Buying vs leasing?
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Newbie
Joined: Aug 2010
Posts: 29
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From: Kentucky
Buying vs leasing?
So I'm actually debating leasing for a new car as opposed to buying. It seems ideal for me because I enjoy the luxury of being in a new car every few years. So I have a few questions:
Generally speaking (Not directly for the Evo), what is everyone's opinion on leasing a new car?
Directly speaking about the Evo - Do you think leasing one would be stupid?
Pros and cons of both leasing in general and leasing an Evo?
Thanks!
Generally speaking (Not directly for the Evo), what is everyone's opinion on leasing a new car?
Directly speaking about the Evo - Do you think leasing one would be stupid?
Pros and cons of both leasing in general and leasing an Evo?
Thanks!
Newbie
Joined: Aug 2010
Posts: 33
Likes: 0
From: Los Angeles
MONTHLY PAYMENTS
> Leasing - Monthly lease payments are roughly 30%-50% less than loan payments for the same car, same term because you only pay for the vehicle's predicted depreciated value, not the entire value. The average vehicle will depreciate approximately 50% in three years.
> Buying - Monthly loan payments are higher because you pay for the entire cost of the vehicle, which includes the depreciated value. The average vehicle will depreciate approximately 50% in three years.
PAYMENT DUE DATE
> Leasing - Payments are due at the beginning of the month. Your first lease payment is due at the time you sign your lease contract.
> Buying - Payments are due at the end of the month. Your first payment is due one month after you sign your loan contract.
DOWN PAYMENT
> Leasing - Leasing does not require a down payment ("cap cost reduction"). However, some special lease deals may require a down payment in order to get the deal. Making a down payment lowers the monthly payment.
> Buying - Buying with a loan usually requires a down payment, as much as 20%. Making a down payment lowers the monthly payment.
UP-FRONT COSTS
> Leasing - Typically includes: down payment (if any), first month's payment, taxes, registration fees, and possibly a security deposit.
> Buying - Typically includes: down payment, taxes, and registration fees. No security deposit is required.
SALES TAX
> Leasing - Sales tax is based on and paid with monthly payments (in most states), instead of all up front on the entire value of the vehicle. This saves money for the leasing customer.
> Buying - Customers pay sales tax on the entire purchase cost of the vehicle up front, but is usually rolled into the loan as an extra cost. If the customer sells the vehicle later, there is no partial sales tax refund. If he trades, there may be a tax refund -- in some states.
SECURITY DEPOSIT
> Leasing - Leases sometime require a security deposit, which is returned at lease-end. The amount of the deposit is typically about the same as one month's payment. Customers with good credit often don't have to leave a security deposit.
> Buying - Security deposits are not required, although down payments are usually required, unlike leasing.
OWNERSHIP
> Leasing - Since leasing is designed to only pay for depreciation (with lower payments), you don't build ownership equity. You return the vehicle to the lease company at lease-end, or purchase your vehicle for it's depreciated value.
> Buying - By making higher payments, you not only pay for depreciation but also build up ownership equity. At the end of your loan, you receive the title and own the vehicle. It's value, however, has depreciated and your ownership equity is significantly reduced.
INSURANCE
> Leasing - Laws in most states require you to have insurance. Lease companies require that you pay for insurance on your leased vehicle. The level of required coverage may be higher than is required by state laws.
> Buying - Laws in most states require you to have insurance. Loan companies may require you to have a minimum level of insurance to protect their interest in the vehicle. The level of required coverage may be higher than is required by state laws.
MAINTENANCE
> Leasing - Lease companies require that you keep your vehicle in good condition and maintain it properly. You are not required to have your maintenance done by a dealer.
> Buying - You are free to maintain, or not maintain, your vehicle as you like. However, if you expect to possibly sell or trade your vehicle in the future, the buyer may be interested in how the vehicle was maintained.
GAP INSURANCE
> Leasing - Most leases come with automatic GAP coverage, or a waiver, that pays off your lease if your car is stolen or totaled in an accident. It makes up the difference (gap) between what your insurance pays and the amount still owed on the lease.
> Buying - Loans do not come with GAP insurance. It must be purchased separately. If you will be upside down on your loan, which is very common, and should have GAP insurance to protect yourself in case of insurance shortfall if your car is stolen or totaled.
