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Leasing a car with 650 credit score


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After getting vaccinated, I'm traveling to San Francisco to visit my daughter and help her choose her first car. She didn't need a car in undergrad or the last 5 years in Boston. She's narrowed the choices to a Mazda CX-5, Honda CR-V, Toyota RAV4. Just now, a friend convinced her to also check out the Volvo XC40.  The Maxda CX-5 is at the top of her spreadsheet. The company has offered free uber and lyft to and from work during the pandemic, but a car would be useful. She's only 8  miles from work, so there's a good chance she'll be able to stay within the 10,000 annual mileage limit. 

She found out her credit score is around 650 due to an unpaid ambulance bill of $850, which she was certain her insurance paid. She just paid it. She has no debt and good income. Will a co-signor (me) be able to get her the best deal on a lease? They're offering a CX-5 for $237 a month, 36 month, $2,999 at signing. 

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i feel like a dinosaur. I buy a car and drive it until the next repair costs more than the bluebook value. Then I trade it in on the next vehicle.

If it were my daughter I’d tell her to buy a used car, <$10k. Use a 2 year loan to pay it off. No lease, no new car.     

As to the last statement here, that's bolded, it's not an "unnecessary financial burden".  You're not really looking at this in the right context. First of all, we ALL make financial decisions di

19 minutes ago, SoBeDad said:

After getting vaccinated, I'm traveling to San Francisco to visit my daughter and help her choose her first car. She didn't need a car in undergrad or the last 5 years in Boston. She's narrowed the choices to a Mazda CX-5, Honda CR-V, Toyota RAV4. Just now, a friend convinced her to also check out the Volvo XC40.  The Maxda CX-5 is at the top of her spreadsheet. The company has offered free uber and lyft to and from work during the pandemic, but a car would be useful. She's only 8  miles from work, so there's a good chance she'll be able to stay within the 10,000 annual mileage limit. 

She found out her credit score is around 650 due to an unpaid ambulance bill of $850, which she was certain her insurance paid. She just paid it. She has no debt and good income. Will a co-signor (me) be able to get her the best deal on a lease? They're offering a CX-5 for $237 a month, 36 month, $2,999 at signing. 

Just an FYI, if you end up leasing (either this or anything else), do NOT put any money down. Roll it into the lease.

ETA -- Based on the info you provided, make sure the MSRP on that car is at least $28,000. If not, you should be able to get a better deal than that.

Edited by gianmarco
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7 minutes ago, Gally said:

Why lease?  Always seems like a waste of money to me unless it is the business that is leasing the vehicle

 

Good point. Her second option was to buy a newer used car, since new cars depreciate quite a bit out of the gate. Income-wise, she's going from having no disposable income, as a  struggling student,  to having quite a bit by her standards. And the company just gave out nice bonuses which she wasn't expecting. She wants a Tesla to be car #2 a few years from now. But there's nothing to show at the end of the lease after spending $12,000 or more.

The lease fits into her budget and seems to her like less hassle than buying a new or used car. She experienced her parents spending forever to buy their cars. 

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10 minutes ago, gianmarco said:

Just an FYI, if you end up leasing (either this or anything else), do NOT put any money down. Roll it into the lease.

So, ask them to put the $2,999 down payment into the lease payments? Will it affect whatever interest rate is involved in the lease calculations? 

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16 minutes ago, SoBeDad said:

Good point. Her second option was to buy a newer used car, since new cars depreciate quite a bit out of the gate. Income-wise, she's going from having no disposable income, as a  struggling student,  to having quite a bit by her standards. And the company just gave out nice bonuses which she wasn't expecting. She wants a Tesla to be car #2 a few years from now. But there's nothing to show at the end of the lease after spending $12,000 or more.

The lease fits into her budget and seems to her like less hassle than buying a new or used car. She experienced her parents spending forever to buy their cars. 

