YZER

I have been looking at getting a used 04 for a little while now. There is actually a blue on right by where I live that I may be buying pretty soon. Then yesterday my dad offered me a lease deal on an 05. He is the GSM of a honda dealership. Right now I have $10000 to put down. He said I could put $5000 down, put $5000 in the bank and pay $257 per month for 36 mo. At the end of of the 3 years, I have the option of buying the car for about $19075. This is also for 15k miles per year and I calculated that I drive 20k a year. He said that I could do the downpayment, residual, and miles however I want.

I have done a few calculation as well as my dad and he said I can actually save some money over buying it new by doing it this way.

I have never leased a car before and actually never even thought about it until my dad offered me this deal. Please tell me what you guys think, I have no idea what I am going to do. Thanks alot,

--Mark

aldersonjames20

Ahhh, the old lease or buy question.... too many variables in everyones position to actually tell you whats best for you, but I would say that the 400 bucks a month that you will be paying ((5K/36mths) + 257 = 396), your not getting the best deal I have heard of for a lease. I leased mine last year when MY05's were coming off the trucks and got really close to that same deal. Your dad should be able to get a much better deal than that for you... hopefully. Let us know what you decide to do.

YZER

How much does it cost if you were to be over your miles at the end of the lease?

steven975

I think it is 15-20 cents a mile. read the contract.

honestly, i would try to find a nice MY02-MY03 and BUY it.

Find one for about $22K, put 7K down and you'll pay about $300 a month for 60 months and OWN it.

the thing with a lease is you don't own it. You are merely paying the insane depreciation on fthe first 3 years. If you buy the 02-03, you will NEVER be upside-down on it and you can sell it at any time. You're not locked into the 60 months like you would be with the 36 month lease. You'll always have some equity in the car.

My situation. I bought a MY01 last year for $22K. It got rear ended last month and totalled. I got $24K (with extras, I got $20.5K+tax for the car) on a car I owed $18.2K on.

YZER

I have a 2002 right now. I bought it a year and a half ago for 20k and Im selling it now for 20k. Actually there is a blue 04 in houston right now, exactly what im looking for going for $26455. I went and looked at it yesterday and its flawless with 6500 miles on it. If I do not get this one due to the buyer of my car not getting his loan quick enough, I was thinking about leasing the 05.

On another not, when you finance a car you dont actually OWN it either. And I have never had a car long enough to pay off a car.

I do agree with you on being locked in though. He told me I could get out and pay the difference. How would I figure out how much that would be?

Sorry I am a newbie to leasing, I have never even considered it until my dad offered this to me. Im actually just hoping everything on this one in Houston goes through. Thanks for the responsed.

--Mark

PilotKD

Yes, this is exactly right and I always laugh when people use "owning" a car as a reason for financing a car for 4-5 years because, you don't own it. Tell the bank you own it when you stop making payments on it. Either way, leasing or financing, you don't own the car. So, as you finance the car for 4-5 years, it is depreciating. In the meantime, you are still paying your $300, $400, $500 a month on the car 4 years after you drove it off the lot.

The best part about leasing is that you can drive a nice, new car off a lot with very little or no money down and have a reasonable monthly payment. No, you don't own the car and yes, you are mileage limited and locked into a contract. However, if you've owned cars in the past, you should know how much you drive and how many miles you put on a car in a year. Also, you can always buy a car out of a lease and sell it, which gets you out of the contract. You will probably end up losing some money, but you can't get out of it without ruining your credit.

Lets say you pick up a new S2k for $30,500. After 6.5% tax and tags, you walk out the door for $32,600. You put $20,000 down on the car and finance $12,600 over 60 months at 2.9%. After 60 months of paying $225.85, you put out $13,550.76, or $950.76 in interest. Now, assuming you actually drive the car as a daily driver like I do and put 12-15k miles on it per year, after 5 years, you've got 60-75k miles. A 5 year old S2000 with that kind of mileage is not going to be worth much more than $17-18k. So, say you sell it and get $18k for it. You threw $20,000 into it and payed almost $1,000 in interest. You can't even get your down payment back. In my opinion, throwing that much money into something that is going to depreciate is a waste.

Now I'm sure there are many success stories of people buying low and selling high and if you can manage to do that, more power to you, but that's a gamble and when the time comes when you want a new car NOW and don't want to wait for that golden customer (aka sucker) to walk up and pay top dollar for your used car, owning a car becomes a PITA.

There are lots of variables in a lease that you don't normally get to see. You need to know the selling price of the car, the residual value and the money factor (interest rate). With those 3 things and the length of the term, you can figure out a lease payment. You also have to find out if there are any fees associated. Normally there will be a acquisition fee and a security deposit. Sometimes there may be a termination fee. Lots of things to find out. By the looks of it, your father is giving you this car for about $28,000. Now I don't know what your tax is and what money factor he is basing this on, but I used 6.5% and .0024 with your residual, a price of $28,000 with $5,000 down and it comes out pretty close to $257 a month. Preferably, you would not want to put down that much money on a lease. Try to have him work you a no money down lease or maybe a grand tops. Your monthly payment would probably be a bit under $400. If you did a 48 month lease, it'd be low $300's.

steven975

one big difference between leasing and "owning"

2 years into the deal, the car is stolen/totalled, whatever. Assume that the amound you owe is less than the value of the car.

when you "buy" you get that extra money. When you lease, the lessor gets it.

NewR

or it can go the other way.

At the end of the lease, if the market value of the car is higher than the residual value you can sell the car and pocket the extra. If market value is less, you simple return it and the lessor takes the hit.

PilotKD

It's not very often you finance a brand new car for 4-5 years and be ahead in the game two years into it. I mean if you put $20,000 down and pay $225 a month for 24 months, you've put $25,400 into the car over two years. If you can get more than $25,400 for a 2 year old S2000 with a significant amount of mileage (12k a year), you'll be lucky. Edmunds.com is telling me my '04 with 21,000 miles in oustanding condition is worth $25,019 private sale and $27,677 dealer retail. I'm not sure where an insurance company's numbers will be compared to those figures.

Chazmo

If you're financing -- leasing or loaning -- why would you put $20K down? I would suspect that's a very uncommon situation.

If you own property (I realize the original poster is young and probably doesn't, but just for reference...) look into a home equity loan or line of credit with which to finance the purchase. You can deduct payments on the loan.. Of course, backing a loan with property is risky if you have any likelihood of being unable to meet your obligataion