EARLY TERMINATION
> Leasing - The cost of early lease termination can be expensive due to the fact that your low monthly payments do not keep up with the rapid depeciation of your vehicle. You nearly always owe more on the lease than the vehicle is worth, until near the end.
> Buying - Ending a loan early by selling or trading can be expensive because payments may not have kept up with the rapid depreciation of your vehicle. You may be upside down, which means your still owe more on your loan than the vehicle is worth. This can happen if you rolled another loan balance into your current loan, made little or no down payment, or have a long-term loan.
END OF TERM
> Leasing - You can return your vehicle to the lease company, or purchase it for the price specified in your lease contract. Some fees may apply (see below).
> Buying - You own the vehicle and may choose to 1) keep driving it, 2) sell it for its depreciated retail value, or 3) trade it for its depreciated wholesale value. No fees are required at end of loan.
END CHARGES
> Leasing - Most leases require a "disposition" fee at lease-end as a kind of administrative fee for handling the return of the vehicle. The amount is typically about $350. The fee is not required, usually, if you choose to buy the vehicle at lease-end.
> Buying - There are no fees or charges at the end of loan.
MILEAGE FEES
> Leasing - Typical leases allow 10,000 to 15,000 miles per year. Additional miles may be purchased up front. Excess miles are charged at a rate of 15-25 cents per mile to compensate the lease company for the extra depreciation.
> Buying - Since you will own your vehicle at the end of your loan, any extra depreciation caused by high mileage is reflected in reduced resale or trade value for your vehicle. Miles aren't free, regardless of whether you buy or lease.
WEAR AND TEAR FEES
> Leasing - If you have damages or excessive wear and tear at lease-end, you will be charged by the lease company for the repairs to restore the car to a good resellable condition. It's better and less expensive to have the damages repaired yourself before returning your vehicle to the lease company.
> Buying - Since you will own your vehicle at the end of your loan, any extra depreciation caused by damages or excessive wear and tear are reflected in a reduced resale or trade value for your vehicle.
DEALER PROFIT
> Leasing - Dealer profit comes primarily from the negotiated sale price of a vehicle. Many customers don't realize that lease prices can be negotiated and therefore give the dealer more profit than necessary.
> Buying - Most customers know that prices can be negotiated when buying, but often don't. Fundamentally, buying and leasing offer a dealer the same profit potential.
BUSINESS / PERSONAL USE
> Leasing - Leasing offers similar benefits for both personal and business vehicle use. Business users can deduct lease expenses from taxes. Personal users cannot deduct.
> Buying - Buying is not as convenient for business users, who can deduct vehicle expenses, but not quite as easily as with leasing. Personal users cannot deduct.
FINANCING SOURCE
> Leasing - Dealers don't finance leases. They hand off lease financing to the manufacturer's finance company (Ford Motor Credit, GMAC, etc.) or a national bank. The finance company pays the dealer for the car and works out payment details with the customer. Independent lease sources are difficult to find.
> Buying - Dealers don't finance loans. They hand off loan financing to the manufacturer's finance company (Ford Motor Credit, GMAC, etc.) or a national bank. The finance company pays the dealer for the car and works out payment details with the customer. Independent loan sources are easy to find.
INTEREST RATES
> Leasing - Interest rates are about the same as for loans, and depend on your credit score. Lease rate is called "money factor" and can be converted to APR by multiplying lease rate by 2400.
> Buying - Interest rates are about the same as for leases, and depend on your credit score.
CREDIT REQUIREMENTS
> Leasing - Requires you have a good credit score, income, and reasonable debt. Lower credit scores will require a higher lease rate, and possibly a down payment and security deposit.
> Buying - Requires you have a good credit score, income, and reasonable debt. Lower credit scores will require a higher interest rate and higher down payment.
FINANCE COSTS
> Leasing - Total finance charges are usually higher for a lease than for a purchase with a loan. Low payments are slow at paying down the lease.
> Buying - Total finance charges are usually lower for a loan, assuming the same term. However, most loans have longer terms (in months) than most leases, which evens out total cost.
I would not lease an evo, Pretty cheap to buy and high resale value...
> Leasing - Monthly lease payments are roughly 30%-50% less than loan payments for the same car, same term because you only pay for the vehicle's predicted depreciated value, not the entire value. The average vehicle will depreciate approximately 50% in three years.
