PilotKD

Well of course you don't have to put that much down, but then you'll have a $600+ monthly payment and give more money to the bank in interest.

YZER

Thanks for all of the helpful responses guys! I will find out tomorrow hopefully if I can pick up the suzuka in Houston (Keeping my fingers crossed). If not than I may start considering the lease. I still have some more research to do before I start that process but the responses helped alot. Thanks again,

--Mark

YZER

Also with the depreciation topic... Thats why I always buy used cars. You dont take such a large hit of depreciation as you do when buying new. Like I said, I got lucky with my car. Bought it a year and a half ago for 20k, and Im selling it now for 20k. Thats how I have so much equity right now to put down on this car.

aerialcam

I just picked up an S2000 with the Honda lease deal. Since the money factor (interest rate) works out to about 2%, you might want to think about holding on to that down payment and investing it or even just keep it as cash on hand. I've leased all of my vehicles for the last 10 years and don't believe it's worth tying up money in a car just to reduce the payments.

With just drive-offs down I'm paying $335 a month before tax. The other bonus is you are only paying tax on your monthly payment, not the entire purchase price of the car.

As for the depreciation being 'insane' the residual on the AHFC lease deal is 59% which is really good. Besides, I'm not interested in owning any high-performance car out of warranty.

Another misconception is that you are 'locked in' to a lease. Not true at all. You can sell it or buy out the lease at any time. All you owe is the residual value and the depreciation portion of the remaining payments. I sold my 2000 Integra Type-R one year after I started leasing it for exactly that. Didn't cost me a dime other than my payments.

Chazmo

Oh, OK. I guess I was just looking to try to give this poster a reasonable comparison of the options. A normal car loan (compared with lease) would more likely be a small down payment with, yes, much higher monthly payments than a lease. But, then, you need to factor in what happens after the lease is up.

I think ifyou run the numbers, you'll find that leasing doesn't make sense if you're planning to keep the car after the lease ends. For short-term ownership (and low mileage), though, it might make sense.

aerialcam

Unless you put a significant amount down or buy the car outright, that's not likely to happen. If you lease, you should get gap coverage from your insurance company (not from the dealership) to cover the difference if the car is a total loss. I'm paying an extra $24 per year for the coverage.

If you buy the car outright, you are on the hook for the difference between the price for the car and the depreciated value the insurance company will give you. Two years into the deal might not be so bad, but if something bad happens in the first six months, you're pretty much screwed.

I'm not sure how gap coverage works on loans with large down payments or if it's available for outright purchases. Maybe someone else has some insight on this.

aerialcam

Just for fun, I ran the numbers for a 5 year loan at 4.9% compared to the 3 year Honda lease deal. It's difficult to directly compare a lease to a loan, so I figured it would be good to look at the numbers after the 3 year period.

The loan payment works out to $611 per month as opposed to $365 per month on the lease. So you are paying an additional $246 per month.

The interest paid after 3 years on the loan is $3483 as opposed to $1440 on the lease. So you are paying an additional $2043 in interest charges.

However, the amount owing on the car after 3 years on the loan is $13949 as opposed to $21500 on the lease. Which is a difference of $7551. It sounds like a significant difference. However, the extra $246 per month adds up to $8856. So you've still paid an additional $1305.

These numbers assume a purchase price of $30000 even and a tax rate of 8.25% (Los Angeles County) The $21500 is the residual value with tax added, which is what you would have to pay if you bought the car at the end of the lease term.

Of course, if you financed that $21500 for an additional five years, you would pay an additional $2785 in interest for a total of $4225. The total interest over the 5 year loan would have been $4206. Kind of works out the same...

Leasing is probably not the answer for everyone, but in this case it just might be. If you ran the numbers with a standard lease deal, you would likely find that financing would be the better deal for long term ownership.

rich337

i got the same deal as you, except i pay a little more ($373/month with 8.25% tax) for 15k miles. the money factor was .00085 (~2%) also.

this is the first car i have leased, mainly because i wanted to keep the cash i received from selling my last car (which i "owned"). just like you said, i wanted to use that money for investing/saving rather than using it as a down again.

PilotKD

Is this 3 years or 4?

YZER

If you are asking me, its 3 year.