Buying vs. Leasing a car

catsareniice1 · January 2014

I don't make a lot of money so leasing is cheaper from month to month (short term). Looking at the big picture some people are telling me that buying is best. Thoughts?

A concern I have about buying a car is they obviously get old and wear and tear happens. Even with keep up, there is a much greater chance of getting stuck on the road. This world is changing for the worse so I do not want to get stuck somewhere alone.

Also, if I buy a car wouldn't the cost of upkeep (buying a car) almost equal any leasing costs over time or am I completely wrong?

Has anyone else had this dilemma?

tigerfighter · January 2014

I would actually like to see the comments on this too. As I am looking to eventually replace my 2000 Honda in the future.

CuriousKiddosMama · January 2014

NEVER, NEVER, NEVER lease a car. You pay an insane high interest rate on them, and you have nothing to show for it in the end. It is the WORST way to use a car. No, the cost of upkeep on a car does not equal the cost of leasing. My most expensive car repair was when my catalytic converter went out on my car- that cost me 2k and that was the only major expense I had on that car in the 4 years I owned it. There is no way upkeep can equal leasing costs. Even with upkeep, I owned that car, so when I traded it in I got 8k for it, rather than turning it in and possibly still owing money on it because of being over on miles or whatever.

If you can't afford a 'nice' used car right now, buy whatever you can afford. Save your 'lease payments' (what you would have spent on a lease) over the next couple months, and then trade up in vehicle in a couple months. (For instance, you have 3k to spend right now, so buy a 3k car. Save your 400 lease payments for 5 months, and trade up to a 5k car. then do it again until you get in something you feel 'comfortable' with). But honestly, if you are a smart buyer, you can get a cheap car that is reliable. In college I bought a 2k Ford Taurus, drove it for years, and sold it for 2k. Only thing I had to replace on that was the alternator for like $200. Cars get old and some people don't want to buy them because they are old, however they can still be reliable. The only time I have ever been stuck with my car was when the weather was -50F and my car had sat in the college parking lot for a week- of course it wasn't going to start at that time. (Again, this is the same old Taurus).

You can buy a reliable used car for whatever your budget is. Please go that way!!!!

Xstatic3333 · January 2014

Everything PP said 1000%. Don't do it! Ask the board if you need brand recommendations for your budget, commute, and conditions.

catsareniice1 · January 2014

Vikingsfan 71713 said:

NEVER, NEVER, NEVER lease a car. You pay an insane high interest rate on them, and you have nothing to show for it in the end. It is the WORST way to use a car. No, the cost of upkeep on a car does not equal the cost of leasing. My most expensive car repair was when my catalytic converter went out on my car- that cost me 2k and that was the only major expense I had on that car in the 4 years I owned it. There is no way upkeep can equal leasing costs. Even with upkeep, I owned that car, so when I traded it in I got 8k for it, rather than turning it in and possibly still owing money on it because of being over on miles or whatever.

If you can't afford a 'nice' used car right now, buy whatever you can afford. Save your 'lease payments' (what you would have spent on a lease) over the next couple months, and then trade up in vehicle in a couple months. (For instance, you have 3k to spend right now, so buy a 3k car. Save your 400 lease payments for 5 months, and trade up to a 5k car. then do it again until you get in something you feel 'comfortable' with). But honestly, if you are a smart buyer, you can get a cheap car that is reliable. In college I bought a 2k Ford Taurus, drove it for years, and sold it for 2k. Only thing I had to replace on that was the alternator for like $200. Cars get old and some people don't want to buy them because they are old, however they can still be reliable. The only time I have ever been stuck with my car was when the weather was -50F and my car had sat in the college parking lot for a week- of course it wasn't going to start at that time. (Again, this is the same old Taurus).

You can buy a reliable used car for whatever your budget is. Please go that way!!!!

But, 2,000 to fix just one thing in 4 years is a lot of money. The car I am leasing now only costs me $225 a month. I'm not arguing with you, just trying to understand and figure things out.

hoffse · January 2014

Everything Vikingsfan just said. Out of 4 (soon to be 5) Hondas of various models, my family has spent a grand total of $560 for unusual repairs over 15 years. That's literally it. That doesn't come anywhere close to the cost of leasing. Will you have to change your oil? Yes. Will you eventually have to buy new tires if you keep it long enough? Yes. But that's routine maintenance, and it is still vastly cheaper than leasing.

