Lease Vs Buy

[natsueo]

If the lease versus buy discussion on posted already, pls refer me the read. Does anyone have a recommended site or dicussion area for me to educate myself on whether I should lease or purchase my next Lexus.

I currently own my 05 RX 330, but thinking about switching to another vehicle like the RX 400H. (My parents are interested and want to buy my Rx 330; thus, my thinking about another Lexus.) I usually switch cars every 4 years and drive less then 15K a year. I've always purchased vehicles, but keep hearing from others that it may be better - financially - to lease vehicles instead.

As always, thank in advance for your prompt replies. This is a great forum.

[SW03ES]

Im going to move this to the General Discussions forum, you'll get more hits there.

Check out www.leasecompare.com

It sounds to me like it may be worth it for you to lease, espaecially if you can deduct vehicle expenses for business.

One thing to keep in mind, you can't lease hybrids from non captive lenders right now (at least I dont know of any that you can), that means you'd have to lease it from Lexus. The downside is in my experience captive Lexus leases aren't teriffic when compared to non captive lenders.

So far banks have been afraid of uncertain residuals for hybrids and have been leery to lease them.

[Rx330driver]

Personally i dont like leases. I leased my rx300 and after four years, i was over mileaged and i had paid hundreds every month to end up with nothing. So therefore i found it a giant rip off. I also change my cars every 4 years, but i started buying my cars because i can just trade it in in the future. Pros to leasing from lexus are that they dont end up charging you with over mileage if you buy another lexus afterwords...but you probably dont care cause you drive so little.

[nc211]

Aside from the number crunching and deduction benefits "although when you lease in a business name, you are not supposed to be allowed to deduct depreciation", the main reason why I won't ever lease again is due to parking lot battle scars. When you lease, you're basically just renting the car. And if it gets damaged, you have to fix it before turning it back in. Perfect example is my previous 01 Maxima I leased for 3 years. A hurricane sent a medium size tree branch onto the roof of the car. It hit right where the roof and the rear pillar meet, which made it impossible to fix via a dent wizard. It was impossible to get behind the dent, and it damaged the actual weld behind the sheet metal. I was looking at a $1,500 fix. Luckily it didn't brake the paint, so the inspector KID missed it. But if someone scraps your bumper in a parking lot and you don't catch them, then it's on you. Plus, 15k a year mileage is actually a premium in todays terms. Most leases deals are at 12k miles a year. Also, read the fine print on how much money is required up front at lease signing. I've noticed it's been going up lately. Now if you really like the car, and plan on buying it after the lease, then the residual can come into play, but most auto makers these days have already hedged that number which makes it difficult if not impossible to negotiate when the time comes. I learned that lesson too with the Maxima. I negotiated a strong residual value at the initial lease signing, but who knew they were going to throw in a better engine, new headlights and body improvements the following year in 2002? So the depreciation just killed the value of the car, and I couldn't give the thing away, and they wouldn't negotiate at all "except give me a $500 credit towards another Nissan lease." I thought about that, but when the DMX Rapper, Mr. T wannabe looking salesman at Southern States Nissan here in Raleigh screamed out across the parking lot, and I quote word for word here, "hey whitey, you gonna come off that beater and gets hooked up on a bling model?"..... !Removed! boy here showed him my finger, handed the keys to the manager and went to Johnson Lexus and bought my current LS400, for cheaper.

Long story short, the lower monthly payments of a lease could come out in a wash if you have penalties for other's mistakes down the road.

Also, test drive the RX400h first. I'm currently driving one as a loaner and I find it loud and buzzy compared to the normal ones. Plus, mileage doesn't seem to be that much better if you ask me.

[SW03ES]

Personally i dont like leases. I leased my rx300 and after four years, i was over mileaged and i had paid hundreds every month to end up with nothing. So therefore i found it a giant rip off. I also change my cars every 4 years, but i started buying my cars because i can just trade it in in the future. Pros to leasing from lexus are that they dont end up charging you with over mileage if you buy another lexus afterwords...but you probably dont care cause you drive so little.

Well then leasing isn't for you then is it? Doesn't make it a bad idea for others.

