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Thread: Is this true??

  1. #1
    Senior Community Member mommy2env's Avatar
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    Is this true??

    Okay, me and dh are looking to buy a car. We cant afford anything over 20k, and we have in mind a used Sienna. We went down to a dealer, and the guy helping us out suggested that we just lease a new one. I always thought that leasing didnt really make sence in the long run, but according to him it does.

    He said that by leasing a car for a couple of years, and opting to buy at the end of the lease, we would end up having to finance a lower amount (because the car would depreciate). In financing a lower amount we would save on the interest. Please help me figure this out, we would be first time buyers and I am having nightmares, I dont want to be taken a fool with high interest rates.

    My question to you is:

    What is better lease or buy?

    Do they apply all you have paid during the lease to your purchase price?

    How much can a car depreciate in a couple of years?

    Thanks for any suggestions.

    DD1~14yrs old~Seatbelt

    DD2~8 yrs old ~Cow Frontier 85 and Pink Monterey
    DS~3 yrs old Britax Roundabout and Coccoro in Licorice/Carrot Cake
    DD3~ 10 weeks in a Chicco Keyfit

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  3. #2
    CPS Fanatic mominabigtruck's Avatar
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    Re: Is this true??

    The difference between leasing and buying all depends on you. How much do you drive your car? You only get a set amount of miles and I would max out my miles in a couple of months so it wouldn't work for me but if you live in town and don't drive more then 1000 miles a month you're ok. I've always seen leasing as something people do when they want a new car every couple of years and don't want the hassle of upkeeping an older vehicle or having to sell or trade every couple years so honestly I have no idea how it works if you buy it at the end. If you can afford a used one and you don't HAVE to have a new one then I would buy used because you're still going to end up with a payment at the end of your lease and at least now you know what that payment is. If you wait a couple of years interest rates could have gone up or you could end up with a higher pay off then what you thought.
    If it seems like I'm not making sense, it's probably just my phone

  4. #3
    Car-Seat.Org Zealot skaterbabs's Avatar
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    Re: Is this true??

    Well, I would suggest notlooking at a new ca. Look for one that is about 3 years old. New enugh to have a good warrenty and very few mechanical issues, but old enough that any "new car bugs" will have worked out and the worst of the depreciation will have already occured.
    Rebekah Branch, CPST from May 2005 until June 2011
    Mom to CJ (7/96, seatbelt), Gregory (4/98, seatbelt), & Joyjoy (10/03, misc. booster seats)
    "That which you create in beauty and goodness and truth lives on."
    - Denis Waitley

  5. #4
    Admin - CPS Technician Emeritus Jeanum's Avatar
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    Re: Is this true??

    Leasing a vehicle can end up being more expensive in the long run based on my understanding of vehicle leasing in general. The lease payments are intended to cover the amount the vehicle depreciates over the duration of the lease. Then if you purchase the vehicle at lease end, usually for a price that must be determined/negotiated when you start leasing the vehicle, you would be essentially buying a used vehicle with a purchase price roughly equal to the estimated remaining value of the vehicle. Used vehicle loans tend to be at a higher interest rate than financing a brand new one. In the case of a vehicle that tends to depreciate more slowly, like a Sienna which tends to hold its value as a used model, for example, you could potentially end up financing a fairly large purchase price at a higher interest rate at the end of the lease. Skipping the lease altogether, and buying a new or used model outright may be more cost effective.

    It really sounds like the salesman is trying to gloss over some of the details. I know Toyota dealers in my area have been running lease deals on the Sienna off and on for roughly the past two years, and it's possible the dealerships are trying to meet some lease targets this month.

    Happy car shopping.
    Regards,
    Jean

    DD1 Age 16, 66" Driver's Ed
    DD2 Age 12, 64" 5 steps

    Click here if you wish to view the full size version of my avatar

  6. #5
    CPS Technician mommycat's Avatar
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    Re: Is this true??

    I am just about to lease a Honda Civic. A lot of people I know have said leasing does make sense in some cases. It depends on the car and the deal, etc. It is ok if you drive little and if the car holds its value fairly well. I have a hard time retaining what they all say, but it makes sense when they say it, so I'm sorry if I sound confusing. It makes sense if you want a new vehicle all the time and want to know exactly what your payments will be each month, with no surprises on maintenance as you will have a warranty to cover it.

    With the Honda for example, the residual value after the lease as they have determined it now is lower than a typical resale for a Honda that old around here, anyway. So assuming I take care of the car and don't go over my miles, even if I don't want to keep the car I could turn around and sell it for about $3000 more than the residual, and then pay out my lease and pocket the $3000. If you hate the car and it's a lemon and you don't want to/can't sell it, you have a guaranteed buyer (the dealer) who will take it off your hands.

