Looking for the Pros and Cons of Leasing a Car

Dear N.,

Myth:Leasing a car is what sophisticated people do.You should
lease things that go down in value and take the tax advantage.

Truth:Consumer advocates,noted experts,and a good calculator will confirm that the car lease is the most expensive way to operate a vehicle.

(Page 34) Dave Ramsey: THE TOTAL MONEY MAKEOVER

In this month newsletter he has a whole article about buying a car. Dave Ramsey website is www.daveramsey.com

Hope this helps!!!

C.
(Stay at home mom,mother of 6)

HI,
I don't recomend leasing a car I was talked into it by a dealer you can get a good low payment but you can't go over a certain mileage and once you do it can cost up to 25 cents a mile and also you have to have the highest insurance coverage offered which tripled my monthly payment. I don't think it is worth it because you don't own at the end and you risk the chance of oweing money when you turn it in.

I have not leased, but I did look into it. I decided against it because, as some do not know, the insurance on a leased car was a lot higher, bringing my payments higher than a car purchased new.

I also planned to keep my car, which I did for 7 years, after it was paid off to save money. This also worked out very well for me.

My husband used to lease a car and he always was very careful not to drive a lot because he could only have a certain amount of mileage on the car or they would charge him for extra miles once the contract was up.

Then, the contract came up at a really bad time, financially. We had just had our first child and he had been recently divorced and we could not afford the downpayment for another lease. To buy the car he was leasing was insane! They were asking the most ridiculous price because they know it's easier than getting into a new lease if you are financially strapped. We had to let the lease go and share my car (which was awful) for over a year.

I never saw the benefits of leasing, unless you are someone with a good cash flow who always wants to get new cars every few years. If you are set on payments for the rest of your life, anyway, then it is a good deal. Some people don't mind car payments and if you are willing to do that, you can get (sometimes) a nicer car for less a month by leasing, just knowing your downpayment is kissed goodbye and that when the term expires you have to do it all over, again.

I know a rich family who lease, but that is because the wife insists on a new cadillac every year. She has to have the latest and greatest model. So for them, leasing was a much better option than buying new each year because of the hit they would take on resale value.

That is all that I can tell you! Hope it helped! :-)

We have leased a car for the last 10 years. For us it's the way to go for exactly the reasons listed below by the ladies who like leasing. Depending on the dealer you can negotiate the miles. It seems the more you put down, the more they are willing to negotiate. All maintenance is taken care of, loaner cars, etc. I've never exceeded my miles yet.

Hi! I have leased in the past. I sat down and questioned my decision as the lease was coming up. Here is what I found, if you are not going to put a lot of miles on it doesn't really matter. Look at it this way, would you lease a piece of jewelry? All you are doing is renting something for a couple of years. Why not invest that money into a vehicle that you may keep for a long while. Ask yourself this question, do you plan on trading in your vehicle in every couple of years. If not, then leasing is not for you. I would recommend buying and not leasing.

Good luck with whatever decision you may make.

S.
SAHM to 3 boys

Hi N.,

I am also a single working mom of 3 and in the Auto Sales industry. That is the reason I an recommend leasing very highly "IF" you do not intend to put a lot of miles on the vehicle and you plan to take very good care of it. Leasing is really just a cheaper way to finance a car if you plan to purchase the vehicle at the end of your lease term. Or it is a way to get more car for your money if you are the kind of person who wants to upgrade cars every few years or so.

Leasing keeps you from being "upside down" when it comes time to trade for something new, providing you have gone through your lease term and have taken proper care of the vehicle. Upside down means that you owe more on the car than it is valued at at the time of trade. This is one of the biggest problems a car buyer faces when trying to trade for a new car. At the end of your lease term you can turn the car in owing nothing or purchase the same vehicle for the residual amount you would have agreed to at the time of leasing. Make sure you ask what the residual % and $ amount is. A dealer "CANNOT" try to sell you the car for more than the agreed upon residual!!!!!!!!!!!

You can end up paying a fee at the end of your lease if you go over your agreed number of miles or if there is found to be excessive wear and tear on the vehicle. I am leasing my current vehicle because my payments are that of a $15,000 car on a $32,000 vehicle and because I know I will never want to drive a car more than four years old for the sake of my children's safety and comfort. I also know I will not drive more than 12,000 miles per year. If you have simular concerns I recommend it highly. If you are not sure about the miles get the 15,000 per year or buy extra miles up front which can be as much as 85% less than what you will pay at the end if you go over the agreed amount. As to the insurance, my premium went down $172 per year on my lease than on my old junker I traded in. You are required to have full coverage on a lease and so some people might find it more expensive than say a limited liability coverage but it is well worth it when all is said and done. You rate on a lease will depend greatly on your record so if it is not so good expect to have a higher premium.
Also depending on your credit and what you want your payments to be you can lease with no money down so when it is time to enter into a new lease you wont have the worry of coming up with cash.

Good luck
I..

I LEASED A TAHOE YESTERDAY. THIS IS MY SECOND TIME LEASING AND WOULD DO IT AGAIN IN A HEARTBEAT!! WHY, YOU ASK?
1. NEW CAR EVERY 3 YEARS
2. YOU NEVER PAY FOR ANY REPAIRS
3. THEY GIVE YOU A RENTAL IF YOUR CAR IS IN FOR REPAIR
4. NOT TOO COSTLY
5. NO NEED TO WORRY ABOUT LOSING THE VALUE OF THE CAR
6. NEW CAR EVERY 3 YEARS!!!!
NEED I SAY MORE? GOOD LUCK, M.

Hi N.,

Your never to young or old to be money smart - read the following. Its good advice.

http://www.youngmoney.com/wheels/auto_shopping/020416_01

I am leasing a Honda pilot. We were looking for lower payments, that was the pro. Also, I tended to trade in every 3 yrs or so, so owning it and creating equity was not a big deal to me. Milage limits are the con - I'm already over my miles and I have 2 years left!!! If you can stay within the milage, I would recommend it!

I leased a car about 8 years ago and it worked well for me. Be sure that you won't drive more than 12,000 miles per year. If you plan to drive more than that, definitely DON'T lease. They charge you for each mile that you go over and it's extremely expensive. It's also not wise to buy the car at the end of the lease. If that's what you plan to do, you'd be spending more money on it in the long run than if you bought it to begin with. Good luck!