New car buy or lease

[Joyce]

I am looking at a 2011 Volvo S80 and know nothing about leasing. I am retired and drive about 12000 miles a year for travel and fun. Is leasing a better alternative than paying for the car? All comments are welcome.

 

[Passepartout]

Ask your accountant to run the numbers.

Jim

 

[presley]

If you never go over 12K miles in a year and you don't have heavy wear and tear (animals and kids in the car), leasing might be a good choice for you.

I leased a car once and won't ever again. My mileage was about double what the allowed was and at the end of the lease my best choice was to buy the car, which I didn't want, for more than what it was worth.

 

[carl2591]

lease or buy

"fleeshing" the term Dave Ramsey uses says the term are not good for the average user. Instead leasing a new car try to find one a year or so old with 10 or so thousand miles and buy for less than lease. after 2 yrs sell or trade on another good used car and do the cycle all over.

dave like to say that leasing is for loosers. cause in the end you LOOSE..

 

[Mosca]

Ask your accountant to run the numbers.

Jim

This.

I've been in the car business over 25 years. Sometimes I buy new, sometimes I buy used, and sometimes I lease. It all depends on the deals available.

 

[easyrider]

This.

I've been in the car business over 25 years. Sometimes I buy new, sometimes I buy used, and sometimes I lease. It all depends on the deals available.

Leaseing works good if its a business vechile.

Buying new at this time is better than buying used, imo, because of the rebates offered, waranty and service packages offered. This kind of depends on how old and type of used car. An example is Toyota. A brand new Corolla LE is $18,700 out the door. A 2009/10 Corolla with 36000 miles averages $16500 - $18,000.
The cash for clunkers program made used cars worth more as the inventory is down.

 

[bogey21]

I am looking at a 2011 Volvo S80 and know nothing about leasing. I am retired and drive about 12000 miles a year for travel and fun. Is leasing a better alternative than paying for the car? All comments are welcome.

I, too, am retired and average just a little less than 1,000 miles a month. I leased for the first time in my life. My rationale is that I'm 76 years old; the lease payments are small; and if I live out the 39 month lease, although I will have no car I will be a happy camper because I am still alive.

George

 

[Mosca]

Leaseing works good if its a business vechile.

Buying new at this time is better than buying used, imo, because of the rebates offered, waranty and service packages offered. This kind of depends on how old and type of used car. An example is Toyota. A brand new Corolla LE is $18,700 out the door. A 2009/10 Corolla with 36000 miles averages $16500 - $18,000.
The cash for clunkers program made used cars worth more as the inventory is down.

Leasing could be good for a personal vehicle as well; it depends. New, used, lease, finance, paying cash; they're all financial tools. Different tools fit different situations, and there really is no blanket answer. Run the numbers and pick the one that suits you the best.

 

[ScoopKona]

I haven't bought a new vehicle since... wow... 1991.

I'll let someone else pay the depreciation. I'm currently driving a 2003 Ford F150 that I bought from the City Water company with 60,000 on the odometer. I paid $4,000 for the truck.

I'll drive it until the engine or transmission goes, then I'll find another $4,000 truck. If for some crazy reason I wanted a new car, I would make sure that I paid cash or that I got a zero-interest loan. And I wouldn't lease. It's too much like gambling -- someone gets into your car with a pen or screwdriver in their pocket, and now you have to replace the leather seat before the lease is up.

PS -- I hope someday Dave Ramsey instructs his flock how to spell "loser."

 

[Ken555]

Fwiw, I test drive the S80 recently and liked it a lot, but then learned that a new model will be released next year. Compared to the tech and features of the S60 the S80 looks dated, so I suggest waiting if you can. I didn't buy Volvo in the end since I needed a new car. And, to make this even more relevant, I leased since I pay via my business (and got a great deal at MB).

Also, I used www.carwoo.com and it was fantastic. I paid $100 to them and saved about $1400 over the course of the lease because I was able to easily get competitive bids from other local dealers.

