Buy or Lease - what say you?

I broke down my 2nd Gen situation had bought vs leased (using the current lease in my region). Assuming that when the lease is up, I get another.. Because thats literally what literally everyone I know does with leases.


Buy $33k +2k taxes, drive 13 years. Sell for $19k. Total cost to own $16k.


Lease $299 a month $2799 due at signing.

Due at signing total over 13 years $11,196 (need to re-up 4x over 13 years)
Total payments over 13 years $46,664.
Walk away with zero.


Total cost to lease over 13 years = $57,860.

A difference of $41,860.


Granted, I was driving a 13 year old truck at the end. I didn't get a shiny truck every couple years but it doesn't bother me, and I never had a single repair bill outside normal maintenance.

 

Who the hell would lease for 13 years? That’s not even possible.

 

Like I said in my post, literally everyone I know who leases, is always in one. None of them buy at the end.

Just like when my phone is up after 24 months of making payments, yes, I can keep it. But I never have. When there is an opportunity to get something shiny for exactly what you're currently paying, that's exactly what people do. And why leases are so attractive to dealerships.

 

Right but the part your missing is that even if your going to enter into another lease you still buy the truck and then have equity in it. If you just give it back not only are giving up equity but also paying the disposition fee. But it out or use the equity in the trade, NEVER turn in a lease unless the value is below the buyout.

 

Right, but I mean if the "residual value" at the end of the lease is lets say $28k and the truck is worth $32k...Im skeptical that even another dealership would pay $32k because they have to turn around and sell it. Im wondering if you would have to do a private sale to realistically have equity in your Taco at that point.

 

Too many factors to say for sure. Depends on the dealer, the time of year, are you cashing out or trading in? Way to hard to say, but my point is there will be equity in the truck at the end of the lease, so it’s not like you have nothing to show for it. Of course you would have more equity on a purchase, but your also making almost double the monthly payment.

 

Gotcha, good point...I suppose dealers have much more flexibility if you buy then trade it in for something

 

Leasing isn't for everyone but it works for me. Obviously it will cost more than purchasing if you plan to buy it at the end of the lease, but sometimes its a good way to get into a new vehicle and free up cash flow. I can also write off lease payments on my tax return which is a big bonus.

 

Buy is the better financial decision. IMO, if you lease a vehicle go after a Fiat/Chrysler product. A Toyota is for those of us who want to sacrifice some bells and whistles for pure long term durability. You get your money out of a Toyota by keeping it a long time and holding onto the resale value. A Dodge resale value tanks fast. Leasing use to be based on the difference from purchase price to future value then adding rent and dividing by the months on the lease. Toyotas would be dirt cheap to lease so that's not the financial model used anymore. You'll get rid of that Dodge about the same time it falls apart and the dealer is stuck fixing it. Dealers love leasing you the Toyota because all they have to do is wash/detail it at the end of the lease and sell it for top dollar.

 

Its still the same thing, nothing has changed with leasing. Negotiate a better selling price and your payments go down.

 

Where I'm from there is not a lot of negotiating you can do with Tacomas. My state is the #1 tacoma selling state in the nation per capita by far - and dealers know it. They can tell you no because they'll get 10 other tacoma customers that week who will pay sticker.

 

I'll agree that leasing may be what some desire. When I was on a credit union board I was trained to "never spend another's money" which means as we were approving loans I couldn't make a judgement call and say "they should spend their income on a new roof instead of a new ski boat". It's their money and they have a right to spend it how they want. For me it's a purchase and for other's it's a lease.

 

Most people turn their vehicles over every 3-4yrs anyways, why not pay less over that time?

 

If you're only looking at payments instead of what the final total you pay is, you're a dealerships dream customer.

 

Those people are not making wise decisions. That's just fact.

If you're turning over a vehicle every 3-4 years the dealers probably have you on a MVP Client list because you're just throwing money at them.

 

Leasing is the opposite, you never talk payments when buying. Sure we can get to 300/mo just put 5k down and payments over 84mo haha.

 

Those are the people that should just lease, they always have a car payment and just accept it.

 

Not the “most” people know and I know lots of filthy rich people that are very skilled at money management and investment. I also know lots of people that are a paycheck away from homelessness with zero retirement savings that do buy a new vehicle when the battery dies. The latter are probably are good candidate for a lease.

 

the filthy rich people know that their BMW 7 series and M5's depreciate faster than nearly every car on the market and thus leasing for 3 years is a good decision if that's your market. They also aren't putting dirty shit in the trunk, offroading with it, and taking it on rough roads...

 

Bingo most people lease the luxury cars because of the depreciation on those cars are insane. I stupidly bought a Benz for 130k was an AMG loved it. Fast forward got stolen and stripped insurance gave me the value of the car at 95k. That was after some negotiation with the insurance company. Car deprecated 35k in 8 months.