Hi, started to browse around for a hybrid vehicle and discussing options with wife. Her main concern with Lease is that we'll be making monthly payments and once the lease period ends, we kind of end with nothing but a buyout option to own the vehicle. We have only done financing with a used vehicle before, and never done leasing before. How does it work? Is it similar to say pay rent and at the end of it, you toss the car and keys back to the dealership and jump on another lease?
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Finance or Lease - Hybrid vehicle
- Thread starter EC2010
- Start date
J_F
Guest
exactly
with a lease you are paying for the part of vehicle depreciation you use
as long as you stay within the terms of the contract - usage
and do not turn the vehicle in damaged, you hand in the keys and get something else
typical dirt from use, and a small scratch or 2 are overlooked, but if the tires are done they will invoice you
you mention a used car though, risk with that is making sure there is sufficient warranty
to cover the the lease term, if it breaks out of warranty and you're still on the lease
repairs come out of your pocket
if you're stuck on the idea of ownership in the end
a lease will typically cost more $ than finance
lease interest rates are a bit higher
and keep in mind the residual is like any of the other monthly payments
if you exercise the buyout, it will be plus taxes
with a lease you are paying for the part of vehicle depreciation you use
as long as you stay within the terms of the contract - usage
and do not turn the vehicle in damaged, you hand in the keys and get something else
typical dirt from use, and a small scratch or 2 are overlooked, but if the tires are done they will invoice you
you mention a used car though, risk with that is making sure there is sufficient warranty
to cover the the lease term, if it breaks out of warranty and you're still on the lease
repairs come out of your pocket
if you're stuck on the idea of ownership in the end
a lease will typically cost more $ than finance
lease interest rates are a bit higher
and keep in mind the residual is like any of the other monthly payments
if you exercise the buyout, it will be plus taxes
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I would never lease, the thought of paying all that money and then owning butkis at the end for it just irks me.
Then again, I'd never buy a new car, ever - depreciation pits. The newest car I ever bought was the 2012 my wife drives now. Financed it at something like 4%, when it's paid off..we still own and enjoy the car.
Then again, I'd never buy a new car, ever - depreciation pits. The newest car I ever bought was the 2012 my wife drives now. Financed it at something like 4%, when it's paid off..we still own and enjoy the car.
J_F
Guest
biggest advantage is quicker depreciation
if self employed or in a profession where you can deduct expenses from taxable income
every cent you pay to the lease is a deduction
capital depreciation (purchase) happens at a lower pace
other advantage is getting a nicer car at lower payment
if you're okay with never owning anything
if self employed or in a profession where you can deduct expenses from taxable income
every cent you pay to the lease is a deduction
capital depreciation (purchase) happens at a lower pace
other advantage is getting a nicer car at lower payment
if you're okay with never owning anything
Lease is indeed a long term rental. I wouldn’t look at it as a way of purchasing the car. You can. It might be worth it depending on the circumstances at the end of the lease.
The benefits of leasing are, you only pay tax on your monthly payment.
A number of factors determine the payments. And mileage is one.
The payout on the vehicle at the end of the lease can be advantageous or not.
Many dealers will encourage you to return the vehicle and lease another. They will show you the cost of buying the leased vehicle you had, tell cost of an extended warranty, anticipated repairs etc might as well get a new vehicle!
An area of concern when returning a vehicle from a lease is having it returned in the agreed condition. The tires must be decent, brakes etc. There can be no visible damage such as a cracked windshield, dents in the body work etc. And if you exceeded your mileage, it can get costly.
If you are looking at Hybrids as a way to save fuel costs, then I’d evaluate your overall vehicle expenses of the previous years, make adjustments for any changes. Is your driving habits the same? Is the use the same?
Look at payments, fuel, maintenance, insurance etc.
Sometimes a cheap encono car owned outright is the best way. Putting aside a budget for repairs and wear items and you are set. Just like you have in the past.
Is the Hybrid a plug in or just a Hybrid?
While plug ins are good, there is the expense of electricity as well as having a plug. Will you need to install one at home etc? Into not a lot but, some folks look at their fuel savings and don’t look st the additional hydro they pay for a true look at their cost savings.
