# Lease vs Buy...



## thecommish16 (Oct 16, 2006)

Well, I'm back. I NEARLY bought the Trailblazer SS3 AWD a couple days ago...but once again held off. Once I started to consider exactly how much I'd be laying out for a 41k chevrolet, I decided to think about a lease idea.

Who here leases and can tell why they do? Comments?

I've never leased a car, but at this point, I kind of LIKE the idea of getting a lot of car, and not having to be tied to a 41,000 dollar loan. 

The issue is, if I'm talking LEASE...then GTO, and everything else is back on the table...I was leaning towards the TBSS for the 0% finance...now I'm thinking of opening up the options by the lease idea. the thing is, how low does GM go on lease deals for REAL cars..not the malibu LS.


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## GTO JUDGE (May 14, 2005)

*I don't care for leasing.....

You only have one shot at a down payment. If you trade YOUR vehicle, you can do it once. After that when you trade in the leased car you have nothing other than cash to deal with. If you trade from lease to lease make sure you'll need no more money down to acquire the next leased vehicle. You'll need cash down with the leased trade in. Make sure you can budget 2K or more down every 3 years or so to jump from one car to another.

You are limited to miles driven, and are billed for miles over. Typically 12k a year.

If any damage is done, to the car, stone chips etc, they can dock you for it.

Balloon payments at the end of the lease, or take out a loan on the balance if you want to keep it. I've known a few people to take out a mortgage on a car. I cannot see paying on a car for 10 years. People tend to forget the large sum of money due at the end of the lease.

When you get rid of the car at the end of the lease and owe a ton of money on it.... well....you have a major decision to make.

Lease if you don't mind always having a car payment, and it's in the budget. Have cash flow at the end of the lease to jump from one car to another without stealing from Peter to pay Paul.

Leases were designed to get people in a car they could otherwise not afford. Drive now pay later. MOST people's needs change a few years down the road, and the commitment they made to always lease changes. If you change your mind at a later date, this is when you open yourself up for a massive amount of money owed on a car that is worn pretty good. 

Many like leasing. It all depends on your personal situation. Be damn careful if you want to lease, once you start the process you will in time incur a large amount of money owed. A few cars down the road if you decide you want to own is when you best have a pile of money to pay the lease off or take out a mortgage on that specific car.

My theory is if you cannot afford to own it don't take it. 

I will never lease a car. If I don't have the cash for it, or am willing to take a loan out on it... I don't need it.*


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## njmurvin (Jun 28, 2005)

Well, it's a give and take . . .

Don't lease: if you want to mod the car, if you drive a lot of miles, if you take comfort in "owning", if you like to change cars a lot (i.e. before the lease period expires)

Lease: if you use the car in your business and can write off the whole payment (consult your tax advisor), you like driving relatively new cars, you drive relatively few miles, you take good care of your car, you're willing to stay in the car for the duration of the lease

There are lease options with zero drive-off. So, you don't necessarily have to put thousands down every time you change leases. To me, the biggest advantages of leasing are:

1) It lets you drive a nicer car (for the same payment) than if you purchased
2) In some states, you only pay sales tax with each payment (not the whole purchase price)
3) You have a built-in buyer at the end of the lease. Most leases are closed end with pre-defined purchase options. 
4) The bank takes all the risk. If the bank guesses wrong about the future value of the car at the beginning of the lease and the car is worth more than they guessed at the end of the lease, you have the option of buying it at the lower price and selling it at a profit. If it's worth less than they guessed (more common in my experience), then they eat it. 
5) If you want to purchase the car at the end of the lease, some leasing companies/banks will negotiate with you (assuming the value is less than the option price).

Just some things to think about.


