Automotive

When it makes sense for a salaried person to lease a car?

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[OP]
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Aug 17, 2019
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When it makes sense for a salaried person to lease a car?

When it makes sense for a salaried person to lease a car? I have been told never but nobody has explained why.
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May 22, 2005
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When you are willing to pay the extra few thousand bucks to jump into a brand new luxury car every few years. Don't need to deal with depreciation, damage, etc.

Basically people with lots of disposable income.
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Apr 5, 2013
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keenland
...and just to add... costly maintenance ..also when you drive only 10-15K a year.
Deal Addict
Jun 18, 2018
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Toronto
I would look at your current disposable income (money you are saving every paycheque after tax and all your expenses), and see if you have enough for a lease payment on top of that. If you don't, then it doesn't make sense. Also you should be having some savings on top of that...

Also just because you can afford it, doesn't mean you need to get one either. A car (especially a lease) is for convenience to go to places and care-free.
Sr. Member
May 6, 2010
650 posts
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Richmond Hill
coriolis wrote: When you are willing to pay the extra few thousand bucks to jump into a brand new luxury car every few years. Don't need to deal with depreciation, damage, etc.

Basically people with lots of disposable income.
Absolutely, look at Audi, pretty good all around features/design combo, pretty horrible reliability after 3-4 years.
Only good to lease.
Sr. Member
Nov 13, 2016
559 posts
324 upvotes
rh1974 wrote: When it makes sense for a salaried person to lease a car? I have been told never but nobody has explained why.
The only reason for salaried person to lease a car is if doesn't mind the lease cost (affordability), if you plan to buy it out at the end of lease but don't have enough down payment to reduce the monthly finance cost, want the option to drive the car for few years before you decide if you like it and don't mind the cost, no stress of lost value after an accident claim etc... are some I can think of off the top of my head. Everyone's preference is different.

CD
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Feb 11, 2007
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Oakville
rh1974 wrote: When it makes sense for a salaried person to lease a car? I have been told never but nobody has explained why.
Financially, it's almost always cheaper to buy used and drive it into the ground. Only reason not to is if you WANT a new car every few years.
Deal Addict
Apr 12, 2007
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Ottawa
If lease interest rate is =< finance rate and you want flexibility.
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Jan 15, 2017
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Has very little to do with being a salaried employee, and is more to do with the whole lease vs buy argument. Leasing is attractive to people who:

1. Prefer to drive newer vehicles,
2. Prefer to drive vehicles with manufacturer warranties,
3. Don't like dealing with trading and or selling a used vehicle,
4. Drive less than 24,000 kms a year,
5. Don't want the risk of a possible accident affecting value,
6. Have little need to customize the vehicle.

People buy (own) vehicles,

1. They drive a lot,
2. They like to customize,
3. They plan to keep the vehicle a long time,
4. They don't mind buying used vehicles,
5. They like building equity - one day that may own the car and it will have some value,
6. They like the psychological aspect of "owning" a car,
7. They hate car payments - prefer to pay it off and drive it to the ground.

Just depends on your priorities and what is important to you.

If you are self - employed, you may be able to claim vehicle expenses whether you purchase or lease.
Deal Addict
Mar 17, 2016
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Leasing makes sense when:
- you don't want to be bothered searching used cars, trying to figure out whether the used car has any issues that may come up, then spend time trying to sell the used car dealing with all the tire kickers, scammers etc
- Don't want to pony up a big amount for a used car or sign up for those 5%+ finance deals used dealerships offer. Say you want a $30k car, with leasing you can invest most of it and pay only about $400/month. No need to part with $30k right away.
- You want a trouble free car for 3-4 years where even if something breaks, warranty covers it. With a used car, you're on your own and chances of something breaking go up significantly.
- have a business that writes off your car lease
- Want to enjoy the new tech, features etc
- Don't want to drive the same car forever.

That's just off the top of my head. I think it all comes down to budgeting properly. Let's say you're making $50k, it would not make much sense to lease a $1000/month BMW. Figure out your budget, your wants/needs and go from there.
Deal Addict
Apr 22, 2013
2644 posts
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Markham
coriolis wrote: Don't need to deal with depreciation
Actually a lease does deal with depreciation, as its totally baked into the lease cost, and the lease agreement makes the lessee pay the absolute worst of the depreciation. Even if the lessee doesn't see it, they're totally paying for it, irregardless of whether they buy it out or not.
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May 22, 2005
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JeganV wrote: Actually a lease does deal with depreciation, as its totally baked into the lease cost, and the lease agreement makes the lessee pay the absolute worst of the depreciation. Even if the lessee doesn't see it, they're totally paying for it, irregardless of whether they buy it out or not.
For sure, I was referring more to damage/collision, depreciation is definitely calculated in the cost. But for a lease it is at least up front, whereas financing isn't. While it is rare, some cars could depreciate much quicker due to recalls, overall shoddy build quality, or lack of demand resulting in cancellation of the vehicle model itself.
Deal Guru
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Jul 12, 2003
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Toronto
Some cars is just good for lease only and some is a good to finance/buy due to long lasting and reliable.

