went shopping at the local P car dealer today.
so far leasing seems like a good plan.
36 months / 10k miles per annum / move to something else after 36 months.
but
we've never leased before.
can you point us to any websites so we might learn a bit more about how not to get bitten?

thank you

Craig

 

I don't have much perspective, since my 997 lease is/was the first and only car transaction I've been involved in on my own, but I do not have any regrets. I'm 3 years into a 48 month lease, and without providing details, I don't feel like I have been "bitten." Mine has held its value very well compared to the payout/residual, so the payments do not feel like mere rental payments (as they would if I leased a Merc that halved in value a month after I got it home).
My only problem with the lease option, and the reason I will buy in the future: It's not technically my car (yet), so I can't mod it to my liking. But that certainly is no reason not to lease if it is your only option, in my opinion.

 

www.leasecompare.com is a great website. It explains leasing and also can arrange an actual lease for you. I know from experience that they can offer fantastic rates. And no, I have no affiliation with them whatsoever.

 

My one experience with a lease was for a 2002 Boxster S. Porsche Financial does a pretty thorough inspection when returning the car, and I got charged for a lot of small dings, that I would categorize as normal wear and tear. I'm not complaining, but returning a leased car can be a pain, if the car is not in very good condition. Another aspect of leasing is that the car really does not feel like it's yours. When I purchased my 997S, it was just a different experience. I found myself babying the car a bit more, and appreciating it. That may be a subjective thing, but for me, leasing the Boxster just wasn't the same as purchasing the 997.

 

A few years ago BMW tempted me with a company subsidized lease which was very attractive, but I declined for the exact reason that you specify. The car would feel like a rental to me.

 

Porsche money factors suck pretty bad. You probably need a valid reason to take the lease as a business expense, otherwise buy the car. BMW leases kick a$$. Your lease payments equal the depreciation on the car, so keep more of your money and lease. Plus BMW pays all your maintenance.

 

I see this both ways.
I bought my 997. It's a car that I want to keep for awhile.
I leased my A4 Avant. I figured i'd only keep the car for a few years. I love it and take good care of it, but I don't take nearly as good of care of it as I do the Porsche and that's ok with me. I take it through car washes and drive it during the winter. When the lease is up..it's gone. Period. No trying to turn it in and getting screwed on trade in value. No trying to sell it on the open market and dealing with buyers. For vehicles that you want to flip on a regular basis...leasing makes a lot of sense. Just my $0.02. Oh, i also bought something when I leased the Audi called Smartlease. It was a one time fee of $500 the eliminated any charges upon turn in. Seemed like a great deal to me.

 

Edmunds has a good explanation of leasing.

There is one financially justifiable reason to lease and that is if the after tax costs of leasing are less than the after tax costs of owning. There are calculators on the web that can help you figure that out. Unfortunately, many people lease to lower their monthly payment which is not wise from a financial point of view because it doesn't make the vehicle more "affordable" it justs masks the true cost of driving the car over time.

The variables that matter in leasing are the 1. Money factor 2. Residual and 3. Cap cost. You must know in negotiating a lease what the money factor means in terms of interest cost (divide the money factor by 2400). Car companies just love leasing because they can charge outrageous interest rates to "dummies" by hiding true interest costs. Unlike retail financing where they must disclose "APR" (which most consumers don't really understand anyway) with a lease they can hide it.

Obviously, the residual is critical. The higher the residual, the lower the lease payment.

Cap cost is the amount you pay for the car. The difference between Cap Cost and Residual is the amount financed.

All three things are negotiable even when they tell you they aren't.

All common sense advice about negotiating the purchase of a vehicle apply.

BTW, The STUPIDEST lease is a Euro delivery where you don't even have possession of the vehicle for several months. Incredibly, people do that.

 

Provided you "use" all the miles, it wouldn't matter. The stupidest lease is the one that doesn't "use up" the car.

 

I was planning on buying, but I'm starting to get curious about leasing as it appears I may be able to deduct a portion as it will be used for traveling b/w various hospitals for work. I presume getting a CPA involved is the best way to go about doing this?

 

Tell them to check out USBANK- we use them a lot.

Lower residual- BUT- you get 12k automatically, and if you wish (even if the slightest) to own the car afterwards the buyout is VERY low. Payment is only a few bucks/mo different. *Bonus- they typically have much lower rates then anyone.

ps. I had three clients with EQUITY coming out of their USBANK leases, which we used to put down on the new lease. And typically their inspections are pretty straight forward. You dealership just needs to be willing to work with you on the end. Or whom ever you do business with. Meaning, have them call the bank, and set up inspection on the dealership's lot. NOT at their convienence- yours! (the bank vs you).

Charges, if not abused or anything are minimal if any at all.
Chris

 

whether you lease, finance or pay with cash the depreciation is the same and the same person picks up the tab - you. Depreciation doesn't care how you chose to finance it.

 

That's a pretty broad and inaccurate statement. Depreciation, or the cost to 'use' a car can vary greatly depending on how one acquires and disposes of a vehicle. There are also interest rates and opportunity costs to consider when looking at the total cost to 'use' a car.

 

Wasn't really talking about total cost to use, my point was that the way you choose to finance your car - essentially the subject of the thread - has no meaningful impact on its subsequent drop in market value after purchase.

 

I agree. I haven't kept a car longer than three years but I still evaluate lease and loan options to see what works best for me. I used this lease calculater on my last two cars . . .

http://www.leaseguide.com/calc.htm

You need to fish around for the base residual and money factor for the given month you are leasing so you know if the dealer is offering the best rates available. Double check the numbers at closing as the dealer can easily modify the numbers to still arrive at the same monthly and down payment. That's what one dealer tried to do in the finance room. They reduced the annual mileage and residual and increased my money factor. I was extremely annoyed that I had to get them to correct it. So remember that you are negotiating the price, money factor, and residual. If you don't know the lowest money factor and residual available, than you'll feel like an idiot as you push the price down while the dealer counter balances your efforts by adjusting the other two variables. Also question all the fees on the contract. My GL450 has a $595 lease turn in fee and a $150 purchase fee if I choose to buy it! That's all negotiable if you pick up something else from the dealer but it's still a crack up.