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## rockstr3 (Aug 24, 2006)

GTO judge said:


> *I don't care for leasing.....
> 
> You only have one shot at a down payment. If you trade YOUR vehicle, you can do it once. After that when you trade in the leased car you have nothing other than cash to deal with. If you trade from lease to lease make sure you'll need no more money down to acquire the next leased vehicle. You'll need cash down with the leased trade in. Make sure you can budget 2K or more down every 3 years or so to jump from one car to another.
> 
> ...



not neccesarily true. i am leasing my gto. you can get the lease to work for your driving situation. i drive a little bit more than most normal people, so instead of a 12k miles a year lease, i did a 15k. changed the payment a little bit, but not much. Most leases you can adjust the milage to how you need it. 

as far as damage, pontiac sent me a kit to tell what kind of damage i would have to pay for. its actually quite tolerant. If i have a dent and its smaller than the diameter of a golfball (more or less), i dont have to pay for it. A couple of the bullseyes on the windsheild are ok, but a big crack is not. Its just like if you were to trade your vehicle in, you would get docked on the amount you would get by the damage on your car they would have to fix.


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## thecommish16 (Oct 16, 2006)

I hear you about not buying what you can't afford...well thats the thing, I can afford to buy the TBSS especially with the 0%..what I don't like is the 41 grand in terms of IS this car worth that? Do I want this 40k plus car when it's 4-5 years old or more and starts the normal "replace brakes, tires, fix window leak, fix driver side power window" phase that all my GM cars hit? 

I like the idea, for at least this time, to lease the car for 3 years, fully under warranty, and in 3 years, do something else...maybe pick out a new lease, or buy something. 

I'm not doing it to get into a car I can't afford...I'm doing it out of convenience, and I think it's great to be forced to buy a brand new car every 3-4 years...sounds fun to me!!! 

As for miles, I've got 77k on an 8 year old car that I commuted with for 4 of those years...I don't drive much. the 15k would MORE than cover me.


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## BobG (Dec 20, 2006)

according to Consumer Reports, leasing (fleecing) is THE MOST EXPENSIVE way to own a car. You're PAYING for the privilege of taking the butt-kicking on depreciation of a new car so that the REAL owner (the lessor) doesn't have to.

I wouldn't lease. period. but, I also wouldn't get a 'new car' ... I'd get a one or two yr old one. let someone else pay for the depreciation.

I drive an 07 escape. it's a nice car. It's a company car. it's not a goat, but it gets me around. the goat's for weekends and vacation.


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## thecommish16 (Oct 16, 2006)

is it really? I have to look that up on Consumers. I hope ur wrong.


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## rockstr3 (Aug 24, 2006)

thecommish16 said:


> is it really? I have to look that up on Consumers. I hope ur wrong.


it is the most expensive way to own a car if you keep it past the end of the lease. if you are a person that wants a different car every 2.5,3,4 years then it makes a lot more sense. at the end of the lease you dont owe anything, but if you had financed the car you are responsible for the difference between trade in and what you owe


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## GTO JUDGE (May 14, 2005)

rockstr3 said:


> not neccesarily true. i am leasing my gto. you can get the lease to work for your driving situation. i drive a little bit more than most normal people, so instead of a 12k miles a year lease, i did a 15k. changed the payment a little bit, but not much. Most leases you can adjust the milage to how you need it.
> 
> as far as damage, pontiac sent me a kit to tell what kind of damage i would have to pay for. its actually quite tolerant. If i have a dent and its smaller than the diameter of a golfball (more or less), i dont have to pay for it. A couple of the bullseyes on the windsheild are ok, but a big crack is not. Its just like if you were to trade your vehicle in, you would get docked on the amount you would get by the damage on your car they would have to fix.


*
Not every lease is the same.... damage, miles driven etc. What I stated is an accurate overview of the entire process of leasing. Sure deals can be worked out, and leases are somewhat flexible depending on the dealer. What was offered you on a GTO may not be the same for say another brand car, or a GTO at a dealership in another state. 

One deal that can't be worked out though is the amount owed at the end of the lease. If you are leasing a car, be it a GTO or something else, you better be prepared for the process at the end of the lease. At one point or another, a sizable amount of money is going to be owed, and many figure they will worry about it when the time comes, and when it does, some are not prepared. I know a few instances of this. One in particular is a guy I worked with who leased a a F-150. At the end of the lease he owed a hell of a lot of money on it. So, he took out a 5 yr loan on it AFTER the lease expired. He ended up paying MORE for that truck, than what it was listed for on the lot. This is my warning to people who want to lease and drive now, and pay later. 

If one is having a hard time making payments on a credit card, and is paying the minimum, this type of mentality is easily carried over to a lease. The lease process is similar to paying on a credit card, except you have to pay it all off on a predetermined deadline.