I've never leased a car but I don't get the less hassle angle.  Is the process for leasing that different than a purchase?  Also, you have to return it in a few years.  I assume it still has to be registered and insured just like a purchased vehicle.  Also, I assume she'll get dinged for the slightest damage to the vehicle on return.  You mentioned she just got an unexpected bonus.  Can't she use that towards a used vehicle?   I'll admit I'm a little biased.  I always buy cars, and I keep them for a long time. 

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22 minutes ago, SoBeDad said:

So, ask them to put the $2,999 down payment into the lease payments? Will it affect whatever interest rate is involved in the lease calculations? 

It doesn't affect the interest rate or anything else.

That said, if you don't know about leases, I'd recommend reading about it. I'm happy to point you in the right direction or even review the lease terms.

You negotiate a lease the same as you do buying a car.  Just because that's advertised doesn't mean you can't do better. Same way you don't buy a car as advertised. You still negotiate the price of the car with a lease.

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1 minute ago, John123 said:

I've never leased a car but I don't get the less hassle angle.  Is the process for leasing that different than a purchase?  Also, you have to return it in a few years.  I assume it still has to be registered and insured just like a purchased vehicle.  Also, I assume she'll get dinged for the slightest damage to the vehicle on return.  You mentioned she just got an unexpected bonus.  Can't she use that towards a used vehicle?   I'll admit I'm a little biased.  I always buy cars, and I keep them for a long time. 

I've never leased either and just made the last payment on my 2015 Corolla and plan to keep it forever. New cars make sense if you keep them a long time, assuming good reliability. I think the leasing terms are out there and there isn't much negotiation - expect @gianmarco says to roll the down payment into the lease.

How do you buy a reliable used car with some warranty? I have experience with car problems and can solve many of them, my daughter has never owned a car. 

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Ive leased and bought. Both have their advantages and disadvantages.

If your daughter can afford a lease Id prefer that option because you know it wont break down in the 3 years she has it. Its not about cost. Its about peace of mind and with our children I think thats more important.

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2 minutes ago, gianmarco said:

It doesn't affect the interest rate or anything else.

That said, if you don't know about leases, I'd recommend reading about it. I'm happy to point you in the right direction or even review the lease terms.

You negotiate a lease the same as you do buying a car.  Just because that's advertised doesn't mean you can't do better. Same way you don't buy a car as advertised. You still negotiate the price of the car with a lease.

Thanks for the offer. I'm reading this from CreditKarma: https://www.creditkarma.com/auto/i/how-to-negotiate-a-car-lease

Any other sources? Also, will she need me to cosign to get the best deal? 

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Isn't leasing the most expansive way to go about getting a car. 

 

 

My advise would be to use the free Uber for a couple months save money and pay cash for a decent low mileage pre-owned car, 

 

 

 

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1 hour ago, SoBeDad said:

After getting vaccinated, I'm traveling to San Francisco to visit my daughter and help her choose her first car. She didn't need a car in undergrad or the last 5 years in Boston. She's narrowed the choices to a Mazda CX-5, Honda CR-V, Toyota RAV4. Just now, a friend convinced her to also check out the Volvo XC40.  The Maxda CX-5 is at the top of her spreadsheet. The company has offered free uber and lyft to and from work during the pandemic, but a car would be useful. She's only 8  miles from work, so there's a good chance she'll be able to stay within the 10,000 annual mileage limit. 

She found out her credit score is around 650 due to an unpaid ambulance bill of $850, which she was certain her insurance paid. She just paid it. She has no debt and good income. Will a co-signor (me) be able to get her the best deal on a lease? They're offering a CX-5 for $237 a month, 36 month, $2,999 at signing. 

If she is going to lease don`t be picky.  Get the best vehicle you can for the least amount of money.  Try for a 2 year lease and be done with it.

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1 minute ago, E Street Brat said:

Isn't leasing the most expansive way to go about getting a car. 

 

 

My advise would be to use the free Uber for a couple months save money and pay cash for a decent low mileage pre-owned car, 

 

 

 

Obviously new is always going to be more expensive than old.

