Lease or Buy
 

Have any of you leased a car while having every intention of buying it out at the end of the lease? Walk me through your train of thought.

How did it work out?
Why not buy it out to begin with?
Were you able to renegotiate the buy out price to save money?

waste of money to lease with an intent to buy. while ive only had one experience as my friend went that route but icant imagine it being a better idea than buying

Earlier in January, before I discovered the FT86 concept, I was about to lease a G37 coupe.

For me, I was intending on using the lease as a long term "test", if I didn't like the car, I could just not renew the lease and be done with it. Otherwise, I would've just bought the car. Looking at it from an financial view; its a waste of money to lease with intent to buy. You're already paying a set amount, which doesn't really impact the car's buy out price. The car's buy out price is set more strongly than a new car's, and all you're really getting is the lease's span in order to test drive the car. Which is what I wanted.

However, I can't say anything about the renegotiation for buyout, because the finance department said I had "insufficient credit history". Their loss. Though I have heard that negotiating for buyout after the lease is difficult.

Anyways, the bottom line is, you're taking a loss by leasing. It really isn't worth it if you intend to buy out the car anyways, unless you reason that using the lease period to test drive is more valuable than the lease payments.

Instead of putting the required money down for the lease, why don't you use that as a down payment for a purchase? If you don't like the car, you can sell it for a minimal loss after one year. I've never leased a car before, but the dealerships use leases as a way to make fast money after your lease is up. It would be in their best interest to sell the car to a new buyer or put it up for auction since they technically own the car.

Not all leases require money upfront. The only way you would be even close to breaking even 1 year into traditional financing would be with a sizable down payment and/or a 3 year term and a high residual vehicle, both require high out of pocket costs in a short period. Any lease contract I've ever seen gives the lessee the option to buy at the end of the contract. In most cases this amount is not renegotiated however if there is a severe discrepancy (maybe you were way under mileage) some dealers will work with you since they know they will make more on it. Of course if you are over it ca be very costly.

The only reasons I would think a lease could be beneficial is if you know that you will be ready to get rid of it by the end of the term OR if you manage to get a promotional money factor that is lower than the traditional finance rate you would get on the same vehicle. Another pitfall to look out for are fees at the beginning and close of the term.

I'm not sure which route I will go. If there's a decent promo I'm leaning towards lease since there's a good possibility that the first year will have kinks to work out and that there could be another release within 3 years. That and I'm a car slut... averaging 1 car and .25 motorcycles for each year that I've had a license. :)

if the car is worth significantly more, at the end of the lease, than the buy out price, it may be wise to buy it and use it as trade in. provided of course that you can afford to buy it outright. just do the math and see if it turns out in your favor.

I'm no expert on this subject.

I'm under the impression that if you intent to buy the car outright after a lease you would be better off financing it. Depending on the financing options it's possible to save more money on the car then a lease.

A friend of mine just picked up a '11 Mazda 3 as a lease. I initially thought it was a bad move on her behalf but she is currently in school and is moving back to Toronto once she graduates.

She wanted a new car, could only afford <$250/month, didn't want to buy since she knew her living situation would change in several years, lives in the city and didn't want to have the hassle of trying to sell it later.

I've never leased a car but before one can say it's a waste of money, I think it utimately depends on the situation.

Pros:
-you only pay/month for the lease year: 2 or 3 yrs and the full amount for 5 yrs
-you can either get another car or buy it once the lease is over
-those who buy a lease return get a gem

Cons:
-annual milage allowed
-any exterior/interior marks will be accounted for
-its not your car

It was really the mileage requirement that kept me out of leasing. Before I started working from home, I put too many miles on my cars

Having gone through with my very first car starting as leased then bought it at the end of term, I can tell you first hand that money wise leasing with intention to buy is more expensive to financing the car. The same situation also applies to some other vendors deal like *low monthly payment and buy-back option (BMW)*. If you simply calculate the dollars you pay out-of-pocket, you can see that lease-to-own or buy-it-later option is always more expensive.

Warning: this calculation does not take effect on inflation or time of money concept. I.E. 1 dollar 5 years later is equal to the same value as of now.

I also concur on what RRonald said about his friend's decision. Leasing or Buying is always a tough question and it is really dependent based on individual's situation. The pro on lease is lower monthly payment compared with financing but you do not own the car (so no tuning or modding is allowed...:bonk:).

You can mod and tune.. just make sure it's all reversible. :thumbsup:

Would it be a problem if you bring the car back for service and they found out the mod? I wonder if anyone has done so before....

That's true!

I hate it when the dealer says, "what if we can lower your monthly payment to $_ _ _/month, would you buy it now!!" That's such a bunch of BS!

Lease to buy is going to be more expensive then just a conventional finance purchase. It's the 2 yrs lease plan (prob more interest than principal) then when you decide to buy it after the lease is over, the balance is spread over a 48 or 60 month duration. You can have bought the car using a 60 month loan, add more principal to pay it off sooner, saving on the calculated interest from the 60 month.