Leases make sense for many different people, depending on their circumstances. You have to be disciplined and put money away for a pay off, or be prepared to take a loan out to satisfy the lease if you choose to purchase a vehicle out right. 

If you want a GTO NOW and can't afford it so you take a lease out for say 3 years, and at the end of that lease say you owe 20K, you take a loan out for it, now you have an 8 yr loan. Calculate the money paid on that car, and it's very easy that you could have paid more for that car in the long run than you would have if it were purchased new. Dealers love leases. I wonder why :lol:

Today you like the idea of a lease, you get one.... 2 years down the road, your circumstances change. You have 1 year left on the lease and a fortune in a balloon payment.... What ya gonna do? What's the penalty for breaking a lease. OK, so your lease has a clause to let you break it. What about your trade in? How much did you get for it? Bottom line....you're out a ton of money. All because you had to have it now, and couldn't afford it. 

If you chose a lease, be damn sure you know what you are getting in to. For me, I want no parts of one. For others, depending on their circumstances it makes sense. 

*


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## tanktronic (Jul 7, 2006)

*Owed at the end?*

Judge,

What are you talking about owing money at the end? I have leased 6 cars, and have never even heard of owing money at the end of a lease - that's what makes it a lease, you don't owe at the end. 

One option is not "better" than the other, or both wouldn't exist. It's a matter of preference. If you want a new car every 3 years, it's easier to lease, if not, it's easier to buy. You're paying for depreciation and miles no matter what you do, it's a bad investment either way. 

For the record, there is nothing more irritating than someone who drives a 8-year old P.O.S. talking about how their car is paid off, like they're some kind of financial genius. If I lived in an outhouse, I wouldn't brag about not having a mortgage. We get it.


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## GTO JUDGE (May 14, 2005)

*It's called a Balloon Payment. There is not way you are going to lease a car for 3 years and have it paid off. I am not referring to trading a car lease, for lease.

As long as you lease you won't be subject to this.... At some point in time, if you chose to break the lease, or buy a car outright, you are going to owe the balance of that car. Hence...Balloon payment. 

If you could pay off a car in a 3 year lease, why would anyone take out a car loan.*


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## lotaguts (Jan 17, 2006)

A little off topic but if we based what we drove on what we can afford I am willing to bet that a high percentage of this Forum would not be driving GTO's. Majority of us would say that financial burden of owning a GTO is not the most comfortable but we sacrifice just like the other material things in life that we cannot afford life but end up buying.


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## GTO JUDGE (May 14, 2005)

tanktronic said:


> Judge,
> 
> What are you talking about owing money at the end?


*At the end of the lease you will owe money on the car. Extend the lease, trade it in for another leased car, or decide to purchase the car outright.

In any case.... There is a hefty balance due at the end of the lease. How you choose to satisfy it will dictate how much you stand to lose. Unless of course you have money saved to satisfy the balance without due costs.*


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## GTO JUDGE (May 14, 2005)

lotaguts said:


> A little off topic but if we based what we drove on what we can afford I am willing to bet that a high percentage of this Forum would not be driving GTO's. Majority of us would say that financial burden of owning a GTO is not the most comfortable but we sacrifice just like the other material things in life that we cannot afford life but end up buying.


*
MANY people choose to live above their means..... They are the one's more susceptible to run into financial trouble.

If you over extend and it gets out of hand, sooner or later the hole you dug gets too deep. *


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## rockstr3 (Aug 24, 2006)

GTO judge said:


> *At the end of the lease you will owe money on the car. Extend the lease, trade it in for another leased car, or decide to purchase the car outright.
> 
> In any case.... There is a hefty balance due at the end of the lease. How you choose to satisfy it will dictate how much you stand to lose. Unless of course you have money saved to satisfy the balance without due costs.*


the only reason that you would owe money at the end of a lease (at least the way leases are set up here in washington state) is if you decide to keep the car, or there is damage on the car, or you went over milage. If you think you are gonna keep the car as long as possible before you even start the lease, then you shouldnt lease because you are taking the longest possible route in terms of paying the car off. if you break the lease before its over, of course you are gonna owe a lot of money.. you agreed to a contract to use the car for a certain amount of time and if you break that, you have to compensate for the payments you should have payed. 

all in all, if you think you woudl only want to drive a gto for a couple of years, then the lease makes sense. if you are the kind of guy who wants to have it as long as possible, then leases dont make any sense at all.