Bonus: the right car keeps its value. When my dad took in my '97 Accord to be traded several years ago it had nearly 160K miles on it, and it was like 13 years old. The car guy said, "Well I guess you can always sell a Honda for at least $5,000. So I'll give you $1,500 for it." Heck, this past weekend we took H's incredibly crappy Altima to carmax to see what their offer would be. That thing has hail damage, dog damage, and it's been bumped 4 times in various parking lots (he has never repaired any of it). It's a 2005 with 140K miles on it. Carmax offered us $5,000 for that piece of junk. If he had leased that car, he would OWE money because of how many miles he put on it and how damaged it is.

Re: getting stuck on the road. This is what AAA is for. I pay about $75/year for H and I together, and that means we can get our cars jumped, our keys retrieved if we lock them in, and we can be towed up to 150 miles. Bonus: AAA has tons of travel discounts if you are a member. We are going to get about a $150 discount on a hotel for our trip to London this summer with our AAA membership. Needless to say, not only does that single discount pay for our membership, but we are coming out ahead. And we will use it for other hotels this year too. Whether you lease or buy, a AAA membership is really something you should have if you drive a lot. It's pretty cheap for peace of mind.

catsareniice1 · January 2014

Ok. Thanks so much everyone!! The car I am leasing now only has 10,000 miles on it and I've had it for 16 months. Maybe I should just buy the car I am leasing as opposed to risking buying a used...

hoffse · January 2014

OP, with the trade-in value from H's really crappy Altima, we can buy him a brand new 2014 Civic. With the prices we were quoted through our Costco membership, it would cost us about $275/month for three years, and then we would actually own it outright. He tends to drive cars for 7-8 years, so that's excellent value for us. The cost per month is not much different than what you are paying now for a lease - except we have the option to keep it for another 4-5 years with no payments whatsoever, and we will get money out of it when it gets traded in.

I generally think you shouldn't buy a car unless you can afford to pay it off in 3 years or less. If it takes longer than that, it's probably too much car. That might mean you start out used, but that's not a bad thing. Somebody else has taken a depreciation hit. H and I are only looking at new cars right now because costco's prices are so low for new civics and accords that we would actually spend more if we bought used than if we bought new to get the safety features we want. And that seems ridiculous. But for most people, used is the way to go.

Since you don't have something you can use as a trade-in to defray the cost of this car, I would start used and go with Viking's suggestion to slowly upgrade.

catsareniice1 · January 2014

Once my lease is up in 2014, I can buy it in 2-3 year's time. It's 2012 re-designed Beetle. Just not sure how well it will hold it's value. Great car so far, very solid!

hoffse · January 2014

Those are super cute but you might want to look at the safety ratings for those. They're so small that I have a hard time imagining they would perform great in a crash (though they might - you never know). Check the IIHS. They crash just about everything.

The IIHS came out with a new crash test in the last year that many newer cars have failed. It's called the small overlap crash test. Basically, this crash test looks at a particular angle of a frontal collision, which is primarily on the driver's side. From what I've read, it sounds like if the car is failing this crash test it means that the engine could possibly be pushed through the cab and into the driver's body. And apparently it can happen at a relatively low speed - that's one of the reasons it's so dangerous. Those kinds of crashes apparently account for 25% of car fatalities these days. The pictures of it look incredibly bad, and it was enough to convince me to buy something that passed it.

Anyway, some cars have passed that test with flying colors, and others have failed horribly. Those that failed are being re-engineered as we speak to account for it. If you are going to wait a couple years anyway, you might want to plan to buy a used car from the 2013 or newer models that passed this test. I do think it's worth paying a little more for safety. Driving is the most dangerous thing we do every day.

catsareniice1 · January 2014

hoffse said:

Those are super cute but you might want to look at the safety ratings for those. They're so small that I have a hard time imagining they would perform great in a crash (though they might - you never know). Check the IIHS. They crash just about everything.

