Buy or Lease - what say you?

I chose to lease, 359 a month, not to bad. Plan to buy it in the end but gives me options if I need to get a different car in two years when I’m going to college, working, house payment and supporting family.


Flease is what my dad calls it haha.

 

I’ve done it twice now and no, they don’t want the vehicle unless it’s worth a lot at payoff. At end of my lease, I will owe 9k if I buy it. If I decide to finance, I am damn sure I can negotiate the 9 grand to say, 8k. Add interest, 8500 to 9k, finance for 3 years. Pay it off extremely early, save interest and watch you credit score boom.

 

Owning flat out,YES! But unfortunately, not everyone is in that position. So leasing gives more options than a loan.

 

I’d say about 65% of the people on this forum don’t own their trucks (3rd gen). And between a three year lease and a six to seven year loan...three years with the chance to trade in, buy, or return is far more flexible than paying payments.

 

7 pages is to much to read on the toilet. So this might have been said already. You are buying a truck. If you have ANY inkling of using it as a truck, especially if you are getting a 4x4, you need to throw the idea of leasing out the window. Trail scratches, rock chips, damage in the bed, wheel dings, will all gouge your value at the end. Remember, they tell you it's worth so much at the end of the lease. Read the fine print. It's worth that much if it's in pristine condition when you turn it in. How much do you think they are going to charge you to fix the scratch that runs all the way down the side of the truck from the tree branch you scraped on when wheeling? Want to have insurance fix it and pay the premium increase, or have the leasing company bend you over on it.
Buy the truck, mod the truck and keep it. I've been a 2-3 year vehicle changing kind of person for my whole life. This truck I have now is a blank canvas and I'm making what I want and will keep my art. lol

The fact that you are here on this website says ( I want to do more than just drive my truck). You want to lift it, put bigger wheels on it, put enough lights on it that Clark Griswold would be jealous, and go jump shit in the dessert.

 

That’s only if your trading or returning it, if your buying it then does it matter?

 

Only matters if returning it. Tading it is the same as buying it.

 

If you *have* to lease to purchase a vehicle due to financial options then it's too expensive for you. That implies that you are nearly maxing your budget on ownership of said vehicle so leasing is giving you some leeway but definitely not enough.

If you're buying it and you can't afford to pay it off in a reasonable amount of time (thus the reason you're leasing it) it's too expensive for you. There are vehicles that will last just as long if not longer for a literal fraction of the price.

of course everyone is free to use their money how they like but it's proven to not be fiscally responsible to buy a 35k vehicle if you can barely afford a lease payment on it.

 

Some people are in that position and leasing is still an option because it makes more sense tax wise and the taco won't get a crap load of miles on it. (I work from home so I don't drive much and there are tax incentives for me to lease that I would not get to take advantage of if I purchase.)

I think bottom line is this, It depends on your situation! OP already said he drives 20K a year that alone would put me out of the lease mindset.

 

Again it isn't black and white. People spend their money in different ways, they budget their money in different ways. You never know the circumstances of everyone therefore asking "which is better a Lease or a Purchase" is really an impossible question to answer... Because there are a billion different factors to consider for every person, financial situation, budget, reason for owning the vehicle, etc etc etc.

Your best option will not likely line up with my best option (I think this has been proven with the crazy number of scenarios and answers in this tread!)

 

okay, help me out here. Because I'm one of the "I hate leases" guys and if I'm missing out I want to learn.

When you say you can buy it back under market value, are you taking into consideration how much you paid for the lease? Because I did the math when the dealership offered me either a lease or a loan on my current truck. What I saw, was they cost the exact same amount, but where the hidden difference is, is that when I "buy" my own truck at the end of the lease, I would have to take out a loan on that, and all that interest I pay on that loan puts me over the cost of just getting a loan in the first place.