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## GTO JUDGE (May 14, 2005)

rockstr3 said:


> the only reason that you would owe money at the end of a lease (at least the way leases are set up here in washington state) is if you decide to keep the car, or there is damage on the car, or you went over milage. If you think you are gonna keep the car as long as possible before you even start the lease, then you shouldnt lease because you are taking the longest possible route in terms of paying the car off. if you break the lease before its over, of course you are gonna owe a lot of money.. you agreed to a contract to use the car for a certain amount of time and if you break that, you have to compensate for the payments you should have payed.
> 
> all in all, if you think you woudl only want to drive a gto for a couple of years, then the lease makes sense. if you are the kind of guy who wants to have it as long as possible, then leases dont make any sense at all.


:agree :cheers


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## njmurvin (Jun 28, 2005)

Try to think of it this way:

If you take out a lease WITH the expectation of keeping the car after the lease expires, it becomes equivalent to a balloon payment loan - which then would require a hefty payment at the end of the lease term. If you didn't do it this way, it would be a more conventional loan with much higher payments.

If you take out a lease with the intention of giving it back at the end of the lease, think of it more as a rental where, in each payment, you are covering the cost of (1) depreciation over the term of the lease, (2) interest on the purchase price of the vehicle and (3) sales tax. As someone else mentioned, if you have excessive damage or mileage, you have to pay for that at the end of the lease. But, this would reduce the value of a purchased car as well.

Generally speaking, the more attractive lease packages are associated with cars that have higher than average resale (residual) values, factory subsidized lease rates (i.e. lower than average interest rates) and/or factory sponsored discounts (i.e. cap reduction). Higher residual combined with lower cap cost means that the monthly depreciation component of your lease will be less. Lower cap cost combined with factory subsidized lease rates reduce the interest component. Sales tax varies with the state. In California, you pay sales tax only on the monthly payment - not the full purchase price of the car.

For example, right now Honda has a promotion for the Accord Sedan EX-L V6. The car stickers for $27k+. However, because of the high resale (residual) of the Accord, the discount (cap reduction) from the factory/dealer and low factory-subisidized interest rate, the monthly payment is only $269 + tax with a $2199 drive off which includes the first payment.

All that said, I don't think the GTO necessarily represents a good lease candidate. The residuals are not that great. There is no factory subsidized lease rates of which I'm aware. However, the discounts/rebates could be used to reduce the cap cost.


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## hardball75006 (Aug 4, 2006)

With the resale value of the GTO droping like a rock, I am glad I leased it. Let GM take the hit on depreaciation.


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## GTO JUDGE (May 14, 2005)

hardball75006 said:


> With the resale value of the GTO droping like a rock, I am glad I leased it. Let GM take the hit on depreaciation.


*The GTO can depreciate all it wants. The fact of the matter is GM will not take a loss. Depression is built in to a lease. GM is not in the business of taking a loss on a lease. The leasee takes the loss. The bottom line is what you took the amount of the lease for, and what the payoff is at the end of the lease should you convert that lease in to a loan to purchase it out right. 

Just curious... Would you be willing to divulge the amount owed at the end of the lease before the lease is transfered to another lease, or amount owed to satisfy the outstanding balance?*


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## hardball75006 (Aug 4, 2006)

I can't say it any other way except you're wrong. When I make my last payment I hand them the keys and walk away.


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## GTO JUDGE (May 14, 2005)

*OK :cheers 

I suppose if one puts money down, and pays the terms for the lease period and then walks away,(if your lease allows that) perhaps you can do that. I don't know of anyone who wants to do that. Losing your trade, and or losing the minimum cash down to drive a car for a few years then give the keys back and walk away with nothing and start over, IMO isn't the brightest thing to do..... No offense. But there isn't car out there worth doing that for. *


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## hardball75006 (Aug 4, 2006)

I don't know where you are getting your leasing information from, but you either don't understand the concept, or have been talking to a very messed up leasing company.

