Car Lease - Is This A Good Deal?

Thud · Post by **Thud** » Wed Apr 10, 2013 3:39 pm

This would be my first lease, so go easy on me.

Looking at a Honda CR-V. Truth be told, I have no love for this vehicle, just having a hard time finding something I do like. Need at least a hatchback or wagon. Would prefer a late-model used with relatively low miles.

In hatchbacks, the Mazda3, Toyota Matrix, Fords, etc, are pretty tight for me. I gotta wrench myself down to get in without scraping my head. In wagons, you got your VW Jetta with low reliability ratings, or a Subaru Outback, which seems to retain it's value pretty well, meaning it's pricey used. Problem with wagons is the availability is low.

Another vehicle I have my eye on is a used Mazda CX-7. Seem to be a fair number of 2010's out there. Haven't driven one yet.

Then there's all these soccer mom crossovers. They're really a lot of bloat if you ask me, and I don't really love the above-the-road SUV feel. But considering my limited wagon options, here I am...

So, to the CR-V...they've got this lease deal running. Between deposit and payments it looks like you pay about $8K and change for the first 3 years, then can purchase at the end for $16K, which adds up to about $24K for the life of the vehicle, same as purchasing outright:

Terms:
2013 CR-V 5 Speed Automatic AWD LX Featured Special Lease Offer valid from 4/2/2013 through 4/30/2013 $209.00 per month for 36 months. $804.00 total due at signing. Includes 1st Payment, $595 Acquisition Fee. Excludes destination, taxes, titles and dealer fees. For well qualified lessees. Closed end lease for 2013 CR-V 5 Speed Automatic AWD LX (RM4H3DEW) available from April 2, 2013 through April 30, 2013, to well-qualified lessees approved by Honda Financial Services. Not all lessees will qualify. 720 Min Fico Score. Higher lease rates apply for lessees with lower credit ratings. Total monthly payments $7524.00. Option to purchase at lease end $15,920.00. Must take new retail delivery on vehicle from dealer stock by April 30, 2013. Lessee responsible for maintenance, excessive wear/tear and 15¢/mile over 12,000 miles/year for vehicles with MSRP less than $30,000, and 20¢/mile over 12,000 miles/year for vehicles with MSRP of $30,000 or more.

If I consider the life of the vehicle to be about 9 years* , at a cost of $24K, each 3 year chunk of ownership are worth about $8K (3 x $8K = $24K). And to get that rate on the first 3 years, presumably the most trouble free, seems like a good deal.

(*I'm sure people get more, I just think with the rate of technological change (gas mileage, safety improvements, tying in w/ smart phones, etc, plus rapidly rising gas prices, these things will be obsolete by then.)

So what am I missing, assuming I can stay w/in the 12K/yr mileage limits, which I can? Are there a bunch of hidden fees and stuff, or is this just a fair square deal?

Grandpa's Spells · Post by **Grandpa's Spells** » Wed Apr 10, 2013 3:53 pm

Some standard things to consider.

How long do you typically own a car for?
Do you have a business that could help with the tax advantages of leasing?
What are your priorities in a car (new/used, fuel economy, fast, AWD, safety)?

TOM will likely tell you about the Subarus, which are worth a look. The Outback is bigger than the other cars you're considering, the Impreza/Crosstrek/Forester are closer equivalents. A TDI or gas Sportwagen that's a few years old may not be a bad idea to look at either. My wife has the gas one and likes it a lot.

Go to a Ford dealership. Ford is killing it. I am really happy when renting and I get a Focus hatchback.

If you aren't brand conscious, consider Hyundai.

Leasing is generally a good way to take advantage of business tax laws and/or get in a new car every 3-4 years. Or maybe manage monthly cash flow for a few years. If you don't mind used cars, buying a 2-3 year old car is usually going to be a better deal.

Turdacious · Post by **Turdacious** » Wed Apr 10, 2013 4:49 pm

Not sure about the timing. Everybody is getting their tax refunds, may be better deals around May (although I really don't know when the best deals tend to be).

Spells suggests some good things. You might consider buying a corporate vehicle 2-3 years old. Won't be much wear and tear, you won't have to pay new car prices, and it might still be under warranty.

msr2112 · Post by **msr2112** » Wed Apr 10, 2013 5:36 pm

If you subscribe to the Dave Ramsey Total Money Makeover method, leases are bad. He has some mathematical reasons why they're not worth it.

Shafpocalypse Now · Post by **Shafpocalypse Now** » Wed Apr 10, 2013 5:56 pm

What about a used Volvo wagon?

I drive too many miles for a lease

tough old man · Post by **tough old man** » Wed Apr 10, 2013 9:12 pm

75% of people should lease...just saying is all.

If I consider the life of the vehicle to be about 9 years*

No. Trade before 6 years or 70K miles. Banks wont finance used much over these standards so dealers wont pay top $ for them. And if it hits 100K trade in really suffers.

The CR-V add running here is $229 a month and $2600 due at signing. Zero down goes to $319 a month. CR-Vs are throw away vehicles for Honda and if you buy it at the end of your lease you are and idiot. Seriously.

Grandpa's Spells · Post by **Grandpa's Spells** » Wed Apr 10, 2013 9:43 pm

If I consider the life of the vehicle to be about 9 years*

No. Trade before 6 years or 70K miles. Banks wont finance used much over these standards so dealers wont pay top $ for them. And if it hits 100K trade in really suffers.

