Black92LX's post on how to transfer an auto lease led off with the statement that "...in general, leases are not a good financial idea." That got me thinking about this and I didn't want to hijack his thread.

I've leased three cars, the first about 20 years ago, and the last two consecutively since 2020. I'm about to lease my third come the spring.

The prevailing financial wisdom was to buy and/or payoff a good vehicle, take care of it, and drive it until the wheels fall off. I did just that for most of my car-buying life. We bought a Highlander new in the early 2000s and kept it for 13 years.

Back then I subscribed to the financial wisdom that once the vehicle was out of warranty you might have the occasional repair, but your overall out-of-pocket would be far less than a monthly car payment. And there was the ancillary reduction in insurance costs, etc.

But new vehicles' dependence on computers/electronics (a lot of these new vehicles have all of their previously physical knobs and other controls built into touch screens) makes me question if these vehicles are going to last for 10+ years without expensive electronic replacements.

What would be the cost of replacing a touch screen (or the computers behind that screen) that runs the length of a vehicle's dash? A screen that encompasses and/or controls everything from the gauges, to the radio to the HVAC?

Then consider the high MSRP of new vehicles and the fact that many people are taking out five+ year loans to get a manageable monthly payment. That's well past the warranty period for most new vehicles, so one could conceivably end up having to pay a massive electronics/mechanical repair bill AND still have a monthly payment with which to contend.

That's why I think it now makes more sense to lease today's computer/electronic/touchscreen laden vehicles. Yes, I will always have a payment, but I will also always have a warranty, and my payments will be significantly less than if I finance for three years (that's the length of most warranties and I don't want to finance for longer and risk being saddled with car payments and out-of-warranty repair/payment expenses).

I even had some equity at the end of my last lease, as my lease contract buyout price was less than the market rate for my car. So I was able to apply several thousand dollars toward my current lease.

Bottom line, now that vehicles are essentially TV sets on wheels, I think it makes more sense to treat them as consumables rather than investments.

The only caveat to leasing that I see is that it might not work for folks who are high mileage drivers. I'm retired and drive under 10K miles a year, so excess mileage isn't a concern.

I’ve never been a fan of long-term renting a vehicle.

An added wrinkle in regards to EV's leasing. It is my understanding that if you do not qualify for the $7500 tax credit on an EV due to your income level, you can still get the benefit because the tax credit can be taken by the leasing company and rolled into the lease deal regardless of your income level. Of course this may become moot point if Trump kills the credit.

quote:

But new vehicles' dependence on computers/electronics (a lot of these new vehicles have all of their previously physical knobs and other controls built into touch screens) makes me question if these vehicles are going to last for 10+ years without expensive electronic replacements.

What would be the cost of replacing a touch screen (or the computers behind that screen) that runs the length of a vehicle's dash? A screen that encompasses and/or controls everything from the gauges, to the radio to the HVAC?

Then consider the high MSRP of new vehicles and the fact that many people are taking out five+ year loans to get a manageable monthly payment. That's well past the warranty period for most new vehicles, so one could conceivably end up having to pay a massive electronics/mechanical repair bill AND still have a monthly payment with which to contend.

That's why I think it now makes more sense to lease today's computer/electronic/touchscreen laden vehicles. Yes, I will always have a payment, but I will also always have a warranty, and my payments will be significantly less than if I finance for three years (that's the length of most warranties and I don't want to finance for longer and risk being saddled with car payments and out-of-warranty repair/payment expenses).

I even had some equity at the end of my last lease, as my lease contract buyout price was less than the market rate for my car. So I was able to apply several thousand dollars toward my current lease.

Bottom line, now that vehicles are essentially TV sets on wheels, I think it makes more sense to treat them as consumables rather than investments.

Both EV and ICE vehicles fall into this category of more computer than car.

All the digital tech inside, combined with the external sensors and cameras could easily end up costing you serious money after a warranty.

If you are a buy type person, shop and find an extended warranty for as long as you can afford on any new vehicle, ICE or EV..

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Bottom line, now that vehicles are essentially TV sets on wheels, I think it makes more sense to treat them as consumables rather than investments.

I have never treated a car as an investment.

