To Buy or to lease?

And even better if someone gives you the car for free.

It's easy to think up special cases that pervert the basic financial issues behind the lease verses buy decision. One could play this game all day.

Tom

 

I think some research was done a few years back on owning a Honda Accord for 3 years among cash-buy, loan and lease. At that time, in that report, all things considered (interested, repair, maintenance, etc.) the difference of cost was within a couple hundreds of dollars.
There are way too many factors in leasing and buying. As someone said, to someone leasing could be better than the other and vice versa. No simple answer exists for everyone.

I do know one thing. Never ever try to own a German vehicle for long time. It will hurt you financially. For Honda/Toyota, I won't worry about it.

Yes, leasing company (of the automaker) is there to make money. However, leasing is also being used as a solution to sell more vehicles by jacking up unrealistic residual values (if you believe a 3-yr old BMW still retains 61% value - good luck!). Their loss could be your gain.

For a professor, there should be ways to write off the ownership of a Prius. If that is the case, leasing would make it much simpler from tax perspective.

 

What does that even mean? If you mean compared to paying cash for the car then yeah...you have to pay interest...

Actually you need better credit to lease than finance typically.

Like Jay said...not always. You have to think about the opportunity costs on the money.

I've said it before...but I would never pay cash for a car.

 

pearls of intelligence or maybe weird individual?

You never finish a program, you just stop working on it.

 

Question:

Im looking at buying my first 'real' car and am looking very seriously at a new prius.

If I assume around a $25k price (version 3) and I would not be financing (i assume there's no reason to not pay cash for the car if you can afford it?) is there any reason to consider leasing? One issue is that I'm not tied to a location at this point in my life so I don't know where I'll be in 3 years.

Thanks!

 

Leasing is a good option if you want lower payments instead of financing. But there are mileage restrictions when you lease. They will also look over the vehicle with a fine tooth comb when your lease is up and add fees if necessary. If you like to change cars every 3 years or so, leasing may be a good choice.

 

in May 2010 I got a 3 year lease at $199 a month with 2,000 down (down included first month lease). I will pay 35 payments so that is I pay 9,000 for a new Prius II. residual is 15.5K. To buy outright it was 22-23K, say 22.5K monthly payment was at least twice as much. So I figure the drop in value is 7,000, so I paid 2,000 extra to lease it. All maintenance was covered including oil changes, etc. Now in May 2013 I get to decide to buy it outright for 15.5 and resell it for more perhaps, turn it in and walk away , or if something with better gas mileage comes along in those 3 years ( Polo TDI, Prius plugin, who knows? ) move to a more economical car, or if none is available, I buy it at residual and keep it myself with monthly payments close to the $200 I had been paying. It stretches out the payments, and gives me more choices. It was worth it. Especially since I got to sell my 2000 Insight 1 with close to 270,000 miles on it for $3800, still ran perfectly and got close to 70 mpg summers with a real lifetime mpg of 62. Under the same conditions I would do it again.