> Buying - Monthly loan payments are higher because you pay for the entire cost of the vehicle, which includes the depreciated value. The average vehicle will depreciate approximately 50% in three years.
PAYMENT DUE DATE
> Leasing - Payments are due at the beginning of the month. Your first lease payment is due at the time you sign your lease contract.
> Buying - Payments are due at the end of the month. Your first payment is due one month after you sign your loan contract.
DOWN PAYMENT
> Leasing - Leasing does not require a down payment ("cap cost reduction"). However, some special lease deals may require a down payment in order to get the deal. Making a down payment lowers the monthly payment.
> Buying - Buying with a loan usually requires a down payment, as much as 20%. Making a down payment lowers the monthly payment.
UP-FRONT COSTS
> Leasing - Typically includes: down payment (if any), first month's payment, taxes, registration fees, and possibly a security deposit.
> Buying - Typically includes: down payment, taxes, and registration fees. No security deposit is required.
SALES TAX
> Leasing - Sales tax is based on and paid with monthly payments (in most states), instead of all up front on the entire value of the vehicle. This saves money for the leasing customer.
> Buying - Customers pay sales tax on the entire purchase cost of the vehicle up front, but is usually rolled into the loan as an extra cost. If the customer sells the vehicle later, there is no partial sales tax refund. If he trades, there may be a tax refund -- in some states.
SECURITY DEPOSIT
> Leasing - Leases sometime require a security deposit, which is returned at lease-end. The amount of the deposit is typically about the same as one month's payment. Customers with good credit often don't have to leave a security deposit.
> Buying - Security deposits are not required, although down payments are usually required, unlike leasing.
OWNERSHIP
> Leasing - Since leasing is designed to only pay for depreciation (with lower payments), you don't build ownership equity. You return the vehicle to the lease company at lease-end, or purchase your vehicle for it's depreciated value.
> Buying - By making higher payments, you not only pay for depreciation but also build up ownership equity. At the end of your loan, you receive the title and own the vehicle. It's value, however, has depreciated and your ownership equity is significantly reduced.
INSURANCE
> Leasing - Laws in most states require you to have insurance. Lease companies require that you pay for insurance on your leased vehicle. The level of required coverage may be higher than is required by state laws.
> Buying - Laws in most states require you to have insurance. Loan companies may require you to have a minimum level of insurance to protect their interest in the vehicle. The level of required coverage may be higher than is required by state laws.
MAINTENANCE
> Leasing - Lease companies require that you keep your vehicle in good condition and maintain it properly. You are not required to have your maintenance done by a dealer.
> Buying - You are free to maintain, or not maintain, your vehicle as you like. However, if you expect to possibly sell or trade your vehicle in the future, the buyer may be interested in how the vehicle was maintained.
GAP INSURANCE
> Leasing - Most leases come with automatic GAP coverage, or a waiver, that pays off your lease if your car is stolen or totaled in an accident. It makes up the difference (gap) between what your insurance pays and the amount still owed on the lease.
> Buying - Loans do not come with GAP insurance. It must be purchased separately. If you will be upside down on your loan, which is very common, and should have GAP insurance to protect yourself in case of insurance shortfall if your car is stolen or totaled.
EARLY TERMINATION
> Leasing - The cost of early lease termination can be expensive due to the fact that your low monthly payments do not keep up with the rapid depeciation of your vehicle. You nearly always owe more on the lease than the vehicle is worth, until near the end.
> Buying - Ending a loan early by selling or trading can be expensive because payments may not have kept up with the rapid depreciation of your vehicle. You may be upside down, which means your still owe more on your loan than the vehicle is worth. This can happen if you rolled another loan balance into your current loan, made little or no down payment, or have a long-term loan.
END OF TERM
> Leasing - You can return your vehicle to the lease company, or purchase it for the price specified in your lease contract. Some fees may apply (see below).
> Buying - You own the vehicle and may choose to 1) keep driving it, 2) sell it for its depreciated retail value, or 3) trade it for its depreciated wholesale value. No fees are required at end of loan.
END CHARGES
> Leasing - Most leases require a "disposition" fee at lease-end as a kind of administrative fee for handling the return of the vehicle. The amount is typically about $350. The fee is not required, usually, if you choose to buy the vehicle at lease-end.
