Lease or Buy???? Need advice...

[brokeinmichigan]

OK...advice needed from those who've BTDT...or from the financially savvy here on the board.

Which way is the best? Here's our options...

LEASE New- '08 Jeep Commander...money factor .00035, 36 months, $3500 down, $315/mo (includes taxes, etc)

OR......

BUY Used- CapOne Blank Check, 12.45%APR, up to 30K (we'll only use up to 15K, though)

What say you?

[NASCAR20FAN]

Personally, I'm a buyer... If I cannot afford to buy it, I will not get it. I've never been a big fan of the auto lease. Cause you really get nothing out of it at the end of the lease.

[HHM]

Do you have any money to put down (either a Down payment for purchase, or to pay down the front end of the lease).

Also, to give you any type of insight, we need to know the sale price of the car you intend to lease, and the anticipated residual value.

Also, how is your credit and who gave you the lease quote.

Generally speaking, people with financial difficulties should not lease. Also, if you have no money to put down, you should reconsider buying a car, or buy a used car.

[brokeinmichigan]

HHM~
Thanks for the quick feedback...

We have about $5000 for a downpayment. We were approved for the lease through Daimler-Chrysler, with the amounts in my original post. The MSRP of the Jeep we test drove and that the salesman & finance manager "ran the numbers for", was around 27K, with a residual value of 17K (if I remember correctly).

My credit scores are still low (mid to upper 500's), but my husbands are better (685, 589, 685). If we buy, we will definitely buy USED. Unfortunately, we have to have something on the "biggish" side, as my DH is 6'7" tall, so most vehicles are not very comfy for him. We'll either go with a full-size SUV or a van. We liked the new Jeep for just that reason...TONS of head room and leg room for him.

We were approved for the Cap One Blank check 12.45%.

[FLBK7]

Personally, I would never lease unless I were self-employed and/or had a job/occupation that required substantial mileage expenses that I could then deduct from my taxes.

If I buy a car with financing, I like the idea that at the end of my financial commitment, the car will be mine. If I buy a used car with cash, the car is still mine.

With a lease, you end up with nothing at the end of the lease.

But again, from a financial perspective some occupations more than justify a leased car. So it all depends on your particular situation.

Just my $.02.

[HHM]

That lease is not bad, but like the other person said, unless you can deduct the mileage from taxes, you are probably better off purchasing. Given your credit, I am surprised they could offer you a lease (thus, I would be concerned about extra fees, mileage, etc).

With that kind of money down, I think you are better off with a used car. Buy something in the 3-5 year hold range, that way the bulk of the initial depreciation is out of the vehicle, you keep the car for about 3 years, you will have a pretty good amount of equity to put into the next car, etc etc.

[teddy26]

Did you mean to write that your money factor was .0035? If you multiply your money factor by 2400, you will get a figure that is equivilant to what the "apr" percent would be. Kind of brings it into perspective. So by the figure you gave, the lease looks like a 8.4% vs 12% by capital one. You also didn't mention how long the lease was for. 24? 36? etc. If you lease, I'd advise not going into something longer than 36. Also, what is the residual % of the vehicle you are interested in? the higher the residual %, the better for you......as your "lease" total amount is less. Basically, you are paying for the depreciation of the car when you lease. You can find that information at cars.com

We leased a vehicle days after being discharged. We've had our issues of car loans being upside down. So knowing we would have a high apr on a car loan, I didn't want to take my chance right now of accuring another. We have a 24 month lease.....knowing that this is our "transitional" vehicle to increase our credit scores, etc. And we will be able to "walk away" after the lease is completed. Another question to ask is how many miles do you usually put on your vehicle a year. We are usually under 10k; so we didn't really have to be concerned about that.

I would research....maybe check out another vehicle/dealership and see what they can offer. Finding the right dealership/finance person can make a big difference. Remember that any inquiries (that are along the same line....auto loan, etc) on your credit report within 14 days are considered 1 hard inquiry as you are "shopping around".

[HHM]

Also, Cap One auto finance should not be the only place you check for auto financing because their interest tends to be higher. Did the dealership give you any finance options or did you only discuss a lease with them.

