Modern Vespa

OK, I come from a family who never leases cars, and usually I keep a car for a LONG time. But.... right now I am in a bit of a transition, and I'm not sure I want to make a commitment to a particular car right now, so I decided to lease.

But I have no idea what to negotiate. I may decide to purchase it after the lease, but I may not....

Is this anything like negotiating for a new car? Are there any outrageous fees? What about sales tax?

Right now I am thinking of a Honda Civic, which I think will run around $150 a month.....

Anyone who can help me figure out how to negotiate a decent deal.

Thanks.

The catch is the mileage. If your going to use the car for long trips or have a lengthy commute i wouldn't go there. Leased cars have all kinds of weird stipulations and it's costly when you go over the allotted mileage. Lots of good used cars out there. I've never done a lease because of the mileage. It better to buy IMHO. Good luck

If you lease, you are making a commitment. You can't just decide not to lease anymore and turn the car in before the end of the lease. The cancellation fees will be huge and may approach the remaining lease payments.

I have leased 2 vehicles and yes, there is some negotiation, but it is a discussion of the residual value and how much you pay up front. It is to your advantage to lease a hot seller that will be worth more at the end of the lease than a turkey that has poor resale.

The first car I leased for 4 years and turned in to lease another one. The second one had a very reasonable residual so I bought it at the end of the 4 year lease.

Be wary of mileage if you lease. Most leases have a cap on annual miles like 10,000/yr. If after 4 years you turn the car in and it has 60,000 miles, you will have to pay a chunk of cash for the extra 20,000 miles. If you plan on driving more than allowed, you can pre-pay additional miles for less.

Leasing can put you in a pricier car than you could probably afford if you bought, but it isn't for everyone. It is a commitment to be taken seriously.

Good luck with your decision.

I guess I should have said that mostly I work from home, and I have been living with only one car between me and my wife for a while now. I think I have driven only 2000 miles since April in our "second" car. Now, I did drive my daughter's car most of the summer, but she's back in school now.

So the mileage isn't really an issue.... we have a small truck that we use for work, and right now it's our only reliable car. I doubt we would drive more than 10k miles per year.

I think I'm going to do ok on a Honda Civic, since it seems to have a good resale. I'm only looking for 24 or 36 months....

As for commitment, I was referring to spending $$$ to own, and then realizing I don't like it or it's not right for what I need, and having to sell it, etc. Also, I figure with a 24 month lease I am looking at basically zero for maintenance (a couple of oil changes).

That's doable. Go for it if that's the one you like. No commute is key. Mileage caps can be costly.

Go buy a cheap used car then, leasing makes no sense whatsoever.
It will end up costing you more I promise. Use to sell cars and leasing is the worst thing you can do to buy a car.
IMHO, if you can't pay cash, you should not be buying the car.

If your credit is good, the extremely low interest rates
available today for new cars may make owning a better
choice.

Bob Copeland
Minnesota - Some Snow Flakes Today

Leasing is well known to be the most expensive way to purchase a car. It is also very profitable for the dealership. It is very hard to ngoni ate a vpfair deal for yourself. If in transition and uncertain, go buy a $5000 used car that you can probably sell in a year or two for ... $5000 or so.

Hmm, food for thought. I may just go for a used Civic.... the last one I drove for 12 years (it's 16 years old now), so maybe I will get the same results.

One thing that bothers me about leases is paying the "delivery charge" and "loan origination charge" fees that dealers tack on that seem to be non-negotiable. All for a 3 year "lease", I might as well own it.

Back to thinking... my wife thinks I obsess over this way too much.

If the used car dumps a transmission for $3000 that would be 20 payments on the civic.

To say if you can't pay cash you should not be buying the car is ludicrous. 85% of the population would probably be walking to work based on that theory. Would you say the same about a home purchase?

Leasing a new Honda Civic for 24-36 months at $150 a month is a very prudent thing to do as the residual value is very high on that car and it will be under warranty the entire term. Absolute no brainer.

Most of us pay $150 a month for cell phone service.

Best,
SDG

That's not necessarily the case in the UK, where it's often the cheapest if you want to run a new car.
There have been some really cheap lease deals where over a 2 year period you pay noticeably less than the vehicle would have depreciated.

Now if you're talking about the cheapest way to run *any* car then as you say you can buy the right used vehicle and sell it for 90% of what you paid after a while, but that's not exactly a like for like comparison and there's a gamble about huge repair costs.

Going back to leases, my recommendation is not to focus on the car, but just shop round for whatever is the cheapest to lease right now. Manufacturers will often give very large discounts to fleet buyers who take vehicles in bulk, and they come and go on a week buy week basis. If they can get a cheap Golf, Civic or whatever, then they can lease it to you cheaply, so just shop round and see what's on offer.

Keep an eye on mileage limits and charges for exceeding them - be realistic or you risk a large final bill.

I don't believe he is looking to buy the car, so a lease would be a good choice. He wants to drive a dependable vehicle for a couple of years and then walk away. If the residual is reasonable, he has the option to buy it if he wants. That's not a bad deal. He would have had the car since new and would be aware of any issues.

