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  • Questions re: leasing a car

    Leasing is something I've not considered in the past but the more I read about it the more it seems right for me now. But, I'm such a neophyte and will appreciate any info, esp. small print info, that might enlighten me!

    So...here goes!
    Do all dealerships offer both purchase and lease for any new car on the lot?
    Can an old car be traded in on a car that will be leased?
    Can one haggle over the price, just like a purchase?
    Can optional equipment be added to the car or is a lease car "as is", meaning whatever is included is it?

    Or...are these questions dealer specific?

    It appears I'd want a closed end, 36 month lease. At this point in my life, a warranty has become important to me. My current car's mechanic and I were talking about how poorly the more current versions of my car are made (I have an older car from the good ol' days of that particular manufacturer!). He mentioned for someone like me, buying a new Kia, Hyundai (and the like) and trading it in for a new one as soon as warranty runs out is the way to go. All I could think of was...Ugh, the thought of buying a new car every few years is depressing and expensive. The monthly payments are killers even on subcompacts! Once I ran the numbers on how much my current car costs me on a monthly basis, factoring in gas, service, repairs, tires and insurance (I don't have a car payment)...well DANG...I can afford a car payment! But I want to keep it as low as possible. Leasing seems to offer that option. And I don't care anymore if I own the car or not. To turn the car in every 3 years for a new one with a new warranty is now appealing to me.

    So...what am I missing?

  • #2
    Re: Questions re: leasing a car

    Tutu, I'm really glad that you started this thread, since I've been thinking recently about leasing as well. And pretty much for the same reasons that you noted.
    I'll probably need a small SUV, as I have to load and unload an 86-pound amplifier several times a week.
    I'm sure Craig will have some answers about leasing, and hopefully others too.
    .
    .

    That's my story, and I'm sticking to it.

    Comment


    • #3
      Re: Questions re: leasing a car

      Originally posted by tutusue View Post
      So...what am I missing?
      The condition of the car after the lease is over. For instance do you pay for the repair or replacement of things like dented doors, scratches in the paint, nonfunctioning windows or a broken clock?

      What happens if the car is stolen or is involved in an accident such that it is totaled?

      Comment


      • #4
        Re: Questions re: leasing a car

        Originally posted by helen View Post
        The condition of the car after the lease is over. For instance do you pay for the repair or replacement of things like dented doors, scratches in the paint, nonfunctioning windows or a broken clock?

        What happens if the car is stolen or is involved in an accident such that it is totaled?
        Good questions, Helen. The lessee is responsible for maintaining the car and fixing anything beyond normal wear and tear.

        Re: insurance...I'm guessing the lessor has specific insurance requirements to cover theft and accidents.

        Comment


        • #5
          Re: Questions re: leasing a car

          I leased a car for 5 years back in the late '80s. This is what I learned.

          1. 5 years is too long (so three is probably right.)

          2. The leaser pays for EVERYTHING (including all maintenance, repairs and full insurance coverage, just like when you finance a car purchase.)

          3. Any and all marks on your car inside and out will be fixed by you before you turn in the car.

          4. Leasing is like renting, only worse. No getting out of the contract early.
          (I was activated during Desert Shield/Storm, and asked the company to take the car back and cancel the lease, since the end of the contract was about 18 months away. Sure, they said, if I pay all the rest of the payments and whatever else they chose to charge me for my use of their car.)

          I will never lease again.

          Comment


          • #6
            Re: Questions re: leasing a car

            I have leased once in my life, might do it again if the circumstances were right. My daughter leased once and will never do it again. She was transferred out of country with a year left on her lease. Leasing company said "tough"! She had to pay it off completely.

            Leasing is similar to outright purchase - you can lease as many options as you like. The problem is that there are more opportunities to get "fleeced" in a lease program than even a purchase. The lessee has to be VERY knowledgable about the lease game or you can be taken.

            The main reason people lease is that they can get a more expensive car than they would normally be able to afford. Consequently, over the long run, leasing is a more expensive way to "own" an automobile than purchase. Also, you will probably be limited to no more than 12K miles a year. Perhaps not a problem on Oahu but a BIG problem on the mainland.

            So my final answer is....it depends!

            Tutu, send me your email address via pm. I want to send you some information that will help you decide if leasing is right for you.
            Peace, Love, and Local Grindz

            People who form FIRM opinions with so little knowledge only pretend to be open-minded. They select their facts like food from a buffet. David R. Dow

            Comment


            • #7
              Re: Questions re: leasing a car

              Leasing offers a great way to get into a new vehicle with lower monthly payments.

              Things to consider before leasing:

              1) How many miles will you be driving it? Leases imply a limit on annual mileage. Go over the cap at the end of the lease, and the cost per mile will be added to the vehicle when turned in or the lease is paid off (for ownership) thru the balloon payment at the end. For this rule, keep your mileage down during the lease period.