> Buying - There are no fees or charges at the end of loan.
MILEAGE FEES
> Leasing - Typical leases allow 10,000 to 15,000 miles per year. Additional miles may be purchased up front. Excess miles are charged at a rate of 15-25 cents per mile to compensate the lease company for the extra depreciation.
> Buying - Since you will own your vehicle at the end of your loan, any extra depreciation caused by high mileage is reflected in reduced resale or trade value for your vehicle. Miles aren't free, regardless of whether you buy or lease.
WEAR AND TEAR FEES
> Leasing - If you have damages or excessive wear and tear at lease-end, you will be charged by the lease company for the repairs to restore the car to a good resellable condition. It's better and less expensive to have the damages repaired yourself before returning your vehicle to the lease company.
> Buying - Since you will own your vehicle at the end of your loan, any extra depreciation caused by damages or excessive wear and tear are reflected in a reduced resale or trade value for your vehicle.
DEALER PROFIT
> Leasing - Dealer profit comes primarily from the negotiated sale price of a vehicle. Many customers don't realize that lease prices can be negotiated and therefore give the dealer more profit than necessary.
> Buying - Most customers know that prices can be negotiated when buying, but often don't. Fundamentally, buying and leasing offer a dealer the same profit potential.
BUSINESS / PERSONAL USE
> Leasing - Leasing offers similar benefits for both personal and business vehicle use. Business users can deduct lease expenses from taxes. Personal users cannot deduct.
> Buying - Buying is not as convenient for business users, who can deduct vehicle expenses, but not quite as easily as with leasing. Personal users cannot deduct.
FINANCING SOURCE
> Leasing - Dealers don't finance leases. They hand off lease financing to the manufacturer's finance company (Ford Motor Credit, GMAC, etc.) or a national bank. The finance company pays the dealer for the car and works out payment details with the customer. Independent lease sources are difficult to find.
> Buying - Dealers don't finance loans. They hand off loan financing to the manufacturer's finance company (Ford Motor Credit, GMAC, etc.) or a national bank. The finance company pays the dealer for the car and works out payment details with the customer. Independent loan sources are easy to find.
INTEREST RATES
> Leasing - Interest rates are about the same as for loans, and depend on your credit score. Lease rate is called "money factor" and can be converted to APR by multiplying lease rate by 2400.
> Buying - Interest rates are about the same as for leases, and depend on your credit score.
CREDIT REQUIREMENTS
> Leasing - Requires you have a good credit score, income, and reasonable debt. Lower credit scores will require a higher lease rate, and possibly a down payment and security deposit.
> Buying - Requires you have a good credit score, income, and reasonable debt. Lower credit scores will require a higher interest rate and higher down payment.
FINANCE COSTS
> Leasing - Total finance charges are usually higher for a lease than for a purchase with a loan. Low payments are slow at paying down the lease.
> Buying - Total finance charges are usually lower for a loan, assuming the same term. However, most loans have longer terms (in months) than most leases, which evens out total cost.
I would not lease an evo, Pretty cheap to buy and high resale value...
Newbie
Joined: Feb 2011
Posts: 92
Likes: 1
From: 11050
If you're considering leasing, make sure you completely understand leasing math BEFORE you start shopping. I've leased many cars and always carried my laptop into the dealership to run numbers while negotiating. Most car salesmen do not have a clue how lease rates are calc'd--they'll keep running over to the finance mgr to check numbers.
For several reasons, particularly the low mileage i drive, i chose to buy my Evo -- no money down, didnt pay a single cent -- everything was rolled into the 0% 60mos financing.
You can certainly examine both options, but I doubt that the Evo lease rates will be particularly attractive. And I will repeat, unless you really understand all the components of negotiating a lease it is very easy to get skinned by the dealer.
For several reasons, particularly the low mileage i drive, i chose to buy my Evo -- no money down, didnt pay a single cent -- everything was rolled into the 0% 60mos financing.
You can certainly examine both options, but I doubt that the Evo lease rates will be particularly attractive. And I will repeat, unless you really understand all the components of negotiating a lease it is very easy to get skinned by the dealer.
Last edited by Summit1; Mar 11, 2011 at 08:09 PM.