In most states you pay sales tax on the total lease payment which includes inferred interest plus depreciating value. If you purchase the vehicle sales tax is only on the price of the vehicle. It does depend on the state taxes. In Tennessee sales tax is calculated only on the purchase contract price and local portion tax is capped at $3200 of the purchase price. If the vehicle is leased the rate is 9.25 to 9.75% of the monthly lease payment.

EV's might be a good lease option now, with dealers dumping them and the tax credits. But if the expected residual value drops too, might not be so good.

If you are the type to always trade in a car right after you pay it off, and always have a car payment then leasing is an option.

The problem is that when the lease is up you need to get another car. Maybe there is nothing you want better, or maybe something you want is coming out a year later. You lose flexibility there.

All the talk of "electronics" causing decreased reliability. Mechanical things break more often. Yes electronics can fail but in the last 22 years I've driven one car to 200K, another to 100K and my current DD to 90K with zero issues of that kind.

Anything can fail but I think electronics in cars these days are pretty reliable and its still probably cheaper to repair a failed electronic part than have 10,15 or 20 years 9f continuous car payments. If you're worried about anything failing you can always buy an extended warranty which is still probably cheaper than an never ending lease payment. The biggest downside to leasing is you never own the car, its more like renting so when you turn it in you get nothing back. Then there's the issue of mileage restrictions per year which can add up if you exceed the allowable mileage per year. From my perspective it all adds up to leasing still isn't as good an option as purchasing.

Still not a good idea. rich people buy dependable car brands and buy them with cash for 4 year old cars. Let someone else take the hit on the depreciation.

Most leases have clauses about wear and tear. If they consider it above normal you will be paying more!!!

Well the first thing this is exactly what vehicle manus want. They want EVERYONE to lease and turn their entire business models into subscription services. A lease is a subscription service. And people really like making many things, including this, into black and white, one choice or the other, and that’s not reality. It’s complicated, and reality is it is very very grey. It’s going to be different for everyone, not some clear rule, and there are a lot of variables.

I generally don’t like leasing because you never own anything. I also don’t like buy/sell/trade every few years. I also don’t think any one vehicle is a do it all. I do, like what was said in the OP, buy smartly after lots of research, and planning, maintain, and roll it to the wheels fall off. It still can be done. I have 8 vehicles. My daily driver is over a decade old and I have bikes that are 15 years old. My truck is 5 years old. I do this with everything.

Leasing falls into maybe 3 categories. The best being a lease can be good like in the case of my daily driver, MY2013. It was so much less expensive to lease it first, let the Manu eat all the depreciation then buy it at lease end for nothing. So say an EV purchase, better to lease it first and do what I did, letting them eat all that depreciation, or just buy one used. But using sophistication and complication to the mix, I’m coming on year 11, in an EV, so if I can do it others can as well. I’m almost ready to replace it finally, not because of any issues, it’s because my use case is changing. I’ve bought rural property and I’ll need more range so I’m evaluating getting a newer one of the same thing, with almost triple the range, or buying a particular ICE vehicle, 6MT light weight performance coupe. Problem is there is a $15k delta between them, one buying CPO letting the Manu eat the depreciation again vs buying the performance variant new as I don’t buy those used. When spending tens of thousands of dollars I will plan, save, and execute 12-24 months prior to acquiring. Most don’t have the patience. Just an example to provide however. I’m undecided as of yet on which but I’m not going to lease again if I acquire the EV. I’ll just buy a CPO. The newer one I can get with just a couple of thousand miles on it, CPO, for $20-22k with a 7 year warranty.