Really, I can't say one way or another what I want to do.... and I guess that's what makes this soooo confusing to me. But one thing I probably don't want to do is to lease and then buy it.... I believe that is a bit of a loser for the consumer....

I think I'm going to try to compare prices overall.... new/used/lease, and see what shakes out. I know used is sometimes a crapshoot, but I'm looking at 2012 or so with under 30k miles, maybe with a CPO....

Damn, Mrs TSG is right, I just think way too long about these things.

Lease has worked for me. Hyundai Genisis. We needed car, wife does driving, I would rather ride bike.

Found new car I (she) wanted on lot----no crappy options---sticker $38,000, called my credit union, asked what I should pay---they said $31,000 plus tax/lic. etc. Credit Union sent me email stating price---I leased car@ $330-380 a month.... forgot exact amount. End of lease, dealer was hard to deal with on new car, so I bought the leased car from Hyundai finance at what I thought fair price.

Miles: if over miles are charged I would go for 10 cents a mile on original paperwork-----10 cents a mile much cheaper than owning car yourelf.

If I do again, no money up front, just monthly lease payments. Watch dealer/many are crooks! 10 cents a mile on over miles.

A very short, quick internet search will confirm my opinion.

Here's the New York Times take on leasing.

http://www.nytimes.com/2013/09/21/your-money/car-leases-grow-more-enticing-but-no-less-expensive.html?_r=0

"Leasing is the loser across the board".

Pretty darn easy to find someone who wrote some article supporting some opinion. Doesn't mean much, if anything. I am a retired CPA. Understand leasing well. Many of the previous comments are spot on, really depends on many variables, no single answer.

If I wanted a Jaguar, I would never, ever buy one. I would want to be able to walk away. I do own a Honda, and bought it two years ago. Was going to pay cash, but they offered 0 percent financing. So gee, guess what we did?

A few years ago we got a beautiful used Lexus 430 SC used. Purchased an extended warrant very reasonably. Worked out super.

A big issue with leases is understanding the built in interest rate. Many dealers either don't understand the question, or can't/ won't answer it. Other issues are the cap cost and the residual. If you don't have the interest or ability to figure these out it is easy to get burned.

Keep in mind, if you don't like the leased car you are usually stuck with it for the lease term. A nice low mileag Honda is about as easy to sell as ice in the desert

Well, for the record, I too am a retired CPA. And I understand all the leasing variables. It is those variables that make it very easy for consumers to get confused and overpay. And don't be misled - your car salesman probably doesn't understand all the variables, but the finance guy at the dealerships most assuredly does. If you ask him to explain things to you, you have already plunged down the hole to overpaying.

If you are referring to a consumer who doesn't understand finance, perhaps doesn't use his vehicle for business, and doesn't want a more expensive car, I agree. That does seem to apply to the OP, but certainly not everyone.

Btw, were you in private or public? I was with Deloitte, great job, but sure happy when I retired Do not miss the stress!

I'm a business owner who may use the car a bit for business, but we take the mileage deduction. It's mostly just for me to run around in when I'm not on my scooter.

As for finance, no, I really don't understand all the ideas behind leasing. As a former engineer, it appears to be a situation with a dozen variables, and when you optimize one to your advantage, the dealer tweaks another one to their advantage, and there's no simple way to know if you got the best deal.

I have bought a number of new and used cars over the past 30 years, some good (Honda Civic, Honda Element, old Nissan Sentra), some not so good (Pontiac Montana minivan, Saab 9000) and some just pleasant rides (Saturn, Prius). Buying, to a logical mind, gives you only a few variables, like price, trade-in (if you have one), and financing, and it seems simple to understand if you got a good deal or not.

I went into this thinking that I was going to lease, but the more I look at this, I may just buy a used Civic. As much as I might want to look at other cars (my wife has a thing for Minis), I want the no drama ride.

Financially, it's hard to beat a used Civic!

I am retired, but in years past, a potential advantage of leasing, particularly more expensive cars, was the potential for larger tax deductions. Not likely to apply based on what you have indicated.

We have a Honda Fit, our second one. First one cost $16,000, we drove it 100,000 miles with only one set of tires ($600), and a battery. Never even tuned it up. Sold it for $6500 to Car Max.

I think you are making a smart decision 8)

As others have said, many aspects to the leasing question and many variables. For example, quite a few electric cars are leased these days. Several reasons. One of them is that the technology is changing so quickly that it is anybody's guess what they will be worth at the end of the lease period. You will have the choice of buying it if it worth more than the residual purchase price, or giving it back if it is worth less. Another is that the large tax credit is applied immediately to the lease calculations. And finally, manufacturers such as Nissan, Fiat, and Ford are anxious to get a bunch of these vehicles on the road. It reduces their unit cost and gives them a big boast in meeting CAFE fleet mileage requirements. Accordingly, they are willing to subsidize some of the cost of the lease to increase sales. Of course, all of this applies only if you live somewhere full electric vehicles are sold/leased - and serviced.