If the Hybrid is green plated, you can travel in hov lanes which is another benefit.
Good luck!
Sent from my iPad using Tapatalk
The benefits of leasing are, you only pay tax on your monthly payment.
A number of factors determine the payments. And mileage is one.
The payout on the vehicle at the end of the lease can be advantageous or not.
Many dealers will encourage you to return the vehicle and lease another. They will show you the cost of buying the leased vehicle you had, tell cost of an extended warranty, anticipated repairs etc might as well get a new vehicle!
An area of concern when returning a vehicle from a lease is having it returned in the agreed condition. The tires must be decent, brakes etc. There can be no visible damage such as a cracked windshield, dents in the body work etc. And if you exceeded your mileage, it can get costly.
If you are looking at Hybrids as a way to save fuel costs, then I’d evaluate your overall vehicle expenses of the previous years, make adjustments for any changes. Is your driving habits the same? Is the use the same?
Look at payments, fuel, maintenance, insurance etc.
Sometimes a cheap encono car owned outright is the best way. Putting aside a budget for repairs and wear items and you are set. Just like you have in the past.
Is the Hybrid a plug in or just a Hybrid?
While plug ins are good, there is the expense of electricity as well as having a plug. Will you need to install one at home etc? Into not a lot but, some folks look at their fuel savings and don’t look st the additional hydro they pay for a true look at their cost savings.
If the Hybrid is green plated, you can travel in hov lanes which is another benefit.
Good luck!
Sent from my iPad using Tapatalk
Leasing can make your life easier if you are the type of person that fits the mold (~20K km per year, new vehicle every ~3 years). The further you are from that mold, the worse leasing normally is. The big driver for leasing is you can get more vehicle for the same monthly payment and beneficial treatment if a business leased instead of purchased vehicles. The downside is, in almost every scenario a lease will cost you more over time than conventional vehicle ownership.
I've never leased but there used to be problems with the residual value. Some leases left the risk with the leasor, other put the risk on the leasee. I would never sign the second. If the residual is higher than expected, they keep the difference, if it's lower, you pay the difference? wtf? This is especially important on a hybrid which is more likely to get hammered in the used market if problems are identified. I'm not sure if this stupidity still happens or not.
As others have said, pay attention to condition. I have heard many nightmares about lease returns and huge bills (which remarkably shrink if you lease another vehicle, wink wink nudge nudge, extortion anyone?).
I've never leased but there used to be problems with the residual value. Some leases left the risk with the leasor, other put the risk on the leasee. I would never sign the second. If the residual is higher than expected, they keep the difference, if it's lower, you pay the difference? wtf? This is especially important on a hybrid which is more likely to get hammered in the used market if problems are identified. I'm not sure if this stupidity still happens or not.
As others have said, pay attention to condition. I have heard many nightmares about lease returns and huge bills (which remarkably shrink if you lease another vehicle, wink wink nudge nudge, extortion anyone?).
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JTR
Well-known member
While I wouldn't normally advocate a lease over finance, because it is like burning money, in this case I'd go the other way. The idea of hybrid or EV ownership after warranty, well it's just plain scary. These cars have very expensive consumables, that are prime for failure by that point in their life. Price out battery pack replacement on each car that you consider, and decide for yourself whether that's something you're up to paying for out of pocket. Google tells me that the MSRP for a Volt(just an example) main battery is $3k, ofcourse that's USD, after exchange, mark-up for getting it to your dealer, installation, etc I'm sure it's extremely cringe worthy. Prius batteries are reportedly slightly less, but same basic idea. Then there's the drive motor, the various control systems etc. In terms of out of warranty maintenance costs, I think I'd rather have a 15 year old mercedes than an 8 year old hybrid.
If you want a hybrid, I'd say lease a brand new one and enjoy it worry free.
If you want a hybrid, I'd say lease a brand new one and enjoy it worry free.
+1 Exactly what we do.