OP, is this question for your friend with the 1999 Corolla?
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Apr 21, 2004
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So far no one has brought up factory extended warranty when financing a vehicle (new or even slightly used) that for many, extends the peace of mind period but then again, one will need to document and keep evidence of services performed if outside the dealership to keep warranty or extended warranty in place.

Extended warranty is definitely a type of insurance and exclusions could be extensive so one needs to read the fine print.
[OP]
Newbie
Aug 17, 2019
33 posts
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MP3_SKY wrote: Some cars is just good for lease only and some is a good to finance/buy due to long lasting and reliable.

OP, is this question for your friend with the 1999 Corolla?
No its for me. I have a 2003 Honda Odyssey and I am thinking about replacing it.
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Feb 16, 2013
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You want RFD to justify your life choice.
RFD says you buy a beige corolla and drive it till the clock rolls over 400K.
You then drive it some more.

It's your money. Go ahead, do what you want with it.

I buy beaters for cheap and fix them myself.

First car for myself, 97 Camry, 3K $ ( I overpaid).
Got about 6 years out of it and about 120k kilometers.
Maybe 1k$ in total maintenance and repairs.

Second car for girlfriend , 95 Corolla for 500$. Got about 100k kms out of it, still had plenty of life when I scrapped it.
About 1k in maintenance and repair.

Third car for myself, 2007 manual Elantra for 1400 bux.
So far I changed the clutch for 300 bux, did it myself.
Should be golden for another 100k kilometers.

My mom dumped her 2011 Sonata on me cause she wanted a new car.
Scrapped the Corolla and now the girlfriend drives that.

So about 16 years collectively for 7-8K dollars.

I fix what needs fixing.
Some stuff I say puck it.
If something ancillary breaks in the car.

Works for me.
....
Deal Addict
Oct 6, 2015
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If you are intending on buying a car that uses a lot of exotic technologies, and its in its first model year.

If the car turns out to be a piece of junk, then you get to turn it back to the lessor, your cost of ownership being known at the outset.

Of course if you're buying the 20th year of a well known engine platform like the Honda K24, ie: an Acura TLX, then the risks are pretty minimal.

People with a lot of high interest rate credit card debt should probably lease. As the cost of the lease may very well be lower than the cost of servicing the credit cards. And any cash saved on the lower lease finance rate devoted to repaying CC debt.
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Nov 17, 2014
942 posts
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Ontario
We only have one car so I want something reliable. Can't remember the last time I had a car issue. Take it in for an oil change every few months and that's it. Cars are a money-pit no matter what you do, so I simply attach a known monthly cost to it and I get to enjoy my car worry free and actually drive the damn thing, unlike if you plan on driving the car into the ground you have to baby it. Whatever though, there are positives and negatives with everything.
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Apr 5, 2013
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keenland
alanbrenton wrote: So far no one has brought up factory extended warranty when financing a vehicle (new or even slightly used) that for many, extends the peace of mind period but then again, one will need to document and keep evidence of services performed if outside the dealership to keep warranty or extended warranty in place.

Extended warranty is definitely a type of insurance and exclusions could be extensive so one needs to read the fine print.
purchasing an auto extended warranty is as big as a scam as time share...if you think its some type of protection you are out to lunch...it been proven you are better off NOT to purchase extended ...and you are not even guaranteed a payout. If you feel a need to buy an extra warranty...here is a hint...buy a different car! or use that cost of warranty and factor it in to a new car with real warranty sooner...it will change your whole math.
but never ever buy extended...if you feel a need for it..rethink your brand.
never have I purchased it and never did it matter and I have owned many many in my life.
insurance is only there to take your money..not for your protection, but they do sell you a false sense of security and that can be had anywhere, even here for free
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Apr 21, 2004
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cardguy wrote: purchasing an auto extended warranty is as big as a scam as time share...if you think its some type of protection you are out to lunch...it been proven you are better off NOT to purchase extended ...and you are not even guaranteed a payout. If you feel a need to buy an extra warranty...here is a hint...buy a different car! or use that cost of warranty and factor it in to a new car with real warranty sooner...it will change your whole math.
but never ever buy extended...if you feel a need for it..rethink your brand.
never have I purchased it and never did it matter and I have owned many many in my life.
insurance is only there to take your money..not for your protection, but they do sell you a false sense of security and that can be had anywhere, even here for free
For our 02 Civic, repair work was at least twice the $800 7 year extended warranty. For our 11 Accord, repair costs were at least around 2/3 of the $2k 8 year extended warranty.

Honda did not shy away or skirt its responsibility for majority of the extended warranty work but of course it's dealer dependent if they will look for issues that can be repaired at no cost.

Of course the longest period coverage makes the most sense.

On our 16 RAV4H, I will likely not be recovering the 7 year extended warranty cost but heck, the $2,500 for peace of mind is a non-issue.

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