Aside from the number crunching and deduction benefits "although when you lease in a business name, you are not supposed to be allowed to deduct depreciation"

Well if you lease you can't deduct depreciation at all because it isn't your property, you can however deduct a portion of the lease payments (up to 100%) if you itemize whether its in the business' name or not.

Now if you really like the car, and plan on buying it after the lease, then the residual can come into play, but most auto makers these days have already hedged that number which makes it difficult if not impossible to negotiate when the time comes.

Mistake #1, NEVER buy a car off of a lease unless you can resell it for profit. If you're going to lease then buy it, just buy it from the start.

As for the damage, I don't know why someone would pay all the money you pay to drive a luxury car, and NOT get damage fixed immediately anyways. If the damage is smaller than a credit card (dings etc) they won't care, and if its larger you should get it fixed anyways.

I would no sooner drive around in a dirty beat up car than I would wear a tattered and torn suit.

And anyways, if you have damage and don't repair it on a car you own, you still pay for it in the form of diminished value.

[nc211]

Mistake #1, NEVER buy a car off of a lease unless you can resell it for profit. If you're going to lease then buy it, just buy it from the start.

As for the damage, I don't know why someone would pay all the money you pay to drive a luxury car, and NOT get damage fixed immediately anyways. If the damage is smaller than a credit card (dings etc) they won't care, and if its larger you should get it fixed anyways.

I would no sooner drive around in a dirty beat up car than I would wear a tattered and torn suit.

And anyways, if you have damage and don't repair it on a car you own, you still pay for it in the form of diminished value.

It just depends on what the market is like at the end of the lease term, car's condition and owner's satisfaction. If you lease a nice car when interest rates were in the 10% range to have a more manageable personal cash flow, and you have a SET residual value of about half the sticker price at the end of the lease term, then when the time comes and IF interest rates have floored like they were 18 months ago....you like the car, you know the car's history, you know it's dependablility.....Then by all means go to the bank and get a 36 month loan and keep on going for about the same payment as the lease payment. I don't agree with your mistake #1 entirely.... it just depends on the market at the time of lease termination and the residual value. Would I ever buy an off-lease car that wasn't mine? No way.

"As for the damage, I don't know why someone would pay all the money you pay to drive a luxury car, and NOT get damage fixed immediately anyways"

Got kids?? Your car isn't everything to you? You're saving up for a big purchase at the time and would rather wait to fix the blemish? Don't mind a few blemishes because you know once you fix it, Murphy's Law will put it right back to previous? I agree that you'll pay for it in deminished value, but that value is also diluted by other factors that might not make that $ 1,500 repair worth it, especially if it means something else in your life needs the money that is more important. All I'm saying is with the lease option, you could be in one of those situations when it's time to turn the car back in when life is calling for those funds to go somewhere else.

Steve, you and me are like Ying and Yang when this thread appears. I swear it, we agree on pretty much everything but this issue..... Of course, I'm right and you're wrong! :P That's my story and I'm stickin' to it!

Natsueo: Do yourself a favor, go find a rarely used one so you can avoid the depreciation, and finance the hell out of it and enjoy.... Hahahaha..

[SW03ES]

it just depends on the market at the time of lease termination and the residual value. Would I ever buy an off-lease car that wasn't mine? No way

Thats a solid point...

Got kids?? Your car isn't everything to you? You're saving up for a big purchase at the time and would rather wait to fix the blemish? Don't mind a few blemishes because you know once you fix it, Murphy's Law will put it right back to previous? I agree that you'll pay for it in deminished value, but that value is also diluted by other factors that might not make that $ 1,500 repair worth it, especially if it means something else in your life needs the money that is more important.

Then why are you driving $40,000+ cars? You should not be driving a car like this unless you are in a posiiton in life that you don't need to save up for big purchases anymore. Thats why they call them luxury cars, and luxuries should be purchased AFTER neccesities. If your car isn't important to you, again why are you spending so much money on it? And anyways, with a lease, as long as its done before termination its fine. It doesn't have to be fixed immediately

And again, if its a "few blemishes" like door dings, scratches, stuff like that that are smaller than a credit card they're normal wear and tear and you don't have to fix them for the lease anyways.

[natsueo]

Everyone, thanks for all the great information. I'll take a look at the suggested web site for lease versus buy. :)