So you would rather own something that will loose value? Now who is being smart?


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## GTO JUDGE (May 14, 2005)

hardball75006 said:


> I don't know where you are getting your leasing information from, but you either don't understand the concept, or have been talking to a very messed up leasing company.
> 
> So you would rather own something that will loose value? Now who is being smart?


*OK... I have all my facts messed up... 

The only tangible thing I know of that doesn't lose value is real estate. Own a car or lease it, it loses value. *


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## hardball75006 (Aug 4, 2006)

GTO judge said:


> *OK... I have all my facts messed up...*


You do in my case.


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## GTO JUDGE (May 14, 2005)

hardball75006 said:


> You do in my case.


:cheers


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## thecommish16 (Oct 16, 2006)

I have to say theres SO much to read about this....spent the last 2 nights on here reading and reading...it's such a debate. 

The only way you really WIN with the lease is with an example like the Honda you gave..or a BMW lease. It has to be LOW for the amount of car your getting...it has to be a SPECIAL. If you try to lease a GTO, the price is outrageous right now. Even the TBSS I want, same story, insane quotes for monthly payment. I can lease a BMW or Mercedes for 36 mos WAY cheaper than the Trailblazer lease quote I got.


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## njmurvin (Jun 28, 2005)

thecommish16 said:


> I have to say theres SO much to read about this....spent the last 2 nights on here reading and reading...it's such a debate.
> 
> The only way you really WIN with the lease is with an example like the Honda you gave..or a BMW lease. It has to be LOW for the amount of car your getting...it has to be a SPECIAL. If you try to lease a GTO, the price is outrageous right now. Even the TBSS I want, same story, insane quotes for monthly payment. I can lease a BMW or Mercedes for 36 mos WAY cheaper than the Trailblazer lease quote I got.


And that's likely due to the lousy projected resale values as compared to Honda and BMW. The finance company behind the lease are not a bunch of idiots. Since they take all the resale risk on a closed end lease, they have to be conservative when determining residual values. There's no crystal ball here - it's mostly based on historical data. And, unfortunately, Detroit iron doesn't have a history of high resale.


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## njmurvin (Jun 28, 2005)

GTO judge said:


> *OK... I have all my facts messed up...
> 
> The only tangible thing I know of that doesn't lose value is real estate. Own a car or lease it, it loses value. *


Truer words were never spoken . . . unless you happen to own one of the Barrett Jackson "lottery" cars (e.g. hemi cuda convt, cobra, big block vette, etc.). In fact, there were some very collectable (=$$$$) 60s GTOs as I recall. Who knows where these current platform GTOs might be in the Barrett Jackson auctions of the future?


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## GTO JUDGE (May 14, 2005)

njmurvin said:


> Truer words were never spoken . . . unless you happen to own one of the Barrett Jackson "lottery" cars (e.g. hemi cuda convt, cobra, big block vette, etc.). In fact, there were some very collectable (=$$$$) 60s GTOs as I recall. Who knows where these current platform GTOs might be in the Barrett Jackson auctions of the future?


*
Funny, many people who own classics that are in decent shape think they can command the same kind of $$ Barrett Jackson brings. Because of this, people who want one can't afford one because of that. Take a look on Ebay and look at some classics that are over priced for the shape they are in.

And to think most of us had cars similar to what you see on Barrett Jackson and never realized just what we had.*


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## njmurvin (Jun 28, 2005)

GTO judge said:


> *
> Funny, many people who own classics that are in decent shape think they can command the same kind of $$ Barrett Jackson brings. Because of this, people who want one can't afford one because of that. Take a look on Ebay and look at some classics that are over priced for the shape they are in.
> 
> And to think most of us had cars similar to what you see on Barrett Jackson and never realized just what we had.*


Yeah. I can only imagine what my 55 Chevy 2-dr hardtop with a 327 vette engine would bring today. I think I sold it for $500. I remember 57s were all over the place for under $500 - convertibles even less.


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## dmzz (Dec 29, 2005)

It seems like a lot of people have missconceptions about leasing here. Every lease is different. You have to find out the details and make a comparison before you can say if leasing or financing is a better deal. Here is a very good website to learn the in and outs of leasing:

http://www.leaseguide.com/index2.htm


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