll have enough to start over again, or put a nice down payment on a nicer vehicle.

The cash you save by not buying new or leasing ... invest.

I'm 32 and I made the "mistake" of buying a new car before college. I still have the car 15 years later, but then again I also like rebuilding cars ... which I have done.

I wouldn't consider a for myself for another 30 years to be honest. By that time I wouldn't want to be bothered with the upkeep of owning any car and would probably not care about having something to show for my payments. Hell, I won't even consider buying a new car at this point. I'd rather buy something that is 2 years old or something out of warranty so that I'm free to do what I want to the vehicle. Like say a BMW X5 SAV diesel next year ... converted to bio. No way am I going to drop 50-70k on a car that will be worth 20-40k in 2 years (if that). I will drop 20-40k, or less, on a used car that will retain most of that value over the next 2 years.

[Leetahkin]

You're young. Unless you make in excess of 35 a year, I wouldn't suggest a new vehicle of any type.



I'm only 2 years younger than ya! And yes, I make more than 35k (gross) a year.

The desire was to get out of the huge payments I put myself into with my current car; to loosen up the money situation. It doesn't look like that'll happen at this point, as my other options don't sound ideal.

Getting divorced and taking on a lot of the debt (because I was the breadwinner) sucks.

[SpunGirl]

If you have to differentiate between the 35k gross and net, then T's advice still applies.

-K

[Sean of the Thread]

Tsa'ah and his far superior intellect puked very good advice this time. You should listen to him.

The only reason I've bought a "newer" car is for the kids. (gasp mini van MY WIFE DRIVES) I still stick with cheap classic cars/old jeep/pick up.