Lease vs. Purchase, Never leased before. HELP

[mllcb42]

With the resale values of Wranglers what they are... why would you ever lease one?

By leasing, I can reduce my sales tax liability, offload all of the risk of accelerated depreciation to the bank, and still capture equity due to the high resale value for no price penalty.


On other vehicles where the lease programs aren't as strong so that there is a significant price penalty to leasing or the buyout restrictions from the bank make it so I can't easily capture equity, leasing doesn't make nearly as much sense.

Sponsored

 

[Pinky Tuscadero]

I did read what you wrote and a Willys XR (plus the Rubicon, Altitude and even the Sahara) is not a "step up" from the Sport S unless you will use what they come with. You literally said anyone would want that Willys XR more than a well equipped S and that the dealer should be "stuck" with it. That's just not true for everyone.

I have no plans on rock climbing, so no need for a locker, the 35" mud tires on the XR is not a better ride on the road than the AS or AT's on the S, I don't want 20" rims, I hate the red dash, I don't like leather seats and I don't like the grille accents on the Sahara. A Sport S with a great radio, heated seats, a tow package and LED lights is a "better" buy for me than any of the other trims because of what I plan to use it for.

No harm meant, just saying telling someone to buy a 1 ton pickup when they are looking to haul a 5x8 garden trailer once a year and spend the rest of the time on the highway is not really great advice.

It's all good, all my Wranglers through the years have been RHD models, and all have also had the "Sport" badge on them. Easily pulls my 24' pontoon with zero effort and very off road capable and yeah, I suppose not everyone would want the factory lift and 35" tires
Fair enough, some folks like some stuff, some others

 

[kj11]

Serious question...

With the resale values of Wranglers what they are... why would you ever lease one?

I'm not being obtuse. When I was looking last summer, I asked my father, who's an accountant... and he said buying was a no-brainer.

I'm curious about the reasoning of leasing.

Something about buying depreciating assets....

Generally speaking, if it drives, flies or floats rent it

 

[Nitehawk92]

I have never leased a vehicle. I was in the Air Force for 20 years and back then you could not take a lease vehicle out of the country. I don't know if that is still true or not. But for people in the military it should be something they check out before they lease a vehicle. For the military folks you never know when you might get an overseas assignment.

 

[Shibadog]

I’m of the buy it camp. Sell your current Jeep-it ought to bring more than you’ve been offered. Put the equiry down on your new one. If it’s more than you can afford, wait. Don’t paint yourself in a corner. Your 18 is basically the same vehicle you’re looking at getting, so the only “advantages” are shiney paint and more bells and whistles.

 

[Pinky Tuscadero]

Serious question...

With the resale values of Wranglers what they are... why would you ever lease one?

I'm not being obtuse. When I was looking last summer, I asked my father, who's an accountant... and he said buying was a no-brainer.

I'm curious about the reasoning of leasing.

I've never leased and probably never will but this gives the dealership a much better opportunity to cloud the real bottom line and get out his "four-square" sheet to make it seem awesome, shake hands with a smile, and have the customer feel like "they won"
Honestly if you really were only going to drive it that many miles and you were going to keep in in a condition where you could actually turn it in at the end... and it really looked like a super deal based on what the Jeep resale value should really be at the end - (this one doesn't) then maybe
People I've known beat lease vehicles to the ground, go way over in miles, and then think the dealership is going to lower the price because it isn't worth much after they've driven it to near death.... the dealership wins if they keep it and gets paid the beforehand agreed upon amount or if it gets turned it in and they really ream the customer who is now carless to boot
Yeah, I'm curious about the reasoning of leasing too
-But I hear some folks love it

 

[Some Random Guy]

I have never leased a vehicle. I was in the Air Force for 20 years and back then you could not take a lease vehicle out of the country. I don't know if that is still true or not. But for people in the military it should be something they check out before they lease a vehicle. For the military folks you never know when you might get an overseas assignment.

There were some legislative updates that allow Service Members to terminate a lease if they get OCONUS orders. This law trumps all lease clauses too.
So you lose the vehicle, but you’re no longer making payments. Straight-line mileage limits probably apply based on how far into the lease you are at turn-in.

 

[McLeadslinger]

True. My Willy’s was just over 50k sticker and is pretty much fully optioned.

Is the new vehicle marked up above MSRP? $50K for a Sport S would mean that thing has almost every option if it's not marked up.