I wouldn't have any qualms about buying one of the hybrid cars that has a known proven good record (basically Toyota, Chevrolet Volt). If you insist on one that isn't well proven (basically all others, and that includes Honda, their earlier hybrids were troublesome, and it's too early to tell if the new ones have solved this), then lease. Any pure EV - Lease, unless you find a really depreciated used one that still has a functional battery and is so cheap that you basically can't lose.
Lots of people buying used BMW i5s ... almost 15k to 20k cheaper for 1-2 year old.
i3's? Even at 20 off, I wouldn't be interested.
I have seen a lot of myths in this thread....love them all.
You shouldn't/should lease a hybrid because of the batteries....(the most reliable cars you can buy are hybrids, feel free to look it up)
You shouldn't lease if you go over a certain mileage.....(just buy the mileage you need)
You'll get dinged for damage when you return the car...(do you think it is different when you own the car? Your trade is worth what it is worth...not based on whether you own it)
Leasing will be more expensive....(it depends. Look at the rates. If the lease rate is significantly lower....then the total cost can be lower.)
Dealer keeps the difference on residual value at the end.....(not if they want your business again....or they risk you going to ANY other dealer and find out they are way out on price)
Nobody mentioned being protected from depreciation??!!? if you get into an accident in a financed vehicle who pays for the depreciation caused? You do. If the market for a Hybrid tanks....you WANT to be leasing it. Then the manufacturer takes the hit.
The bottom line is that a lease is good for some and not for others....but none of the reasons above are good ones.
The best example I can give you is that if you have a buyout at the end....that is the same amount you have saved over the time not buying it in the first place. example 60 month lease (example only) pay $400 a month with a $6000 buyout.....or 60 month finance for $500 a month....see where I am going with this? The second option means you own it....you own $6000 more that you paid. Or you keep $100 more a month in your pocket and have $6000 less spent at the end. All the same.
Where's the catch...sounds all positive right? The dealer wants you to lease because they control the deal more....they have a reason for you to come back to the dealer at the end of the lease. Even if you choose to buy your own lease....you have to walk past all the 2023 cars on your way to buy it out and maybe just maybe you buy one instead.
You shouldn't/should lease a hybrid because of the batteries....(the most reliable cars you can buy are hybrids, feel free to look it up)
You shouldn't lease if you go over a certain mileage.....(just buy the mileage you need)
You'll get dinged for damage when you return the car...(do you think it is different when you own the car? Your trade is worth what it is worth...not based on whether you own it)
Leasing will be more expensive....(it depends. Look at the rates. If the lease rate is significantly lower....then the total cost can be lower.)
Dealer keeps the difference on residual value at the end.....(not if they want your business again....or they risk you going to ANY other dealer and find out they are way out on price)
Nobody mentioned being protected from depreciation??!!? if you get into an accident in a financed vehicle who pays for the depreciation caused? You do. If the market for a Hybrid tanks....you WANT to be leasing it. Then the manufacturer takes the hit.
The bottom line is that a lease is good for some and not for others....but none of the reasons above are good ones.
The best example I can give you is that if you have a buyout at the end....that is the same amount you have saved over the time not buying it in the first place. example 60 month lease (example only) pay $400 a month with a $6000 buyout.....or 60 month finance for $500 a month....see where I am going with this? The second option means you own it....you own $6000 more that you paid. Or you keep $100 more a month in your pocket and have $6000 less spent at the end. All the same.
Where's the catch...sounds all positive right? The dealer wants you to lease because they control the deal more....they have a reason for you to come back to the dealer at the end of the lease. Even if you choose to buy your own lease....you have to walk past all the 2023 cars on your way to buy it out and maybe just maybe you buy one instead.
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I've leased many cars. I like driving brand new cars every three years and I tend to drive the average amount of miles (20,000 kms or less) a year. I've also been able to deduct part of the lease payments during tax-time since I've used the vehicles for business. Leasing made the most sense for me.
That said, there are some hidden costs to leasing.
Unless you've bought some kind of excess wear and tear protection package for tires, you will almost always get dinged for a new set of tires on lease return. Most times it's cheaper if you change them out yourself and return it with close-to-new rubber. It gets expensive if you lease a car that demands high-end performance rubber.