In other words, in simple numbers

Loan:

Price + Interest = Total cost of vehicle
35K + 5K = 40K

Lease:

Lease + Buyout + Interest on buyout = total cost of vehicle
20K + 20K + 3K = 43K

And let's say I do decide to sell at 3 years, half way through my loan, then I haven't even paid all the interest yet. Yes, I understand that loans are front loaded so I pay more interest up front but the lease had me paying ALL the interest in the first three years.

What am I not getting? Just that cash flow is higher?

 

It all boils down to this.
If you can afford the payments and want to keep the truck and pay payments for 4-7 years, buy.

If you potentially want to spend more money in the end but have more options wether it be buy, trade it in for your dream truck or straight up return it due to changes in your life, lease.

If you want to get a truck for free, but be on the run, grand theft auto is also an option.

 

Not true at all. 7 pages is easily doable on the office toilet. Hide, read, post, repeat. I'm a fucking pro.

 

I think leasing is a good option but each person has to decide based on their own preferences and financial situation. I lease my current vehicle, a 2017 Subaru Crosstrek but we purchased my wife's Sienna which we plan to keep for a minimum of 7 - 8 years. Like Tacoma's, Crosstrek's have a pretty high residual. I negotiated a decent amount off of MSRP and with 0 down my payments are just under $200 a month. The money factor Subaru was offering at the time sealed the deal, less than 1% APR. So I'm paying depreciation with almost no interest tacked on and I can buy the car for just over $15K at the end of the lease. Retail on the card will probably be a couple of grand higher when the lease is up in a year and a half. I decided to hang onto the cash and plan to buy the car out right at lease end, no loan.

Toyota's money factor is .0022 or ~ 5.5% which sucks, IMO.

BTW, I decided not to purchase, or lease, the Tacoma right now. I'll keep the Subaru as my commuter vehicle. I just couldn't justify the additional expense.
Thanks for all the replies - very interesting points of view!

 

People think they are getting a better deal on a lease because they’ve been told they are. The dealer and lease lender wouldn’t offer it if it was stacked in their favor. For a few people it works out better, but for most people it’s an equal sum game or worse.
The big advantage to leasing is for people that don’t want to keep a car very long and don’t drive a lot.

 

Sorry to say, but if you are using dealer financing to make the choice, you are screwing yourself. I can get a loan right now at 2.49% using my credit union. A dealer is going to mark up the auto loan he SELLS you. They are making money at every stage of the deal.

 

not always true. Got my truck at 0.9% on a 3 year loan through the dealer. Couldn't find a bank here that could even touch that number.

 

Try to follow me on this.
6 year loan on a 38000 truck (35,500 + taxes and fees at 3.5% interest rate)
Payment is 585.90
36 payments equals 21092.40
Still owe 19995 after 36 payments based on amortization table
So buyout after 3 years would be 19995 if you purchase
I put nothing down on my lease and they paid first payment so I have 35 months at 355.
355x35=12425
Residual is 27500
If you take the difference in amount paid in 3 years on the loan versus the lease you have 8667.40. 21092.40-12425
If you put said amount down on the residual value if you were to purchase you would have a purchase price of the leased truck at 18832.60. So after 3 years the leased truck is about the exact same price or even a little cheaper. May be hard to follow, but if you people that love the high payments would rather lease and save the difference you could have a 3 year test drive and decide then if you want to purchase.

 

You get it.

And I think your point on the .0022 money factor nails it. You can still get a credit union loan <3% so paying >5% in money factor doesn't make sense unless you have some serious tax advantages to doing so.

When I leased my Tacoma I had access to a third party .00083 money factor combined with a 73% residual value, thats one of those situations where even if you're planning on paying cash it wouldve been smarter to lease. Why tie up $40k in cash when you have access to <2% rates? I leased my truck in November 2016 if I had $40k cash to burn it wouldve been wiser to stick it in the market and seen a 50%+ return since then instead of saving 1.9% in interest lol.

 

Same here .9% or maybe it was 1.9% don't remember.