John Francis Donaghy said:

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62strat said:

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We lease then buy. I think it's quite smart to be honest.

Starting with a lease means:
Get a nice, well equipped car with a very low down payment and low monthly payment.

After 3 years, you get a used vehicle in which you already know the price, and you know the maintenance on it and how well it was cared for because, well, it was yours. The last one we did, I literally purchased the vehicle over the phone through USAA. Never had to go to the dealer. Price is fixed so they just send a check to lease company.

So now you buy it as a 3 year old vehicle, so again you don't need a large down payment and monthly is still low because you're dealing with a car in a much lower price range than when you got it new.

Buy it with 36 month or less. Pay it off, drive for 2 more years, now it's 8 years old and still worth something, maybe $10k.


When you buy the lease, you don't have to worry about over mileage or condition. The dealer can't charge you for anything if you buy it. If you have really low miles and great condition, you can actually sometimes buy lease then sell right away and make money, since residual price is fixed and is based on average condition.


Repeat cycle and pocket some of trade in for future down payment for lease buyout.
We've done it twice. Works for us. We've gotten really low money factors. Equivalent to 2% or less.

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If that's what you're going for why not just finance the initial purchase over 72 months?

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if you Do that with little down, you will be upside down in the car.
Lease then buy avoids that.
Also, if you truly don't like the vehicle, at the 3 year mark you have a guaranteed sale st the right price, so then you can move onto something else.

1939 said:

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Those of you claiming leasing is absolutely stupid at all times don't know what your talking about.

Leasing makes sense for people in certain situations, especially those that don't put a whole lot of miles and their cars and like to have a newer vehicle and not have high monthly payments and don't want to worry about maintenance costs.

It's a much better option than people who finance a vehicle for five years, pay it off and are left with a car with not much value, then trade it and take the full depreciation on another expensive vehicle.

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Buy preowned from last two years and drive it and maintain for 20 years. Everything else is a waste

I agree that's the way to lose the least money, but most people won't keep a car that long

THE 7 BABY STEPS:

1: Save $1,000 cash in a beginner emergency fund.

2: Use the debt snowball to pay off all your debt except for the house.

3: Save a fully-funded emergency fund of 3 to 6 months of expenses.

4: Invest 15% of your household income into retirement.

5: Start saving for kids' college.

6: Pay off your home early.

7: Build wealth and give generously!

hypeiv said:

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500,000ags said:

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I have leased 2 cars in the past. Part of it was the pendulum swinging away from driving a beater that killed my wallet with maintenance. People can mock leasing, but there is no winning with vehicles, there is just varying degrees of losing. The best option is to get a slightly used car and keep it until it dies. I know people who buy new, pay the car off, and then get the itch for a new car soon thereafter. That's as much a financial mistake as leasing IMO.

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Yes you can create scenarios that are dumber than leasing, but that doesn't make leasing smart... just less dumb

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This right here. Anytime people try to justify leasing it's with the argument of "it makes sense if you want a new car every 2-3 years." Hate to break it to you but that's a stupid decision financially. You may have the means to make that happen and that's fine but that doesn't mean it's a good financial decision.

IMO leasing is right for some people. It depends on their use-case/lifestyle. If someone wants/needs a new car every few years, then leasing is probably the best choice.

Some examples of people that might prefer a lease:

• Realtors (want their car to always look nice, and maybe flashy/new)
• Salespeople (may be driving customers, may way to project an image of success)
• people who have critical dependence on transportation (don't want to deal with unexpected car issues)
• People who simply like to have the newest/flashiest vehicle
• People who don't want to have to deal with any car repair decisions
• etc

I can certainly understand people like I described above who might prefer to lease.

SJEAg said:

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My elderly mother leases - it works for her. She likes new cars and she drives like 2k mile a year (literally). Think she is more than happy to pay 330 a month for the rest of her life to not deal with the drama of buying/maintaining/selling a car.

Plus every other 3yr lease she has, I'll buy her car for the residual when she's done. Last car, I paid 18k for a 3 yr old car with 6k miles on it. I kept it for 6 years, put a 125k on it or so, and sold it for 8k when it was time to buy out her lease again. A like-new car with a verified history costing me 10k for 6 years of ownership? Works for me. Pretty sure the dealership hates me...they must make a killing on the cars she does turn in.

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And here is an incredible example that there is no one size fits all - this is an incredible deal for both parties, mom and son/daughter.

The opposite is also true in that a lot of people don't want to believe a lot of people who have something nicer than they do can afford it -- it's easier to just assume they must be in debt or they must have rich parents.

Are there a ton of people with nicer cars and houses than they can afford? Sure.

There's also a ton of people who make more money than you think.

SoupNazi2001 said:

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Can you afford it is relative. Could I afford a $75K car. Absolutely, I could pay cash for it. Do I want to spend $45K more than I need to, just to have a "luxury" vehicle to impress people. Hell no. Many things I would rather do with that money.

