Wednesday, May 16, 2012

To lease or not to lease?

I found an incredible lease deal on a car the other day and discussed it with Mike. We got the terms, the offer details, and found several cars that match that lease.

My current car is paid off, is 4 years old, has 66,000 miles as of yesterday on it, and is in ok-good condition. The new model just came out of my car.

Mike had some math that got me thinking:

Trade my car in - ~$13k
Cash out of pocket - $3k
Lease - $3,600 over 2 years (keep the money aside and hold onto it for each monthly payment)
= $6,400 in my pocket for my car 

The lease terms are 24 months at 22,000 miles. This year with Mike so close to work I have only driven about 8-10,000 miles, so the math checks out. 

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Then my dad came back with this:

- Leases are dangerous because you get into a spiral of leasing
- Leases make your insurance go up
- Leases are dangerous especially if you get into an accident, then you are responsible for your lease
- You will most likely damage the car in some way and have to pay tons of money to have that repaired
- Your car is fine and the car you are moving into has worse gas mileage
- What will you do after the end of the lease? What if you are driving more and there are no cars you can lease within that mileage range? Are you ready to pipe up the money for a new a car?
- You do not drive less than 11,000 miles per year.
- What if you want to go on a weekend trip - with so few miles you can no longer do that.
- What if you get a new job and are driving a lot more?
- Insurance will go up because of the type of vehicle you are moving into
- Insurance companies don't like to insure leases

So... um... to lease or not to lease?

4 comments:

Buddy Bear said...

I agree with Dad! I'd never lease a car, not in a million years.

friendly reader said...

Listen to your dad.

Leases suck. You are renting your car at full price. I do find it funny your last post was about increasing expenses.

If we get a post that you listened to your man, can we at least get a pic of the new wheels. You don't need to be in the pic.


Ps. If you traded your car in. And just drove mike's. You would be 13k in the green.

Don't co-sign.

fan of casey said...

Mike: The real fundamental questions are do you really need a new car and can you really afford it? Answer that honestly first before considering the buy vs. lease option.

The advantages and disadvantages are spelled out nicely here: www.leaseguide.com/lease03.htm

If you end up moving in with your BF -- he has 2 vehicles, can't you use one of them? You could then sell your vehicle and pocket the whole 13k and use that money for other things.

Ty said...

I agree, avoid the lease.

Leases used to be popular because at the end of the lease you had the option to purchase the car for a ridiculous low amount. That isn't so anymore. Speak with any banker and they will tell you not to do it.