              2) Do you own a business? Leases offer a great way to write off the lease payment entirely (or a greater part of). If you bought the car, you cannot write off the monthly payments, nor the downpayment (likewise it would be hard to justify writing off the balloon payment of a lease either). For purchased vehicles you can do the five-year sliding depreciation scale, the One Time Capitalized deduction, or claim mileage for business write-offs on purchased vehicles. But for practical purposes it's hard to purchase a car for business and take the one time deduction if it's financed. Leasing offers a big monthly write off on lease payments.

              3) Because auto dealers want to insure the leased vehicle is maintained properly (for greater resale value if turned in) they will sometimes offer better maintenance schedules or better extended warranties. If you have the dealer do the scheduled maintenance, there is a maintenance record that is beneficial on resale value of that vehicle. You don't have to dig up those records, it's at the dealership. But dealership maintenance is quite a bit more expensive than outside mechanics...but it's deductable.

              4) Extended Warranties. If you can afford it I recommend it. Sure it's a fleecing at the F&I Manager's desk, however cars do break down and when they do costs can be expensive. If you plan on returning the vehicle at the end of the lease, the most pristine condition will warrant a greater resale value to the point where you could possibly walk away from the lease at the end with no out of pocket expense. Plus it's a deductable expense.

              5) Most balloon payments at the end are based on what the monthly lease payments accumulated to over the term plus the initial down payment, subtracted from what the projected Blue Book value of that vehicle would be at the end of the term. Typically it's based on pristine conditions, hence get the extended warranty.

              There are probably other tax advantages to leasing rather than purchasing. But from a business standpoint it's well worth it.

              Insurance wise because it's for business purposes, your insurance will go up slightly. But that's par for the course for any business use of a personal vehicle. Most car insurance waivers will ask if you will use this vehicle to get to work and back or use it for non-personal use. If you say yes (even if it's your own private vehicle) your car insurance will reflect that usage and will more than likely be higher. But like any business expense, it's deductable.

              If you state you won't be using it for business purposes, you cannot deduct that cost, only mileage. But by deducting for mileage, you are implying to the car insurance company that you are using it for business purposes and can reject any auto claim you submit if in your disclaimer you indicated you will not use it for business purposes.

              Bottom line is a lease indicates a clear definitive use of the vehicle if using it for business purposes which allows for lawful deductions as a business expense...purchasing thru financing enters a grey area and can flag an audit.
              Last edited by craigwatanabe; May 25, 2010, 09:42 AM.
              Life is what you make of it...so please read the instructions carefully.

              Comment


              • #8
                Re: Questions re: leasing a car

                Originally posted by craigwatanabe View Post
                Leasing offers a great way to get into a new vehicle with lower monthly payments.

                Things to consider before leasing:

                1) How many miles will you be driving it? Leases imply a limit on annual mileage. Go over the cap at the end of the lease, and the cost per mile will be added to the vehicle when turned in or the lease is paid off (for ownership) thru the balloon payment at the end. For this rule, keep your mileage down during the lease period.
                I have yet to hit 5,000 miles in a year!
                2) Do you own a business? Leases offer a great way to write off the lease payment entirely (or a greater part of).[...]
                Yes, I own a business and am aware of the tax advantages of a lease. In this economy, however, I'm not in need of extra tax advantages! And it's projected I won't need them for a few more years which should take me into full retirement! I'm waiting to hear back from my accountant.
                3) Because auto dealers want to insure the leased vehicle is maintained properly (for greater resale value if turned in) they will sometimes offer better maintenance schedules or better extended warranties. If you have the dealer do the scheduled maintenance, there is a maintenance record that is beneficial on resale value of that vehicle. You don't have to dig up those records, it's at the dealership. But dealership maintenance is quite a bit more expensive than outside mechanics...but it's deductable.
                My goal is to keep costs down while driving a newer, safe car under warranty. I can honestly say this is a decision based on age(ing!)!!! I'm fanatical about maintaining my cars and have saved every receipt...even the one for the new cup holder! I do this for every car and turn that package of receipts over to the new owner. You bring up a good question...can warranty work be done by an outside mechanic?
                4) Extended Warranties. If you can afford it I recommend it. Sure it's a fleecing at the F&I Manager's desk, however cars do break down and when they do costs can be expensive. If you plan on returning the vehicle at the end of the lease, the most pristine condition will warrant a greater resale value to the point where you could possibly walk away from the lease at the end with no out of pocket expense. Plus it's a deductable expense.
                Won't the car's initial warranty cover 'big' breakdowns/repairs? I assume the warranty doesn't cover normal servicing but I would expect bigger repairs to be covered. Not so?
                5) Most balloon payments at the end are based on what the monthly lease payments accumulated to over the term plus the initial down payment, subtracted from what the projected Blue Book value of that vehicle would be at the end of the term. Typically it's based on pristine conditions, hence get the extended warranty.[...]
                Do all leases have a balloon payment or just open-end leases? What about a closed-end lease and I roll over lease #1 into lease #2 at the end of lease #1?

