Leasing a car - Updated

[Formerly Rockymtnole]

I despise everything about car dealerships and buying a car. I hate the Sales BS, the come ons, the upsells, the waiting, the inevitable meeting with the sales manager, the annoying finance guy, etc etc. Hate it with a passion.

Leasing a car means I am tied to the dealer for the life of the car. I don’t want anything to do with them beyond buying the vehicle.

 

[Tenacious E]

I despise everything about car dealerships and buying a car. I hate the Sales BS, the come ons, the upsells, the waiting, the inevitable meeting with the sales manager, the annoying finance guy, etc etc. Hate it with a passion.

Leasing a car means I am tied to the dealer for the life of the car. I don’t want anything to do with them beyond buying the vehicle.

I agree with hating the game/dealerships. The last time I tried to get out of the leasing game the sales rep contacted me about a new lease. I basically told him no way, unless he could get me the car I wanted (different and more expensive model than then car coming to an end), at the same payment. He then did it, after I agreed to lease one with like 4K miles on it that the old dudes use to shuttle people around. My lease will be up a year from June and I will probably only have 20K miles or so, when I have a lease for 15K/year. COVID really suppressed miles. Since I love the car and I am paying for nonexistent depreciation, might as well buy it and be done with dealerships for awhile...

 

[Joes Place]

Agree on the rental thing, too. The out of state clause is often a surprise. My sister and I rented a car in Salt Lake City and we just happened to mention we'd be going to all the National Parks in Utah plus Wyoming (Yellowstone!) and they had to add that into the rental agreement showing multi-state travel.
We're thinking of renting a full size Suburban for an extended trip later this spring and we are both glad to park our cars at home in our garages. Saving the wear and tear on our cars.

It's also saved me insurance premium $$, because my insurer balks at the mileage numbers I quote that I drive.

When they challenge that, I show them the odometer on my 10 yr old MINI, that has about 27,000 miles on it. Shuts them up quick, because that's 2700 miles a year, and not disputable.

 

[Joes Place]

Leasing a car can have advantages but as others have said, there are many things to consider. In no particular order -

1 - is there a upfront cost outside of the standard costs? I don't think you should ever pay a "down payment" (outside of taxes and license of course) on a leased vehicle. It is a clever way for the dealership to make some money right away.

2 - as has been hammered home above, residual value, is often key, especially if you think you are going to want to buy it in the future. Not all dealers are alike so some will value the exact same car with a different %. Often times, dealers that focus on leasing use their own finance companies or floorplan companies they have a relationship with so they should know the residual value immediately. Fairly decent article that breaks it down in pretty simple terms -
https://www.edmunds.com/car-leasing/the-residual-value-of-leasing.html

3 - also mentioned above - mileage is key. Can add up quickly if you go over.

4 - are you looking at a vehicle that is highly sought after in the used market? If so, that could help towards the end of the lease

5 - I have never leased so I do not know if insurance is looked at the same on a leased vehicle, so worth checking with your company ahead of time. Most companies require full coverage when you have a loan so I assume it is, but may be worth checking.

6 - may be worth considering if there is a fee to break your lease and/or return the car. For one reason or another you may not need/want the vehicle. Probably overthinking that one.

Also, depending on your state/local laws:

• You're paying a sales tax on the lease.
• You're paying new-car registration fees on the lease.
• You're paying high insurance costs, because the value of the lease is a lot higher than for an older vehicle.

All of those are significantly higher out-of-pocket costs that people rarely include in their vehicle ownership costs, compared to an older vehicle. And as I've already noted, $1k a year in repairs is rather small compared to those. The caveat being that your older vehicle is still well maintained and otherwise reliable.

 

[Tenacious E]

Also, depending on your state/local laws:

• You're paying a sales tax on the lease.
• You're paying new-car registration fees on the lease.
• You're paying high insurance costs, because the value of the lease is a lot higher than for an older vehicle.

All of those are significantly higher out-of-pocket costs that people rarely include in their vehicle ownership costs, compared to an older vehicle. And as I've already noted, $1k a year in repairs is rather small compared to those. The caveat being that your older vehicle is still well maintained and otherwise reliable.

I don't necessarily agree on insurance. Collision would be more but liability could be less if the new ride has more and better safety features.

 

[Joes Place]

I despise everything about car dealerships and buying a car. I hate the Sales BS, the come ons, the upsells, the waiting, the inevitable meeting with the sales manager, the annoying finance guy, etc etc. Hate it with a passion.

I walk out the door when they start with it. Literally.

They either negotiate in good faith, or I ain't wasting my time.
Did that at 3-4 different dealerships the last time I purchased a vehicle. Every one of them followed me to my car, chattering the whole way.

