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Any advice: vehicle lease vs. buy?

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DownEastDeac

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I've always bought reasonably-low mileage vehicles, then held on to them for years, i.e. up to 10 or more. I don't ever see myself buying new b/c of the rapid depreciation in value, but wondering if a lease could make sense b/c of the safety & comfort features of a newer vehicle, less maintenance costs of an older vehicle, etc. I haven't put pencil/paper to any of this, just wondering if others have thoughts either way.
Thanks-
 
if you lease a new car, you're still paying for the depreciation on day one. If you want a new car, it's a way to manage the monthly outlay down, and then if you like it you can buy it used at the end of the lease term.
 
Big consideration for lease is the number of miles you drive vs "allowed" miles in lease. Real bummer to realize you are out of miles with four months to go on your lease. So you can't drive, or pay some ridiculously high cost per mile for overage.
 
DownEastDeac said:
I've always bought reasonably-low mileage vehicles, then held on to them for years, i.e. up to 10 or more. I don't ever see myself buying new b/c of the rapid depreciation in value, but wondering if a lease could make sense b/c of the safety & comfort features of a newer vehicle, less maintenance costs of an older vehicle, etc. I haven't put pencil/paper to any of this, just wondering if others have thoughts either way.
Thanks-
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It's funny you say this because with the insane used car market the last few years, this hasn't really been as true (or at least buying used doesn't help avoid this).

I just traded in a car I purchased new in 2014 in 2022 for nearly 5k more than I bought it for, fucking wild stuff.
 
i mean, are you considering the car an asset? why do people care so much about depreciation when buying a new vehicle
 
I was raised to never buy new and never lease, that a new car loses x% of its value the minute you drive it off the lot, etc. I think a lot of that has changed now for a few reasons.

First, the creation of CPO programs. Being able to buy an almost-new car with a full warranty is a good value prop, and seriously eats away at the money you save from buying used. Second, the complexity of cars today versus 20 years ago is significant. Safety systems, cameras, drive-by-wire, electronics - so much of the systems are integrated you can have a minor issue and it's $500+ easy.

Finally, most folks these days are going to finance a purchase. If you're going to buy a car in cash you can disregard this, but you can typically get much lower rates on new cars than used, and that also helps drive the CPO market. Especially with the used car market being so crazy right now, when you add up money saved on interest and maintenance if really can be straight up more affordable to buy new.

As for leasing vs buying, I think you just have to grind the numbers. Some lease deals are truly terrible, some are extremely good. And don't overlook your end-of-lease options. I leased my current car pre-pandemic (first lease ever), and the buy-out at the end was like $10k less than the value of the car now so I just bought it. The rate built into the lease when I got it was so far below the purchase rate that it made more sense to lease-then-buy vs buying it to start. In hindsight it was an even better deal that I expected. There are often some hidden fees, costs, and extras built into leases, so I ended up building a spreadsheet to track them all.

Final piece to me is just how much you care about or enjoy newer cars. I got caught once with an older car that kept bleeding money - timing belt here, water pump there - I could have covered a year of lease payments with the cost of the repairs. Plus it was old and boring. I swore to never do that again, but definitely know plenty of folks who just want to spend as little as possible on cars and don't care. Once the deals on new cars got into the "pretty close" range it was no-brainer to me.
 
DCDeac said:
I was raised to never buy new and never lease, that a new car loses x% of its value the minute you drive it off the lot, etc. I think a lot of that has changed now for a few reasons.

First, the creation of CPO programs. Being able to buy an almost-new car with a full warranty is a good value prop, and seriously eats away at the money you save from buying used. Second, the complexity of cars today versus 20 years ago is significant. Safety systems, cameras, drive-by-wire, electronics - so much of the systems are integrated you can have a minor issue and it's $500+ easy.

Finally, most folks these days are going to finance a purchase. If you're going to buy a car in cash you can disregard this, but you can typically get much lower rates on new cars than used, and that also helps drive the CPO market. Especially with the used car market being so crazy right now, when you add up money saved on interest and maintenance if really can be straight up more affordable to buy new.

As for leasing vs buying, I think you just have to grind the numbers. Some lease deals are truly terrible, some are extremely good. And don't overlook your end-of-lease options. I leased my current car pre-pandemic (first lease ever), and the buy-out at the end was like $10k less than the value of the car now so I just bought it. The rate built into the lease when I got it was so far below the purchase rate that it made more sense to lease-then-buy vs buying it to start. In hindsight it was an even better deal that I expected. There are often some hidden fees, costs, and extras built into leases, so I ended up building a spreadsheet to track them all.

Final piece to me is just how much you care about or enjoy newer cars. I got caught once with an older car that kept bleeding money - timing belt here, water pump there - I could have covered a year of lease payments with the cost of the repairs. Plus it was old and boring. I swore to never do that again, but definitely know plenty of folks who just want to spend as little as possible on cars and don't care. Once the deals on new cars got into the "pretty close" range it was no-brainer to me.
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Had the same experience with my prior lease - the residual was about $9k less than the going FMV of the car at the height of the used car market, so I bought it, but then immediately sold it back to the dealer and got a new lease. I lease because I like cars, get bored fast and will always be the person that is getting something new every 2-3 years.
 
Even when I bought my first new car in like 2007 it was about the same price as the same model but couple year old low mileage CPO version that I was originally looking to buy. So unless I’m willing to take a leap on something without that sort of manufacturer certification/warranty I’ll just buy new. We keep cars for a while anyway.
 
I hope used car prices are going down. When I bought my Subaru a few years ago, I was looking for a used car I could throw a bike on and get dirty. The savings for a used one was < $2 and to me, it made sense to just get a new one.
 
One great thing about COVID was the streamlining process of new car buying. I was haggling on a new Palisade and waited until near end-of-month. I made a pitch and the sales guy was like zero chance we're doing that. Then he called back on the 30th and said he'd do it if we could do the deal today. I was working from home and it was pouring down rain - the guy ended up driving the car out to me, picking up our trade-in for us, and prepping all paperwork ahead of time. We drove it around the block, signed the docs, done deal. Took under 30 minutes. It was incredible.
 
DCDeac said:
One great thing about COVID was the streamlining process of new car buying. I was haggling on a new Palisade and waited until near end-of-month. I made a pitch and the sales guy was like zero chance we're doing that. Then he called back on the 30th and said he'd do it if we could do the deal today. I was working from home and it was pouring down rain - the guy ended up driving the car out to me, picking up our trade-in for us, and prepping all paperwork ahead of time. We drove it around the block, signed the docs, done deal. Took under 30 minutes. It was incredible.
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congrats on the sex
 
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