 

[Moblrn]

I know people who only lease their vehicles and love it. Always have a new car and hardly any maintenance worries.
I tried it once with a BMW Mini Cooper. All was good till I drove it too far and was going to be responsible for putting a brand new set of OEM tires on it at the end. Wound up selling to CarMax because dealership wouldn't give any where close to what they did. Still cost me money in the end and I will never lease another long term vehicle.
I will still occasionally rent a car for trips that I may not want to drive my Jeep all the way, but won't have my primary vehicle as a lease.

Rod

 

[Joe98]

I went to a dealer nearby yesterday and got the information for leasing vs. purchasing

Put the cashflows on a spreadsheet.
One column for purchasing and a second column for leasing.
Apply an interest rate.

For the purchase column, if you borrow use that rate. If you pay cash then use the interest rate you would receive had you placed the money on deposit

For the lease column, choose the interest rate that applies to the lease.

If you buy, assume 7 years x 12 months = 84 rows
If you lease assume the lease is 3 years and you keep rolling over. Use 84 rows so they are comparable

Now calculate the Net Present Value ("NPV") for each column.
The column with the lowest figure is the cheapest

Excel has NPV as a function. Google NPV for a how to lesson

 

[Chance_P]

Serious question...

With the resale values of Wranglers what they are... why would you ever lease one?

I'm not being obtuse. When I was looking last summer, I asked my father, who's an accountant... and he said buying was a no-brainer.

I'm curious about the reasoning of leasing.

My reasoning.. im gonna get rid of it in 3 years. No matter what, i want a new vehicle every 3 years. Thats not the best financial decision but its what I want and I can afford it.

Now, the wrangler has great resale (residual) and will be worth the same amount in 3 years whether I lease or buy... over those 3 years ill spend a lot less $ on the vehicle. (More money in my hands to invest in other things) Sure, itll all even out when I pay more on a loan and then sell it with more equity... but what if values dive? What if its in an accident and the value goes down after repairs? What if the economy crashes and used car values plummet? With a lease, i have the option to walk away in 3 years. With a loan, I could potentially be upside down in 3 years when I go to sell.

 

[JDub11]

This won't help the OP much, and I not singling any one out, but I need to vent.
Car loans are not insanely long because cars are expensive. Cars are insanely expensive because people are willing to mortgage their first, second, and even third child to buy a car. If people didn't buy these cars then the price would come down. These days though, it seems everyone has to keep up with the joneses. On top of that they want it now now now. Here's a novel idea, buy what you can truly afford. Pay cash. (But, i can make more investing. That's not how it works. It's called Risk management. Not enough time for that discission) If you can truly afford to piss money to the wind. Then go out and lease or pay the bank interest for 72 to 84 months. more power to you. However if you have a house payment,credit card payment, Car payment, no retirement. Don't expect any sympathy front me when your the Walmart greeter at 70 years old.

 

[dahacker]

Getting a new vehicle every 3-4 years (including leasing) or never owning a vehicle outright is a poor financial choice.

Now if you can afford it and enjoy and new vehicle that often, go for it, but don’t claim its the smartest financial move you can make. It provides instant gratification and short term happiness and there is something to be said about it. I mean, if any of us on this forum cared about money, we wouldn't be buying a $50k - $80k vehicle to begin with. So the audience here is a bit skewed.

Now in Maryland, they pretty much eliminate any benefit to leasing if you ever plan to buy the car in the end. You get sales taxed again if you buy the vehicle at the end of the lease.

 

[Shibadog]

This won't help the OP much, and I not singling any one out, but I need to vent.
Car loans are not insanely long because cars are expensive. Cars are insanely expensive because people are willing to mortgage their first, second, and even third child to buy a car. If people didn't buy these cars then the price would come down. These days though, it seems everyone has to keep up with the joneses. On top of that they want it now now now. Here's a novel idea, buy what you can truly afford. Pay cash. (But, i can make more investing. That's not how it works. It's called Risk management. Not enough time for that discission) If you can truly afford to piss money to the wind. Then go out and lease or pay the bank interest for 72 to 84 months. more power to you. However if you have a house payment,credit card payment, Car payment, no retirement. Don't expect any sympathy front me when your the Walmart greeter at 70 years old.

This. If you are buying a car and paying for it over more than 3 or at most 4 years you are likely buying more than you can afford. Like the folks buying an RV and financing it for 240 months? (that’s right, 20 years on a depreciating asset!!). Think BEFORE you buy!

 

[Hennessey17]

Something about buying depreciating assets....

Generally speaking, if it drives, flies or floats rent it

Yes, there's a cost to depreciation... but there's a cost to leasing as well.

That's why I was asking... because when my dad ran the numbers, leasing came out to be more expensive once you take into account resale value.

Buying certainly has a higher monthly payment... but when the loan is up, you own the equivalent of a ~$30K downpayment...

Sponsored