This sounds like kooky talk. It doesn't matter if you lose money on your trade-in if you're waiting an extra 3-4 years without payments to buy another car. There will be increased maintenance costs, but it's not like on a 10+ year old car.

tough old man · Post by **tough old man** » Wed Apr 10, 2013 10:12 pm

This sounds like kooky talk. It doesn't matter if you lose money on your trade-in if you're waiting an extra 3-4 years without payments to buy another car. There will be increased maintenance costs, but it's not like on a 10+ year old car.

That is the Subaru exception. Other car owners have a 5 year vehicle life. CR-Vs over 5 we dont take in trade unless they go to auction and not on the lot

tough old man · Post by **tough old man** » Wed Apr 10, 2013 10:15 pm

I lease 2 cars. A Forester and a XV Crosstrek limited.

j-cubed · Post by **j-cubed** » Thu Apr 11, 2013 12:34 am

tough old man wrote:I lease 2 cars. A Forester and a XV Crosstrek limited.

And until last year, I had gone about 6 years without a car payment.

People don't call it "Fleecing" for nothing.

johno · Post by **johno** » Thu Apr 11, 2013 12:35 am

My approach to a car is similar to marriage: find a keeper, then put in the necessary maintenance.
In 2005, I bought a 2003 Acura TL and it now has 118,000 miles on it. I've only put in routine maintenance, which got a little spendy at the 100,000 mile mark when I replaced the timing belt & water pump.

I'll probably drive it 'til the wheels fall off.

nafod · Post by **nafod** » Thu Apr 11, 2013 10:48 am

I have a 98 CRV with almost 200K on it. No car payment for 10 years. Burns a little oil and has had some front wheel drive train components replaced. Otherwise keeps on trucking.

tough old man · Post by **tough old man** » Thu Apr 11, 2013 12:50 pm

Johno, you are exactly the person who should buy. People who need or want a new car every time they see a new one and don't drive over 20K a year should lease.

Compare it to moving for a job. If you knew you were getting transferred in 3 years would you buy or rent? If you lease you only pay for the part of the car you use and it's always under factory warranty.

tough old man · Post by **tough old man** » Thu Apr 11, 2013 2:41 pm

Thud, I traded in my truck, had 11000 in equity in it. My Crosstrek lease with all that equity worked out to 142 a month, zero down and because of cap cost reductions I got a check back for 3300 dollars which I applied to lease payments. basically 23 months with no payments. Worked out perfect for what I do daily.
When I trade it in at the lease end I should have 4-5K of equity towards a new car because of how well Subarus hold value and its an in demand car.

Andy83 · Post by **Andy83** » Thu Apr 11, 2013 4:57 pm

Thud. No matter how you try to crunch the numbers, when getting a car new or used, it's a financially losing proposition. So it boils down to what brand of car you like and how often you want a new one to drive. I've always bought a new car every 2 years until they invented the leasing BS. I've been leasing for over 20 years now. I like best the Ford 2 year Red carpet leases with full warranties. With the low monthly payment it's nice. When the time is up after 2 years simply drive over to the dealer and get a brand new one with little or no down payment. The only thing I don't like about driving a new car is the fuckin' insurance premium.
If you lease, you aren't putting out a lot of money for monthly payment. And my dealers always treated me like royalty whenever I took the car in for maintenance or whatever. I enjoyed that!
Quit fretting and get the car you want with a payment that doesn't hurt.

Thud · Post by **Thud** » Sat Apr 13, 2013 5:02 pm

Sorry to start this thread and then fade away. Just got bizzy.

I am self employed, so any biz benefits would help.

Typically I pay cash, be it used or new, and drive the car into the ground. My current car is 13 yo, relatively low miles and in decent shape. But it's got a pesky check-engine/emissions problem that I've already put over $1.2K into with no relief in sight, plus, it's got a really pokey, unresponsive turbo engine (always has) which requires a lot of foot travel to kick in the turbo, which gets fatiguing. And even beyond the emissions problem, something about the car makes my son ill. All told, the love is gone and I don't want to keep putting good money into a 13 yo car I have no feelings for.

tough old man wrote: The CR-V add running here is $229 a month and $2600 due at signing. Zero down goes to $319 a month.

This is the crux of this thread. That's typical of what I see for cars in this price range. So over the course of 3 yrs that comes to $10,844. The deal I'm referencing comes to $8,328. So my thoughts really were specific to this lease, which is about $2,500 below the norm.

Just to make a point, if one could lease a new car for $100/yr, that would have to be considered an undeniable deal. So clearly, even to the lease deniers, there must be some price point at which leasing is a good deal, and I'm wondering if this deal represents that point.

To further elaborate. I see some used Mazda CX-7's around. Say I get a 2010 for $16K (which from a dealer would represents a better than average price, but it makes the math easy). It's already three years old. If I keep it another 6, aside from what little resale value the then 9 yo low MPG car would be worth at trade-in ($1-2K?), I'd be paying ~$8k, plus repairs, for each 3 year block of time. Same as I'd be paying for the first 3 years, repair free, on the lease.

My other thinking is that I haven't yet found the vehicle I really want, so this would be a bit of a punt to buy some time and see what develops.

TerryB · Post by **TerryB** » Sat Apr 13, 2013 5:46 pm

You're overthinking this.

You've decided you want a station wagon. Coupled with Crocs and sweatpance, it completes the "I Don't Give a Fuck About My Life Anymore" trifecta.

Do the details really matter at this point?

Thud · Post by **Thud** » Sat Apr 13, 2013 5:58 pm

Yeah, nothing like a soccer mom SUV to boost my sense of manliness. What a twisted world we have made...

Andy83 · Post by **Andy83** » Sat Apr 13, 2013 8:51 pm

Thud. Just get under therr, take off the cat converter, punch out the shit that's in there with a long metal rod and put it back on empty and illegal. The car will run better than ever.

IGX

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