Leasing

[Learning_Tee0225]

Is there a downside to leasing a car right now? 

Im going to need to get a new car in the next 3-5 months. I've never considered leasing however given the high interest rates it seems im able to get a lower monthly payment when leasing right now$489 vs $694.  Im also on the fence about the type of car I want. Considering between a Rav 4 Hybrid for the gas savings but boring drive and lack of interior appeal vs an Acura RDX (tech)AWD for the enjoyment, features and positive interior appeal the car has. I currently own an Acura TSX and love it. I work from home and have no commute so the mileage restriction wouldnt be a con to me.  They are both in the same price range however, Im leaning toward the Acura.

I'm wondering the following:

1.  Does it make sense to lease a car for 36 months to see if its "the one" and then purchase at end of lease.

2. What is the downside to leasing?

3. Is there a downside if im about 90% sure id want to purchase at the end of the lease?

Appreciate any feedback - 

[dunn2500]

you will owe alot more at the end of a lease vs a purchase.....

car payments are structured as paying off a loan literally.....so that $200 a month your saving a month will be added to the end, plus you will have a used car loan for a higher balance .....unless its a writeoff or you just want to lease every 3 years its usally not the way to go

it would be the most expensive way to purchase that vehicle doing a lease then buy out......the unknown would be fed int rates in 3 years

am sure there a algorithms for this online

[Horseshoez]

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@Learning_Tee0225 wrote:

Is there a downside to leasing a car right now? 

Im going to need to get a new car in the next 3-5 months. I've never considered leasing however given the high interest rates it seems im able to get a lower monthly payment when leasing right now$489 vs $694.  Im also on the fence about the type of car I want. Considering between a Rav 4 Hybrid for the gas savings but boring drive and lack of interior appeal vs an Acura RDX (tech)AWD for the enjoyment, features and positive interior appeal the car has. I currently own an Acura TSX and love it. I work from home and have no commute so the mileage restriction wouldnt be a con to me.  They are both in the same price range however, Im leaning toward the Acura.

I'm wondering the following:

1.  Does it make sense to lease a car for 36 months to see if its "the one" and then purchase at end of lease.

2. What is the downside to leasing?

3. Is there a downside if im about 90% sure id want to purchase at the end of the lease?

Appreciate any feedback - 

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I would argue the following:

• If you work from home and don't put on significant mileage per year, the fuel savings of the Rav 4 Hybrid compared to the RDX will be minimal.
• Unless the vehicle will be used primarily for a business where the cost of the lease is considered an expense, leasing is not in your financial best interest.
• If you plan on buying the vehicle at the end of the lease, that is almost always money loser; especially on vehicles which hold their value well.

Long story short, you'll come out well ahead if you simply buy the vehicle with traditional financing.

[cashorcharge]

Leasing can be beneficial if you don't mind have that perpetual car payment forever.  Good News...you get a new car every 3 years and it's always under warranty...Bad News...yep, you're always making a car payment until you decide to stick with something.

I have been leasing cars for 15 years and never had an issue with mileage and have always enjoyed getting that new car all the time.  

As @Horseshoez stated...buying a car at the end of the lease is NOT a good idea.  If you decide during the lease that it's the "one" that look to buy another new one.  Also, depending on the car....you may find the car is worth MORE at the end of the lease than the payoff so you can "trade in" the lease before it ends and take that equity and put it towards your new car.  I have been lucky enough to have this a few times...though I don't think that of the 2 you're considering, that would be your experience.

When leasing, there are a few fees to be aware of:

Inception Fee: Essentially a fee also called Security Deposit that varies in range.  The dealership can confirm that.  Some banks do waive that fee if you've done business with them before.

Termination Fee: This will be a fee to end your lease at the end of the term if you keep it that long...typically $500-$800 dollars.

Money Factor: This is the interest on the lease.  If you ask and the dealers gives you a money factor...multiple that by 2400 and that will give you the APR for the lease.  Money Factor: .00312 x 2400 = 7.488% interest.

Mileage: This is self explanatory...go over the miles, pay x per mile.  HOWEVER, if you trade the car in before the lease ends, you would not pay this.

LASTLY, the best resource for Lease Deals is Edmunds Car Forums.  You can look into each manufacturer and car and find lease deals, money factors specific to the car you want and your zip code. If you DON'T see the specific rate for the car you want, create an account and ask the forum and they reply in about 24 hours giving you more info before walking into a dealership.

https://forums.edmunds.com/

[CorpCrMgr1]

Totally agree that buying is better than leasing. 

[Shooting-For-800]

There a good leases.

Like any loan, it all depends on the deal.

A good lease  deal gives options.

You have to do the actual math then determine what that flexibility is worth to you.

Post real numbers and we can figure it out.

Due at signing

Monthly payment

Number of payments 

Mileage allowed

Milleage Expected

Mileage charges

Purchase at end of lease

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Real purchase price

Real APR

Exact model number

[Learning_Tee0225]

Thank you all for your feedback. You have all given me a lot to think about. Will work with some real numbers and see what route is most beneficial.