amongmany

Ok, I have never leased a car so bear with me on this one. Out of curiousity, I was checking out the S2K's listed on leasetrader.com. One example that I found had 50 months remaining at $444/mo with a lease end buyout of $17,100. Now, by my calculations, one would pay $22,200 over the course of 50 months in lease payments, and then if you wanted the car, you'd have to pay another $17,100? Correct me if I'm wrong, but wouldn't you be paying upwards of $39000 for an S2000? What is the advantage of a lease then? Please understand, I'm not trying to flame anyone for leasing, I just don't entirely understand how it all works. Can someone explain this to me?

ntphan

I have never lease before either. This is my understanding of it. Somebody else can correct me if I am wrong. If you intent to buy a vehicle in the first place, then leasing will often, if not always, cost you more than financing in the end. If you just want a new ride every several years, then leasing is for you if you maintain the vehicle well and drive under the milage limit. In this case, finance can be more expensive, especially for vehicles that depreciate quickly.

V8NV-mys2k

IMO, you lease if you can not afford to buy. I might have been able to float buy payments, but it would have killed any extra $ I would have had. I lease because it is all I can afford to do. Even then with my buyout at 14K, after 5 years, IMO the car should hold value better then that, especially if they discontinue in MY03. My payments are not 444 though, I got them for 400w/tax, in the end if I buy the car when lease is up, I guess I end up paying just a bit over 38K, I can live with that, because there is no other way I could have got the car with my budget, im not made of $, although most of my friends now think I make WAY more then I do. Hope this might answer your question.

V8-What?

thunderchicken

I agree. I leased my vehicle prior to getting my S.
#1, you aren't guarenteed that the value of the S will be that amount after 4 years.
#2, you have to carry higher insurance premiums according to what the leasing company requires.
#3, any dings and dents need to be fixed if you want to trade it in at the end.
#4, it's a pain in the butt to get rid of if you want to terminate your lease early
#5, usually payments on a new S are only around $100 in difference in comparison to a lease rate.
#6, forget about any upgrades.

The advantage would be that you are "renting" the car and driving it around with lower payments. Though my experience is through GMAC, you can pretty much turn in your lease at anytime IF you get another vehicle through GM. This may not be the case with Honda.

brushman

People lease for various reasons
Here are the 4 main reasons (IMO)

1. Lower payments vs purchasing
2. Little or no up-front money
3. New car every 3-4 years (under warranty)
4. Tax implications (own your own business, 100% write-off)

When you lease you are paying (financing) for a set period of time that you will drive a car vs paying (financing) for the total amount of a car. The monthly lease payment has the following factors to consider:
1. Money factor (%i)
2. mileage per year
3. residual value (end buyout usually expressed as a %)
4. lease start-up fees

In a nut shell: (forgive this is a crude definition)
The auto manufactures / auto financiers are trying to "GUESS", based on the amount of miles you drive per year, the total depreciated value of the car at the end of the lease. Based on the depreciated value, their profit requirements, and the cost to acquire capital to loan money, they will establish the money factor per vehicle. You will give them amount of time you want to lease for, the amount you are will to give up-front, the miles per year you are willing to stay within. Combined this will establish your lease price (monthly payment)

Lets use your example:

$444 per month
$17,100 buyout
$22,000 50 months
$39,100 total at end of lease to own the car

Now think of buying the car for 5 years
Cost of car with ttl = $35,000
5.9 %i
0 down

This gives you payments of $671.72 per month

$671.72 per month (times) 60 months = $40,303.15 to own the car

In this example, not all examples are going to be this way, leasing has many advantages:

Advantages:
1. $444 per month vs $672 ($228 a month money to burn/save)
2. If you don't like the S2000 at end of lease or new and better model comes out in 2004-2005, give it up
3. Warranty
4. Taxes

Disadvantages:
1. If you decide to buy at end of lease and finance the $17,100 for the the S2000 will cost you $2000 to $3000 more to own (This depends on how long you finance and %i at the time)

2. If you turn the S2000 in at the end of lease, you have nothing of value for the money you spent. (this argument assumes that you keep a vehicle more than 1+ years after payment and sell it and use the moneys as a down payment for next vehicle, else you will always have a car payment and never really receive any value for you payments other than transportation)

modifry

brushman -I agree. You can do well leasing or buying, or you can get screwed leasing or buying. Believe it or not, you can negotiate a lease just like a purchase. You can haggle with them over the "purchase price" even if you are leasing. My wife just got an Accord EX, and here final lease note was $75 a month less than the first quote she got. Every quote was for the same car, same term, same 0$ down, so we knew they were good comparisons. They always try tricks like "I can beat that payment" and then offer you a 39 month instead of a 36 month lease. Watch for that.

Basically, keeping a car longer lowers your "cost per unit", whether you count it as cost/mile or cost/month doesn't matter. It's much cheaper to keep a car for 10 years, even if you add in the repair bills. But you also have an older car, with increasingly lower reliablilty, safety, comfort, features, etc, when compared to keeping up with the market by getting a new car every few years. What's important to you?