Car Buyers: Lease or Purchase?
 

When would you lease and when would you purcahse a car? How do you know it's the right time to lease and when it's the right time to purchase?

I've ordered a 2006 Lexus RX400h, which is the only Luxury Hybrid SUV on the market right now. I can't decide if I want to purchase the vehicle, or lease it. I have a really hard time keeping a vehicle for more than a year, but I don't want to pay the high payments of leasing for only 1 year.

But then again, I don't want to be STUCK in a long-term lease. If I purchased it, I could sell whenever I want, but then I'm scared of losing a ton of money because it's the first year of the hybrid. You'd think the technology would get much better in the coming years, which would devalue my 2006.

What are your thoughts and opinions?

I would never lease a car, i dont understand why people do that.

I say you buy it man.

If it's a car I know I'm going to want to replace in a few years, I lease. But if I know I'm going to keep it, I'll buy. For instance, I just bought a Jeep Wrangler, but leased a Cherokee. I PLAN on having the Wrangler forever.

Cars have too many new cool things come out on them for me to be happy keeping a main driver more than a few years and I've only made money ONCE on a car I bought and I swear I think that was a fluke.

Honestly, I've heard the current hybrids are going to be a bitch for maintenance - leasing seems like the best option, IMO as I think the resale value will be crappy in a year.

Why not lease it for 2 years? Lower payments and you can drop it off in 24 months.

We are buying one vehicle and are getting ready to take on a second. We are looking at leasing it since it won't be our primary car and we won't be taking it on road trips where the mileage can get racked up on it. We just need a nice second car for jetting around town.

euw
i woulda gone with the FX45

Leasing it for 2 years would be $1,553/mo, vs. the much more apealing 4 year lease for $1,084/mo lol. Also a 4, 5, and 6 finance will cost $1,602/mo, $1,391/mo, and $1,209/mo respectively.

I guess I just love the idea of purchasing because then I am never STUCK with the car. But a short-term lease doesn't seem very cost effective.

if you plan on keeping the car 10 yrs or more buy it... if you like to swap out cars every 3-5 yrs.. and you do not run up lots of milage leasing is a great way to save cash on an item that does noting but depreciate..

as for the RX400h.. i've heard its a dog when climbing hills (even on highways).. bad reviews.. also.. any fuel you save would be burnt up on replacing the $800+/each batteries (not sure how many it has) after 5 or so years.. that aspect alone will start to hurt used hybrid sales in the next few years..

but if you can lease for 5-7% and make 10%+ on your money in a short term investment.. it makes a lot of sense..

How many miles can you have on that car if you lease?

Don't forget that when you purchase you are 'paying' depreciation. Just because it is not a cash flow does not mean it is not a cost.

Also, you have to analyze how much your money would be making for you if it were not tied up in a vehicle. There is an opportunity cost of owning a vehicle that is:

Depreciation + Opportunity cost of lost investment/interest income.

If you calculate this on a yearly basis/ and divide that amount by 12 and if it is MORE than a monthly lease payment then it is a poor purchase decision.

You also have to factor in all repair and maintenance costs that you will pay once the warranty expires.