Lease or buy?

[gt_ltd]

Does anyone know if it's possible to lease a 05 Legacy GT now? If so, where can I find more information on this? Assuming I am gonna keep the car for 3 yrs, will buying or leasing cost more overall? Thanks.

[gtguy]

I believe that people have done lease deals. My only problem with leasing is that you never own the car. Even though I am turning around my paid-for WRX to get a Legacy GT, that's a $17,000 hunk o'change that I am throwing at my GT. Had I leased my WRX, I'd be returning it, and signing up for a Legacy GT, with nothing to show for those three years (or however many years) of lease payments. I intend to keep the Legacy GT for a looong time. And given my current pace of driving about 3,000 miles annually, I'll have the car ten years before I even cross the 36K warranty threshold (too bad they also put a time limit on the warranty!). Kevin

[Dr. Zevil]

Leasing is not a good idea. It's a complete waste of money in ALL cases. Unless you lease for a corporate car in which case it's a good idea because of tax breaks and so on... If you can, buy the car.

[Ken S]

Financing is handled by whatever bank extends the loan or lease so there's really no reason why one could not lease a 05 GT now. The question is why lease? A lease is simply a long term rental. It makes a lot of sense if you use the car for business and the lease payments can be expensed. For personal use, the answer is not so clear. A lease does have the benefit of lower monthly payments, but it's a the cost of control. If you can drive the car for exactly the yearly milage allowed and agree that the end-of-lease market value that the bank thinks it will be, then it probably makes sense. If you are not sure about keeping your yearly milage (staying below the milage is also wasting money since you've paid for it) and you even have some thought of purchasing the vehicle, it's better to buy outright IMO. Ken

[gt_ltd]

Thanks for all the replies! :) The reason I am considering a lease is that, I am a graduate student and will get outta school in 2~3 years, and I will move to a different country if I cannot find a job after that (which depends a lot on who is in charge in the White House...). If I can find a job in 2006/2007, I will get a better car (Legacy STi...). Either way, I will have to get rid of whatever I have. I can afford a GT with cash, and I don't drive much (my 5yr old car has 40,xxx miles right now, and that's after a 3.5K trip to CA), but I just want to see which way is cheaper. More input will be appreciated! :)

[gurpman]

If you only plan to keep the car a short while (say 3 years or less), I would consider leasing. When you buy a car, it depreciates several thousand dollars as soon as you drive it off the lot, so if you end up trading it in within the first couple of years you will probably lose more money than had you leased it. It really depends on the residual value used to determine the lease payment and whether you think you'd be able to sell the car for more than that on your own. I think you save sales tax on a lease too, since you don't pay tax on the full price of the vehicle.

[bravoballer]

[quote name='gt_ltd']The reason I am considering a lease is that, I am a graduate student and will get outta school in 2~3 years, and I will move to a different country if I cannot find a job after that (which depends a lot on who is in charge in the White House...). More input will be appreciated! :)[/quote] I think the chances of you landing a job center more on your choice of graduate level study. You might be studying for a career in clown psychology but even BOZO the clown in the white house couldn't keep that job from being outsourced. That being said, good luck, and buy the car. Leasing is the work of the devil.

[jk]

the value of a lease depends on 3 things: the cost of the car at origin, the interest rate, and the estimated residual value at the end of the lease. some manufacturers have assumed unrealistically high residual values, thus lowering the payments, in order to move the metal. if the original cost is not inflated and if the interest rate is low and the residual value is high relative to the original cost, you've got a good deal. if it's open ended, you then get the choice at the end of the lease to buy the vehicle at the residual value or to walk away. if the actual market value is higher than the official residual value, that's a good deal. if the actual market value is below the residual value, you can threaten to walk and probably buy at the lower price if you wish to keep the vehicle. the scenario in which you get raped is if you don't keep the vehicle but get hit with extra mileage and/or "damage" assessments.