The reason most people get upside down in car loans is that they only focus on their monthly payment and go about buying the car the wrong way.

[yoyoma51]

Personally, my wife and I have always liked leasing.

Currently we own two car with no payments that we bought while pre-planning our BK.

We always did three year leases, that way we're always driving something in warranty at a reasonable cost.

Also, my experience has been while most people finance their car for 5 or 6 years (for the lowest payments, with no money down), they don't keep them that long. Because of this, they owe more than what it is worth for the first 3 - 4 years (so they really don't 'own' it anyway) and end up 'rolling over' the deficient balance onto their next loan.

I realize that buying a car and driving it until it dies is the smartest financially, but in our car crazy American culture that seems far fetched for many (my wife and I are both car nuts).

Just my 2 cents.

[Minnymouth]

Guess I'm NOT A TREND SETTER in my old 1987 Chrysler Lebaron, Huh???? Sure have gotten my money's worth out of it and it still looks like brand new.

All vehicles serve the same purpose.... they get you from point A to point B....

The only difference is most people like to travel there in STYLE.... and that you have to pay for...

My $.02.....

[brokeinmichigan]

Thanks all for your replies...for clarification,

HHM: I was a bit surprised about being approved for a lease, too. However, the finance mgr. @ the dealership said that recently they have been able to approve people for leases more easily than loans (post BK people, that is). Not sure why. We generally put less than 10K miles/year on our vehicles, as both my husband and I work only a few miles from home. I think we're leaning toward buying used, just don't want to be "upside down" on it, ever. My husband is nervous about leasing, since he's never done it (nor have I), and his good friend insists that it's NEVER a good idea. Not sure I agree with that, but whatever. Oh, also applied with HSBC, but the best they could do was 15.5% APR...NO THANKS! Could you elaborate on the right way to go about buying a car? You mention that most people get upside down because they go about it the wrong way. Thanks again for your insight!

TEDDY26: Yes, that's correct. Also, in my original post I mentioned the lease terms (36mos., $3500 down, $315/mo, RV was 17K (I think). I was thinking along the same lines as you....lower interest rate, rebuilding credit over relatively short time frame, then buying something after the lease is done and credit scores high enough to get low APR.

Thanks again everyone!

[teddy26]

I think many people are nervous regarding leasing as there used to be Open and Closed leasing......the open is when they could come back saying that you owed more on the car when you returned it. Those days are over and it is only closed-ended leases.....the "set" amount you pay over the duration of your lease.

Guess it just boils down to whether you put many miles on your car and how well you keep your car (cosmetically). As those are the two things that can impact you paying something when you return the vehicle.

Good Luck!

[CindyLou]

Didn't like my lease in the end. Was charged for extra mileage (had to change jobs in year one with a 20 mile commute instead of 5) and was rear-ended once and also had other body work done due to accidents and was charged for those incidents even though they were repaired properly. They also tried to charge me 100 bucks for each ding in the door over 2 per side.....living in Los Angeles, cars get very dinged with the tight parking and valet everywhere you go.

I take care of my vehicles and felt they did not treat me fairly on the return.

I feel more comfortable owning now that I have experience having to change jobs during a lease and felt helpless as far as the mileage accumulation. I got to the point where I cringed evey time I had to even go to the store because I new it was costing me 15cents per mile!

I ended up owing them 2300 which I included in my BK.

[emoney]

In this discussion I would like to offer some facts on this subject.

The most expensive miles driven in a car occur durning its first few years. So in a lease you are paying a rather high rate per mile or year of ownership in a lease becasue the car is new.
Then there is the problem in "over mileage or under mileage" to settle up at the end of the lease.
There is now tax savings in ownership or a lease.
So why are there car leases you ask. Well they are encouraged by the car makers becasue it helps them sell new cars.
Regards,
emoney

[Simrn]

It's all times Controversial...Lease Or Buy?
In my opinion, it all depends on the personal choice buying or leasing and more than the personal choice it also depends on the circumstances in which the decision is being taken! Always consider the financial comparisons of both options, and don't forget to develop an insight into the personal priorities of your own. The most important question you should ask yourself is: Is owing a brand new car every 2 or 3 years with no big repair risks more significant than long-term cost?