Fun to look at their faces when they play the "go back to the manager game" for 15 minutes, and come back with the 4-box BS, after I already told them I was paying out of pocket, and I inform them they just wasted another $100 of my time with this nonsense, so my offer is now $200 lower. When they pretend to laugh, I walk, and they quit laughing and start begging/negotiating. But I'm firm on them wasting my time. Time is money, so give me your honest deal for a decent profit on the vehicle, or my offers go down, not up.

 

[Joes Place]

I don't necessarily agree on insurance. Collision would be more but liability could be less if the new ride has more and better safety features.

Not really. People drive like idiots, safety features, or not. And people over-rely on safety-radar systems, that cause more accidents while they play with their phones. Most vehicles have ABS, air bags, etc nowadays, and those are the big ones.

 

[LesClaypool]

If you can write it off as a business expense, that's the only way leasing makes sense.

Wrong. I’m definitely not an unabashed lease apologist, but Gonolz outlined the upside to leasing (for those for whom it applies) earlier in the thread. Go back and read that.

 

[West Duval Nole]

When you lease, you are getting fleeced.

 

[Formerly Rockymtnole]

I walk out the door when they start with it. Literally.

They either negotiate in good faith, or I ain't wasting my time.
Did that at 3-4 different dealerships the last time I purchased a vehicle. Every one of them followed me to my car, chattering the whole way.

Fun to look at their faces when they play the "go back to the manager game" for 15 minutes, and come back with the 4-box BS, after I already told them I was paying out of pocket, and I inform them they just wasted another $100 of my time with this nonsense, so my offer is now $200 lower. When they pretend to laugh, I walk, and they quit laughing and start begging/negotiating. But I'm firm on them wasting my time. Time is money, so give me your honest deal for a decent profit on the vehicle, or my offers go down, not up.

Yep. I hate going through the motions.

They don’t like negotiating the total price of the car and always start with the monthly payment BS. Even when you agree a price it’s another couple hours getting out of there with all the paperwork. Did I mention I hate it?

Last vehicle we bought last year For one of the kids we got a steal via the internet playing a couple dealers off each other. They were pretty pissed when we said no thanks on the wrote a check. I assume they were expecting to make up some money on the financing. Either way, they still make money in all sorts of ways.

 

[Tenacious E]

Not really. People drive like idiots, safety features, or not. And people over-rely on safety-radar systems, that cause more accidents while they play with their phones. Most vehicles have ABS, air bags, etc nowadays, and those are the big ones.

Hence the "if" I used. If it has more and better safety features, it will absolutely decrease premiums. That's why they ask you a million f&cking questions when giving you a quote.

 

[Tenacious E]

I walk out the door when they start with it. Literally.

They either negotiate in good faith, or I ain't wasting my time.
Did that at 3-4 different dealerships the last time I purchased a vehicle. Every one of them followed me to my car, chattering the whole way.

Fun to look at their faces when they play the "go back to the manager game" for 15 minutes, and come back with the 4-box BS, after I already told them I was paying out of pocket, and I inform them they just wasted another $100 of my time with this nonsense, so my offer is now $200 lower. When they pretend to laugh, I walk, and they quit laughing and start begging/negotiating. But I'm firm on them wasting my time. Time is money, so give me your honest deal for a decent profit on the vehicle, or my offers go down, not up.

I test drive with the dealership but will never negotiate right then and there. I will solicit offers from various dealerships in DSM, Omaha, KC, twin cities etc, and play them against one another. Sometimes those dealerships from far away treat you like found money and will wheel and deal. I try to reward the local guy if he will play ball and I found they almost always do if you tell them or can show them quotes from other dealerships.

 

[LesClaypool]

Yep. I hate going through the motions.

They don’t like negotiating the total price of the car and always start with the monthly payment BS. Even when you agree a price it’s another couple hours getting out of there with all the paperwork. Did I mention I hate it?

Last vehicle we bought last year For one of the kids we got a steal via the internet playing a couple dealers off each other. They were pretty pissed when we said no thanks on the wrote a check. I assume they were expecting to make up some money on the financing. Either way, they still make money in all sorts of ways.

I like when the finance guy gets his feelings hurt when you tell him to F off on all of the unnecessary extended warranty stuff he tries to sell you.

 

[WisestIowan]

I will say this, the one I'm looking at is a 2020 model, they are advertising it at just over 9k below MSRP (about 30% off). I rounded down to the nearest $100, about another $300, and told them I'd look at the lease if they hit that.

So another question...how do they determine the amount the lease will cost, overall. For example, what I'm looking at lists at $31k, they are asking $22k, and I'm looking at 4 years. Do they estimate the depreciation and you pay the difference? Is there a set amount by model?

I mean, I know I won't end up paying $22k, but would I end up paying 10k? 15k?

$30,000 MSRP? Is it a Kia?