[B4_Maniac]

Okay, I am going to explain this to you guys. Just to let you know, I am a banker by proffesion. Lets just start off by saying, weather you lease or buy a car, is completly up to you and they BOTH have their pros and cons. When you lease a car, and there is some vartiation between dealers. I have had two leased vehicals, one through Subaru and one through Mazda and I can tell you, I won't do it through Subaru again. But, I will explain more in a moment. The sad truth about all cars in the world is that they depreciate in value. Everyday you drive your car, your cars value decreases. When you lease a vehical, you are paying on the depriciated value of the vehical over X number of years. Before you sign a lease you will have the selling price of the vehical plus minus down payment (not a good idea), the ammount you will pay during the term of the lease and the agreed upon value of the car minus X years of depreciation. What you are paying on the car during the lease is the depreciation. So, at the end of the lease you have a choice, purchase the car for its agreed upon depreciated value or return the car..minus and additional cost for wear and tear. At the end with a lease, idealy you never put more money into the car then what you actuly use. And if you realy like the car, you can buy it. Depending on who you are leaseing the vehical through, they will give you a joint registration with you and the lease holder on the registration. In Mazda's case there lease program is execptional. They joint register the car giveing you the ability to sell the car on your own before the lease agreement ends. All you have to do is pay back the residual on the loan. Or you can return if for fair market value. Subaru on the other hand, does not do that. They also continued to bill me after the lease ended and I had returned the car to them. When you buy a car you are soley responsible for the depreciation of the car. Even though you own the car at the end of the loan, your car will not be worth the same amount of money you invested into the car during the 5-6 year time frame it took to pay the car off. Plus intrest that you paid during that time. If you are a person who likes to modify the car or drive alot, then a lease may not be what you want to do becuase there are constraints. But, you have to know when you modify your car it reduces its blue book value to ZERO. Meaning that banks will not give you a loan for a car modified car or car with out a vin number. Because when a bank reproseses a car they auction it off to the higest bidder or sell it to a dealership and they do not want modified cars. Also lease terms usualy never exceed the warrenty. And they have yet to make a car with a life time warrenty. With a lease if you have a business with business credit (two years or longer of positive earnings as a corportate entity) you can write of the lease as an expence. With realy good lease programs, personal property taxes are included in the payment along with registration. Becuase the car is not your "personal property". With Subaru you have to pay personal property taxes....on a lease... So, if you ask weather you should lease or buy your new Legacy. Buy it like I will mine, becuase the Subaru leasing experince is not something I would like you or anyone else to go through. But, leaseing as a whole can be the perfect solution for some people, not just busineses.

[SUBE555]

Thank you for your insight. I know I will be buying mine because I do want to race it some, but not very competitively, that being not beyond AutoX and not highly modified beyond mostly factory parts. I will likely be putting mine down for the 5 year loan and pay it off ASAP. I am finishing my last semester of school this fall and will probably dump a bit of cash into it as soon as I land a decent job post graduation as I will then be able to pay it off much sooner and with less interest. Question is though, how is interest nomally added in, amount of percentage per payment or??? I can't ever remember. If you pay it off early do you pay less interest or the same? Nice having a banker around. :cool:

[B4_Maniac]

