Lease vs finance
Ladies and gentlemen please help me understand the difference between these two, I know some what of what the two mean but I'd like more of a detail look if someone can spare a few moments to explain it. Thank you so much for the time.
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I know that but I mean I've been looking for a Q50 and I'm learning a lot through the forums but I have seen things I don't really understand. Like money factor, residual etc etc. =(Lease = Renting w/ option to buy at end of lease.
Buy = Buy
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You can find plenty of information here: Auto Leasing Guide - The Art of the Deal
Leasing is not renting.Lease = Renting w/ option to buy at end of lease.
Buy = Buy
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Buying vs. leasing basics
Buying vs. Leasing Basics | New Car Buying Guide - Consumer Reports
Does it make sense to lease?
The financial workings of leasing are so confusing that people don’t realize that leasing invariably costs more than an equivalent loan. And even if they did, the extra cost is difficult to calculate. Still, many people can’t afford the higher payments of a typical loan, at least not without putting a substantial amount down. If payments are an issue, consider buying a lower-cost vehicle or a reliable used car.
Opting for a longer-term loan of, for example, six years, could result in roughly the same low monthly payments as a three-year lease. But longer loans make it easier to get “upside down” on your loan, where you owe more than the vehicle is worth. So, if you decide to get rid of the car early on or if it’s destroyed or stolen—the trade-in, resale, or insurance value likely will be less than you still owe on the loan. Indeed, if you want to drive a new car every cou*ple of years, taking out a long-term loan but trading in early will leave you hav*ing paid so much in finance charges compared to principal, that you might as well have leased. If you can’t pay off the difference on an upside-down loan, you can often roll the amount you still owe into the new loan. You end up financing both the new car and the remainder of your old car.
If you decide on a long-term loan, hold on to the vehicle until it’s paid off. If low monthly payments and the opportunity to drive a new vehicle every few years with little hassle are worth the extra cost, consider leasing. Be sure, however, that you can live with all the limitations on mileage, wear and tear, vehicle modifications, and the like. Finally, keep in mind that you should be able to afford the lease for the entire period, since the early termin*ation penalties can be costly.
Buying vs. Leasing Basics | New Car Buying Guide - Consumer Reports
Does it make sense to lease?
The financial workings of leasing are so confusing that people don’t realize that leasing invariably costs more than an equivalent loan. And even if they did, the extra cost is difficult to calculate. Still, many people can’t afford the higher payments of a typical loan, at least not without putting a substantial amount down. If payments are an issue, consider buying a lower-cost vehicle or a reliable used car.
Opting for a longer-term loan of, for example, six years, could result in roughly the same low monthly payments as a three-year lease. But longer loans make it easier to get “upside down” on your loan, where you owe more than the vehicle is worth. So, if you decide to get rid of the car early on or if it’s destroyed or stolen—the trade-in, resale, or insurance value likely will be less than you still owe on the loan. Indeed, if you want to drive a new car every cou*ple of years, taking out a long-term loan but trading in early will leave you hav*ing paid so much in finance charges compared to principal, that you might as well have leased. If you can’t pay off the difference on an upside-down loan, you can often roll the amount you still owe into the new loan. You end up financing both the new car and the remainder of your old car.
If you decide on a long-term loan, hold on to the vehicle until it’s paid off. If low monthly payments and the opportunity to drive a new vehicle every few years with little hassle are worth the extra cost, consider leasing. Be sure, however, that you can live with all the limitations on mileage, wear and tear, vehicle modifications, and the like. Finally, keep in mind that you should be able to afford the lease for the entire period, since the early termin*ation penalties can be costly.
It's a semi-long term commitment and in the end you don't own the vehicle unless you decide to buy at the end of the agreement. So yes, it is renting. Nothing wrong with it!Leasing is not renting.
if you aint got the money to buy it outright you shouldnt buy it. at least thats the way i was told growing up
This is going to be a bit long winded but here is my take on leasing vs purchasing:
1. Leasing is buying the car with a loan that has a balance due at the end of the lease term that is equal to what the lender predicted the value of the car would be at the end of the lease term. You can pay off that balance by giving them back the car or paying off the loan with cash.
2. If you like getting new cars every 2 or three years and you drive between 10K and 15K miles per year then you might want to consider leasing. If you drive 3K miles per year you are wasting your money.