    I also chose the lease over the straight buy or buying used because I will be going on mat leave and losing a lot of my income for the next year. I want to know EXACTLY what I will need to pay each month, and the payments are lower than buying. I know when I go back to work I will be able to afford to save up some money so that I can pay cash for at least some of the residual and not have to finance it. Another bonus of leasing is that you are not financing the tax - it is applied monthly and then at the end on just the residual. When you buy, you pay interest on the tax as well.

    I called for rates on used car loans to compare to the dealer's rates and the interest was more than twice that offered for either lease or buy. That said, when my husband bought a brand new Sunfire a few years ago, he paid less going through the bank and getting a better purchase price that he would have getting the 0% financing on their (rather higher) purchase price. Some companies negotiate on the price a lot more than others.

    Clear as mud, right? :lol:

  7. #6
    Senior Community Member mommy2env's Avatar
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    Re: Is this true??

    Thank you all, I am still confused. I dont know wether to buy a used van or to lease a new one. The new and used ones seem pretty similar to me. Does anyone know a site that can explain a little more on leased vehicles. Thanks

    DD1~14yrs old~Seatbelt

    DD2~8 yrs old ~Cow Frontier 85 and Pink Monterey
    DS~3 yrs old Britax Roundabout and Coccoro in Licorice/Carrot Cake
    DD3~ 10 weeks in a Chicco Keyfit

  8. #7
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    Re: Is this true??

    Here's a link to an Edmunds.com article on the subject. Edmunds is a very reliable source on most things related to cars, so I would assume that this is reasonably good. (I've never leased a car, so I don't know anything about it.) They cover new cars vs. leased cars vs. used cars, and has a good cost comparison. According to their calculations, leasing is far more expensive over five years than buying a used car.

    http://www.edmunds.com/advice/buying...9/article.html
    DD#1 (7 y, 5 mo, 54 in, 68 lbs ) Clek Olli
    DD#2 (4 y, 2 months, 43 in, 42 lbs) Britax Marathon

  9. #8
    CPS Technician Namegirl's Avatar
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    Re: Is this true??

    Quote Originally Posted by mommy2env View Post
    He said that by leasing a car for a couple of years, and opting to buy at the end of the lease, we would end up having to finance a lower amount (because the car would depreciate).
    Or you could just finance a lower amount from the get-go by buying a used car right now and skipping the years of lease payments! I wouldn't take car-buying advice from your salesman. Most likely, he has a quota to meet, or they've got too many new vans that aren't moving, etc.
    Namegirl
    DD in Turbo
    DS in Turbo, Pioneer
    DS in Diono
    DD in Britax B-Safe

  10. #9
    CPS Technician TXDani's Avatar
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    Re: Is this true??

    An easy way to look at it would be to do this...find out what you need out of pocket, what the lease payments are, and what the purchase price at the end of the lease is. Add all these figures together for example $1500 in fee's/charges up front, $350 a month over 48 months, and then the car costs $25,000 to buy at the end of the lease. You approximate cost would be $43,300 *if* you didn't re-finance the $25,000 you would need to buy the van at the end of the lease. Do the same with what it would cost to purchase the van now take your down payment and the amount you finance. 99% of the time leasing is a BAD idea if you plan on purchasing the car at the end of the lease. If you plan on turning it in at the end of the lease then it *could* be a good option for you...but that is something you need to research and see if it is a good option for you and your situation. If you want to own the vehicle in the end the only time leasing should be considered is if you plan on re-financing the vehicle within the first year into a loan as opposed to a lease, but then you will have to pay a lease termination fee.

  11. #10
    CPSDarren - Admin SafeDad's Avatar
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    Re: Is this true??

    The more confusion there is, the more likely that dealers will make a big profit even from smart buyers. Leasing isn't good or bad in itself, but it is one more thing to confuse people over and above the cost of the vehicle and trade-in (if any). Leasing is more difficult than financing to figure out how much you end up paying in interest and you also have to keep track of residual values and buyout clauses.

    If you're a stickler for details, you can get as good a deal on leasing as you can on financing. I suspect a lot more people end up paying a lot more with a lease just because they don't know how to negotiate a good lease. If you do lease, I'm sure there are plenty of good guides you can find online to make sure you don't pay too much.

  12. #11
    Senior Community Member Amaris's Avatar
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    Re: Is this true??

    Having never leased a car I'm not personally familiar with it, but my MIL leased a new dodge caravan in 1998 or 99. She opted to buy when the lease was up. She said it was the worst mistake she had ever made. She will never lease a car again, and said she really regretted buying at the end. She ended up paying more when she bought her leased van than she would have for the exact same thing used. She doesn't have the van anymore, she traded it in for a toyota rav-4 in 03 and said that buying the rav-4 was a much smarter decision than leasing the van. Personally, after hearing all she and a few others that I know had to say about leasing I will never lease a car.



  13. #12
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    Re: Is this true??