The IIHS came out with a new crash test in the last year that many newer cars have failed. It's called the small overlap crash test. Basically, this crash test looks at a particular angle of a frontal collision, which is primarily on the driver's side. From what I've read, it sounds like if the car is failing this crash test it means that the engine could possibly be pushed through the cab and into the driver's body. And apparently it can happen at a relatively low speed - that's one of the reasons it's so dangerous. Those kinds of crashes apparently account for 25% of car fatalities these days. The pictures of it look incredibly bad, and it was enough to convince me to buy something that passed it.

Anyway, some cars have passed that test with flying colors, and others have failed horribly. Those that failed are being re-engineered as we speak to account for it. If you are going to wait a couple years anyway, you might want to plan to buy a used car from the 2013 or newer models that passed this test. I do think it's worth paying a little more for safety. Driving is the most dangerous thing we do every day.

You're awesome! Thank you for all this valuable info!!

I'm going to check rating for this car now. It was rated as one of the SAFEST coupes when I was looking into this car a year and a half ago. But, I am not sure about that specific test you mentioned.

vlagrl29 · January 2014

I would never lease. that's so silly! I had an uncle that leased cars all the time and never understood it. It's much better to buy!

catsareniice1 · January 2014

This is what I am seeing for the 2012 Beetle...

Looks like the front small overlap has not been tested on this car. Everything checks out very well except it got marginal rating on the front small overlap in the 2013 and 2014 models.

http://www.iihs.org/iihs/ratings/vehicle/v/volkswagen/beetle/2012

hoffse · January 2014

Yeah the crash test thing was really interesting. They haven't crashed anything with that test older than a 2013, so it's one reason H and I are sticking with 2013s and 2014s in our search. The 2013 Camry was really interesting - it got a perfect score on everything except that test. It failed the small overlap test so badly that Toyota pulled crashing its other cars to try to address the problem before sales were affected. It made the national news, because Camrys are supposed to be incredibly safe. The 2014 Camrys are better, but still not perfect.

The 2013 & 2014 Accords and Civics all got perfect scores. I'm a Honda person anyway, so that just sealed the deal for us.

catsareniice1 · January 2014

hoffse said:

Yeah the crash test thing was really interesting. They haven't crashed anything with that test older than a 2013, so it's one reason H and I are sticking with 2013s and 2014s in our search. The 2013 Camry was really interesting - it got a perfect score on everything except that test. It failed the small overlap test so badly that Toyota pulled crashing its other cars to try to address the problem before sales were affected. It made the national news, because Camrys are supposed to be incredibly safe. The 2014 Camrys are better, but still not perfect.

The 2013 & 2014 Accords and Civics all got perfect scores. I'm a Honda person anyway, so that just sealed the deal for us.

Are Hondas safer than VW's? I don't care for Hondas too much. My nephew's Accord seemed tin-like compared to my VW. But, it could just depend on the model. Thank you for pointing out this very important crash test!

I love Fiats too! Looks like their rating is very high.

vlagrl29 · January 2014

catsareniice1 said:

hoffse said:

Yeah the crash test thing was really interesting. They haven't crashed anything with that test older than a 2013, so it's one reason H and I are sticking with 2013s and 2014s in our search. The 2013 Camry was really interesting - it got a perfect score on everything except that test. It failed the small overlap test so badly that Toyota pulled crashing its other cars to try to address the problem before sales were affected. It made the national news, because Camrys are supposed to be incredibly safe. The 2014 Camrys are better, but still not perfect.

The 2013 & 2014 Accords and Civics all got perfect scores. I'm a Honda person anyway, so that just sealed the deal for us.

Are Hondas safer than VW's? I don't care for Hondas too much. My nephew's Accord seemed tin-like compared to my VW. But, it could just depend on the model. Thank you for pointing out this very important crash test!
I love Fiats too! Looks like their rating is very high.

I can't stand fiats. I got one for a rental last year when my car was in the shop. felt like i was in a tin can.

hoffse · January 2014

It's all relative - in general a bigger car is safer than a smaller car. If crashed together, a bigger car usually wins. But that's just because of weight, velocity, etc.

