Is car leasing ever a good idea?
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| Wed, 02-02-2005 - 8:13am |
Hi all! I have a question that might seem basic but I really want to know. I have a minivan which has been a nightmare. It is almost out of warranty -- a place I do not want to be since it has been one problem after another (an entire new transmission at 30,000 miles). Anyway, I have been trying to sell it myself with no luck. I would like to get back in a Toyota or Honda for the reliability. I need the third row seat option for the kids which leaves me at a Pilot or Highlander. If I trade my car I will be slightly upside down since they don't give you squat. I can deal with that just to walk away BUT I was wondering if it made any sense to lease? It would lower the payments considerably wqhile I paid off some other stuff and if I wanted the vehicle at the end of the lease period I could buy it.
I have always thought leasing was a bad idea because you ended up with nothing. But then again I ended up with nothing this time. (For background I had wanted to buy a Pilot two years ago but chickened out in the end because of the price and bought a used minivan.) The Pilots I looked at two years ago have held their value within a few thousand dollars and my minivan has dropped by more than half. Anyway, I could use some advice. There are no used HIghlanders with the third row seat now because the model just came out last year. There are some used Pilots but the financing incentives on new ones make them a better deal. Thanks, sorry to write so much, Jenny

You know just the other day I got my daily e-mail money tip from Jean Chatzky (an article I'm subscribed to) which dealt with this particular issue. So I'll paste it on so you can read what her thought were.
(http://www.jeanchatzky.com/freesite/moneytips/moneytips_167.asp)
To Lease or Buy?
(Published 5/14/04) A noble question, for sure. But the answer really depends on your situation. Buying is often a cheaper option for the long term. Still, if you like a new car every couple of years, you may be better off leasing. Here are four questions to help you make your decision:
1. How many years will I have this car? If the answer is three or less, you're better off leasing. At four you could go either way. More than four, buy.
2. How many miles do I drive annually? If it's more than 15,000, you ought to buy. Leases usually figure on mileage of 12,000 to 15,000 a year. Drive more than that and you'll pay an additional 10 to 15 cents per mile. Ouch!
3. Do I take good care of my car? Be honest. If you're the kind of person who never misses an oil change and avoids curbs at all costs, you'll be fine when it comes time to return your leased car. But if not, buy. Otherwise, you could find yourself looking at a hefty bill for "excessive wear and tear."
4. Do I use my car for business? If yes, you may want to lease.
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On that note, I'll mention that my husband and I lease both our vehicles. We don't usually keep cars more than 4 years and on top of that we're not too thrilled to pay out of pocket for repairs. I like knowing that my cars are covered for any repair/service that is needed while it is in my care. But I should mention that both car's leases will be up next april or so and we HAVE contemplated buying my car out after the lease is up. But the more we look at how much repair/service my car will need in it's later life - the more we're begining to incline towards NOT keeping it for the long haul because it looks like I'd be spending a lot of time at the service dept. (which I already do)and which I ALREADY loathe and would loathe EVEN MORE if I was actually paying for the service out of my own dime.
I know a lot of people don't condone leasing but I really think it depends on each individual's situation. JMHO
"I have always thought leasing was a bad idea because you ended up with nothing. But then again I ended up with nothing this time." <----In regards to this statement, here's another blurb from a Chazky article:
"The reality is, you can't build equity in a depreciating asset," Spinella says. "The only people who truly have an advantage are the ones who use it all up."
(http://www.womenswallstreet.com/topics/Topic.aspx?aid=305)
Good luck to you in researching which is the best option for you in the long run. And I'm sure the other ladies on this board will also have excellent advice/opinions.
:)
You also need to consider wear and tear. When you return the vehicle, it needs to be in mint condition or the dealership will charge you for it. Door dings, fender bumps, windshield chips and cracks, the condition of the interior, etc... If you are like me, the inside of the car is never clean, no matter what kind of rules are in place for the kids. Here is a website that explains a lot:
http://www.leaseguide.com/lease03.htm
Windy
Edited to delete some misinformation and add the website URL.
Edited 2/2/2005 10:57 am ET ET by windymulder
Edited 2/2/2005 11:00 am ET ET by windymulder
Hi.
mslvp@sbcglobal.net
Cruise and Group Specialist
HAVE A GREAT DAY! (OR EVENING!)