Lease vs. Buy/Rent vs. Own

[Panserbjorne]

I'm in the midst of some huge changes and one of the things I'm pondering right now is the whole buy vs. lease/rent vs. own thing. I'd love to hear thoughts. I come from a family where renting or leasing is considered to be outright throwing money away. In fact, one of the things that spurred this is me needing to move-I told my mother I was looking for a rental and she was totally aghast. "You're just throwing money down the drain! It's going towards nothing-you're just LOSING it!"

At the same time I don't have a reliable vehicle. I'm gathering information and have opened my eyes to the possibility of a lease. I've never done this before. Basically, what I'm hearing is that for less than the amount of a car payment I get a brand new, warrantied car that I will have no financial obligation towards (other than payments, insurance and gas which I have buying too.) I never have to deal with a car needing brakes, transmission, belts, gaskets, pumps etc. I show up for the maintenance (which they pay for) and go on my merry way. Given that finances are super tight this seems *smart.* This way, instead of borrowing money and buying a car with 80k miles on it-basically right when problems start manifesting-and then having to put more money I don't have into it I can be guaranteed PEACE OF MIND. Clearing there's benefits to both owning and renting, leasing and buying...but I'm curious to hear others thoughts!

[TiredX2]

From what I understand, leases only make *financial* sense for those people who are both relatively easy on cars AND are committed to buying new cars fairly often.  Also, the longer the lease, after 2ish years, the worse the deal.

The only people I know who really enjoy leasing have no kids and like having a new car every couple years.  It is definately not a financially motivated decision, it is gone with for convenience and ease.  By the time their new car love has worn off, it's time for a new one.

Financially, be sure you are comparing the same thing.  A lot of leases are initially attractive but actually have a large payment up front--- the monthly cost is artificially lowered.  Will you stay within the milage required?  Are you comfortable leasing *permanently*?  (If you are comfortable driving a car for 10+ years and the payments stop after 3-5 years it definately makes a financial difference).

I think leasing *a car* is just like any other service--- you are paying for not only the item, but for the convenience.  I have no problem paying more for eating out than eating in, having my house painted instead of painting it myself, etc... But I don't even consider those as *financially* beneficial choices, it's just that, sum total, I prefer one option over the other.  Don't get a lease because it's cheaper--- they rarely, if ever, actually work out that way.  Get a lease if all the benefits outweight all the costs.

[Panserbjorne]

Originally Posted by TiredX2 

From what I understand, leases only make *financial* sense for those people who are both relatively easy on cars AND are committed to buying new cars fairly often.  Also, the longer the lease, after 2ish years, the worse the deal.

The only people I know who really enjoy leasing have no kids and like having a new car every couple years.  It is definately not a financially motivated decision, it is gone with for convenience and ease.  By the time their new car love has worn off, it's time for a new one.

this is not me!  I don't care about having new...I care about having reliable.  If a ten year old car is going to run and be reliable I'm all over it.

Financially, be sure you are comparing the same thing.  A lot of leases are initially attractive but actually have a large payment up front--- the monthly cost is artificially lowered.  Will you stay within the milage required?  Are you comfortable leasing *permanently*?  (If you are comfortable driving a car for 10+ years and the payments stop after 3-5 years it definately makes a financial difference).

This is what I guess I'm not sure of.  I'm having a hard time comparing apples to apples.  They did a comparison of a pre-owned car to purchase vs a new car leased with the same amount down and showed me the payments.  The pre-owned has a great package and warranty, but there will come a time when it needs repair and maintenance-something that will be a financial hardship for me.  I will easily stay within the miles, but I do have three kids!  I'm not *easy* on cars.  I don't know!!!

I think leasing *a car* is just like any other service--- you are paying for not only the item, but for the convenience.  I have no problem paying more for eating out than eating in, having my house painted instead of painting it myself, etc... But I don't even consider those as *financially* beneficial choices, it's just that, sum total, I prefer one option over the other.  Don't get a lease because it's cheaper--- they rarely, if ever, actually work out that way.  Get a lease if all the benefits outweight all the costs.

Thanks for the feedback!!!!  Still weighing through this.  This is absolutely not my area of expertise and I'm struggling with it.

[ChristyMarie]

Originally Posted by Panserbjorne 

...

At the same time I don't have a reliable vehicle. I'm gathering information and have opened my eyes to the possibility of a lease. I've never done this before. Basically, what I'm hearing is that for less than the amount of a car payment I get a brand new, warrantied car that I will have no financial obligation towards (other than payments, insurance and gas which I have buying too.) I never have to deal with a car needing brakes, transmission, belts, gaskets, pumps etc. I show up for the maintenance (which they pay for) and go on my merry way. Given that finances are super tight this seems *smart.* This way, instead of borrowing money and buying a car with 80k miles on it-basically right when problems start manifesting-and then having to put more money I don't have into it I can be guaranteed PEACE OF MIND. Clearing there's benefits to both owning and renting, leasing and buying...but I'm curious to hear others thoughts!