If you decide to buy the car out, you have to pay a myriad of fees, not just the residual: Driveclean test and safety certification at the minimum, and some dealerships charge you an admin fee for lease transfer costs (anywhere from $150-$1200).
You can't suspend insurance on a leased vehicle. If you get a summer car and garage it over the wintertime or decide to go away on a business trip or on vacation for a month or so, the leasing company needs full coverage on it the entire time.
That said, there are some hidden costs to leasing.
Unless you've bought some kind of excess wear and tear protection package for tires, you will almost always get dinged for a new set of tires on lease return. Most times it's cheaper if you change them out yourself and return it with close-to-new rubber. It gets expensive if you lease a car that demands high-end performance rubber.
If you decide to buy the car out, you have to pay a myriad of fees, not just the residual: Driveclean test and safety certification at the minimum, and some dealerships charge you an admin fee for lease transfer costs (anywhere from $150-$1200).
You can't suspend insurance on a leased vehicle. If you get a summer car and garage it over the wintertime or decide to go away on a business trip or on vacation for a month or so, the leasing company needs full coverage on it the entire time.
JTR
Well-known member
Any experience with lithium cells? Do you vape? kept a laptop for a couple years or more? lol any vaper will instantly tell you that you don't want to own a hybrid or ev out of warranty, they use the same cells. Any time you see a laptop that can no-longer live more than 20 minutes off the charger, remember it's the same cells. Tesla did start using a proprietary cell, but they had to build a megafactory to do it.
I don't think I would call the $ difference between lease and finance a "savings", since at the end of term finance guy owns a car, and lease guy doesn't.
short answer : I wouldn't lease. pure waste of money.
Long answer: buy a solid reliable vehicle like a honda or a toyota. if you need to finance, find the lowest rate possible or line of credit and make as many payment as you can.
keep it long term and reap.
Here's why: my last car, a 98 Honda Accord was kept for 14 years. Bought it cash, and never spent a dime on repairs. and still collected $3g+ when I sold it.
in those 14 years, I shudder to imagine how much I would have downpaymented every 2/3 years and wasted away on monthly payments, along with incremental insurance costs with each newer recent model vehicle, if I had leased.
Long answer: buy a solid reliable vehicle like a honda or a toyota. if you need to finance, find the lowest rate possible or line of credit and make as many payment as you can.
keep it long term and reap.
Here's why: my last car, a 98 Honda Accord was kept for 14 years. Bought it cash, and never spent a dime on repairs. and still collected $3g+ when I sold it.
in those 14 years, I shudder to imagine how much I would have downpaymented every 2/3 years and wasted away on monthly payments, along with incremental insurance costs with each newer recent model vehicle, if I had leased.
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sburns
Well-known member
I have a 2014 Toyota Camry Hybrid, bought new. Most reliable car I have owned. 95K on it with only oil and gas for maintenance. Normally I would be considering a new vehicle around this mileage but it runs so well and is in good shape I may just drive it for a couple more years. The battery performance still seems the same as it has been.
That's not possible. You took an ICE engine and added other systems to it that also have a (small) chance of failing. By definition a hybrid has to have a higher chance of needing repairs than a less complicated system. For a BEV, I entirely agree with you as it removes the parts most likely to require repair.
J_F
Guest
gotta disagree with that part, maybe it's a typo?
make as few payments as you can afford
being upside down on a worn out car is a bad situation
I'm with you. I take the longest loan I can get at the lowest rate available up to 5 years (although typically the rate climbs above 3 or 4 years so I end up shorter than my self-imposed max). I keep vehicles for ~10 years.
People buying Hyundais on 8 year loans are going to be in a world of hurt. The only thing saving them now is dealerships are rolling the old loan into a new one but that just compounds the problem. Soon the pyramid has to collapse.
how can you disagree with paying off a line of credit (DEBT) as fast as you reasonably can?
If you invest in a properly made and well engineered car, with lasting quality, it will run well for many years. the guy that bought my old Accord was hooked within 30 seconds of driving it. Ran like brand new.
If you invest in a properly made and well engineered car, with lasting quality, it will run well for many years. the guy that bought my old Accord was hooked within 30 seconds of driving it. Ran like brand new.
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