I’m a college student, with a couple years left, and my car is on its last leg. I know leasing a car is terrible in that you never own anything, but considering I only need something for a few years until I can afford something better I’ve been considering it. I’ve been reading a few articles over the pros and cons of it, but what are some personal experiences of those who have tried it?
If you plan on getting into a new vehicle every 3-4 years than it’s a cost effective way to go. If you plan on keeping a car for more than this time period, you will get reamed in the buy out. The other issue is mileage. If you will be putting a lot of miles on the vehicle, it will cost you big time. One option is to lease vehicles that retain their value like Hondas, acuras, high end toyotas, high end mazdas ect. You can usually sell them privately for at least the buyout price of the lease at the end of the term. If you have’nt put too much mileage on it, you can even make a couple thousand profit. This is the only time leasing and buying out makes sense IMO. Not a bad way to go really, lease payments for the vehicle at a fraction of a loan payment, buyout the car after 3-4 years and sell it for a small profit. This won’t likely work on domestic models though.
Fragile -
Leasing a vehicle IMO always makes sense. Even if you but the additional miles up front. Look at it this way. It is an asset. Why buy an asset you know is going to be worth less the longer you own it. Lease it an you do not lose the value each year.
You can sometimes get good deals on leases, but as has been mentioned, pay attention to the mileage restrictions and the buy-out price. Sometimes if a carmaker is rolling out a completely new line or model, you can get a really good deal on a lease – this was the case when Honda rolled out its Infiniti line.
Generally though, if you’re a student with limited funds, I would advise buying a used vehicle with a good reputation for quality, such as the above mentioned Toyota or Honda - hopefully about 2 years old, with several years left on the warranty. Lease returns can often be good buys, although some think people tend to beat on leases harder than on cars they own.
i’ve done it once and never will again.
I have 6 or 7 friends who also have leased and never will again.
If you can’t afford to buy the new car you want, buy a used car.
In your situation, it depends on what your cash position is. Lease can be a good option if you are cash poor (in relative terms)but have reasonable cash flow. You have to assess how you use the vehicle. If you take good care of your cars, and will be under the mileage cap, it may work. If the opposite is likely, it’s probably a bad idea. Always seek to drive down the cost of ownership. I pay cash for a 3-4 year old car for myself, and lease new for my wife. If you are sitting on say, 2 -3 grand, find yourself an older Nissan or Yota and buy it outright. Or, find a 3-4 year old vehicle with a solid resale track record and finance it. I am what you would call an automotive opportunist. I have had good luck with driving my vehicles for 2 years and then selling them for damn near what I paid for them because I buy used, do research, and am patient. If you choose this path, never buy used from a dealer, and less mileage is always better.
APW is right. I have been in the car business for about 10 years and will never buy new. Too much depreciation as soon as the tires hit the street (at least 30%). Buy an import(Honda,Toyota,Nissan) and do a 36-42month term loan if needed. Shoot for a 3-4 year old model. You have plenty of time to get what you really want later. Stay away from domestics if possible. They just aren’t built to last like the imports are. BTW, Honda did not roll out Infiniti. Nissan did. Just a little fyi.
My bad. I drive a Dodge Dakota with the 5.2 V-8 and 4-wheel, so info on import luxury cars isn’t necessarily my forte. =-)
When you dig into the overall financial implications of leasing something, it’s quite difficult to see how it could be a good deal. A lesser of two evils, sure, but never a good deal.
First make sure you absolutely need a car and it’s not just a “want.”
Then, why not get something cheap and used? The market is glutted with reliable, inexpensive used cars.
You’ll have time for a cool car after you graduate and can afford one.