That said, within the same size class of car you can use the IIHS ratings as a starting point. I haven't looked at Fiats, but if they are rated as safer than Beetles, then that would be enough to make me move brands eventually. I don't think you should necessarily jump ship now - but if you're thinking about it, it's good to be aware that test is out there, and manufacturers are now engineering for it. That test is so new that it's really turned the whole "safest car" thing on its head in the last year.

I like Hondas because they basically never die, never break, and they're very safe. For instance, the base models of ALL their cars now have back-up cameras. It's things like that which I really appreciate as a consumer. If an Accord is too big for you, check out the Civics. We sat in a 2013 base model Civic this weekend, and it was pretty sexy. Yes, I actually called a civic sexy. H said it was like sitting in a cockpit. The entire dash is angled toward the driver, so it's like this curved console thing. Everything is close within reach, and it's like the driver has ultimate control. H actually got a bit of a high sitting in it. We're worried it will be too small for us with a hopefully-soon-to-be-growing-family. But for a single person or a couple? It's great. Very sporty.

catsareniice1 · January 2014

hoffse said:

It's all relative - in general a bigger car is safer than a smaller car. If crashed together, a bigger car usually wins. But that's just because of weight, velocity, etc.

That said, within the same size class of car you can use the IIHS ratings as a starting point. I haven't looked at Fiats, but if they are rated as safer than Beetles, then that would be enough to make me move brands eventually. I don't think you should necessarily jump ship now - but if you're thinking about it, it's good to be aware that test is out there, and manufacturers are now engineering for it. That test is so new that it's really turned the whole "safest car" thing on its head in the last year.

I like Hondas because they basically never die, never break, and they're very safe. For instance, the base models of ALL their cars now have back-up cameras. It's things like that which I really appreciate as a consumer. If an Accord is too big for you, check out the Civics. We sat in a 2013 base model Civic this weekend, and it was pretty sexy. Yes, I actually called a civic sexy. H said it was like sitting in a cockpit. The entire dash is angled toward the driver, so it's like this curved console thing. Everything is close within reach, and it's like the driver has ultimate control. H actually got a bit of a high sitting in it. We're worried it will be too small for us with a hopefully-soon-to-be-growing-family. But for a single person or a couple? It's great. Very sporty.

THANK YOU!!! I see the Passat's pass everything with flying colors. So, we'll see

I will not over spend. I'll have to see what my situation is like when the time comes. I like to gather as much info in advance. My VW's have been extremely reliable too. And, I have heard the same about Hondas and Nissans. I also like Subarus so I can check those out too. Too many choices. But, that's a good thing I guess.

Xstatic3333 · January 2014

I'm a Honda fan too because of their reliability. I hate paying for repairs, so when I got my car I considered reliability and cost of maintenance first after safety and gas mileage. Model year does make a difference too, like you mentioned. For example, the Civic tends to get great ratings across the board but the 2012's were very poorly rated by Consumer Reports.

Its interesting to hear that you've found your VW's to be reliable. My parents (who do not base their car choices on MM alone) loved theirs to drive but had a ton of maintenance issues. I guess it could be another issue of the model year.

The year I bought my car, I actually got the paid version of Consumer Reports online for the year (around $12, but don't forget to cancel it or it will automatically renew). I know very little about cars so it was extremely helpful for me. It laid out the differences between models and model years in terms of the characteristics I found most important.

catsareniice1 · January 2014

Xstatic3333 said:

I'm a Honda fan too because of their reliability. I hate paying for repairs, so when I got my car I considered reliability and cost of maintenance first after safety and gas mileage. Model year does make a difference too, like you mentioned. For example, the Civic tends to get great ratings across the board but the 2012's were very poorly rated by Consumer Reports.

Its interesting to hear that you've found your VW's to be reliable. My parents (who do not base their car choices on MM alone) loved theirs to drive but had a ton of maintenance issues. I guess it could be another issue of the model year.

The year I bought my car, I actually got the paid version of Consumer Reports online for the year (around $12, but don't forget to cancel it or it will automatically renew). I know very little about cars so it was extremely helpful for me. It laid out the differences between models and model years in terms of the characteristics I found most important.

I think there are some bad batches out there with all cars for sure.

I had a friend who owned a very expensive Mercedes. Well, it would smoke when she tried to charge her car phone lol, she had constant brake issues among a bunch of problems that should not have occurred. When I think of Mercedes all I hear is my friend say, "This effin Mercedes, never again." But, she happened to get stuck with a crappy one.

