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Originally posted by blackfifty:
Thanks Venomous99 that's good information. I have really good credit and I was reading on a few different websites it does help with the amount you pay for a lease. I wouldn't mind paying a down payment if it means my monthly payments would be less. Thanks again brother.

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Originally posted by swedensky:
Being in the car business I'll try to give an unbiased transparent response...starting with my feelings on the Pros vs Cons above...

Pros
Lower monthly payments.
This all is dependent on the situation at hand. Credit, incentives, money factor, mileage, vehicle type, state fees, etc all have an impact on both sides of the equation. Generally yes, they are lower.

Lower down payment.
100% agreed. As mentioned earlier, you want to put the least amount down to be comfortable with the payment. Leases require a drive-off. It is initial fees, a small tax, and your first months payment. A lot of leases will have enough rebate to cover drive-off meaning you can 0 down. Unlike a financing term where you want to pay interest, leases have a money factor so you aren't doing any benefit other than lowering the payment.

You get a newer car more often.
This is why a lot of people lease, and I think the article above did an "ok" job so I will go into it a little more..
Some people just want a new car every few years. New technology, our generations generally speaking want the newest and best items especially when (like cars) they can actually benefit our day to day lives.
Why can't you buy your car and get a new one every few years? You can, but you are more likely to lose money every single time in negative equity (or general depreciation for the argument of paying cash), taxes, fees etc.
When you lease a car it has the Residual Value. That is a percentage set by the manufacturer (not the dealer)and cannot change. The article above stated it as an "expected value" and while that is true - thats more the manufacturers wording. To a customer its "guaranteed future value" from the manufacturer. I'll use the same numbers.
MSRP is $30,000
Based on 24 months of driving and 12k miles per year - they expect your car to be worth $16,500 at the end of your lease. You are guaranteed that number per your contract.
For your 24 mo lease you are only paying that $13,500 difference. However what makes the payment smaller generally is all rebates, dealer discounts, down payment, etc is applied to the $13,500. That $16,500 number is guaranteed to not change. So with $2,000 in rebate, and you negotiated $2,000 off the car - now you're only financing $9,500. Way better having 30% off your loan than the same discount and rebate off of a $30,000 purchase.

Towards the end of a lease you have 3/4 options.
1. Keep it. You love the car. Your Guaranteed Value is a good price for the year/make/model/miles. Go finance the $16,500 plus tax and enjoy the vehicle.

2. Return the car. You're ready for something new. The car's value based on the market is much lower than the guaranteed value of what you can buy it for. It doesn't make sense to buy it. Pay any difference in mileage, wear/tear etc.

3. Trade the car in early. Your lease balance in trade is your Residual ($16,500) plus any remaining payments. Maybe you drove way less than expected mileage and your cars value is above the payoff - that is still your equity to use.

4. Sell it. Same as #3 but you can sell it to anyone as long as the total payoff is fulfilled. Most manufacturers have a stipulation against "trading" in the last cycle of your lease. At that point a sale would be required.

Another plus is here in CA we pay tax based on the monthly payment. You never pay tax on that $16,500 unless you buy it at lease end for that $16,500 amount. If you finance the car you're paying all the tax on all the car regardless of how long you keep it.

Another pro is the fact that most leases are under factory warranty for the entire term.

Another plus (with Ford at least) GAP insurance is free and included. Which is another reason why its a good point as stated earlier to put down the least possible. If you put 5k down and total it the next day, insurance and GAP are covering you but its highly unlikely they're going to value the car $5k over what your pay off is and you'll be out that capital.

All in all there are way more pros, the only person who doesnt fit into a lease well in my opinion is the person who drives their vehicle "until the wheels fall off"


Cons
Leasing is hard with poor credit.
Hard to agree or disagree here. It's not a con. It's life. If you made poor choices it will be hard to lease OR finance. Leasing however can be a huge way to rebuild credit. You need more down, your payment could be higher than a cheap used car from a pot-lot BUT you get more for your money, less interest, you're not smothered in negative equity from 15-25% interest AND you have a paid loan in 2-3 years as opposed to 5-6. I know Ford buys deep and with poor credit, if the car is sold at a low cost, with good rebate, good money down and a low payment - they will put someone with bad credit in a lease before a purchase. Its a quicker ROI for the financing company.

When your lease is up, you don't own the car.
A lot of people make the argument that leasing is like renting because you never own it. I hate to break it to you but if you finance your vehicle its the exact same thing except that a lease can protect you from market fluctuation, a changed mind, etc. You never own anything until its paid off. You can begin a 2 year lease and then purchase it on a 4 yr term if you love it. Its the same as doing a 6 yr finance to begin with. (Total cost will differ, sometimes in favor of the purchase, sometimes in favor of the lease)


Mileage is limited.
Mileage is not limited but predetermined. Most companies will lease much higher than 10-12k also. All it does is change your residual, obviously a car is worth less later with more miles on it. Same as if you purchase a car. If you purchase a $30k car and try to trade in 2 years with excessive miles, you will be upside down. At 0.15 per mile or even 0.25 per mile, you could be looking at a LOT less than trading your car in with negative equity if you financed and drove high miles.


Wear and tear is your responsibility.
Also not a con. Wear and tear devalues a vehicle regardless of whether you lease, finance, or purchase outright. If you lease, you are subject to charge with excessive wear and tear. If you finance, your cars value is generally lower causing possibility for less equity. If you purchase cash and sell on craiglist down the road - well thats why KBB has Excellent, Good and Fair. Because people will pay you less with more wear and tear.

Leasing can be more expensive.
If you fall into the cycle of leasing one car after another, you'll end up spending more money over time.
Correct, like I mentioned earlier very few people these days buy cars and keep them. If you finance and trade every year or two however I believe leasing to be a better route.

Early termination can be costly.
If you decide you don't like your vehicle, or are unable to continue your lease agreement, you'll be forced to pay a high penalty.
I know with Ford, we have no penalty. It's still your car, do what you want. Like previously said: your residual plus remaining payments is your payoff. Terminate anytime.


I may have missed some things and said a few things 2-3 times but over all leasing can be great. I'm on my second plus my ex-fiances 2 I did for her.

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Originally posted by blackfifty:
Thanks so much. I've heard stories of people having nightmarish issues when returning it at the end of the lease because they find any little issue with the car. This happened to people returning it and no renewing a lease with that particular dealer. That's the only worry I have. I have good credit so I'm not really worried about that. I drive 21 miles to and from work so I'm not going to really rack up miles so that's neither a concern. I guess i'll just have to go in and see for myself what the options are. I just hate going to dealers because of the salesman and how much they try and pressure you.

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Originally posted by 90GT510:

I've been trying to learn about leasing as well recently.

I'm having a little trouble understanding this part. What is residual?

Also to clarify if I lease a ford and 7 months down the road I decide fuck this I can return it at no cost??

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