                Still curious about:
                Do all dealerships offer both purchase and lease for any new car on the lot?
                Can an old car be traded in on a car that will be leased?
                Can one haggle over the price, just like a purchase?

                Thanks for taking the time to explain this, Craig. I really appreciate it. I wish your new job was at a Honda dealership on Oahu. I'd make an appt. to be your first customer!

                Comment


                • #9
                  Re: Questions re: leasing a car

                  Originally posted by matapule View Post
                  The main reason people lease is that they can get a more expensive car than they would normally be able to afford.
                  Originally posted by craigwatanabe View Post
                  Leasing offers a great way to get into a new vehicle with lower monthly payments.
                  Isn't this the kind of mentality that got the country into the financial mess we're in? Consumers just want want and want. Can't afford it? Borrow. Already in debt? Borrow more. Extend yourself. Max out your credit. Damn the consequences. Maybe someone will bail you out if it all goes south.

                  I'm not saying leasing is a universally bad idea. There are lots of situations where it's a smart thing to do -- but I think a good general rule of thumb is if you can't afford to buy the car, you shouldn't lease it either. I think the better course of action is to choose a car in your price range instead.

                  Comment


                  • #10
                    Re: Questions re: leasing a car

                    My accountant just gave me a HUGE green light to go ahead and lease. She strongly feels it's the right thing for me to do at this time in my life. So, now to edumacate <g> myself about the various leases and their pitfalls. <sigh>

                    Comment


                    • #11
                      Re: Questions re: leasing a car

                      Originally posted by tutusue View Post
                      I have yet to hit 5,000 miles in a year!

                      Yes, I own a business and am aware of the tax advantages of a lease. In this economy, however, I'm not in need of extra tax advantages! And it's projected I won't need them for a few more years which should take me into full retirement! I'm waiting to hear back from my accountant.

                      My goal is to keep costs down while driving a newer, safe car under warranty. I can honestly say this is a decision based on age(ing!)!!! I'm fanatical about maintaining my cars and have saved every receipt...even the one for the new cup holder!
                      Cup holder? Hmmm.

                      Do keep in mind that in addition to keeping the outside of the car free of any scratches and dents, the lessee also has the responsibility to have the interior be clean and immaculate upon the car's return. Penalties are assessed for any food or drink stains found on the carpeting and upholstery. So one needs to be very careful if he/she is in the habit of drinking and/or snacking in their vehicle.

                      Needless to say, this factor is the reason why an otherwise ideal candidates for auto leasing is sometimes better off buying their own car. You never know what can happen if you have to transport young children or pets.
                      This post may contain an opinion that may conflict with your opinion. Do not take it personal. Polite discussion of difference of opinion is welcome.

                      Comment


                      • #12
                        Re: Questions re: leasing a car

                        Thx, FM, but all cars have cup holders. I just happen to LOVE one of the cup holders in my car. It's very cool! I'll miss it! And, yes, I've been known to drink a soda in my car...one with a top on it...but I have yet to spill a drop in any of my cars. Plus, I'm not very good at eating and driving...eating is too much of a distraction for me! Much like cell phones! Kids? Nope! Pets? Huh uh! Rarely a passenger, even! Regardless...$h!+ happens, and it can happen in any car at any time to anyone. But, for the most part, I'm the only one who spends any time in my car.

                        Comment


                        • #13
                          Re: Questions re: leasing a car

                          Originally posted by tutusue View Post
                          Thx, FM, but all cars have cup holders. I just happen to LOVE one of the cup holders in my car.
                          That's supposed to be a safe place to keep a person's family jewels.

                          Comment


                          • #14
                            Re: Questions re: leasing a car

                            Sorry, tutu, my post wasn't directed at you. It wasn't directed at matapule or craig either, for that matter. It was mostly directed at the people matapule and craig were talking about. People who see leasing as yet another way to live beyond their means.

                            Originally posted by tutusue View Post
                            Thx, FM, but all cars have cup holders.
                            Well, not ALL cars. I have two that don't, and I know a few people who have cars that don't have cup holders.

                            Comment


                            • #15
                              Re: Questions re: leasing a car

                              Originally posted by zff View Post
                              Sorry, tutu, my post wasn't directed at you. It wasn't directed at matapule or craig either, for that matter. It was mostly directed at the people matapule and craig were talking about. People who see leasing as yet another way to live beyond their means.
                              Thanx, zff, but I knew it wasn't directed at me. That was obvious.
                              Well, not ALL cars. I have two that don't, and I know a few people who have cars that don't have cup holders.
                              Really? My previous 2 cars didn't have cupholders but one was a 1978 and the other a 1988! My current car is a 1995. I kinda figured anything from the 1990s on had some sort of a cup holder!

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