New to leasing and trying to wrap my head around the best lease to buy option

Ask the Hackrs
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1

I’m sorry if this is long. I’m trying to digest all of the great information the members of this site have shared about leasing.

My wife and I are looking to lease a car to replace her 11-year-old Honda Civic. She’s also looking for an SUV, either a hybrid or a PHEV, to own for hopefully the next 7+ years. We want to lease instead of finance because the monthly payments are too high for us right now with the interest rates we’re getting, and she doesn’t want a used car.

This gets me to the problem I’ve been running into when doing the numbers. Since we want to hopefully buy out the lease, many of the great deals would not be great if she bought the car out at the end of the lease because of negative equity.? please let me know if that’s not right.

The cars she drove and liked were the
25’ CX-70 Prem Plus
25, Kia Sportage X-line prestige
25’ and 24’ Hyundai Tuscon PHEV Limited
24’Rav4 Prime
24’ Rav4 Hybrid XSE

I don’t know the long-term values of the cars well, and I either couldn’t find them or didn’t know where to look to make the best guess for the best car for purchase at the end of the lease. My best guess so far is either the Rav4s or the Tuscons, but please if that’s not the case, I’d like to know what the best way to go about this situation could be

2

I dont think you are going to win on everything if you are leasing for 3 years and buying it out after

For example the Kia and Tucson have much lower leasing but a higher buyout

and the Rav4s have much higher leasing and a lower buyout

I would probably just get the one she likes the best if she is keeping it that long

3

Speaking broadly, it generally doesn’t make financial sense to lease a vehicle to term and then buy it out.

It’s something of a paradox that many people consider taking the more expensive path to solve budget constraints.

If buying isn’t an option, note that at any given time there is generally something that’s absurdly inexpensive to lease, and you can contain your automotive expenses by exercising flexibility in the make/model that you drive.

It struck me recently that our home utilities cost more than our Blazer EV lease.

We both wfh, we have another car, and put on very few miles (just 1,300 on the Blazer since June), so we didn’t really choose this vehicle, as much as we let the lease program, soft demand, and generous incentives choose us.

4

I am considering something similar (although in CO). I thought leasing is the only way to get around the $7.5K tax credit restrictions? I.e. When you lease, they can apply the $7.5K on the financing side to lower the capitalized costs for most PHEV and EV vehicles that would not qualify if you just bought/financed it?

5

Do the end-to-end math for this strategy. Total of all lease payments including the DAS plus the sum of all payments from financing the RV plus tax/title at the APR of a typical used car loan which is like 7.5%.

Compare that total against the total of financing from day one. There are some makes and models which have promotional APRs of 0% (VW Tiguan) and 0.9% (Mazda CX50) for 60 months. Possibly Ford, Nissan and some other brands too.

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