I made the comparison here: https://www.evolutionm.net/forums/ca...g-ontario.html
Keep in mind, this is for Canada, so the actual $ values will be out, but the concept will be the same.
Keep in mind, this is for Canada, so the actual $ values will be out, but the concept will be the same.
I wouldn't recommend leasing an Evo of any year shape or form. Once you see other Evo's at meets, track events, on threads, you might get that mod bug itch, and if you scratch you will be in for a big one... Lease something else that won't tempt you to mod it go fast wise, or looks.
Newbie
Joined: Feb 2011
Posts: 7
Likes: 0
From: texas
... flame suit ON ...
Considering a lease or balloon on an MR. Current lease offer on the Evo is a 55% 3-yr residual 15k mi/yr and a 3% finance rate (converting money factor to interest rate), not a bad deal for a guaranteed buy back and the lease provides strong incentive not to mod the car if you need that incentive. Current 3 yr balloon is same residual and miles and rate is 2.7%. I've done leases and balloon buys on several cars and found that if you can negotiate purchase prices and money factors/interest rates and keep within the miles it's no different than buying, plus, you have a guaranteed buy back price. It also helps me from modding the cars to the point of no return.
If you can sell it for more than the guaranteed residual at the end of the lease you can put some cash back in ur pocket.
Considering a lease or balloon on an MR. Current lease offer on the Evo is a 55% 3-yr residual 15k mi/yr and a 3% finance rate (converting money factor to interest rate), not a bad deal for a guaranteed buy back and the lease provides strong incentive not to mod the car if you need that incentive. Current 3 yr balloon is same residual and miles and rate is 2.7%. I've done leases and balloon buys on several cars and found that if you can negotiate purchase prices and money factors/interest rates and keep within the miles it's no different than buying, plus, you have a guaranteed buy back price. It also helps me from modding the cars to the point of no return.
If you can sell it for more than the guaranteed residual at the end of the lease you can put some cash back in ur pocket.
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Newbie
Joined: Feb 2009
Posts: 61
Likes: 0
From: Huntington New York
I leased my evo for 2 years and ended buying out the lease for 6 more years. Big mistake when you have trouble with your evo it is impossible to fix. Yes you have a warranty but all dealerships are independent so i have an on going hub bearing problen I have been to the dealership 4 times 2 different ones just to find out what is wrong. They would not go near my car never even found the problem, never looked,so i have to pay to get it fixed myself. Should have given the car back. Criminal what these service dept. are doing well here in ny. Please someone exspose these crooks.
Newbie
Joined: Feb 2011
Posts: 92
Likes: 1
From: 11050
twokrx, totally agree with you. the lease vs. buy decision depends on a few factors and money factor is one of them (the 0% financing from mitsu was prettay enticing). also critical is your average annual mileage. in my case, my wife drives 12-15K miles/p.a. so it fits well with a lease, on the other hand, i drive about 2K/p.a. so leasing is a very expensive option considering depreciation. i also tend to baby my cars, my wife and kids, on the other hand, kind of beat the life out of them. i owned my last car for 17 years and put a whopping 30K on it -- when i sold it, it was a museum piece.
Last edited by Summit1; Mar 12, 2011 at 05:50 PM.
Evolving Member
Joined: Mar 2005
Posts: 280
Likes: 0
From: Orange County
Trenalsur's post was excellent, unbiased and informative. Here is a great website for more information regarding your question:
www.leaseguide.com
Please be aware that many people who have NEVER actually leased a vehicle before like to make blanket statements that bash leasing as an option. It is almost always the case that these people do not understand leasing and boil it down to a simple perspective, such as "Leasing is renting." Nothing could be further from the truth.
The buy vs lease debate is determined by the ONE PERSON who actually plans to acquire the vehicle. Some of the biggest factors are a) Cash Flow b) Possession of Down Payment c) Mileage Driven d) Average Car Ownership Years e) Car Care Habits
A typical owner who would be a GREAT lease candidate has these qualities:
a) Financially stable
b) Multiple car owner
c) Low mileage driver
d) Prefers dealership maintenance
d) Loves to change cars often
LOL at those who say you can't mod a leased vehicle. Um, as if you are allowed to mod a purchased vehicle. Your chances of warranty denial are EQUAL between the two and last I checked, Mitsubishi doesn't have a super stellar record of backing its warranties on these cars. A simple search on this forum will reveal all the Evo owners who cry about warranty denial because of a few [or a lot] of mods.
