Automotive

What is your thinking when you decide to lease even when you know you will need a car for a long term

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  • May 30th, 2019 9:28 pm
[OP]
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Jun 27, 2015
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East York, ON

What is your thinking when you decide to lease even when you know you will need a car for a long term

HI guys

I am looking for a car and I need to get a low monthly payment rate so I am also looking at leasing from this perspective
Here is what leasing a Kia Soul for three years with 0 down payment means. I don't see the point of leasing when after 3 years you would have paid 50% of the car already.
Assuming that you do not want to change the car every three years, you do not have a business to write off the lease amount and you do not plan to leave the country soon ...what other reasons would you have to lease??
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Mar 17, 2006
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lease at cheaper interest rate than finance. save the interest on those 3 years
[OP]
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Jun 27, 2015
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konsensei wrote: lease at cheaper interest rate than finance. save the interest on those 3 years
But you end up paying more car if you don't buy the car at the end of the lease
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Mar 17, 2006
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CuriousC wrote: But yo end up paying more care if you don't buy the car at the end of the lease
if you are not buying the car at lease end, what's your question then?
[OP]
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Jun 27, 2015
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Swerny wrote: There have been many threads on this topic.

Outside one of those scenarios, there's no good reason to lease other than a lower monthly payment, but if that's the only reason you are leasing, you are leasing more car than you can afford.
I did search the forum Buying vs Leasing but I could only see isolated messages ...maybe I am not using the right key words
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[OP]
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Jun 27, 2015
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konsensei wrote: if you are not buying the car at lease end, what's your question then?
If you are buying at the end the total cost of the car should be higher than if you finance the car from the beginning I think
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Mar 17, 2016
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There are plenty of reasons to lease:
- cheaper rate, lower monthly payments, lower out of pocket initial expenses. Can invest the rest and get more money back
- 3-5 years is generally how long the majority of people prefer to keep their cars. Not a lot of people keep cars for decade+ anymore. Let's be honest here, you get tired of having the same car after year 3.
- no hassle involved trying to sell your vehicle. Just return it back once lease is done. No need to deal with tirekickers, scammers or get fleeced by trading it in.
- most comprehensive warranties expire after 3-4 years. If you keep your car for longer than that you're running into a risk of expensive repairs etc.
- can drive a better car than you can actually afford (need to be careful with this one)
- tax advantages for business owners

It's got its advantages and disadvantages. It's really up to you.
Last edited by Hindenburg1 on May 29th, 2019 9:39 am, edited 1 time in total.
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CuriousC wrote: If you are buying at the end the total cost of the car should be higher than if you finance the car from the beginning I think
if i can lease a car at 1% rate then buy off after 3 years vs finance a car at 5% for 5 years.
Which one do you think is better economically?
[OP]
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Jun 27, 2015
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Hindenburg1 wrote: There are plenty of reasons to lease:
- cheaper rate, lower monthly payments, lower out of pocket initial expenses. Can invest the rest and get more money back
- 3-5 years is generally how long the majority of people prefer to keep their cars. Not a lot of people keep cars for decade+ anymore. Let's be honest here, you get tired of having the same car after year 3.
- no hassle involved trying to sell your vehicle. Just return it back once lease is done. No need to deal with tirekickers, scammers or get fleeced by trading it in.
- most comprehensive warranties expire after 3-4 years. If you keep your car for longer than that you're running into a risk of expensive repairs etc.
- can drive a better car than you can actually afford (need to be careful with this one)
- tax advantages for business owners

It's got its advantages and disadvantages. It's really up to you.
you are kidding right? I paid 1000 more to get 6 years bumper to bumper warranty for my Outback...To me that looks like a lot better deal
And then you get charged by the dealer for any scratch or damage done to the vehicle and limited mileage
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Mar 17, 2016
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CuriousC wrote: you are kidding right? I paid 1000 more to get 6 years bumper to bumper warranty for my Outback...To me that looks like a lot better deal
And then you get charged by the dealer for any scratch or damage done to the vehicle and limited mileage
So you've just reinforced my point. You paid an extra $1000 to be covered for those extra 2 years. What if nothing breaks? You are still out $1k extra regardless. You will get dinged on resale value if your car is all scratched up/banged up anyways.
[OP]
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Jun 27, 2015
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East York, ON
Hindenburg1 wrote: So you've just reinforced my point. You paid an extra $1000 to be covered for those extra 2 years. What if nothing breaks? You are still out $1k extra regardless. You will get dinged on resale value if your car is all scratched up/banged up anyways.
it is bumper to bumper
the bumper to bumper expires after 1 year so I bought 5 more years of that
when you resell your car you have the option to say f...off to the guy who is bargaining on scratches, at that point any car would have scratches so he can't buy or get a discount from the others either ....it will be the market value calculated with an average number of scratches
when you finish the lease you have to pay for those scratches no matter what
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Sep 9, 2012
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Hindenburg1 wrote: There are plenty of reasons to lease:
- cheaper rate, lower monthly payments, lower out of pocket initial expenses. Can invest the rest and get more money back
- 3-5 years is generally how long the majority of people prefer to keep their cars. Not a lot of people keep cars for decade+ anymore. Let's be honest here, you get tired of having the same car after year 3.
- no hassle involved trying to sell your vehicle. Just return it back once lease is done. No need to deal with tirekickers, scammers or get fleeced by trading it in.
- most comprehensive warranties expire after 3-4 years. If you keep your car for longer than that you're running into a risk of expensive repairs etc.
- can drive a better car than you can actually afford (need to be careful with this one)
- tax advantages for business owners

It's got its advantages and disadvantages. It's really up to you.
There’s an additional tax benefit that applies for both business owners and salaried/hourly/retired.

You only pay sales taxes on the lease payments during the life of the lease. You save the tax on the residual value if you walk away. In the OP’s example in Ontario there would tax savings or avoidance of $1,257 in Tax ($9,671 x 13% HST).

The more expensive the vehicle and/or the higher the residual the less tax you pay. Of course though, if you sign up for another lease, you’ll start paying tax on the next lease payment again. So really it’s not so much a tax savings as it is a tax deferral.

Not a deal breaker or tipping point but it is an additional consideration in the pro vs con of buy vs lease.
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Mar 17, 2016
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CuriousC wrote: it is bumper to bumper
the bumper to bumper expires after 1 year so I bought 5 more years of that
when you resell your car you have the option to say f...off to the guy who is bargaining on scratches, at that point any car would have scratches so he can't buy or get a discount from the others either ....it will be the market value calculated with an average number of scratches
when you finish the lease you have to pay for those scratches no matter what
Oh ok I see. That's a really good deal then for 5 years. I thought you just topped up 3 years to 5.
Sr. Member
Jan 20, 2012
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Toronto
1 huge advantage I found from leasing is you can walk away from an accident damaged / lemon without obligation.
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Sep 1, 2004
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Lease is definitely good if you can write it off for some pretax spending.

If you can't the benefit of leasing are:

1) cheaper payment.

2) Be ahead of depreciation, a $70K Merc will lose $10K the minute you drive off the lot. It will take 11 months of lease payments before you hit that.

3) In event of accident, you don't take the hit of dimmished value, the leasing company that owns the car does.

When leasing doesn't work.

1) you know you will own the car beyond warranty, doesn't matter if it got into an accident or if it's a lemon.

2) you are using this as a way to buy something you can't afford.

3) you don't have the money to invest in other thing that isn't a depreciating asset.

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