[quote name='SUBE555']Thank you for your insight. I know I will be buying mine because I do want to race it some, but not very competitively, that being not beyond AutoX and not highly modified beyond mostly factory parts. I will likely be putting mine down for the 5 year loan and pay it off ASAP. I am finishing my last semester of school this fall and will probably dump a bit of cash into it as soon as I land a decent job post graduation as I will then be able to pay it off much sooner and with less interest. Question is though, how is interest nomally added in, amount of percentage per payment or??? I can't ever remember. If you pay it off early do you pay less interest or the same? Nice having a banker around. :cool:[/quote] No problem!! Its what I do! Intrest is compounded monthly. With car loans you will have a fixed intrest rate based on the prime lending rate at that time. The prime lending rate is subject to change (I.E Alan Greenspan). But it will be fixed for the duration of the loan at that ammount. Now because intrest is compunded montly you can pay your loan off early and not pay the remaining intrest. So it does not hurt you to pay your loan off early or to pay more than you are required every month. When you pay your car note payments are applied to intrest first then principle. So you can calculate how much intrest you would pay if you had a 6 year loan for 25,000 at 5% wich is 1% over the current prime rate. Now intrest rates are also subject to the credit worthieness of the buyer. As a general rule if you have no credit or bad credit your intrest rates would be higer then some one with perfect credit or exsiting credit. With a lease, you have to qualify for tear one credit, a beacon score of 700 or above. ( :D ). So, most people will not qualify for a lease. Now, a common mistake that people make is when they consider cars "Investments" cars are not investments, houses, art and your loved ones are investments. Cars, boats, motorcycly ares are "LIABILITIES" they cost money and rarely yeild any acrued value. So the goal of buying a car is to pay the least amount of intrest possible. So long story short..you will do nothing but benifit from paying of a automobile loan as soon as possible.

[jk]

b4, you describe a car loan as if it were a mortgage, and indeed that's how it would work to pay off a home. it has been my understanding, however, that auto loans and similar commercial loans do not work that way, and are paid off by "the rule of 72"(i think it's called), which punishes you for early payoff.

[B4_Maniac]

[quote name='jk']b4, you describe a car loan as if it were a mortgage, and indeed that's how it would work to pay off a home. it has been my understanding, however, that auto loans and similar commercial loans do not work that way, and are paid off by "the rule of 72"(i think it's called), which punishes you for early payoff.[/quote] Nope. Because you are not going to be responsible for unpaid intrest. Now, if you wanted to get into mortgages and LOCS there are diffrent rules. Plus, each finanical institution has their own lending criteria and rules. Then if you wanted to go a little deaper...states have diffrent laws regarding loans... for example Texas...and I am not even going to start on that. I would also not suggest paying off a house early becuase off the potential loss of tax benifits. Oh..also...I just say this for the record. This is how my employer handles their car loans. And to mabey shed some light on why the explanation sounds like that is because when you do consumer loan training Auto/Boat/RV loans are followed by LOCS/HELOCS then Mortgages. Wow..bringing me back memories of consumer days...seems so long ago....

[SoldonSubie]

B4_maniac: I appreciated reading your post. Most people don’t understand leases and the ones that use them are often seduced by the monthly nut and that’s all. I too am a lender (commercial) and it was a well-written explanation. Interestingly on leases, the cost factor that is built in by the manufacturer is pretty important. A couple of months ago I was playing around with the Audi dealer for an a4. If I traded my current ride and took the typical financing my monthly payment would have been in excess of $425 or so a month. Using his lease and my typical 15,000 miles per year the payment would have been around $385 and he would have written me a check for $10-$12k for my trade!!! Had it not been for the Legacy I would have taken that deal. That way, 4 years down the road I give back the a4 and still have my $12k in the bank J.

[B4_Maniac]

[quote name='SoldonSubie']B4_maniac: I appreciated reading your post. Most people don’t understand leases and the ones that use them are often seduced by the monthly nut and that’s all. I too am a lender (commercial) and it was a well-written explanation. Interestingly on leases, the cost factor that is built in by the manufacturer is pretty important. A couple of months ago I was playing around with the Audi dealer for an a4. If I traded my current ride and took the typical financing my monthly payment would have been in excess of $425 or so a month. Using his lease and my typical 15,000 miles per year the payment would have been around $385 and he would have written me a check for $10-$12k for my trade!!! Had it not been for the Legacy I would have taken that deal. That way, 4 years down the road I give back the a4 and still have my $12k in the bank J.[/quote] Thank you! I appricate you takeing the time to read it!. WOW :o That sounds like a awsome deal! Yeah, I wouldn't have blamed you if you taken that deal. That would have been awsome. I actuly thought of leasing the LEG..but, I plan on modding mine when I get it. I already have parts on order. :lol: . But, for me personaly I always think..Lease before purchase. Becuase they have yet to make a car that I would like to keep forever.

