Question about car leases

[Rogue Hawk]

I know how to estimate a normal loan based on a car's price. But how do you do the same thing with a lease?

[Rob Rodriguez]

If you lease the amount is based on what the difference between purchase price and what the dealer says the car is worth when your lease is up. Also have to add in taxes and fees.

[MONK]

I'm currently leasing a 2019 Honda CR-V. What Rob said is close but not quite. There are a LOT of other factors involved including the lease term (length), the amount of depreciation the company (Honda in my case) feels there will be (i.e. what it's worth in 36 months), damage allowance, etc. For most basic cars (not something high end) and based on the "standard" 36 month/12k mile per year lease and assuming you have good to great credit, you can figure you'll pay between 70-85% of the loan type monthly payment. For example, when I leased my Honda about 18 months ago, I would have paid about $575/mo for 72 months. My 36 month, 12k mile/year lease runs me about $500/month.

Most OEM websites (Chevy, Honda, Subaru, etc) will give you a suggested lease payment. Many times, you can get an even better deal once you're at a dealer and have picked out what you want.

[ARtraveler]

A little off your question...but hopefully a good FYI.

You might want to look at your price per mile. Leasing is beneficial mostly to the lessor, not the lessee. Check out the mileage penalties etc. You get to drive good stuff, but it costs to do it.

[MONK]

A little off your question...but hopefully a good FYI.

You might want to look at your price per mile. Leasing is beneficial mostly to the lessor, not the lessee. Check out the mileage penalties etc. You get to drive good stuff, but it costs to do it.

Good info, there. Price per mile is probably a bit less than a traditional loan as you're monthly payment is generally less. Mileage penalties are a killer. I would have to pay .20/mile for any overages. (I only have 18 months left in my lease and I've got less than 3k miles on the car now. (I work from home so I don't envision getting anywhere near my mileage.)

If you want to drive a new car all the time, a lease is great. If you think you'll get a raise in the near future and you plan on keeping the car for a long time, a lease is great as your monthly payments are less now. When your lease is up, you can get a conventional loan where your payments may be higher.

[JayBros]

FWIW, when I took off my uniform for the last time many years ago I worked for a gentleman who was a former big wig at Price Waterhouse Coopers. Amongst his clients was Roger Penske and companies of that ilk, and in a discussion about leasing an automobile for personal use as opposed to purchasing one he said he had crunched the numbers every way possible and could not make them come out where leasing was more favorable than purchasing.

[Rob Rodriguez]

FWIW, when I took off my uniform for the last time many years ago I worked for a gentleman who was a former big wig at Price Waterhouse Coopers. Amongst his clients was Roger Penske and companies of that ilk, and in a discussion about leasing an automobile for personal use as opposed to purchasing one he said he had crunched the numbers every way possible and could not make them come out where leasing was more favorable than purchasing.

I would agree with this. I've never been able to see where leasing is of any great value to the customer. You might be able to get some great leasing deal where the numbers work in your favor but I wouldn't say that's the norm.

[canamjhb]

I would agree with this. I've never been able to see where leasing is of any great value to the customer. You might be able to get some great leasing deal where the numbers work in your favor but I wouldn't say that's the norm.

Many years ago I worked at a new car dealership as a F&I Manager. I wrote leases, provided traditional financing and "sold" other things such as undercoating and insurance. Unless the world has changed dramatically, there is no financial benefit to lease as opposed to purchasing UNLESS you have the ability to write off the vehicle for business use. That doesn't mean that individuals didn't lease vehicles for personal use. The dealership LOVED them because of the profitability..... Jim

[RayBJ]

A little off your question...but hopefully a good FYI.

You get to drive good stuff, but it costs to do it.

Agreed. I've opted to lease since retiring in 2010. Three reasons: never have to pay for repairs or service, payments lower, New car every 3 yrs.
For me cost/benefits tilted to a lease.

[Possible]

Leasing is just a more marketing friendly term than renting. Tomay-to, tomah-to.

[cptjam]

I worked for GM. We ran the numbers, and leasing is cheaper. Buying means payment and depreciation. Leasing means payment. No repairs, ever, and since we ride, never exceeded miles. Since I’m not passionate about cars, a car is a car. It is transportation. Had cool hobby cars, enjoyed them, but would rather ride!

[wyliec]

I'm currently leasing a 2019 Honda CR-V. What Rob said is close but not quite. There are a LOT of other factors involved including the lease term (length), the amount of depreciation the company (Honda in my case) feels there will be (i.e. what it's worth in 36 months), damage allowance, etc. For most basic cars (not something high end) and based on the "standard" 36 month/12k mile per year lease and assuming you have good to great credit, you can figure you'll pay between 70-85% of the loan type monthly payment. For example, when I leased my Honda about 18 months ago, I would have paid about $575/mo for 72 months. My 36 month, 12k mile/year lease runs me about $500/month.