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Sure. But that's also assuming anyone who has a luxury vehicle buys it just to impress other people.

People like nice things.

Don't get me wrong -- there's a lot of people out there spending outside their means, but for the most part they will eventually have to pay the piper.

But there's a lot of people out there that have a lot of money and driving a luxury car is something they can afford without it taking away from more important things.

SoupNazi2001 said:

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Can you afford it is relative. Could I afford a $75K car. Absolutely, I could pay cash for it. Do I want to spend $45K more than I need to, just to have a "luxury" vehicle to impress people. Hell no. Many things I would rather do with that money.

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NO LEASE FOR YOU!

I could give a rat's ass about impressing people, but once you have perks it's hard to go without. Having a loaded fx4 company truck spoils you a bit. So when it came time to have to buy my own, well, I wanted a loaded truck. But I can't stomach a $60k price tag, so I went 3 years used to get under $30k.

I don't think I'll ever buy a new car.

I'm saying there is no financial winning with the typical consumer and vehicles, unless that consumer doesn't mind driving a few more years with a 10+ year old car that already has 150k+ miles.

I'll line up two scenarios over 15 years.

1. A person completes five 3-year leases of a $44,000 car. With my last lease for a $44,000 car, I paid $3,000 up-front and $450 per month. That's $19,200 over the life of one lease. If I did that five times in a row over 15 years, that's $96,000 in total.

2. A person buys one of those same $44,000 cars with 0% financing paid over five years. They then keep that car 2.5 years after they finish paying it off for a grand total of 7.5 years. If they did this two times in a row over 15 years, that's $88,000. I'll also assume each car has a residual value of $5,000. So, the consumer in scenario 2 is out $78,000, net.

I consider scenario 2 to be the above average consumer. They have good rates, buy instead of lease, and are also willing to drive their cars for a couple of years after paying them off. However, for an additional $18,000 over 15 years, the consumer in scenario 1 got a new car every three years and had zero expense with maintenance.

My point is unless you bought that $44,000k car two years old for $35,000, and drive it for the 15 years, you are not hitting a home run by buying over leasing.

free_mhayden said:

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Most of the people who push the "lol it's so dumb to lease" are still referencing articles or things they researched 15 years ago.

The numbers have changed considerably and the market has become more efficient. There's good deals and bad deals with leasing just like buying.

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This is spot on. I don't lease, but it isn't anywhere near as bad of a deal as people think if they do their homework and understand the deal.

500,000ags said:

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I'm saying there is no financial winning with the typical consumer and vehicles, unless that consumer doesn't mind driving a few more years with a 10+ year old car that already has 150k+ miles.

I'll line up two scenarios over 15 years.

1. A person completes five 3-year leases of a $44,000 car. With my last lease for a $44,000 car, I paid $3,000 up-front and $450 per month. That's $19,200 over the life of one lease. If I did that five times in a row over 15 years, that's $96,000 in total.

2. A person buys one of those same $44,000 cars with 0% financing paid over five years. They then keep that car 2.5 years after they finish paying it off for a grand total of 7.5 years. If they did this two times in a row over 15 years, that's $88,000. I'll also assume each car has a residual value of $5,000. So, the consumer in scenario 2 is out $78,000, net.

I consider scenario 2 to be the above average consumer. They have good rates, buy instead of lease, and are also willing to drive their cars for a couple of years after paying them off. However, for an additional $18,000 over 15 years, the consumer in scenario 1 got a new car every three years and had zero expense with maintenance.

My point is unless you bought that $44,000k car two years old for $35,000, and drive it for the 15 years, you are not hitting a home run by buying over leasing.

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A $44,000 car is only worth $5k after 7.5 years? Have you seen the used car market over the last decade? For all the folks who claim my perception is out-of-date; my wife and I just replaced her 8 year old Mazda with a 2019 Acura RDX. I listened to their lease spiel and did the math. It is not even close. Financially speaking the best way to own a car is to buy a new, good-resale value brand (Toyota/Subaru/Honda/Ford Truck/etc,) be responsible and take good care of it, drive it 6-8 years, sell it yourself (don't trade it in,) and repeat.
I have bought, owned, and sold, nine new vehicles (Tacomas in '87, '92, '98, Dakota in '90 (a lemon,) Tundra in '05, Spectra in '06, Montero in '93, Sienna in '01, Mazda in '11) I currently own another Taco, a Subaru, a Ford, and the Acura. That is thirteen cases where I compared leasing with buying.
Most dealerships make their profit on selling used cars (your trade-ins and former leases) and more new leases. If you need to constantly have a new car for whatever reason that is fine, you are going to pay for it though. You can make buying way more financially advantageous relative to any lease with a little common sense. IMO of course

I agree 100% with what you are saying. But you are talking about a financially optimal solution for you personally. There are a vast majority of people not buying a Toyota (etc.), or not driving their vehicle like a leased car for 6-8 years, or not pursuing a private sale on the back end.