The other category is people who want way more vehicle (In terms of performance, capability, or purchase price) than they can either afford, or maybe they can afford it but know it’s a huge waste of money. Leasing in this instance is cheaper. There are extremely reliable vehicles on the market for daily driver purposes that will very well last you 10+ years however. One that comes to mind first is a Toyota Corolla hatchback. They start at $23.6k, new, to $26.9k if you want the top trim with some more mod cons. You are not going to beat buying one of those compared to a lease of something else. You can run cost per mile calcs, with purchase, fuel, insurance, maintenance, and you won’t beat it with any lease you can find. Not a chance in hell. There are reliable vehicles on the market that will last. The reality is people want fancy this and that, luxury this and that, expensive shit this and that, etc. Most people buy vehicles because of some capability it has, that they will either never ever use at all, or use so rarely that using that to justify acquiring it is a fools errand, or for image/joneses reasons. And I’d say the majority of buyers do indeed buy for image. Image for work, family, and even strangers. To that I say you aren’t your car, your bank account, or your khakis. Quit caring about what people think that don’t pay your bills.
Even compact cars now have things like heated seats, wireless connectivity to your phone, LED lamps, so many things. Marketing/advertising just has a lot of people by the balls or the titties thinking they need an expensive vehicle to drive to the supermarket or the doctor. Yeah it’s going to be a luxury ride via stop lights to the store, or 10 miles on the highway. That’s boring mundane driving to me that wouldn’t be fun in a Ferrari, a Raptor, etc. You don’t need performance or towing for mundane driving.

The third category of leasing I would say is the new new people. They just want something new every couple of years. They want this constant change in their life and even though it’s costly, it’s just what they want to do. For them, yes, leasing is the best option because it’s better than depreciation, but it’s still a waste of money. You can beat those lease costs, all day, long term, with ownership, have multiple vehicles instead of one, but it takes work, research, planning, etc, that most just don’t want to do because it is work. And that will likely rule out fancy this and that, expensive this and that, and require more frugal choices. Most people don’t want to put in the work nor planning to properly acquire vehicles. They want an easy button and for them leasing is best. Most people think in terms of payments because that’s the marketing stealers have pushed for decades now. I mean sure if you can get a cheap lease with no money down, that could be a great option. But usually leases require down payments of a few thousand dollars so those $399 payments aren’t that, add another $100 a month to it. But see that is stealer trickery always getting people in that payments mentality instead of seeing the bigger picture.

There are reliable vehicles that will last long term, 10 years or more. They are there. Car, truck, SUV, yes they are there. If you want to acquire whatever you want, don’t want to do the research and due diligence, are in a hurry, etc, leasing can be the best option. Like I said prior, it’s complicated.

And just a couple of anecdotes. My 11 year old DD, the OEM head unit still works, never an issue. My MY2019 truck, I replaced the OEM head unit and audio system 30 days after I purchased it. If the head unit fails, $500 for a new Pioneer unit which is better than factory anything a vehicle mfr puts into their shit. My last purchase, a ‘23 performance car, same thing, I will replace the OEM head unit and audio system in the next year. It can and has been done already, did my research. So choose models that have this capability and definitely choose vehicles that have physical controls for many things even if you don’t replace anything.

^^^^^

Great analysis, sir.

Number 1: a car is a lousy investment. It's more of a consumable item.

Number 2: I bought a two year old Ford off lease last year. It still had the factory warranty in effect. I like the car but the replacement cost of some of the parts like LED exterior lights is breathtaking. The labor for some repairs like changing a heater core is the same - remove both front doors, pull the complete dash, etc.
I shopped around and found a Ford dealer that was selling the Ford Motor extended warranty for just under $2000. It's good for 8 years or 80,000 miles from the date of the original sale with a $100 deductible. When the warranty runs out I'll replace the vehicle.

Number 3: the car is paid for. No monthly payment, no excess mileage charges, no agreed value at the end of the lease.

I'm glad people lease cars. They supply the late model used car market.

quote:

Originally posted by Ronin101:
… Most leases have clauses about wear and tear. If they consider it above normal you will be paying more!!!

If that’s the case, don’t turn the car in. Instead, buy it / keep it or sell it private party.

I think it's not the best option for most, but as with anything, you should consider your situation and needs. I like buying cars I can pay for. I have only purchased a new car once. Everyone's needs and situations are different.

There are many good reasons to lease as long as you don’t think one of them is being a better financial move in all bust the most extreme cases. Not including EV’s.


Try and look up the actual percentage rate you will be paying. The car lobby spent millions so they didn’t have to put that on paper and let the car out of the bag.

My purchase experience -- used truck. Ideal vehicle for RV towing. Bought cheap from coworker (paid off his loan). Have spent $10K in routine and non-routine maintenance over the past two years. $10 per day, as it turns out. So, the used, cheap high mileage truck actually cost about 30% more, over time, than its purchase price. Leasing would eliminate that maintenance cost, but the lease payment on a new truck would likely equal the used vehicle payment and maintenance costs. I would have modern technology, a warranty, etc. in comparison to a used truck with high mileage. But, insurance on a new truck would be about double what I pay on the used truck, maybe even more.

