Ok… so my wife and I are looking for a new vehicle and are trying to keep our monthly payments low. The idea of leasing the vehicle we want for 3 years and then buying it out at the end of the lease came up and it seems like this could be a way for us to keep our payments low for the first few years. We can then put a large downpayment down at the time of buying out the lease.
We’re currently looking at a car that lists for 29,500… could purchase for 27,500… we have $7k for a downpayment.
It sounds like we could lease the vehicle for $269 with $3k down.
We don’t drive huge miles. We’re not too tough on our cars, but they do get used. We typically wouldn’t consider a lease as we usually run our cars into the ground, buying new or close to new, paying them off, and then getting 3-5 years of additional use.
Would leasing first make sense? Good idea? Bad idea?
Assuming the answer is… “It depends”… What are the things we should be aware of? What could make this a good idea? What would make this a bad idea?
Thank you for any input or assistance… It’s appreciated!
+1 for @Jon. Just to keep in mind: not a big deal, but you need to add acquisition fee ($600-1000) to your start-up expenses on the lease that you don’t have with purchase.
If you’re leasing and the MF comes out to be under 1% then it can be much better than financing for those 3 years IMO. You do have to add that acq/bank fee to your calculation but that still may pale in comparison to the low MF when leasing.
Remember if the car is underwater after 3 years you don’t want to be buying it out anyways as you’ll be putting yourself at a huge disadvantage. With a straight finance deal you’ll be stuck with the car no matter if it’s underwater or not.
You are most likely going to pay a higher interest rate to buy out the lease after 3 years than if you just buy it new. It would help if we knew what vehicle you were interested in so the hackers could fully analyze the situation. But it sounds like your three best options are to either buy it new with a big down payment, lease with no down payment, or buy a used 1-2 year old car that has already depreciated.
Thank you everyone… We’re looking at minivans and the top choice right now is the Chrysler Pacifica… Though we’re not married to that model in any way. We’ve just started shopping and was interested in the different buying approaches.
I’m considering doing the same on a VW Golf GTI. I really like the GTI, but I’m afraid of it’s reliability. It seems that they are either really reliable, or have constant problems. If it has problems, they are covered under warranty and I can get rid of it at the end of the lease. If it turns out reliable, I’d probably buy at the end of the lease.
Check out Ally Bank for leasing, it seems they heavily negotiate at buy out based on other people’s info. If you know you’re going to buy you can shoot them an offer within 30 days of lease end and secure a good deal.
Just recently had this conversation with my son.
If you guys are concerned of the vehicle’s reliability for you new wheels, you should
a. lease
b. lease only if the numbers make sense
c. consider another “proven to be reliable” car
The fun factor wares out really fast on any car that spends time in the service bay while you are driving a loaner. Besides, time is money and in some cases a lot of it.
To the OP, there’s nothing wrong with driving a reliable used car/van. If you can find something for $7k great, if not, find something as close to it as you can and finance the rest.
