Lease vs Buy

[gachrist_3.5]

Hey everyone,

Long time reader of this forum. Great info on everything in here. I'm about ready to order my coupe, but the one question I have looming is whether to lease or buy.

I know there are pros and cons for both. Part of me is leaning towards a lease because I'm thinking that in 2-3 years from now I might not want to be climbing in and out of a two door everyday and all that junk about a family and such. Part of me is leaning towards buying the car so if I would want to make any modifications to it I would be able to do so. Also, in my line of work (accountant) theres a lot of traveling. I haven't been able to get a good estimate on my amount of miles a year since I've just started this job, so another hurdle might be the amount of mileage during the year.

This is the first new car I'll be getting so any info you guys have for me would be a great help. Thanks a lot.

[generic808]

Just buy a sedan and you won't have to worry about having a family. 4 doors with basically the same performance as the coupe. The best of both worlds in my opinion.

For me, I always buy cars instead of leasing because I tend to keep my vehicles for 5+ years or so. In the long run, it wouldn't make sense for me to lease. I can't see myself paying for 3 years with nothing to show at the end of the lease. And on top of that, I tend to modify my vehicles. I wouldn't want to buy aftermarket parts, install them, and at the end of the lease have to remove them and try to sell them.

The plus side of a lease is having the option to drive a better car than you could if you were to finance. With equal monthly payments, you could drive a top-of-the-line rather than an entry level Altima. But, at the end of the lease, what will you have to show for all those payments? Nothing.

That's just my opinion on buying vs. leasing. Good luck with your choice!

[jdshift]

just sums up how I feel about own/lease.

[SHIFT_2.5S]

With a lease, you end up paying 60%+ of the car's value, and then you have to give it up after the lease ends. On the positive side, you're not stuck with an old model at that point and can get a new car. On the downside, you've paid more than half of the car's value and are left with no car. Additionally, the buyout value will be much more than the remaining balance after the lease expires. In the end, it depends on your financial situation. If you can actually afford the entire car, I would probably say purchase and after 3 years or so, you can sell it (for at least half of its original value) and use that money towards a purchase of a new car. Then again, you may be able to get an amazing lease deal with $0 down so it all depends...

[MadBlackCoupe]

I say buy, buy, buy!

The money you save on the front end (in terms of lower monthly payments) gets lost on the back end AND like someone else mentioned, if you don't get a good deal (zero down), you'll put up a grand or two up front--that also is lost.

Yes, if you own, you can mod to your hearts content.

If you lease, you will be haunted by mileage and every little bump, dent, or sratch that may result in you paying extra at the end of the lease. Who knew?

I leased once, just to save a couple bucks. I felt like I had a rent-a-car. Truthfully, I was so paranoid about damaging the car in some way, I never truly enjoyed riding it. Not to mention, cutting down on long trips because of the mileage issue. Hell, we buy cars to drive them. Luckily, the car was totaled after 8-months and I never leased again. I almost ended up paying an extra 2 grand because the depreciated value of the car was estimated (at first) to be lower than what was still owed and my insurance company was only going to pay book value--I would have had to make up the difference. Who would have tought GAP coverage was needed in a lease?

It was the worse experience ever.

I say don't do it.

In two-three years you can trade your car in OR just put baby in the back seat. I met a nice young lady with a kid who had a coupe. She said one of the things she liked about having one was she could easily put her child in the back seat compared to putting the child in a sedan.

-MadBC

PS: One more thing. I had my last Altima for 10 years. Nothing like not having a car payment for 5 years.
Modified by MadBlackCoupe at 4:33 AM 11/18/2007

[gachrist_3.5]

Thanks for all the info guys. Since the lower payment for a lease doesn't really matter all that much to me, the only reason for me to pick a lease was so I wouldn't be stuck with a car if I don't want it after 3 years. But again like you guys said, I can just trade it in or sell it. My only question was about if I'm thinking about letting go of the car in 3 years, if a lease was a better option than buying (since I know you make out on the purchase if you keep it awhile like MAD said).

So I think I'll be purchasing the car. I have my heart set on a dark slate 3.5 with everything except navi. I figure I'll just add a portable GPS (Garmin) rather than installing an indash navi after seeing all the trouble MAD went through.

Now my last decision is whether to buy it now before winter starts (the winters here in eastern PA aren't all that bad IMO, but as I write this its snowing here). Or I can wait till after the winter and put more of a down payment. I'm at about a $6,000 down payment right now. Which puts my monthly payments to between 360-420 depending on the length of the loan. I'll get employee pricing (my dad is the service manager), so that's a big plus.

Any comments or suggestions about when to purchase? I know to each their own but I'd like to see everyones opinion.

Thanks again for all the help

[Serkle K]

Any comments or suggestions about when to purchase? I know to each their own but I'd like to see everyones opinion.

Thanks again for all the help

From what I've been reading, and heard from talking to alot of people, the best time to get the car is at the end of the month... and if it's raining or snowing out then even better... most dealerships will try to sell as much as they can no matter the final price (within reason) at the end of the month to get extra/last minutes sales, and if the weather is bad out, even better for you, cause they dont want to be stuck out in it either... again this is from what I've read and heard... good luck!

[adidas2go]

I got my lease for

0 down

590 a month for 2 years

[notaverage]

So in the end you would have paid $14k! thats kinda expensive, don't you think?