 

[Formerly Rockymtnole]

I like when the finance guy gets his feelings hurt when you tell him to F off on all of the unnecessary extended warranty stuff he tries to sell you.

Lol
My wife drives me nuts with this stuff.
I’m stone-faced and one “Nope” “Not interested” “No thanks” “Nope” after another.

She on the other hand, tries to be polite and actually gives the guy an opening. “10 year scratch protection and dent removal for only $1,500? Should we consid...” Me: “NOOOO!!!”

 

[onlyTheObvious]

We put too many miles on our car to lease.

my last five cars ended up at junk yard. I drive them until they are dead.

 

[SF HAWKEYE]

We've leased 3 vehicles. We leased a Hummer back in 2006 the residual was terrible on it so we just turned it in and didn't have any extra costs.
We leased a Toyota Highlander in 2015 we traded that in on our next lease for $3600 profit Toyota has fantastic residual value!
The lease were currently in is for a Chrysler Pacifica we are done with the lease next month so I haven't figured it all out yet. But I'm assuming we will just turn it in. We've been under the mileage on all of the vehicles but it's always a pain to figure out ok we have 22 miles a day. That first year is a bugger.

I would say if you're going to lease go with a Toyota or a Honda.

 

[Hawk_4shur]

So, I need a new car, thanks transmission, and was just looking at buying a newer used one, but a salesman brought up a possible lease.

I've never leased one before. What are some pros/cons of leasing, aside from you don't own anything when the lease ends?

Do you deal on the price like buying? How do they figure the monthly payment/total lease value?

FTR, I'm looking at getting a 3/4 year at 15k per, since I'm going to be driving a bit each day.

I am a retired CPA. The 2nd most common question I got was "should I lease or buy?".

Neither is inherently better. You have to do your homework. Leasing is really just another way of financing a car purchase.

Get the deal to lease or to purchase. What are the miles? Do they fit your driving habits? What is the implied interest rate? Do you like to trade vehicles often, or keep them for 5+ years?

Lease rates are always less, so that is attractive. But, you need to look at the all the options before you decide.

 

[DogBoyRy]

I have had a leased car from about 10 years. Initially through work before we ended the program, and then continued on for the "pros" listed below. I am intending to buy this last one out of the lease and call it good, as I love the vehicle and it has and will have extremely low miles due to the pandemic.

Cons:

• fuzzy math on the lease payment. I have constructed several spreadsheets over time based upon different websites and articles, and I can never quite get the math to work out like the dealer has.
• you don't own it and cannot do with it what you like.
• you will need to replace the tires when you turn it in.
• you build no equity so when the lease is up you either buy at a negotiated value, buy another vehicle, or remain on the leasing carousel.
• you get charged for mile overages but you don't get credit for unused miles, at the end of the lease

Pros:

• Cheaper monthly rate.
• Not necessarily a bad financial deal if you are a good negotiator playing regional dealers against one another.
• Can work out well financially if you intend to buy the vehicle out of the lease, and you know the history of the car.
• If you stay on the carousel, you always have a fresh ride under warranty.

I’ve leased numerous cars and have never paid a penny on tires.

 

[Tenacious E]

I’ve leased numerous cars and have never paid a penny on tires.

I have. At least BMW has remaining tread requirements and the run flats they come with are only rated for 20,000 f*cking miles. So lots of pennies spent on tires.

 

[SSG T]

$30,000 MSRP? Is it a Kia?

3 or 4 we're looking at, Honda, VW, Subaru. The 2020 models all have huge amounts off.

 

[Tenacious E]

I am a retired CPA. The 2nd most common question I got was "should I lease or buy?".

Neither is inherently better. You have to do your homework. Leasing is really just another way of financing a car purchase.

Get the deal to lease or to purchase. What are the miles? Do they fit your driving habits? What is the implied interest rate? Do you like to trade vehicles often, or keep them for 5+ years?

Lease rates are always less, so that is attractive. But, you need to look at the all the options before you decide.

And on this, when they quote you a "money factor" just multiply it by 2400 to get the interest rate.

 

[Brian_Fantana]

One thing I'll add to my point about not paying anything upfront, except for standard Tax, Title, License, is that the lease terms will be pre-set, so unless you think you would just burn that money you are considering putting down, it isn't worth it. Little different than a loan where you could get a better interest rate, loan period, ect... That is how I look at it anyway; but maybe I am missing something.

 

[Herkmeister]

Four Rules of Life

1. Never commit adultery
2. Never buy a new car
3. Never lease a car
4. NEVER LEASE A CAR!!

 

[Tenacious E]

Four Rules of Life

1. Never commit adultery
2. Never buy a new car
3. Never lease a car
4. NEVER LEASE A CAR!!

Eh I don't know. I did the math and the interest paid and to be paid on my 3-year lease versus what I would have paid on a 5 year note is about a wash, and I will be able to purchase at the residual price at the end of lease for considerably less FMV. I think I did pretty well.

