Question about leasing vs buying a car
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Ok, please consider this the "no stupid questions" thread....
Background: I have never leased a car. The first three cars I owned were purchased in Japan (two used, one new) and the whole situation was different. Our current car we purchased with a big down payment and a loan that we paid off in less than three years. But we are currently a one-car family, which is inconvenient. And our car is Honda Fit -- great in terms of reliability but not great for long-distance and small enough that safety is a concern. So I've had getting a new, bigger (safer) car on my to-do list for a while
Anway, I read the article linked below comparing leasing and purchasing with a loan, and I'm still a little confused.
Basically, my question is what happens at the end of the term, and the article doesn't specify (maybe bc they assume everyone understands this point? Everyone but me anyway).
If you take out a loan to purchase a car, whether it's a 3-year loan term or 6-year, at the end of the term, you own the car outright.
If you lease a car (again, whether for 3 years or 6), what happens to the car at the end of the term? Do you have to give it back and get a new car? And you have zero equity in the car, right? So, assuming you still need a car, does that mean you'd have to get a new lease? With all the start up fees and another down payment??
If so, and unless I'm missing something, we definitely won't be leasing our next car!
And if leased cars are generally new cars, what happens to your leased car that you have to give it? Does it get sold on the used market?
Oh, here's the article:
https://www.nytimes.com/2024/09/20/your-money/buy-lease-car-cost-compared.html?smid=url-share
TIA for any explanations!
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Sorry can't be much help on the leasing side. From what I know of it, it seems like an expensive way to go. We have never leased and we keep our cars forever. We have always paid cash for them, except once when we got both a rebate and zero percent financing. It was the end of the model year and the new model was a redesigned version, so dealers were anxious to clear out old stock.
Used is the way to go if you can find a good one. Still not cheap. I'm amazed at what they're going for. My neighbor bought a 2015 Lexus SUV with 150K miles on it. He paid something like $23K for it. But it will likely last him for a long time. His nephew is a mechanic at a Lexus dealer and it was a car that came in as a trade-in. Danny looked it over and pronounced it sound. And if something breaks, he's available to repair it as he has his garage set up for repair work he does on the side. My neighbor Joe gets the family rate.
When the world wearies and society ceases to satisfy, there is always the garden - Minnie Aum么nier
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FWIW, here's Consumer Reports on buying vs leasing.
https://www.consumerreports.org/cars/buying-a-car/leasing-vs-buying-a-new-car-a9135602164/
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@wtg said in Question about leasing vs buying a car:
From what I know of it, it seems like an expensive way to go.
Yes, that's my impression of leasing.
We have never leased and we keep our cars forever.
Yep, this is the best approach. The more I look at prices, the more I'm thinking we'll stick with our Fit for as long as possible.
We have always paid cash for them, except once when we got both a rebate and zero percent financing.
My understanding is that this is not an option anymore and may never be again.
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P.S thanks for the CR link, I'll take a look.
If anyone has the answer to my core question, please let me know.
If you lease a car (again, whether for 3 years or 6), what happens to the car at the end of the term? Do you have to give it back and get a new car? And you have zero equity in the car, right? So, assuming you still need a car, does that mean you'd have to get a new lease? With all the start up fees and another down payment??
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Deals by manufacturer.
https://cars.usnews.com/cars-trucks/best-car-deals
Subaru has some zero percent financing on Outbacks, just the first one I clicked on. That deal might only be good on certain models in certain areas...
edit: I put in my zip code and it's 1.9% on the 2024 and 2025 Outbacks.
What car(s) are you considering?
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@ShiroKuro said in Question about leasing vs buying a car:
P.S thanks for the CR link, I'll take a look.
If anyone has the answer to my core question, please let me know.
If you lease a car (again, whether for 3 years or 6), what happens to the car at the end of the term? Do you have to give it back and get a new car? And you have zero equity in the car, right? So, assuming you still need a car, does that mean you'd have to get a new lease? With all the start up fees and another down payment??
I think that's covered in the CR article. There are a bunch of options.