3. Keeping your car for a long period of time is the most economical way to own a car. However, in my case, I don't gamble, do drugs and don't drink very much so I indulge my one weakness....cars.
4. Car rentals are short term and car leases are long term. When I lease a car it is registered and insured to me. When I rent a car the rental company owns and insures the car. There are myriad legal and financial differences. However, it still remains that you pay by the month and have nothing to show for it at the end of the lease.
5. Regarding #4, having nothing to show for it at the end of the lease is not bad since you paid less per month than if you purchased it and paid it off over the same period of time. When you buy you pay more each month and you get it back when you sell the fully paid off car. With leasing, you only pay for what you use.
6. It's been said here but it bears repeating, it is not a good idea to pay a down payment or capital cost reduction on a lease. If the car is demolished or stolen on the first day you have the car you will lose any down payment or capital cost reduction. If you did not put down any money you can just walk away for the cost of your insurance deductible and go get a new car.
Any of you car pros out there want to comment or correct what I have said, please feel free to do so. I am not involved in the auto industry in any way and welcome comment from the pros.
1. Leasing is buying the car with a loan that has a balance due at the end of the lease term that is equal to what the lender predicted the value of the car would be at the end of the lease term. You can pay off that balance by giving them back the car or paying off the loan with cash.
2. If you like getting new cars every 2 or three years and you drive between 10K and 15K miles per year then you might want to consider leasing. If you drive 3K miles per year you are wasting your money.
3. Keeping your car for a long period of time is the most economical way to own a car. However, in my case, I don't gamble, do drugs and don't drink very much so I indulge my one weakness....cars.
4. Car rentals are short term and car leases are long term. When I lease a car it is registered and insured to me. When I rent a car the rental company owns and insures the car. There are myriad legal and financial differences. However, it still remains that you pay by the month and have nothing to show for it at the end of the lease.
5. Regarding #4, having nothing to show for it at the end of the lease is not bad since you paid less per month than if you purchased it and paid it off over the same period of time. When you buy you pay more each month and you get it back when you sell the fully paid off car. With leasing, you only pay for what you use.
6. It's been said here but it bears repeating, it is not a good idea to pay a down payment or capital cost reduction on a lease. If the car is demolished or stolen on the first day you have the car you will lose any down payment or capital cost reduction. If you did not put down any money you can just walk away for the cost of your insurance deductible and go get a new car.
Any of you car pros out there want to comment or correct what I have said, please feel free to do so. I am not involved in the auto industry in any way and welcome comment from the pros.
i've never leased or financed so just out of curiosity, what happens when you crash a leased / financed vehicle and its no long salvageable, i know the insurance will write off a cash purchased car there for you take your money and simply buy a new one, however if its leased / financed, does the dealership expect something back? the money you got from insurance claim perhaps ?
Most leases come with GAP insurance so that whatever the difference between the insurance settlement (based on the market value of the car) and the balance due on the lease is covered. If you lease from the manufacturers finance company (Infiniti Financial Services) then it is almost always covered. If your lease is from another entitiy then make sure you have GAP coverage. Personally, I like to lease from IFS.
AFter the Hurricaine last year I had many friends who had leased cars that were a total loss due to the flooding. They just turned in their cars and got new ones.
It's not renting. The differences between leasing and renting are numerous.It's a semi-long term commitment and in the end you don't own the vehicle unless you decide to buy at the end of the agreement. So yes, it is renting. Nothing wrong with it!
I tend to buy cars and keep them for at least six years. Plus, I average over 15K miles per year so leasing is usually not an option for me.
The key is to take advantage of low, manufacturer-based financing if you have a strong credit score. If you secure a 0% or 0.9% financing deal over 5 years (60 months) and you have a good down payment or good, paid-off trade, it's basically a free loan and at the end of the term, you own the car. Just do the math and break it down into the monthly payment you want to determine how large of a down payment you need either in cash, trade or a combination of the two.
A lease to me is basically a rent to buy option. You are paying for the expected depreciation of the car.
The key is to take advantage of low, manufacturer-based financing if you have a strong credit score. If you secure a 0% or 0.9% financing deal over 5 years (60 months) and you have a good down payment or good, paid-off trade, it's basically a free loan and at the end of the term, you own the car. Just do the math and break it down into the monthly payment you want to determine how large of a down payment you need either in cash, trade or a combination of the two.