If you decide to lease Credit Union of Texas has the best deals--residuals, money factor, no early return penalties. Leases are so flexible these days it almost makes no sense to purchase. Yes, some particular vehicles may present a better option on either choice, but buying is not the slam dunk people assume it to be.

Example 1: Lease a new vehicle for 5 years. and return it in three. Slight chance of some equity, but more than likely just walk away. Much lower payments than buying. Manu's don't offer 5 year leases.

Example 2: Lease a 1 year old vehicle for 5 years, return in 2-3 years. Very high chance of equity and again a much lower payment. This is far and away the smartest way to get into a vehicle. Purchasing can't come close.

You can lease 2-5 year old vehicle as well, though anything after 2 years old your equity chances are pretty slim.

There is no need to put any money down. ZERO. Putting money down doesn't impact the payment all that much, but that is also flexible. You will likely have to bump up your liability insurance to the $300-500k range, but it is not that much.

Generally(almost always) stay away from manufacturer leases. They tend to be very kind to themselves, and their requirements.

DaveRamsey said:

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Leasing is never a good idea.

Do not buy a car you can't pay cash for.

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Buying a car for cash is about the least smart thing one could do.

SoupNazi2001 said:

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MBUSA said:

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DaveRamsey said:

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Leasing is never a good idea.

Do not buy a car you can't pay cash for.

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Buying a car for cash is about the least smart thing one could do.

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If a person can't figure out how to make that cash grow more than the 0-3%... they may want to start taking the bus, and at the same time praising the Lord that they ever got their hands on the cash in the first place.

500,000ags said:

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I'm saying there is no financial winning with the typical consumer and vehicles, unless that consumer doesn't mind driving a few more years with a 10+ year old car that already has 150k+ miles.

I'll line up two scenarios over 15 years.

1. A person completes five 3-year leases of a $44,000 car. With my last lease for a $44,000 car, I paid $3,000 up-front and $450 per month. That's $19,200 over the life of one lease. If I did that five times in a row over 15 years, that's $96,000 in total.

2. A person buys one of those same $44,000 cars with 0% financing paid over five years. They then keep that car 2.5 years after they finish paying it off for a grand total of 7.5 years. If they did this two times in a row over 15 years, that's $88,000. I'll also assume each car has a residual value of $5,000. So, the consumer in scenario 2 is out $78,000, net.

I consider scenario 2 to be the above average consumer. They have good rates, buy instead of lease, and are also willing to drive their cars for a couple of years after paying them off. However, for an additional $18,000 over 15 years, the consumer in scenario 1 got a new car every three years and had zero expense with maintenance.

My point is unless you bought that $44,000k car two years old for $35,000, and drive it for the 15 years, you are not hitting a home run by buying over leasing.

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Youre saying a $44k car is worth 30k after 3 years, (lease payment of $450 is about $300 principal, so 300x36+3000=$13,800 reduced principal), but then you say it's worth $5k in another 4? That's nuts.
I bet that $44k car is worth $15k in a personal sale at 7 years old. My truck sticker was $48k in 2013. It's still worth about $22-$24k. In two years (8 years old) I expect to get mid-high teens. So your $5k assumption is highly one sided to make your numbers work.

So now we have $88-$30k, or $58k over 15 years. Considerably less than the 5 leases.

If lease vs buy were that close financially in the long term, no one would buy a car. Cars depreciate very slowly after year 3.

blindey said:

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If the lion's share of your income is from a salary, then I would generally say that buying is the correct option. If your income is from draws, distributions, etc., the tax implications of a lease may make it the more attractive option.

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ding ding ding.


Leases work great for a certain sector of people and the vast majority of Americans do not fall into that category.

BenFiasco14 said:

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LOLpoors who lease vehicles

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Kind of the opposite for me. LOLpoors are focused on looking for best deal and value. I just leased a car for the first time.. Decided it was fantastic to get a new car and just focus on getting a new car now and every few years. It's more expensive, so lolpoors shouldn't be leasing.

One thing i did learn.. Gotta get sales tax credit in negotiations.

The Wonderer said:

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blindey said:

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If the lion's share of your income is from a salary, then I would generally say that buying is the correct option. If your income is from draws, distributions, etc., the tax implications of a lease may make it the more attractive option.

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ding ding ding.


Leases work great for a certain sector of people and the vast majority of Americans do not fall into that category.

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Ding ding ding *

* kind of

Unless you and your vehicle can qualify for Section 179, and bonus depreciate the f out of that bad boy.

I've got one thing to say to that p*$$y Dave Ramsey. YOLO!

Looking on a laptop. I just love that the ad on the side of the page is for a Nissan Titan.