I got my lease for

0 down

590 a month for 2 years

[SHIFT_2.5S]

adidas2go, $590 a month seems very very expensive. In California, I believe you can get a BMW 328i Coupe for that price.

[gotak]

Buy if you can might be a bit more hassle to sell it vs lease where you just return it. For the amount involved though it's worth the effort to sell it yourself or drive it till it's not worth it to maintain anymore.

And yeah like the other people say leasing make the ownership a lot less enjoyable in some ways.

[Betimbe]

If there were ever an occasion in which leasing was financially a better option than buying, it would be where you would rather have the finance company bear the financial risk that the car will be worth less in 2 or 3 years than everybody currently expects. That might be the case here.

Whether you're thinking about it or not, when you buy a car you're calculating in a timeframe of ownership and a residual value you think the car will have. When you lease, that calculation is explicit. If you're betting the 2008 A/C will turn out to hold onto its value better than the standard depreciation offered by the banks, you should buy. If you think it won't, or even if you're just fearful that it won't and don't want to be stuck with a car worth less than you predicted when you know you won't want the car anymore, you should lease.

Even in the first scenario, there's a way to recapture the depreciation that wound up not occurring. I did this with my 2004 Passat Wagon. Leased it for three years. At lease end, my buy-out was $2,500 less than the book value of the car (the car had lower-than-expected mileage and was generally more popular than the finance companies had guessed when they calculated the depreciated value). So I paid the depreciated value stated in the lease and took title to the car. I could have turned around and sold it for $2,500 more than I paid for it, but I decided to hold onto it because the sales tax would have eaten some of that figure. As luck would have it, it was totaled six months later, and the insurance company paid book value. I don't fool myself into thinking this was "profit" -- it was really only a refund of overpaid depreciation during the lease term -- but it allowed me to optionally recapture that money. If, on the other hand, the car had been worth less than the depreciated value, I would have surrendered it at lease-end and walked away, the loss falling on the finance company.

So when you lease, you essentially get to decide whether to buy the car at two points in its lifespan, and you might be able to make a beneficial deal at both points. This might be especially true here, where demand for a new model makes dealers less flexible on price at the beginning of the lease.

Finally, let's face it, gran turismo coupes are a market segment for young people with money and no kids -- i.e., people who want new cars more than they want three-year-old cars. The A/C is in its first model year, and there might be bugs that make it depreciate faster than average. Leasing a car under these circumstances is far from stupid -- it puts the risk that the car will be a used-market dud on a faceless finance company rather than on your family. If you know you're going to grow out of the car in three years, I'm not 100% confident there will be a great deal of demand for this car in the used market. Whether I'm right or wrong about that, it may make sense for me not to carry that risk in my financial portfolio, in which case I would lease.

[SHIFT_2.5S]

Betimbe, you make a lot of sense. However, I don't think that the demand for a used A/C would be very low. Judging by the demand for used G35 and 350Z vehicles, I think that the A/C would still have a strong resale value.

[Betimbe]

In two-three years you can trade your car in OR just put baby in the back seat. I met a nice young lady with a kid who had a coupe. She said one of the things she liked about having one was she could easily put her child in the back seat compared to putting the child in a sedan.

I have two kids and know something about car seats. I commend her on maintaining a positive outlook, but I would only recommend a two-door as a daily driver when the kid is old enough to sit in a booster seat and buckle his/her own belt. But booster seats are the Stage 3 of car seats. Stage 1 (infant carrier) and Stage 2 (rear- and forward-facing convertible car seat) would both be nightmares, and that's pretty much the first three and a half years of the kid's life.

[adidas2go]

adidas2go, $590 a month seems very very expensive. In California, I believe you can get a BMW 328i Coupe for that price.

Ya im a BMW enthusiast. Acutally my last car was a 330i. I test drove the new 328i, 335i, Z4 and M Roadster in hopes of finding a bmw i liked. I did like the M Roadster and 335. However they are both twice as much as the 3.5SE and the lease amount was was close to $800 and loan monthly payments were close to 1000 a month. The 328ci was 680 a month lease and 800 a month loan payment. Not worth it in my book. I searched around alot before i bought this car. Im waiting for the 135i from BMW or maybe Nissans GTR

[Betimbe]

Betimbe, you make a lot of sense. However, I don't think that the demand for a used A/C would be very low. Judging by the demand for used G35 and 350Z vehicles, I think that the A/C would still have a strong resale value.

I won't argue with you. Obviously the car has a lot to recommend it. But I didn't say "very low," I said I was not 100% confident. In the context of this question, we're talking about a thousand here or there three years in the future. No one's going to lose their shirt over having been "off" by two thousand bucks on resale value of a 3-year-old A/C. The only question is, are you willing to bet the over on the over/under? If "yes," then you should buy, because if you lease, you'll need to buy out the lease and then sell the car in order to recapture (as I did in my story about the Passat). And you can't answer that question until you know what you need to be "over," i.e., with margins that thin, the bank's specific depreciation number is going to make all the difference.

BTW, the people who buy used G35s and Zs aren't in the market for other cars, IMHO. It's like saying the G6 will have strong resale value because the Mustang does. Maybe the A/C will be as popular, but something tells me the G35 and Z markets are inflated by buyers looking for a car with "street cred" within a particular crowd. The A/C will be up against the Accord Coupe, the Eclipse, the Solara, and others. Some of these are no-brainers if I was asked to choose, but markets are driven by a collection of individuals, some of whom are stupid.