I've never financed a car. Can someone please tell me the benefits of financing? Is there anything better about doing that, rather than leasing? I know the payments are usually higher with financing, and you have to put more down. But with financing you don't have mileage restrictions or continuous payments. With leasing you usually end one lease and begin another.
Benefits of Buying vs. Leasing
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Kim
Obviously the advantage of financing a car is that you actually own something at the end. However, a large percentage of buyers lease their cars. The typical lease is a 36 month lease with 12K-15K miles. I have a friend that's leasing a car for 18K miles a year. The difference in the monthly payment between 12K and 15K miles on a $35,000 car is 13 bucks. Say you lease a car for 36 months, your payments will be much lower than if you finance the car and every 3 years you get a brand new car. Also a lot of manufacturers offer owner loyalty in which they immediately take $1000 of the price if you trade your current car in for another car of the same make... I paid for my car in full when I bought it, but if I didn't I would have definitely leased the car...
Eric......
Obviously the advantage of financing a car is that you actually own something at the end. However, a large percentage of buyers lease their cars. The typical lease is a 36 month lease with 12K-15K miles. I have a friend that's leasing a car for 18K miles a year. The difference in the monthly payment between 12K and 15K miles on a $35,000 car is 13 bucks. Say you lease a car for 36 months, your payments will be much lower than if you finance the car and every 3 years you get a brand new car. Also a lot of manufacturers offer owner loyalty in which they immediately take $1000 of the price if you trade your current car in for another car of the same make... I paid for my car in full when I bought it, but if I didn't I would have definitely leased the car...
Eric......
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I've never leased a car, but isn't another disadvantage is that since you don't own the car you can't make any major mods to it. Like throwing in a supercharger or adding a body kit?
As I see it.....
Advantages of owning:
1. Build equity
2. Customize as you feel
3. Drive as many miles as you like
4. If you keep it for a long time, it will leverage the cost, even if it is high.
5. No hidden charges
Disadvantages:
1.Higher monthly cost
2.Have to be more careful, eg: taking it to clubs, beach etc. It is yours, so you want to take the BEST care of it. If you are leasing, you might not mind a little sand in it from a day at the beach!
3.If you trade it in after a couple of years, you will most likely lose your shirt.
Advantages of owning:
1. Build equity
2. Customize as you feel
3. Drive as many miles as you like
4. If you keep it for a long time, it will leverage the cost, even if it is high.
5. No hidden charges
Disadvantages:
1.Higher monthly cost
2.Have to be more careful, eg: taking it to clubs, beach etc. It is yours, so you want to take the BEST care of it. If you are leasing, you might not mind a little sand in it from a day at the beach!
3.If you trade it in after a couple of years, you will most likely lose your shirt.
I think if you plan on owning a car you should finance one that will hold a high resale value. And yeah, if you lease you can't do any mods. You have to return the car just as you leased it. Unless you decide to purchase it at lease-end.
Kim,
I'm in the same situation as you, I have never financed a car and the IS will be my first big investment. Personally, I wouldn't leased a car cuz of the restricted miles you have to put on it. 15K, 18K a year...whatever it is, you have a certain limit or else they'll charge you for going over. It almost defeats the purpose of having a car if you can only put so many miles on it. But if you're the type that doesn't drive around that much, maybe leasing isn't so bad. But if you have an IS, why wouldn't you drive around for fun and showoff?? hehe
I'm in the same situation as you, I have never financed a car and the IS will be my first big investment. Personally, I wouldn't leased a car cuz of the restricted miles you have to put on it. 15K, 18K a year...whatever it is, you have a certain limit or else they'll charge you for going over. It almost defeats the purpose of having a car if you can only put so many miles on it. But if you're the type that doesn't drive around that much, maybe leasing isn't so bad. But if you have an IS, why wouldn't you drive around for fun and showoff?? hehe
It's interesting...
Lexus models have an excellent resale value for the first three years. After that it drops of quite a bit. I think the reason is many people that can afford a Lexus either want brand new or one that is a few years old while the model is still new. Thus, they expect to pay a premium for it, even if it is used. Those who can't afford a brand new Lexus might buy one that is three or more years older, but often don't because for the same price they can buy a preyty nice NEW car. The point I'm trying to make is that when a Lexus gets older than three years, it really narrows down a target market for it. People with cash want a new Lex and people without cash would rather buy a new car rahter than an old style Lex. Just my 2Cents
Lexus models have an excellent resale value for the first three years. After that it drops of quite a bit. I think the reason is many people that can afford a Lexus either want brand new or one that is a few years old while the model is still new. Thus, they expect to pay a premium for it, even if it is used. Those who can't afford a brand new Lexus might buy one that is three or more years older, but often don't because for the same price they can buy a preyty nice NEW car. The point I'm trying to make is that when a Lexus gets older than three years, it really narrows down a target market for it. People with cash want a new Lex and people without cash would rather buy a new car rahter than an old style Lex. Just my 2Cents
Plan on spending about 2 percentage points more for a lease/smartbuy program than conventional financing. The great thing about a lease is that you let the mfr. guess on residual value. Yes, you will pay more in interest, but you will be responsible for selling the car near the estimated residual value (if you finance instead of lease) at the drop dead date, i.e. 36 months if you intend on beating the leasing program. It's not an easy task. I financed my Pathfinder and it is wonderful driving a car with no payments, but don't think that I sometimes was jealous of my friends driving nicer cars at lower payments by leasing. My advice is that you should understand your entire financial goal (savings, spending, 401k) for the next five to ten years and then decide what's best. If you can live with the same car for more than four years then financing might be best.
I'm leaning more towards leasing because I want smaller monthly payments, and I like to drive a new car every 3 or 4 years. Also, I don't have to put too much down. So I think leasing is for me. But I also think it would be nice to actually own it.
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Well in the past my parents have leased cars... Chrysler Town & Country, which they went over 10K miles... they didn't care... His 7series which he traded in for his new 2000 740iL... He went over 6K miles.... no problem....They never paid excess milage.... BUT they traded cars for the same make.... I'm sure if they went for a different make they would have had to pay
Eric
Eric
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