 

[Nancy]

We leased a car once and moved to a different state. This caused us all sorts of problems and I would think long and hard before I leased again.

Nancy

 

[timeos2]

Leaseing works good if its a business vechile.

Buying new at this time is better than buying used, imo, because of the rebates offered, waranty and service packages offered. This kind of depends on how old and type of used car. An example is Toyota. A brand new Corolla LE is $18,700 out the door. A 2009/10 Corolla with 36000 miles averages $16500 - $18,000.
The cash for clunkers program made used cars worth more as the inventory is down.

Agreed. We can never make leasing a"deal". On the other hand our new 2011 Chevy HHR LT was discounted over 1/3 off sticker including all my added dealer options & tax! A used, 2010 with over 25k on it and without all the features I wanted was more! Plus I got a full year of XM radio & Monster the used wouldn't have had plus the full warranty the used had only some left. No contest - buy new now & probably get a great deal!

 

[LUVourMarriotts]

I don't look at leasing vs. buying based on cost. I look at it based on replacement time. Meaning, if you want to get a new car every 2-3 years, then leasing is probably a better option based on the break even points, etc. If you don't care about getting another new car in that time period, then buying is the way to go. When leasing, your still going to be haggling on price for down payment, monthly payments, etc. Also consider that at the end of a lease, you have no equity, you simply return the vehicle. Compare that to owning, where you will have equity to do as you wish. For instance, I have a 2003 Accord that I purchased new, and I could get $5000 for it if I wanted to trade it in today.

 

[MichaelColey]

I don't look at leasing vs. buying based on cost. I look at it based on replacement time. Meaning, if you want to get a new car every 2-3 years, then leasing is probably a better option based on the break even points, etc. If you don't care about getting another new car in that time period, then buying is the way to go.

Gotta agree with this. I'm way too cheap to replace my car every 2, 3 or 4 years, so I'll probably never lease a vehicle. Our newest vehicle is 8 years old, and I'd love to get another 8 years out of it.

Some people dump huge amounts of money into car payments every year. I dump my money into timeshares.

 

[dougp26364]

For us it's always depended on the deal offered and the miles we're driving now and anticipate driving in the future. At this point in time, we have two cars and put approx 6,500 miles per year on each car. When we were shopping for our last new cars, they gave us a deal we couldn't refuse on a lease/buy option. Essentially lease for 4 years at < 1% interest and, at the end of 4 years, the option to buy under the same terms with payments lasting another 42 months. At 4 years we had approx. 30,000 miles on both cars and elected to keep them as they are both in like-new condition. The payments for both cars totaled $538/month.

At the end of 4 years, no one could match the deal we had so we took the option to buy. So far it's been a great deal for us. But, this was the first time leasing worked for us. Before it was always better for us to purchase the cars.

The only thing you can do is look at both options and look at your driving habits. Be vary wary of the miles per year allowed. If you go over, the charges at the end of the lease may leave you with the only feasable option of buying the car and it might be a car you really want to get rid of at that time.

 

[PigsDad]

Essentially lease for 4 years at < 1% interest and, at the end of 4 years, the option to buy under the same terms with payments lasting another 42 months.

Wow -- I could never imagine paying almost 8 years for a car. What happens if, in year 5 (for example), you are in an accident and it was totaled? You certainly would not have any equity and would be "underwater" at that time. Then you would be in a situation where you have to shell out $$ just to replace your vehicle with a like vehicle, even after the insurance payment.

For someone well established like you, that probably wouldn't be a problem. But I think this is how some people who lease just to stretch what they can afford get into financial problems.

Personally, I don't like paying on a car for more than 2-3 years, but then again I usually drive mine an average of 10 years before replacing them. I just think of the 10's of thousands of dollars I save vs. some of my neighbors who get new cars every 2-3 years. And then they complain that vacations are so expensive and they can't afford to take them. I just silently laugh.