    I worked for a large bank that financed leases for dealerships but we also handled traditional auto loans. I can tell you that when we talked with customers we were told to push as many people into a lease as possible as it is more profitable for the company, the dealer got a bigger kickback, and would send us more loan customers. That being said, if you are looking to always have a newer vehicle and don't expect to go over mileage restrictions you may be okay. Also, a previous poster mentioned that with a traditional loan you are also financing the vehicle sales tax and paying interest on that. I know that is comon practice in some states but others will only finance the sale price (or current blue book price of a used vehicle) and will not finance the sales tax, title fees, etc. I would suggest that if you are planning to keep the vehicle for more than a few years you would be better off buying a vehicle that is a few years old. The previous owner will have already taken the hit for a lot of the depreciation and you will be left financing what the vehicle is actually worth. Definitely check out Edmunds.com and NADA.com. Dealerships in deifferent areas use different blue books to determine their used car values but have an idea of what you're looking for and what the blue book value is so that you are not overcharged and don't be afraid to negotiate!

    Good luck!

  14. #13
    Senior Community Member sirrahn's Avatar
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    Re: Is this true??

    I don't get the comments about financing the sales tax We've always put at *least* enough cash down to cover TT&L when we've bought our cars. Of course you don't want to be paying interest on that stuff. Are there places where you can't do that??

    Unless you're someone who trades every few years no matter what or can't get a loan that wouldn't quickly be upside down, I can't personally imagine how leasing could ever really be a better deal.

  15. #14
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    Re: Is this true??

    Where I am at the TT&L is paid at the courthouse once you receive the title from the dealership. I know that in other states those fees are paid to the dealership and are often financed into the vehicle loan. So, here, it's common not to put money down unless you were trying to get youre payment lower. It was a little confusing to the military customers we had that came from other states.

  16. #15
    CPS Technician TXDani's Avatar
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    Re: Is this true??

    I am not sure about TT&L either. As here in Oregon we don't pay sales tax so we don't have to worry about that and licensing/registration is around $60 for 4 years and you normally just pay that with cash the day you purchase the vehicle.

  17. #16
    CPS Technician mommycat's Avatar
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    Re: Is this true??

    This looks like a good read:
    http://www.leaseguide.com/lease03.htm

    And I was talking about financing taxes etc - I live in Canada, so I don't know how everything compares here vs States.
    Cat in Canada
    DS1 7 yo - 47 lbs (47"/??"t/??"top of head) - boostered in SKMonterey/2TBs/2CowmooPWSG/2HarmonyNBBs
    DS2 4 yo - 34.5 lbs (40"/15"t/??"top of head) - FF in CowmooMA/TrueFit/2Radians/2Nautiluses/HarmonyV7
    Also in possession of: Graco SafeSeat1 and MyRide (loaned out) + 1 demo seat: SnugRide.

  18. #17
    Senior Community Member tjham's Avatar
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  19. #18
    CPS Technician emandbri's Avatar
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    Re: Is this true??

    I thought about doing just what you are saying because I wanted something very specific and my thinking was I would be better off having it build then to search for it. I ended up not doing it because I really wanted green and they stopped making them so I bought a 2004 instead and had it shipped with carmax from california. The buyout at the end seemed very reasonable to me and the dealer I talked to said if you do the buyout you don't have to pay for the extra miles or the excess wear and tear that they always find on leased vehicles, this might vary though so double check on it!

    I would drive them and see what you think, people on siennaclub.org say the 2007 sienna is heavier and nosier so you may decide you would be happier with an older one anyway.

    It has been a month and a half and I TOTALLY LOVE MY SIENNA!
    Good Luck!

    Emily tech and mom to Jacob 16, Daniel 13, Benjamin 9, Elizabeth 6. Child care provider to 4 other kiddos.

  20. #19
    CPST Instructor
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    Re: Is this true??

    I won't add anymore to what everyone has already said. You have gotten some great info. My vehicle is a lease. I can say one thing is make sure get add'l mileage if you know you drive more then standard 12k miles a year. We went with the 15k miles a year and that is been perfect for us. We won't have to pay add'l mileage fee at the end of our lease.

    I can say we won't be buying me truck at the end of my lease. I want the new GMC Acadia (new crossover).
    Jenny
    Senior CPS Tech-Instructor & Mommy of 2 girls
    K1 12 yrs old- 61" & 100lbs in vehicle seat belt
    K2 10 yrs old- 59" & 92lbs in vehicle seat belt

  21. #20
    CPS Technician Suzibeck's Avatar
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    Re: Is this true??

    I haven't personally researched this, but I have heard this over and over again. Personally, I've never leased and I don't like to take out a loan. Unless you can get a 0% loan, you pay way more than the vehicle is worth in the long run. Plus it usually depreciates faster than you pay it off. We prefer to pay cash here, which leaves us with older cars and/or cars with a lot of mileage, but that's OK with us.
    Mom to three big girls in adult seat belts (20, 17, and 14) and one booster rider (8) in a Kia Sedona and a VW Tiguan.

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