Furthermore, some (I said some) owners who finance their Evos are probably making mistakes purchasing a money pit car (a common term Evo/STI owners use because of the mods they choose to buy) that they probably couldn't afford in the first place. Hence, lease vs buy is out the door. There are SO MANY Evo owners who couldn't help themselves and purchase this vehicle with little to no down payment for 5, 6, or even 7 year loan terms!
Proof? Take a gander at the For Sale threads. So many "I can't afford to lose any more money on my Evo because I still owe money on it; would someone please help pay my loan off; thanks".
Both leasing and buying can be smart decisions depending on the person considering it. Just because you had a bad experience leasing (or know nothing about it), doesn't mean it's bad for everyone else.
Oh, and I've never leased a vehicle so it's not like I'm biased towards this option.
www.leaseguide.com
Please be aware that many people who have NEVER actually leased a vehicle before like to make blanket statements that bash leasing as an option. It is almost always the case that these people do not understand leasing and boil it down to a simple perspective, such as "Leasing is renting." Nothing could be further from the truth.
The buy vs lease debate is determined by the ONE PERSON who actually plans to acquire the vehicle. Some of the biggest factors are a) Cash Flow b) Possession of Down Payment c) Mileage Driven d) Average Car Ownership Years e) Car Care Habits
A typical owner who would be a GREAT lease candidate has these qualities:
a) Financially stable
b) Multiple car owner
c) Low mileage driver
d) Prefers dealership maintenance
d) Loves to change cars often
LOL at those who say you can't mod a leased vehicle. Um, as if you are allowed to mod a purchased vehicle. Your chances of warranty denial are EQUAL between the two and last I checked, Mitsubishi doesn't have a super stellar record of backing its warranties on these cars. A simple search on this forum will reveal all the Evo owners who cry about warranty denial because of a few [or a lot] of mods.
Furthermore, some (I said some) owners who finance their Evos are probably making mistakes purchasing a money pit car (a common term Evo/STI owners use because of the mods they choose to buy) that they probably couldn't afford in the first place. Hence, lease vs buy is out the door. There are SO MANY Evo owners who couldn't help themselves and purchase this vehicle with little to no down payment for 5, 6, or even 7 year loan terms!
Proof? Take a gander at the For Sale threads. So many "I can't afford to lose any more money on my Evo because I still owe money on it; would someone please help pay my loan off; thanks".
Both leasing and buying can be smart decisions depending on the person considering it. Just because you had a bad experience leasing (or know nothing about it), doesn't mean it's bad for everyone else.
Oh, and I've never leased a vehicle so it's not like I'm biased towards this option.
I have a lease. DO NOT DO IT. I hate it they basically own my soul and you can't out of the lease at all. AT ALL. Take it from me, it's the worst decision you will ever make especially on this car. You go lease a Hyundai not an Evo.
Evolving Member
Joined: Mar 2005
Posts: 280
Likes: 0
From: Orange County
From what you're saying it sounds like you are stuck on the lease (probably exceeding your mileage, can't keep up with payments, etc) and are finding out the hard way that a disadvantage to a lease IS being under contract.
Sounds like you'd better research your next vehicle moves more meticulously. Anyone who's had a lease before knows "thou shalt not break a lease".
EDIT: From your other posts it's evident that you have surpassed your annual lease mileage (30,000 miles in less than 2 years according to you). Then yes, you absolutely will and SHOULD have a bitter taste in your mouth about leasing. You do NOT lease a car "to drive it" (your words). That was not a very smart decision. Btw, if you cut down on your shopping for Evo parts maybe you'd have more money to buy more miles from Mitsubishi. The lease contract and Mitsubishi are not at fault here. You are sir.
Last edited by Fittest; Mar 13, 2011 at 04:59 PM.
I had an evo lease, now i bought one. I modified my car, i had a boost controller, wastage, exhaust, intake, and a hot pipe and they didn't say/charge anything when i returned it. But since i beat the hell out of that car (knowing it was just temporary) I decided to just buy a brand new one and actually do my oil changes in time and proper maintenance.