Here's the thing, it depends on the maintenance program.  Each company is different.  Make sure you know what you are getting into.  Even with new cars, there can be maintenance costs.

Currently we lease my husband's car and bought mine.  Totally tax based decisions for us.  The leasing can be a great option - if you are ok with having a car payment forever.  And every time you lease there will (most likely) be a down payment of some sort.  And if you go over the miles that adds up FAST.  Very fast.  And charges for repairs upon turning the car in vary greatly depending on the leasing company.  Some go over the car with a white glove and charge you for everything.  I once had a company try to charge me about $1500 to fix the 4 wheel drive.  Yeah, the light on the switch was burned out.  It was a $60 fix - and that was what the dealer charged.  Leases can look great up front - just make sure you know what you are getting into on the back end.
 

[mommariffic]

We lease our cars, and I love it. Like you mentioned we don't have to worry about upkeep and the few times I've had an issue I just bring my car in (same day) it's fixed, and I leave. I also think cars are a waste of an investment anyway - they break, there's always a better one, etc. I have no problem leasing and getting a brand new car every year or two : ) 

We are also renters. I want to move to the middle of nowhere eventually so until than, we rent. Happily! I love to move 

[Panserbjorne]

just found this for more info:

http://www.mothering.com/community/forum/thread/1301222/owning-vs-renting-houses-cars-appliances-long-sorry

[nd_deadhead]

Renting a place to live makes perfect sense if you don't have a lot of money to put down on a house, you don't plan to stay in your present location for a long time, you don't have the time/money/skills to do home maintenance. Buying a house is not the guaranteed money-maker it might have been when your parents were your age! If property values go down, you can lose a lot of money on a house. Closing costs when buying a house add nothing to the value of the house, so unless you're staying in one place for several years, buying often doesn't make sense.

I agree with the others who said that leasing a car only makes sense for people who would be buying a brand new car every couple of years. I have one vehicle I've been driving for 13 years (and plan to keep driving it for at least 5 more); I had a van for 10 years (until it dropped one too many transmissions). If you buy a car, once it is paid off, every month you drive it without a car payment is a bonus.

We have bought new cars; we have bought used cars. In fact, we are probably going to buy a used vehicle today (if my mechanic gives it his seal of approval). Either way can be a good investment, if you choose well.

[Caneel]

Leasing a car can be a good option but you really need to do your homework.  There are lots of lease versus buy comparison things on the net, MSN had a good one a while back.

We leased a car and came out ahead in the end when I evaluated the lease cost versus the cost to finance for the same period/residual value.  A couple of things made it a good deal for us.  1 - it was a no money down lease, $0 due at signing.  2 - we took the car offered.  The monthly costs can really shoot up when you want extras on the car.  3 - At the time, I worked very close to home and we knew that there was no way we would get close to the max. milage.  4 - the lease included all maintenance.  I think we spent $19 over the 3 year lease and that was to get a small dent pulled out.

We own our current vehicle and had to spend $4,000 over the past couple of months for new tires (some wacky size) and another maintenance issue.  That $4,000 could have paid for a years worth of lease payments. 

Like someone else mentioned, with leasing, you will always have a car payment but if you can budget $XXX per month for transportation costs and be comfortable with that. leasing can be a good option when compared to a paid-off car that might need constant maintenance.  Vehicles are so frustrating.  Some seem to run forever with just a little TLC and others nickel and dime you.

[redvlagrl]

I would never lease a car after seeing what happened to a friend. First, she got a job in another city and couldn't drive there because she would go over her milage so she relied on me to drive her every day (she split gas with me). Then she was in a 3 or 4year lease and her husband got a job overseas. Basically she was screwed. She tried leasebusters and eventually relied on the kindness (!) of the dealership to let her get out of it. It was a mess. She lost the $5000 they put down on the car, plus had to pay a hefty fee.

That said, if you want to try leasing you could do leasebusters which is taking someone else's lease over. You wouldn't have as long a term and you would be taking advantage of someone else misfortune (and helping them out of a hole).

[JudiAU]

I think it really depends. I leased a car and then bought it at the end of the lease. On the one hand, it cost more than way. On the other hand, I couldn't have afforded a new car at that point and I'd serious serious car problems in the past year.

I may or may not buy a new car again (rather than used) but I probably wouldn't lease a car I couldn't afford. At the time however, it got me a safe car with no maintence and I needed that.

[diana_of_the_dunes]

I'm a huge fan of Dave Ramsey, so I looked up his car advice on his website.  Take a look: http://www.daveramsey.com/articles/full-article-list/category/100369/  If you're not familiar with DR, he offers good, practical advice on how to become and stay debt-free.  We don't subscribe to his plan exactly, but it's gotten us out of debt and on our way to saving.

Good luck in your decision.

[Panserbjorne]

thank you!  That was a great link!

[lookatreestar]

yeah i would not lease. i'd find a good used car. i am lucky we have a great mechanic (finally after trying like 10!!) and my dh is kind of a car guy. we can easily get something good for under 6k.