Most OEM websites (Chevy, Honda, Subaru, etc) will give you a suggested lease payment. Many times, you can get an even better deal once you're at a dealer and have picked out what you want.

Either you didn't put any money down, or we have better lease deals in my area. My lease on a Jeep Wrangler runs out this year and I have been checking out the Honda CR-V. The ones I have been looking at have stickers of over 36,000, and with $2,999 down I can get for $284/month; I'm not sure if with 10,000 or 12,000 miles/year. I may actually go for the Passport.

[wyliec]

Agreed. I've opted to lease since retiring in 2010. Three reasons: never have to pay for repairs or service, payments lower, New car every 3 yrs.
For me cost/benefits tilted to a lease.

I'm the same. But, whatever I lease, I look at the 0-60 times b/c I want to get into the flow of traffic. If I didn't care about getting into the flow of traffic, I'd get a Honda HRV. For me personally, I've got to get something that will at least get into the mid 6's, and also be less than $320/month. I do realize that most cars can be less than $320 per month based on the money put down up front.

[wyliec]

I know how to estimate a normal loan based on a car's price. But how do you do the same thing with a lease?

The bank you get the lease thru will have a say in those monthly payments. When I leased my first Jeep, the lease was thru a bank b/c Chrysler Financial was higher. While I was haggling with the finance manager, my gf was on the phone to her nephew who is a finance mgr at a BMW dealership, and he agreed with the numbers given to me. I usually shop FCA products because I get employee pricing, a discount for loyalty, and the typical military discount.

[Yabbadabbadoo]

My wife is a CPA. No way no how would we ever lease a vehicle. Although I could understand why it might be attractive from a standpoint of someone who always wants a new vehicle and no maintenance/repairs. But you will pay dearly for that convenience.

[cptjam]

Why? The depreciation is insane. Usually more than the payment. Residuals are low, and once paid for, maintenance costs rise. We just bought a truck, only because nobody leases an F450, fitted like we want.

[MRH]

A little off your question...but hopefully a good FYI.

You might want to look at your price per mile. Leasing is beneficial mostly to the lessor, not the lessee. Check out the mileage penalties etc. You get to drive good stuff, but it costs to do it.

Agreed. Had I leased my last car, it would have been returned long ago. Having bought a Spyder, and using it much less, I simply own it and that made it a lot more reasonable to buy a new Spyder. Unless you turn over your vehicles a lot, and that isn't financially impactful on you, leases are not a good financial option. I like the security of owning, and knowing that I won't need to replace a vehicle until I really want to.

I didn't listen to these when I pulled the links, but I've heard him on the subject in the past:
https://www.youtube.com/watch?v=PJ0TlFYpAXY
https://www.daveramsey.com/askdave/debt/10367

[Possible]

I'm also one of those people who feel that a car is a way to get from Point A to Point B while remaining dry
and cool/warm. Consequently I never buy new, and thus avoid the depreciation, and paying for something
but having nothing to show for it but more payments is an anathema to me. Yeah, I'm a cheap bastid. LOL

Our car is a 2013 bought 3 years ago, the truck we use to pull our toyhauler is 2001 bought in 2005, we
also have a 2015 Honda scooter which was bought new, a 2013 Spyder GTS-SM, and a 1999 Honda
Interceptor bought in 2000. 20 plus years of no payments, lease or otherwise means money that would go
to someone else stays with us.

Full disclosure, we did buy our 40' toyhauler new, because there were no models that appealed to us used. Now
talk about depreciation!! But we bought it 11 years ago, and still have it.

[Tango]

This is a very good starting point. https://leasehackr.com Lots of information available, as well as some brokers who are very active. Tom

[RayBJ]

I'm 74 and I told my kids if they inherit anything, I mis-calculated.

[Possible]

I'm 74 and I told my kids if they inherit anything, I mis-calculated.

Amen, bruddah.

[Rogue Hawk]

Sounds pretty complicated. I would not be able to write it off, so it may be not for me. But I wonder if it's economical if the car is expensive.

[Possible]

IMO unless you can use the lease amount as a deduction, or better yet as a credit, it is never going to be economical.
Look at it this way, is it economical to rent a car from Hertz?

OTOH, if you are determined to own $30,000-$40,000, or more, automobiles, and you want to drive a new one every
2-3 years, then it may indeed cost you less to lease/rent that vehicle. But it's never going to be "economical" in the
strictest sense of the word.

[Tango]

The best lease is a no money down, zero drive off. VW does it often. Others also do it when the inventory on a particular model is too high. BMW once in a while also. Tom

[Spyderman2018]

You forgot to factor in a down payment - usually between $1500.00 - $3000.00, depending on vehicle......