Kurt

 

[tompalm]

Volvo does not have a good reputation for reliability or repairs. We had one and when the warranty was up, I got rid of it. Also, two very good friends of mine had a business lease with Volvo and both had to take their cars in for repairs too often. They loved driving those cars, but didn't get a new Volvo when their lease was up. Same thing with my real estate agent. Yes, the car was under warranty and no money out of their pocket, but it is not good having to bother with it. If you are set on a Volvo, then lease it. Buying one with an extended warranty might be ok, but you still have to take it for repairs more than you should.

Mine was stuff like: temp gauge stop working, vent ducting for AC came apart and they had to take the dash apart to fix it, windshield wiper motor, spark plug wires, fuel pump, etc... All were minor and small repairs except for the fuel pump which was minor, but due to a bad design, the fuel tank had to be removed in order to replace a $15 part. This all happened during the first three years. To make matters worse, the closest dealership was one hour from my house.

 

[Jestjoan]

Suze Orman

http://biz.yahoo.com/pfg/e16buylease/

 

[Ken555]

http://biz.yahoo.com/pfg/e16buylease/

I like some of the stuff she writes, but I can't agree with all of this one. In my own experience, I've leased three times, bought the first two at end of lease at a good price and then sold them a few years later at more than Kelley Blue Book. The last lease didn't make sense to buy, so I returned it and leased a different one from a different manufacturer (who happened to have a $2000 promo since I had a qualified auto I was switching from). My annual expenses are well within what I want to budget for a car, and if I simply bought one and kept it for years - as Suze suggests - I would have more expenses (plus loss of time dealing with the repairs). Fwiw, I bought a BMW earlier this year intending to do just this, perfect car with a great deal and decided to sell it a few months later because I did more research and determined the long term cost of maintenance for this particular vehicle was higher than my previous budgeted annual leasing expense.

Basically, there's no one way to do this. You need to speak with your accountant and figure out your best approach based on your particular needs and how long you intend on keeping the car. Personally, I like keeping a car about six years, so lease then buy then sell, whenever possible.

 

[Ken555]

Wow -- I could never imagine paying almost 8 years for a car. What happens if, in year 5 (for example), you are in an accident and it was totaled? You certainly would not have any equity and would be "underwater" at that time. Then you would be in a situation where you have to shell out $$ just to replace your vehicle with a like vehicle, even after the insurance payment.

For someone well established like you, that probably wouldn't be a problem. But I think this is how some people who lease just to stretch what they can afford get into financial problems.

Look up gap insurance. For instance:

http://cars.about.com/od/buyingadvice/a/gap_insurance.htm

 

[dougp26364]

Wow -- I could never imagine paying almost 8 years for a car. What happens if, in year 5 (for example), you are in an accident and it was totaled? You certainly would not have any equity and would be "underwater" at that time. Then you would be in a situation where you have to shell out $$ just to replace your vehicle with a like vehicle, even after the insurance payment.

For someone well established like you, that probably wouldn't be a problem. But I think this is how some people who lease just to stretch what they can afford get into financial problems.

Personally, I don't like paying on a car for more than 2-3 years, but then again I usually drive mine an average of 10 years before replacing them. I just think of the 10's of thousands of dollars I save vs. some of my neighbors who get new cars every 2-3 years. And then they complain that vacations are so expensive and they can't afford to take them. I just silently laugh.

Kurt

Why would anyone want to pay off a loan that charges less than what they can earn in a passbook savings account? I'm better off putting the extra money against loans with higher interest rates, such as my mortgage, or putting the money in the bank.

Yes it's a long time but, with one loan being 0.5% and the other 0.9% and, with the fact we drive each car ~ 7,800 miles per year, I'd have been willing to stretch the loan out for even longer. It was a good deal for us and a very bad deal for GM. This wouldn't work for the average person who drives 12,000 miles per year but, it has worked extremely well for us.

 

[Mosca]

Haha, people in a timeshare forum spouting the conventional wisdom. We of all people should know that it is deal-dependent. In the one example above, it's 7 years, not 8, and the APR is under 1%! The car is at its break even point at 42mo (the owner couldn't buy one anywhere else for the same price, as stated).

There is no blanket answer, there is only the answer that works for you.