I took a Tesla test drive thinking the monthly lease cost would be $300 actual. Turns out insurance on a leased vehicle of that complexity is $150 per month, at my retiree age. In part, gap insurance between lease payoff and car value is necessary, raising that cost. Leasing the EV makes sense, even with the high insurance cost, but the "savings" of the EV are certainly reduced.

And, presently, I'm considering dealer financing or leasing, on a MINI Cooper purchase, which is only 3% for 60 months. Clearly they are using company and dealer tactics to keep as much of my money that they can, but they offer a better rate than my credit union. Leasing from this dealer vs. purchasing? Lease is $369, purchase is $568, a monthly difference of $200. Is leasing the right move? It could very well be. The lease payment of $369 is for only three years, and I tend to change cars frequently. Being able to walk away from a car like the MINI Cooper in three years could be very good -- I could in those three years realize that we do love RV, we do want to tow big, and I need a new truck. $3,879 due at signing vs. $5,000 to purchase saves more money, up front. But, the mileage limit is 7,500 miles per year...hmmm. I could put 3K miles on the car with three trips to see my daughter in Charleston SC.

Obviously, leasing reduces monthly costs, may reduce up front money, eliminates maintenance cost, limits driving, and increases insurance (the gap). Leasing makes the car an expense, rather than a possession.

Decisions have dimensions.

My lease experience with 4 vehicles was very good. My first was a Honda Accord paid 0 down and 199.00 a month for 36 months limited to 36000 miles. Also worked in free oil changes and tire rotation. The next 3 were Honda Pilots with 0 down and we split the cost of oil changes.

I think the most I paid for the Pilot was either 239.00 or 245.00 a month. I should also note that all these vehicles were base models with no options so that helped with the monthly price. Also I did not go over the 36000 limit.

Today's EV's and PHEV's are transitional technology. In 2-4 years solid state batteries will replace current Li-Ion tech, with batteries that are more efficient, safer, and longer lasting.
I leased a Mazda CX-90 PHEV for 2 years; I'm just about at 12,000 miles for the first year. I like the vehicle, but my wife thinks--and I reluctantly have to agree--that for the purpose we use a large SUV, which is mostly carrying around our two grandddaughters, a minivan makes more sense.
So I'm planning to turn in the CX-90 at end of lease; we will either keep our existing old (2006) Odyssey or get a newer one.
I did get the $7500 rebate on the lease which made it a good deal. But insurance is $1200/year. I have no solar panels at the rented house were we keep the CX-90; charging even at night is no cheaper than buying gas. Even though with its hybrid setup the CX-90 get better mileage than my Honda Accord, it's pretty expensive.

My current 2 vehicles were purchased and happily paid off! ( the heavier used of the 2 is just shy of 150K miles so I know within a couple years will need to be replaced)
I have leased a number of vehicles over the years and to me there are some advantages:
Let’s say it is 3K down and 300 a month for 3 years so roughly 14K. For the entire term of the lease bumper to bumper warranty is involved, and for some of my cars, even included routine maintenance like oil changes and filters etc.
you never have to worry about being stuck with a broke down car and potentially expensive repair bill. You never have to drop 1500 bucks on new tires, etc. typically for me, I see the cost of leasing for 3 years is about half the total purchase cost. I did a screaming deal on my last lease trading in a rusty 150K mileage Jeep as a down payment. My lease including maintenance was 149 a month. Drive a new car for 3 bucks a day? No brainer.

Also a lot has to do with how and where you drive and how much. My current situation is 400 miles a week commuting to work alone, so leasing for me doesn’t make sense. For my wife who does less than 200 it might.

When it does come time to replace my current ride, I will be near retirement. At that point, my plan is to buy a very simple new vehicle without a lot of options. Once I retire, my drives will be 90+% to my VFW post or gun club, don’t need a fancy car for that.

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Originally posted by captain127:

My lease including maintenance was 149 a month. Drive a new car for 3 bucks a day

The maff is not working for me.