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From the CR article:
buyers must return the car at the end of the lease term.
And
a lease has lower monthly payments and lets you drive a vehicle that may be more expensive than you could afford to buy, but you get into a cycle in which you never stop paying for the vehicle.
That's about all I need to know. We're not going to lease.
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I just read an article that sedans seem to be going the way of the dinosaur. Subaru is dropping the Legacy as of 2025. And I think Nissan is looking at what to do with the Altima.
I wonder why. Some people prefer them... Like my mother.
Mr SK OTOH wants an SUV, or I guess maybe the CRV is considered a sub SUV? I don't know.
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@ShiroKuro said in Question about leasing vs buying a car:
I wonder why. Some people prefer them... Like my mother
I think that is the demographic that prefers them, and they're aging out.
We're small SUV people. The Outback works for us but I miss the extra cubic inches of space the Sienna minivan had. I just make do.
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@ShiroKuro said in Question about leasing vs buying a car:
I guess maybe the CRV is considered a sub SUV? I don't know.
Yes, I think it's a compact SUV.
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@ShiroKuro said in Question about leasing vs buying a car:
What is a standard Prius considered to be? To me they're sort of like a cross between a sedan and a hatchback?
I hadn't realized how much the body design had changed. I think they used to be more hatchbacky, but the redesigned Prius looks like a small sedan. The interior seems to be open to the back part of the car like a hatchback is rather than having a separate trunk. But from the outside it looks more like a sedan.
Car and Driver calls it a compact car and it's rated against the Honda Civic, VW Jetta, and Hyundai Elantra.
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I have never actually leased but my impression is that leasing is good for people who want to have a newer, safer, under-factory-warranty car forever. They are willing to make a monthly payment forever in exchange for never having to worry about out of pocket repairs and being able to get something new every few years. You typically have the option to buy out the lease at the end of the lease period if you really like the car -- a lot of car leases have a buyout value listed. But you also need to make sure you stay under the limit for mileage and don't have any unusual wear and tear -- if the car comes back in worse condition than they are expecting at the end of the lease, you could end up having to pay them a lump sum when turning in the car to make up for the extra mileage or small dents or whatever the dealer decides is wrong.
All our cars for the past 20 years or so were purchased outright as recent model used -- mostly from the dealer as a preowned certified. But my current car we bought at CarShop and I was really pleasantly surprised by the experience there. They have loads of newer models, most of which they get from auctions of vehicles that were turned in at the end of leases. They are well taken care of (because again, leasing means you have to turn the car back in in good condition), they give you the carfax to verify service and accident history, and they had a great selection of vehicles including all makes and sizes/styles. Pricing is clearly listed and is no haggle but didn't really seem to be any higher than the dealers were offering AFTER haggling and Carshop offers their own warranty on top of whatever is left of the manufacturer's warranty. They were also not at all hard-sell with any of the extended warranties or whatever that you usually go through in a dealership finance office -- they offered an extended warranty, gave me the price, I said no, and they said cool and off we went with the rest of the paperwork. WAY fewer games than I've experienced at manufacturer dealerships. And Carshop gives you like a week to return the car if you buy it and realize you hate it. If you're going to buy, I'd recommend at least taking a look at the places like that - Carshop, Carvana, Carmax, etc. I was very pleased with the whole experience and wouldn't hesitate to use them again.
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@Lisa said in Question about leasing vs buying a car:
You typically have the option to buy out the lease at the end of the lease period if you really like the car -- a lot of car leases have a buyout value listed
Interesting. I would probably be pretty cranky at having to pay a buyout after paying monthly for 3-6 years.
I hadn't heard of CarShop, or those other places, thanks for the tip!
Do they do after-car/maintenance?
Re haggling, when we were shopping for our Fit, after spending an hour or so at one dealership, I got fed up with the games and told the guy we would buy elsewhere. His jaw dropped. I think he was flabbergasted. Before walking out, I also made it a point to tell him we would be buying the exact model he had shown us, just somewhere else.
IOW, I hate those car dealer games too!
