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Do you buy or lease your cars?

Which option do you use, and why?

  • Finance through the dealer

    Votes: 16 20.5%

  • Finance with a loan from a bank/credit union

    Votes: 29 37.2%

  • Buy with cash outright

    Votes: 35 44.9%

  • Lease

    Votes: 3 3.8%
  • Total voters
    78
D

DrummerDeac

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Which option do you use, and why? If you have multiple cars, feel free to vote more than once:

1. Finance through the dealer
2. Finance with a loan from a bank/credit union
3. Buy with cash outright
4. Lease
 
This is a good topic. I was very close to buying a new car and financing it through the dealer a few months ago.

I'd be interested to see the rationale behind people who lease their cars.
 
TWDeac said:
You did :)

I merged them for you.
Click to expand...

Thanks! I too am interested in hearing people's rationales, especially since it seems like a good number of posters really know what they're doing w/respect to negotiating with dealers, based on RTQ's thread a while ago.
 
I swore I'd never buy a new car... Then I bought 3 straight new cars. Here are a few reasons:

1) Resale (obvious) - Plus I tend to get very popular configurations of very popular cars that have great resale value

2) Interest Rates - Never paid over 0.9% for a new car interest rate. Used cars typically don't come close.

3) CPO - genius move by dealerships. That gap between a new car and a used car in value? CPO it and get it back. Jacks up used car prices.

4) Haggling. People underestimate how much haggling can be done on a new car. Never paid over invoice. Car buying services help.


I like getting a new car every few years, which is when they say leasing is a good option, but if you buy new, get good deals, sell privately, and don't mind having a monthly payment all the time - I still think you come out ahead buying. Lease fees are extremely high. With this method, you can either stay in the same type of car and slowly lower your monthly over time, or you can keep your monthly the same and get nicer cars - ie buy car, pay off cheap loan for two years and sell, put money into next car which lowers payments, rinse, repeat.

The type of person I would not recommend this strategy to is someone whose goal is to get a car that will run for 200k miles, and they love having a car with no payment and will "drive it until it dies." I admit I never want to do that. Modern cars are so expensive to fix and maintain that I think it's easy to get caught with multiple years of $3k+ repairs. One repair can be as much as an entire year of monthly payments of a recent model car at that point.
 
I bought a new car 9.5 years ago. Low miles, still runs great & it's paid for. Fine if I continue to drive it for a while, though if a promo comes through at work and my pay goes up enough, I'll be shopping for a new ride.

Wife is like her father - must have a new car every couple of years. Threw in the towel a couple of cars ago and just went the lease route for her. Just finished negotiating the new terms on her new car. Reminded me (1) just how slimy car salespeople are, and (2) negotiating 100% via email is the only way to go.
 
It's amazing how much of a deal you can get when you come ready to pay cash at the end of the month/year.
 
Bought my 2003 model car on eBay in 2005. It's a $21,000 car that I bought for $13,000 with about 15,000 miles.

Still use it today though will probably pass it on to my brother in the next year. Hoping for an awesome graduation present in the form of a new car or at least some help with it financially.
 
You can really haggle on new cars. The used market is very different I have found. I think this is mostly because you search for a specific car online and they have the "internet price" which is usually 2-3K less than the price on the vehicle on the lot. With new cars, you just kinda go to the dealership, find one with your options and haggle. I had two separate Acura dealerships refuse to drop the price of a used RL. Not even $500 off the internet price. I did not buy from them.
 
dot com said:
It's amazing how much of a deal you can get when you come ready to pay cash at the end of the month/year.
Click to expand...

I understand end of month opportunities but would note that car dealers also make money on the spread when they do a car loan. Their rates are usually pretty good. I am not sure how it works with promotional rates on new cars.
 
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1. Bought my truck straight cash homey because it was a white whale well-below-invoice newspaper advertisement vehicle that I didn't want them juicing me on by building in additional financing fees and exorbitant rates to make back their money.

2. Financed the wife's car through the manufacturer because 0.9% financing so, once the price was negotiated, no reason not to borrow the money at that low rate.

3. We've got a disabled child who needs specific educational care during the day, and the most qualified girl didn't have reliable transportation, so we lease her a cheapo Kia as part of her compensation to keep the actual cash outlay down but still not have to worry about her car, but we're not out too much if she bails at any point.

So, different reasons for each choice.
 
DCDeac has great advice on this topic. I always thought buying a new car was a waste of money until I actually thought about it, but between lower interest rates, better resale value, and high maintenance costs on old cars, the actual cost is pretty comparable -- but you end up in a much nicer car.

When I was making my decision I did the math on the model I wanted, and the difference in cost between buying a new car and a five year old one was less than $2,000, without taking into account the warranty, maintenance costs, peace of mind or new car smell. And I ended up with a lot nicer car.
 
Yeah, you can't beat the new car smell!

What are people's thoughts on getting a better deal when offering cash vs. using a dealer's financing? I know 0.9% sounds like a bargain, but I always thought they just incorporate a better return into it (for example, with their financing you'd pay a higher price than you would with cash - so although you are only paying 0.9% on the loan, it is at a higher price, and they are really still getting a 6 or 7% return).

Would a dealer rather you pay cash, or use his financing?
 
My wife's car is a salvage title 2003 Ford Windstar. We ended up getting into it for 7K when the blue book in a clear title was 15K for the same car. It's been great. Have about 5 years in it, and we could sell it for 4 or 5 K right now.

I just bought a 2011 Hyndai Elantra Touring that had 3K miles on it but was beside another car that caught on fire. My guy just about has it repaired. It ran about 10K.
 
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If you can pull it off paying cash is absolutely the way to go. Even if you get "0% financing" you aren't really - there's certainly an implied rate because they'd give you a much lower price if you paid cash.

Obviously it's not feasable for everyone, but I'm conservative enough on these things that I'd rather buy a lesser car for cash than more care with a payment. If I did get a payment, I would not dealer finance - I'd go with a bank/credit union.
 
I had the price settled upon before the financing even started, and getting 0.9% APR is essentially getting free money. Plus, it's a pretty huge credit boost.

I also believe the dealership gets a little additional kickback if they finance.
 
How can your resale value as a percentage of purchase price be better on a new car than a used one?
 
bought a car in January and paid cash. Probably should've financed it because that's the "smart" thing to do. But I didn't want to go through with the hassle and I hate the idea of auto loans. In my opinion, if you can't pay cash then you can't afford it. I also bought it from a private party so cash was a lot easier
 
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