I recently leased a BMW after being convinced that leasing was better for me for a second car. Many folks who I meet at work have opinions and misconceptions about leasing and think its a bad option. Most common are:
Leasing costs more if you decide to buy at the end.
Leasing is on MSRP so you miss on discounts.
Its waste of money as you end up with nothing after return.
What are some of other stuff you have heard from folks?
Leasing doesnât give you pride of ownership ⌠
That actually is the case unless there are bigger lease incentives vs purchase.
Yup. The Fusion deal got me lease + buyout many thousands below buying outright. But only because as Mark alluded to, the incentives were ridiculous. Obviously there are just as many reasons to buy as there are to lease. Everyone individualâs situation is different. So are their personal preferences. Personally I want something new and different, and my pride was hurt long ago. lol
Nor the headache of trying to sell it later.
The thing is, in most cases, the incentives are the same (or better for purchase)âŚso all you have to do is get the dealer to give you the same sale price you had on the lease sheet and the purchase will beat leasing. For EVs this gets lopsided even further due to post sale fed credits which the captive may not pass to you entirely on leases.
If you are willing to lose $1-2k then there is no headacheâŚCarvana will gladly take it of your hands.
Not if itâs a BMW.
For me, now seeing how both new and used cars depreciate, Iâd much rather let the bank bear the burden of the depreciation while I pay a small fraction of the carâs value.
Letâs not forget the cost of brakes, tires, maintenance, and out-of-warranty repairs. No thanks.
I think for a lot of people that is just a way of life with owning a car. Once youâve had a taste of constant warranty and included maintenance, it is hard to go back.
Not true for all financial companies/brands. But if there is positive equity, you can trade it/sell it and pocket the difference.
A lot of treads here concerning same issues with leasingâŚ
Leasing is simply a long term rental. It is not uniformly better or worse than buying. In my view the key factors are cost, mileage and length of ownership. If you buy a Toyota or Honda and hold it for 10 years you will pay less overall than leasing the same models because the cost of maintenance and depreciation is low. This will be true whether you drive low miles (in which case your residual value will remain high) or high miles (in which case maintenance costs will be low)
However IME if you buy a German car you may do worse overall because the cost of maintenance is prohibitive, particularly with high mileage.
Leasing is great with some models, poor with others. The misconceptions come from generalizing (including mine!)
People often forget when youre financing a car, you dont own it then eitherâŚ
I never advise anyone to purchase their car when their lease ends as youâve already partly paid depreciation for the 3 years you have owned it and it may not be worth its residual value.
Their are larger rebates and incentives on purchases but the term length is twice as long. (Often times the finance incentives are not that much greater.)
Its not a waste as you have paid what you have used.
When leasing you donât have to worry about maintenance or being out of warranty.
Leasing may not work for everyone but in my opinion it is the most hassle free way of âowningâ or rather driving a vehicle.
Yeah. Lease to purchase unless the incentives are greatly outsized generally cost more as youâre paying the interest on the full sale price less incentives and then paying it again on the residual if you take a loan to buy it outâŚ
Unless of course you take the loan to buy it out immediately after leasing it but then youâre still on the hook for the acquisition fee paid to the bank. YMMV as always.
Itâs not really a fixed term though unless youâre instantly stuck far underwater in a rapidly depreciating asset (so most BMWâsâŚ) and donât want to take a âlossâ
In reality, just like a lease, there really is no âfixed term lengthâ - you can sell at anytime whether itâs owned by you or a bank.
Definitely agree with this. We just sold our 2010 Prius II for $9,000. This was purchased new almost 10 years ago for ~$21,000.
Aside from routine maintenance, which was minimal, we put one set of tires on it. There were literally zero repairs.
It also cost almost nothing to insure when it was new, and it only went down from there.
Not so sure. You turned $21k into $9k in 10 years. A 5% compounded interest investment would turn $21k into $34k in 10 years.