I have one friend who didn't like her VW but everyone else I know have found them to be extremely reliable.

daisy662 · January 2014

Be very careful about buying your vehicle at the end of your lease. It will likely be more expensive than just buying the same car would be if you weren't at the end of your lease. I agree - do not lease. Buy what you can afford to pay cash for.

CuriousKiddosMama · January 2014

catsareniice1 said:

Vikingsfan 71713 said:

NEVER, NEVER, NEVER lease a car. You pay an insane high interest rate on them, and you have nothing to show for it in the end. It is the WORST way to use a car. No, the cost of upkeep on a car does not equal the cost of leasing. My most expensive car repair was when my catalytic converter went out on my car- that cost me 2k and that was the only major expense I had on that car in the 4 years I owned it. There is no way upkeep can equal leasing costs. Even with upkeep, I owned that car, so when I traded it in I got 8k for it, rather than turning it in and possibly still owing money on it because of being over on miles or whatever.

If you can't afford a 'nice' used car right now, buy whatever you can afford. Save your 'lease payments' (what you would have spent on a lease) over the next couple months, and then trade up in vehicle in a couple months. (For instance, you have 3k to spend right now, so buy a 3k car. Save your 400 lease payments for 5 months, and trade up to a 5k car. then do it again until you get in something you feel 'comfortable' with). But honestly, if you are a smart buyer, you can get a cheap car that is reliable. In college I bought a 2k Ford Taurus, drove it for years, and sold it for 2k. Only thing I had to replace on that was the alternator for like $200. Cars get old and some people don't want to buy them because they are old, however they can still be reliable. The only time I have ever been stuck with my car was when the weather was -50F and my car had sat in the college parking lot for a week- of course it wasn't going to start at that time. (Again, this is the same old Taurus).

You can buy a reliable used car for whatever your budget is. Please go that way!!!!

But, 2,000 to fix just one thing in 4 years is a lot of money. The car I am leasing now only costs me $225 a month. I'm not arguing with you, just trying to understand and figure things out.

2000 divided by 48 months is 41 dollars a month. That's what it cost me to drive that car for that one repair. And car repairs are not an emergency, so we save for them monthly and had that in the bank ready to go. That was the only thing other than regular oil changes and a new set of tires that I needed for that car the entire time I drove it. I would have kept the car, it only had 70k on it, but it no longer fit our lifestyle with my 6 month old, so we traded it in and got 8k for it (I bought it for 11k). It really held it's value (Kia, just in case you want to look into them).

vpine · January 2014

I have always financed but have a friend that always leases. I'm the type that always traded in cars and have never actually owned one so I suggest leasing only if you are sure you don't want to keep the car for the long haul.

I've had Honda Civics and CRV and I agree with PP - they are great, never had an issue with Hondas.

Erikan73 · January 2014

My husband would love to lease as he likes getting new cars frequently. The problem is that right now financially that wouldn't work for us. To get those great lease offers you see on tv you have to put any where from$ 3,000-$6,000 down to get that price. Then at the end of the lease you've got nothing equity wise to show for the years you made payments. We can't afford to put that down, make payments and save up for that next big lease downpayment. So we will continue to buy so that way we can go a few years with no car payments after the vehicle is paid off and have equity from the car (even if it's not much) and cash that we saved up from not having payments due.

Sisugal · January 2014

Figure your TOTAL costs over time - like 10 years and you will definitely see that buying a car and keeping it is a better financial move. AND you still have a car to sell.
Remember that car insurance will cost you much more with a new leased vehicle.

Sisugal · January 2014

Plan ahead for unexpected car repairs - emergency fund or a car fund (for repairs and future purchases - something set aside every month)

Jennycolada · January 2014

A hidden cost with leading tends to be insurance, so keep that in mind.

I mean, obviously there were many factors in play (age of car, etcetera), but my insurance payments decreased nearly $700/year when I purchased my car versus leasing.

Sisugal · January 2014

Basically, leasing is penny wise and pound foolish -- unless you are a business that can write off the cost of the lease.

catsareniice1 · January 2014

Thanks so much, everyone!

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