Leasing a car, is it stupid?

[Steeze]

I'm right out of college so I don't have much liquid cash. About 12 K total right now. A. But I just signed a contract for a new job that will pay me about 80k a year all told. I'm thinking about leasing a car for 24 months because at that point I should be in a much different financial position and will have different tastes. I found a lease for an Accord at $109 a month with $1499 down plus a free iPad. Seems like it might be a good solution. What do the experts think?

 

[teddieriley]

$80K out of college and bonuses? I'm jealous. What kind of work? Partly relevant to the question as to job stability.

Lease. Do it. As long as you can stay within the mileage limitations. $109 a month? You're good to go. You don't want to be straddled with high car payments for 5 years, assuming purchase.

 

[ceaton]

I generally lease when I expect a car to have high depreciation, and buy when I expect it to keep its value; hondas generally resell well.

That said, that monthly cost is ridiculously low, so yeah, go for it (just don't buy it out at the end).

 

[bdeuce22]

most of the attractive lease deals are dead and gone, but this is an exception. since you are making decent money, i suggest putting little to $0 down. yes, your monthly payment goes up a bit, but if your car were to get totaled or stolen, you are out whatever your down payment is.

that is a pretty damn good deal for a car though. Say the sticker on an Accord is 20K, that lease is saying that it'll be worth around 16K after 2 years and say 24,000 miles or whatever mileage limit there is on the lease. That probably won't be the REAL case, so in this scenario, it's better to lease.

 

[Michigan Planner]

Usually I wouldn't recommend leasing on just about any vehicle but a quickly depreciating luxury car like a Cadillac or Mercedes or something but this deal on the Accord sounds just about too good to pass up.

As long as you can stay within the mileage, it's not a bad deal.

 

[impolyt_one]

Originally Posted by bdeuce22

most of the attractive lease deals are dead and gone, but this is an exception. since you are making decent money, i suggest putting little to $0 down. yes, your monthly payment goes up a bit, but if your car were to get totaled or stolen, you are out whatever your down payment is.

that is a pretty damn good deal for a car though. Say the sticker on an Accord is 20K, that lease is saying that it'll be worth around 16K after 2 years and say 24,000 miles or whatever mileage limit there is on the lease. That probably won't be the REAL case, so in this scenario, it's better to lease.

man, the thing is though, I bet the sticker on an Accord nowadays is more like $30K, and not $20K, and that is why this lease deal is great. It's like a Honda lease cost from 1997, seriously. $1500+the free iPad and $109 a month, no brainer.

 

[bdeuce22]

definitely a better deal if the sticker price is higher than my example. ANY car sub $200/month is a good deal.

I'd try to lower the down payment and still get the iPad. shouldn't be a problem to get it lowered.

 

[Douglas]

I'm having a tough time understanding how they're even leasing a vehicle at that price. Take all those payments, and imagine the entire down payment goes towards the lease (and that therefore all taxes, title fees, delivery charges, other misc. fees are above and beyond that) and the payments total $4,115. Even assuming ZERO interest/money factor, the base Accord is a tick above $21,000. That comes out to about an 80% residual, actually even slightly more. And that's the best possible picture.

I'm skeptical that this deal is real.

 

[why]

Originally Posted by ceaton

I generally lease when I expect a car to have high depreciation, and buy when I expect it to keep its value; hondas generally resell well. That said, that monthly cost is ridiculously low, so yeah, go for it (just don't buy it out at the end).
The best leases are usually the cars that hold their value best anyway. Lease in areas with poor roads, weather, etc. that damage cars and thus quickly depreciate a car's value. Initial sticker prices in these areas are the same as areas more favorable to automobiles. Buy in areas favorable to automobiles, since resell values will be higher due to less damage and therefore less depreciation of the car. As a useful heuristic, if winter extends past its allotted three-month season don't buy a car that will be driven every day.

Originally Posted by Douglas

I'm having a tough time understanding how they're even leasing a vehicle at that price. Take all those payments, and imagine the entire down payment goes towards the lease (and that therefore all taxes, title fees, delivery charges, other misc. fees are above and beyond that) and the payments total $4,115. Even assuming ZERO interest/money factor, the base Accord is a tick above $21,000. That comes out to about an 80% residual, actually even slightly more. And that's the best possible picture. I'm skeptical that this deal is real.
It's probably not. He'll see when he gets to the dealership and they start charging him to lease the wheels and windshield. Accords will generally be above $230/month, even for the past year's model.

 

[bdeuce22]

could be a 2010 model, maybe even an newer 09 that never got moved.

there was always funny math going on with leases and they vary from location to location. back 3-4 years ago, we in detroit could get almost any domestic car for sub $300, it was ridiculous. i drove an H2 for 2 years and paid $320/month with taxes. that was one of the many downfalls of GM and Chrysler. they leased car a $30K at $200/month for 2 years and at the end of the least the car had little resale value, so used, it'd sell for 15K instead of the estimated 22K.

 

[uhurit]

Originally Posted by Douglas

I'm having a tough time understanding how they're even leasing a vehicle at that price. Take all those payments, and imagine the entire down payment goes towards the lease (and that therefore all taxes, title fees, delivery charges, other misc. fees are above and beyond that) and the payments total $4,115. Even assuming ZERO interest/money factor, the base Accord is a tick above $21,000. That comes out to about an 80% residual, actually even slightly more. And that's the best possible picture.

I'm skeptical that this deal is real.


+1

Honda dealers are notorious for signficantly bumping you on the payment...too good to be true...expect at least a $120 per month increase at the dealership

 

[turboman808]

My office is right near a toyota dealer. They rented out all the available space in the area and must have upwards of 500 new cars that are not moving. A few thousand dollars on a car thats just sitting is better then nothing I guess, so who knows it could be real.

I've kinda reached a point where I don't want to owe anyone money and I am paying cash for everything. Just a personal choice that I don't expect others to really get.

But really this does sound like a heck of a deal and ya cannot go wrong at that price.


Keep in mind that these cars are not moving and they are costing them money to keep on the lots at this point. If they can get you into a car just so they break even they are better off. Not to mention in 2 years when you come back chances are you will either lease or buy from them again and at that point look for prices to be jacked back up.

 

[otc]

Originally Posted by uhurit

+1

Honda dealers are notorious for signficantly bumping you on the payment...too good to be true...expect at least a $120 per month increase at the dealership

You expect them to more than double their advertised payment?

How is this not a bait & switch?

 

[Douglas]

Originally Posted by otc

You expect them to more than double their advertised payment?

How is this not a bait & switch?

LOL have you ever bought a car?

 

[Piobaire]

Originally Posted by ceaton

I generally lease when I expect a car to have high depreciation, and buy when I expect it to keep its value; hondas generally resell well.

That said, that monthly cost is ridiculously low, so yeah, go for it (just don't buy it out at the end).

High depreciation would drive your lease payment up. The best leases are ones with high residual value.

Removing the particulars from this question, leasing is the way to go for you. I'd look for a 33-39 month lease, as most companies sponsor artificially high residuals for an approximate three year lease. We do 36 month (or there abouts) leases for both our vehicles.