 

[Herkmeister]

Eh I don't know. I did the math and the interest paid and to be paid on my 3-year lease versus what I would have paid on a 5 year note is about a wash, and I will be able to purchase at the residual price at the end of lease for considerably less FMV. I think I did pretty well.

But..... if for some reason your mileage runs high, you lose. Just my opinion, but I would never lease. I also used to buy new cars. No more. But I was a slow learner.

 

[Tenacious E]

But..... if for some reason your mileage runs high, you lose. Just my opinion, but I would never lease. I also used to buy new cars. No more. But I was a slow learner.

You don't lose if you buy the car out of the lease. Also, if you get another lease with the same dealer, they pretty much forgive mile overages. Or, at least BMW does.

 

[Herkmeister]

You don't lose if you buy the car out of the lease. Also, if you get another lease with the same dealer, they pretty much forgive mile overages. Or, at least BMW does.

I will confess I have not entertained a lease in years, so I speak with no current knowledge. I also hate change. So trying to persuade me about anything is futile. 🙄

 

[Tenacious E]

I will confess I have not entertained a lease in years, so I speak with no current knowledge. I also hate change. So trying to persuade me about anything is futile. 🙄

I am not trying to change your mind and I am not saying leasing is better than buying. It can be worse. MUCH worse. But sometimes it can be a wash or better.

 

[goldmom]

I despise everything about car dealerships and buying a car. I hate the Sales BS, the come ons, the upsells, the waiting, the inevitable meeting with the sales manager, the annoying finance guy, etc etc. Hate it with a passion.

Leasing a car means I am tied to the dealer for the life of the car. I don’t want anything to do with them beyond buying the vehicle.

But you’d like the greeter. She’s way cool. 😉

 

[Herkmeister]

I am not trying to change your mind and I am not saying leasing is better than buying. It can be worse. MUCH worse. But sometimes it can be a wash or better.

That I believe to be true. And never have you been a man I would not trust.

 

[Tenacious E]

But you’d like the greeter. She’s way cool. 😉

Are you referring to yourself or that Iowa transplant?

 

[WisestIowan]

The new Genesis SUV seems to hold up well in serious accidents...

 

[Tenacious E]

The new Genesis SUV seems to hold up well in serious accidents...

 

[goldmom]

Are you referring to yourself or that Iowa transplant?

😉
The Iowa person is in sales. I’m the greeter.

 

[Gonolz]

I like when the finance guy gets his feelings hurt when you tell him to F off on all of the unnecessary extended warranty stuff he tries to sell you.

You know that any deal, like an extended warranty, where they will immediately cut the price in half when you say no is a ripoff. I like to make them sweat a little. When they tell me the wisdom of buying the extended warranty, I start with the, "well I thought I was buying a reliable car, but you are telling me things are going to go wrong, so maybe I shouldn't buy this car?".

If you have enough knowledge about how it all works and don't mind spending some time, you can actually have fun with the whole car buying process and get a good deal as well. Make sure to pay for the undercoating and the fabric protection!

 

[SSG T]

So, update...

I ended up going with a 2020 Jetta SEL. Fully loaded, leather, sunroof, tech package, 15k miles per year. Got the asking price of $19,100 ($28k MSRP). Only money down was lease fee, tax, registration. $170 per month for 48 months.

Also covers all oil changes/services, a tire change (since it goes over tire mileage).

 

[Tenacious E]

So, update...

I ended up going with a 2020 Jetta SEL. Fully loaded, leather, sunroof, tech package, 15k miles per year. Got the asking price of $19,100 ($28k MSRP). Only money down was lease fee, tax, registration. $170 per month for 48 months.

Also covers all oil changes/services, a tire change (since it goes over tire mileage).

what was your money factor and residual?

 

[ironside1]

They like having pre-owned inventory of certain vehicles and In your case, they like Highlanders. A 3-4 year old Highlander with average or below miles flies off the lot.

Depends on the strength of the used car market. I’m assuming the highlander was purchased by the dealership to sell outright which means he didn’t have to pay for any damages. If the dealer would’ve passed and the car was sent to auction then he would’ve had to pay for them.

 

[ironside1]

I despise everything about car dealerships and buying a car. I hate the Sales BS, the come ons, the upsells, the waiting, the inevitable meeting with the sales manager, the annoying finance guy, etc etc. Hate it with a passion.

Leasing a car means I am tied to the dealer for the life of the car. I don’t want anything to do with them beyond buying the vehicle.

That is why the dealer likes leasing, you have to bring it back to them in 2-4 years when you are in need of a new vehicle.