[jim malach]

Hey have a store, I leased my 05 my legacy limited gt got a good deal $346.00 a month four 4yrs there were like 100 miles on it so I bitched and compliand and they gav me a 4yr 60,000 miles warr. The car with in two month I put on 4,000 miles on it.Then the accident got side swiped after yanking the wheel hard to the right heading for a huge metal pole and the curb and sidewalk stopped me. Well what I was getting at my side curtain bags our front air-bags didn't deploy so after $12,500 I am stuck with a busted whip that is fixed but wha should I do

[Whitestar Pilot]

This is why I hate the idea of leasing a car. You have to consider the 'what if everything goes to hell' factor. The smartest way to buy a car that you really can't afford to pay for up front IMO, is to at least save up enough cash or have a trade in vehicle that will allow you to have equity in the car from the start. When buying new, you have to shell out a larger downpayment to make sure you stay ahead (also don't buy a new Chevy, Mitsubishi, or Chrysler, they depreciate like crazy). Staying ahead is smart though, because if you are upside down, or leasing, and you lose your job or become injured without insurance, then you will soon lose your vehicle and have nothing. If you have equity in your car though, you can always sell it, and take the left over cash to buy a cheap daily driver until you get your financial situation restored.

[franklin]

[quote name='gt_ltd']Thanks for all the replies! :) The reason I am considering a lease is that, I am a graduate student and will get outta school in 2~3 years, and I will move to a different country if I cannot find a job after that (which depends a lot on who is in charge in the White House...). If I can find a job in 2006/2007, I will get a better car (Legacy STi...). Either way, I will have to get rid of whatever I have. I can afford a GT with cash, and I don't drive much (my 5yr old car has 40,xxx miles right now, and that's after a 3.5K trip to CA), but I just want to see which way is cheaper. More input will be appreciated! :)[/QUOTE] Here is an opinion. Delay your gratification. Hold on to your 5 year old car with 40,000 mi. Save your money and see how your career plays out. As a grad student your focus must be on school. Its unlikely you drive too many miles a year-right? And unless things are great for you I doubt you have lots of money right now. Dont dig a financial hole for your self right now with a car. (P.S. I love cars and my son is an undergrad now) Franklin

[pktrckt]

The biggest consideration you must make is how often do you honestly turn cars over? If it's an average of three years or less you will land up spending a great deal less over your life time leasing. If you own for many years like 6+ then purchasing outright would make more sense. I have had great luck with my Chase backed Subaru leases and been able to negotiate great deals. I also turn my cars over a lot, so I'm very unlikely to drive one to it's grave and have found leasing to be the most cost effective. In your cost calculations don't forget to take tax implications into account, for example here in California you pay taxes based on your monthly payment when leasing not the vehicle purchase price when purchasing outright. Buy a $40k car here and sell it in two years and you have eaten a solid $3300 in taxes alone!

[Driver72]

What's up all of a sudden people bringing all these posts back from the GRAVE??

[DKB_SATX]

[quote name='Driver72']What's up all of a sudden people bringing all these posts back from the GRAVE??[/QUOTE] It's always important to save our fellow drivers from getting sucked (upside down) into evil leases. ;) DKB

[melayout]

[quote name='Driver72']What's up all of a sudden people bringing all these posts back from the GRAVE??[/QUOTE] Some n00bs actually search before starting new threads, which is a good thing. Mojo

[Nsaglibene]

How does the bank know that your car is moded? Like is there an extent to where they dont care?

[GBY]

I've never leased, always purchased but it is my understanding that part of the lease agreement is that you don't mod the car. What the definition of mod is I'm not sure but I think it's fair to say that turbo/intercooler/UP/DP/exhaust/springs/shocks/sway bars etc. would not be acceptable. Someone with a lease please chime in. Dave.

[jim malach]

no not if you buy the car how many miles can I put no it with no lic. 4 6 months but by then it going to hanve 400whp