saw a recent lexus RX lease - a 9.1 LH score, 15,956 total for 27 months.
So $590/month all taxes fees etc. Let’s pretend you can replicate this deal every 27 months.
Let’s say you buy this same car at the discount the lease was had at - $53k, let’s say $57k w/ taxes title etc.
That’s $475/mo over 10 years.
So for just outlay, buying is $13800 less over 10 years.
Of course if you buy, you’ll need to get tires and pay for repairs. And you don’t get a new car every 27 months with all the latest tech and safety stuff.
Yep, I would say that’s pretty close. Yes, also need to consider things like tires, brakes, wear and tear items. Also get to skip tags every other year since it’s usually rolled into the lease (around $500 savings here in MN). The value of the vehicle at the end of the 10 years also needs to be taken into account. I usually lease F-150’s, which usually lease very well. My lease payments overs 10 years, equal nearly identical what my purchase price would be when buying one. So whatever a 10 year old F-150 with around 120k miles is worth, minus wear and tear items is what leasing costs me over purchasing in that 10 years. I figure I pay a $5-7k premium. That’s peanuts over 10 years, to get a fresh vehicle every 24 months, with all the latest tech and upgrades. Fresh paint, brakes, all the filters that come with a new vehicle. Even little things like wiper blades, floor mats, all those items that you get fresh. The only thing I have to do, is get an oil change every other year. It’s worth it to me. Does that calculation work with every vehicle, unfortunately no. As an example, most Hondas, I can make the math work much better for purchasing.
I did similar math on the Kia and figured I can fix major things with their 10 year warranty and just let minor things die. Hopefully I can still sell it in 5 years for around $10K.
I made a list of financial experts who recommend serially leasing new vehicles as the most cost-effective way for the average person to manage his or her transportation needs:
The last car I bought, I drove for 13 years and 245,000 mikes. However, with safety/connectivity being improved all the time now, it may not make as much sense to buy a car and keep it for that long.
There are publications who compile this data regularly (Edmunds for one). You can look up the true cost to own x vehicle over y time. Of course it’s all estimated but it gives you a good idea. I can fix most stuff myself and cars are very reliable overall these days. Best bang for your buck is to probably buy a Honda (or Kia) and drive it for 7 to 10 years. But that’s not very fun
I’ve done this exercise over and over for people on different cars to try and make sure they have a clear understanding of what the true comparison is… trouble is that sometimes people have “odd” hangups that keep them tied to purchasing - even if it doesn’t make financial sense.
When I get my numbers and plug them into the calculator, I’m usually between 9.0-11.x on the LeaseHackr score - that is in no small part thanks to this community and the efforts of the people on the Edmunds leasing board as well.
When you get to numbers in that range, you are talking about starting your FOURTH (3 x 3 year leases and 1st year into the final three year lease) lease while someone who bought is in their 10th year of ownership, with roughly the same total expenditures, not including any out of warranty work they had to have done including wear parts like tires and brakes. And that doesn’t even take into account someone who pays it off in three or five years and then sells it and buys new again. YIKES.
To make that comparison today, look back to 2009/2010 vehicles. Look at the equipment, styles, options, etc.
So you would have drive a 2009, a 2012, a 2015 and probably be in a 2018 with a year or two to go.
Leasing isn’t for everyone, certainly. But, if you are looking at lease vs buy, there are a lot of good reasons to get out of a car in 24/36/39 months if you can keep negotiating good deals.
I’ve gone round and round with a few about this and here is my takeaway: They recommend buying pretty much always. but (and its a big but) you need to keep the car for a while.
While they may feel leasing is bad - whats worse is the buyer who gets a four or five year loan, pays it off and immediately goes out to buy another one. the rate at which that happens is staggering.
Any major out-of-warranty work, will quickly tip to the side of leasing on nearly any good leasing car. When you throw hackr level leases into the mix, like those sub-$100/mo ones, it’s not even close.
Most people have no business getting a new vehicle at all.
Buy or lease?
No.
First pay off all of your credit card bills, your student loan debt, your mortgage, max all of your pre-tax retirement options, keep the rainy-day fund over 12 months of expenses.
Until you’ve completed all of the above, keeping your four-year-old Hyundai Tucson is almost always your best bet.