A lease to me is basically a rent to buy option. You are paying for the expected depreciation of the car.
This is not really true, especially in a comparison with purchasing a car. For one, you can absolutely have equity in a lease. If you only drive 5,000 miles per year but you have a 15,000/yr lease, then most likely you will have equity in the vehicle which you can cash out on. This is also true if the used car market moves in your favor.4. Car rentals are short term and car leases are long term. When I lease a car it is registered and insured to me. When I rent a car the rental company owns and insures the car. There are myriad legal and financial differences. However, it still remains that you pay by the month and have nothing to show for it at the end of the lease.
Two, at the point in the contract when your lease runs up, you have exactly the same value in the vehicle as someone financing. So to say you have "nothing to show for it" - which suggests that when financing you do, is missing the point.
For example, you have a $50,000 car, that is worth $30,000 in 36 months. If you purchase the car, you have nothing to show for the lost $20,000 either. So whether you lease or purchase, you have the exact same "nothing" at the end of 36 months.
The difference is that on a lease you are only paying for what you used, the actual depreciation. It's far smarter than buying - especially with aggressive lease deals. If you are smart with your money, you can take the money saved on your monthly payment and roll it into other investments.
My Q50 payment is $600/mo. The payment to purchase would be closer to $1,000/mo. I can do quite a bit with $400/mo, which is $15,600 at the end of my 39 month lease not counting any interest gains. With modest interest, closer to $18,000. To compare this to a purchase. After 39 months you would still owe roughly $16,000 on a purchased vehicle. If I count my savings with interest, I'd owe the equivalent of $14,000. So which is a smarter deal for the savvy consumer?
Ultimately, the difference between leasing and buying is simple. When leasing you pay for the actual depreciation of the car plus finance charges, in other words, you are paying for what you use. When purchasing, you are just paying for the car, in full, regardless of your usage.
Leasing is smart for many people.
You are correct that the if the value of the car at the end of the lease is higher than the expected amount in the lease contract, then you do have some value.This is not really true, especially in a comparison with purchasing a car. For one, you can absolutely have equity in a lease. If you only drive 5,000 miles per year but you have a 15,000/yr lease, then most likely you will have equity in the vehicle which you can cash out on. This is also true if the used car market moves in your favor.
Two, at the point in the contract when your lease runs up, you have exactly the same value in the vehicle as someone financing. So to say you have "nothing to show for it" - which suggests that when financing you do, is missing the point.
I was referring to paying off the car over the same number of months as leasing it. At the end of the lease you either have to give back the car or pay for it. At the end of the loan you own the car, the loan is paid off and you don't have to give the car back. However, the value of the car you have is really the excess of the loan payments over the lease payments. You have something (the car) at the end of the loan because you paid more each month.
That low interest rate is usually available for leasing so you can get the "interest free" loan in a lease also.If you secure a 0% or 0.9% financing deal over 5 years (60 months) and you have a good down payment or good, paid-off trade, it's basically a free loan and at the end of the term, you own the car. A lease to me is basically a rent to buy option. You are paying for the expected depreciation of the car.
Agreed that with a lease you are paying for the expected depreciation of the car.
I guess the point I was trying to make is simply that you have absolutely nothing more to show at the end of the lease than you do if you paid off the car in the same term. You have the exact same depreciation and spent the exact some money on that usage of the vehicle. Paying more monthly to buy the car is equivalent to buying the car at the end of the lease. So in that sense, you still have the same to show.You are correct that the if the value of the car at the end of the lease is higher than the expected amount in the lease contract, then you do have some value.
I was referring to paying off the car over the same number of months as leasing it. At the end of the lease you either have to give back the car or pay for it. At the end of the loan you own the car, the loan is paid off and you don't have to give the car back. However, the value of the car you have is really the excess of the loan payments over the lease payments. You have something (the car) at the end of the loan because you paid more each month.
The idea that you have nothing to show at the end of a lease is simply not true. You have 36 or however many months of car usage that you enjoyed without the obligation to resell or keep it. I'd say you have more to show at the end of a lease
I've always heard that leases are a bad decision. The benefit is you get a new car every couple years if you do leasing, but the bad news is that you never actually own a car. So it isn't a very good investment of your money. Though cars generally depreciate in value so much that buying a car isn't a very good investment either. I've just always taken my family's word for it and have steered clear of leasing things.
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