The Right Car-Lease Terms

I’ve done 2-year car leases, 4-year car leases and 5-year car leases.  Oddly, I never have tried a 3-year car lease, which is probably the most popular and practical car lease today. Nearly all dealers, sales people and financial advisers will recommend a lease that is shorter than 4 years. There are some good reasons for this, which I will get into below, but there are also some drawbacks and disadvantages of short-term leasing that is often not mentioned or considered. Having had the experience of leasing so many different cars, I thought I would share my thoughts on the disadvantages and advantages of each of the different lease terms.

5-Year Car Leases (60-Month Lease)

5-Year car leases are not very common anymore. In the late 80’s and early 90’s, the five-year lease was a good option for me. I had my eye on a Toyota 4x4 Pickup and a Honda Accord LX, but I wanted to keep my payments around $250 or less. In 1987, I leased a brand-new Toyota 4x4, V-6 Pickup for only $237 a month and no money down. Then, in 1990 I leased a 1990 Honda Accord LX for $235 a month and nothing down. These turned out to be great cars and I never regretted making the monthly payments. In fact, I was able to trade the truck in after 3.5 years into the lease, and leased a Honda Civic in it's place for just $205.00. I needed more seats and the Honda Civic was more practical for hauling kids and saving gas money. Because these were popular cars with extremely high residual values, I was able to significantly reduce my payments by getting into a longer term lease. Read the rest of this entry

Should I Lease or Buy a Car?

If someone asks you whether or not you should lease or buy a car what do you say? When you ask someone else whether or not it is better to lease or buy a car what do they say? It depends on who you ask!

lease-vs-buy

The question to Lease or Buy a Car is an age old argument among the general population. This debate probably has more questions than answers. Since this blog is devoted to leasing cars, I think it makes sense for me to weigh in on the topic. My answer on whether it is better to lease or buy a car assumes two things:
One: you have a decent credit rating: (important whether you lease or buy a car)
Two: you drive 12,000 miles or less per year. (whether you lease or buy a car, mileage will still cost you money)
If you don’t meet either of these two criteria, buying is the better option. Assuming you do meet these criteria, is it better to lease or buy a car? Well, more criteria is needed to answer the question:

Criteria for deciding to Lease or Buy a Car

The Bias Against Car Leasing

Lease or Buy a Car Myths

As I touched upon on in, Car Leasing Myths, there seems to be a bias against those who lease cars, as opposed to buying them. Those who lease cars are often portrayed by car buyers as being impulsive, greedy and fool-hardy with their money, while they prop themselves up as being financially mature, patient and smart with their money. Merely asking the question, Lease or Buy a Car causes a leasing skeptic's pulse to rise. The truth is that those who lease tend to be more secure, confident, but quiet in their ways.  The non-lease crowd tends to have a spiteful outlook upon those who lease or refuse to pay cash for luxury items. Don't ask whether or not to lease or buy a car: Just do what's best for you. This is clearly not the mindset of many of our so-called, ‘financial experts’, such as Suze Orman, and her overly critical view that, ‘if you cannot afford it, don’t buy it. I won't let Suze Orman tell me whether or not to lease or buy a car and neither should you. Besides, you lease a car because you CAN afford it.

<h4>Lease or Buy a Car if you can afford it!</h4>

If You Can't Afford it, Lease It

Personally, I am not about to let Suze Orman’s lack of appreciation for new cars guide what’s best for me, and neither should you. More importantly, her reasoning is illogical and foolish. She says, we shouldn’t buy something we cannot afford. That is precisely why we lease cars, Suze. Leasing makes cars affordable. The reason I lease a car is so I can make a low monthly payment that I can afford. I could just as easily choose a car purchase that I cannot afford as a much as I could choose a car lease payment that is outside of my realm. Leasing a car with an affordable monthly car payment is no different than buying one. We should only buy or lease what we can afford, either way. Furthermore, I wonder if Suze Orman has considered the safety and liability issues of older or inferior cars. Old cars are not only a liability for financial reasons, but for safety and security too. Let’s face it, there is a reason the majority of cars only have a 36 month warranty. They become a repair, security and risk factor. Your car becomes a liability after five years, not just for repair concerns, but for safety and security. Nobody wants to be broken down on the road, particularly at night. If leasing, allow you to upgrade to a bigger car with more air-bags and a higher crash rating, you are making good practical, as well as financial sense. Older cars are simply not as reliable. That doesn’t mean you cannot get a good deal on a five year old car, it just means it’s past the age where you can compare your investment fairly to a new car with warranty. Oil Baron, John Paul Getty has been quoted saying this thousands of time, yet for miserly codgers like Suze Orman, let me state it again: “If it appreciates, buy it. If it depreciates rent it.” John Paul Getty (words to live by). Why? Read the rest of this entry

"I love to lease"

When it comes to financing cars, there are two kinds of people: Those who lease cars and those who have never tried it.
I have leased over a dozen cars in the last 25 years and not once have I experienced any justification for some of the bad reputation car leasing receives from non-leasing car owners.  Personally, I love to lease cars.  However, it never fails; if I even bring car leasing up to a non-leasing car owner, he/she will usually scoff at the mere mention of the term and act as though I am infected with the flu or plague. Unarmed of any facts, experience or knowledge, these leasing skeptics will spread lies and misinformation to friends and relatives who are shopping for cars. Sadly, these people will take their advice and dismiss leasing as a bad car financing option before they've ever had a chance to learn about and consider it. I realize that leasing isn't for everyone. There are certainly situations when it doesn't make sense to lease cars, but there is a significant percentage of the car-buying population where car leasing is a viable and attractive option if they can get past some of the myths of the detractors, then educate themselves about how it really might make sense for them. Read the rest of this entry

Toyota Camry Tops Lease Offers for October

2009 Volkswagen EOS Lease

No, this is not a picture of a Toyota Camry to the left, but we'll get to that later. What's more important is this: Isn't it amazing that you can drive a $23,000 car for three years for just $1299 down and $199.00 a month? The Toyota Camry LE 2010 Model has an average monthly payment of just $235 a month. This translates into one of the very lowest Lease Value Ratios ever at a tiny 1.03 %. For an explanation of how this works, visit this page: Car Lease Ratings Guide. Read the rest of this entry