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13 minutes ago, SoBeDad said:

Thanks for the offer. I'm reading this from CreditKarma: https://www.creditkarma.com/auto/i/how-to-negotiate-a-car-lease

Any other sources? Also, will she need me to cosign to get the best deal? 

Cosigning won't be any different than for purchasing.  Both require financing, so if she can't get financing on her own with her credit score then you'll need to cosign.  650 is a fair credit score so it likely "depends". 

As for negotiations, there definitely are for leasing.  You can get some good deals on leases.  Most don't know how they actually work and can end up with some pretty poor deals.  Some advertised lease deals aren't bad at all, but that's not common.  And no matter what is advertised, you can still negotiate the terms.

Read this

At the bottom of the page is a link to the next page.  It's 15 pages total and worth the time to read.  Might help reading it twice.  That site also has some calculators where you can calculate the lease payments and you can play with it to see how different numbers affect it.  The main point is you do NOT negotiate based on monthly payments.  You look at the MSRP, the price of the car you are paying (just as if you are buying), the interest rate (or money factor) and the residual on the car (what it's expected to be worth at the end of the lease). 

If you have questions after reading through that, let me know.

ETA -- With her credit score, they likely will want/require some down payment.  I don't know if cosigning would eliminate this.  So, unfortunately, she may not be able to get around that.  There's risk with that in a lease, because, in the event the car is totaled/lost, you don't get that money back.  It's why you avoid paying anything up front in a lease whenever you can.

Edited by gianmarco
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2 minutes ago, E Street Brat said:

Isn't leasing the most expansive way to go about getting a car. 

 

 

My advise would be to use the free Uber for a couple months save money and pay cash for a decent low mileage pre-owned car, 

 

 

 

No.

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FYI, a friend of mine is actually getting a new Acura MDX.  He is getting an exceptional lease deal. 

The MSRP on the vehicle is $47,500.  It's a 2020 and it's a "loaner" with only 200 miles.  The cost of the car is dropped to $38,000.  In the end, his lease payments are $375/month before tax ($405 with).  That's with $0 down.

The car you listed above, when you roll in the $2,999, is $320/month before tax.  He's getting a car that's probably worth about $20K more for only $55/month more.

Now, to be fair, it's one of the best lease deals I've seen (I helped him out with it), but it just shows that it can be found.  It's even easier to find if you're not set on just one make and model.

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2 minutes ago, E Street Brat said:

... My advise would be to use the free Uber for a couple months save money and pay cash for a decent low mileage pre-owned car,

This, while perhaps inconvenient, would be worth considering.

Circumstances change. 2 years from now she might change jobs and have an 80 mile commute instead of an 8 mile commute.

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5 minutes ago, brun said:

This, while perhaps inconvenient, would be worth considering.

Circumstances change. 2 years from now she might change jobs and have an 80 mile commute instead of an 8 mile commute.

good points. a few other non-lease related considerations:

- driving and parking in the City is a hassle, and a new car is going to get dinged up (especially w/ street parking) 

- vehicle break-ins in SF are out of control. SFPD received 25,677 (70 per day) reports of break-ins in 2019 and the number went up in 2020 (DO NOT, UNDER ANY CIRCUMSTANCES, LEAVE ANYTHING OF REMOTE VALUE VISIBLE INSIDE THE VEHICLE)

- if she's going to be heading to the North Bay or East Bay on any kind of consistent basis, she might want to consider getting a FasTrak for the bridge/road tolls

 

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31 minutes ago, Quint said:

good points. a few other non-lease related considerations:

- driving and parking in the City is a hassle, and a new car is going to get dinged up (especially w/ street parking) 

- vehicle break-ins in SF are out of control. SFPD received 25,677 (70 per day) reports of break-ins in 2019 and the number went up in 2020 (DO NOT, UNDER ANY CIRCUMSTANCES, LEAVE ANYTHING OF REMOTE VALUE VISIBLE INSIDE THE VEHICLE)

- if she's going to be heading to the North Bay or East Bay on any kind of consistent basis, she might want to consider getting a FasTrak for the bridge/road tolls

 

She told me about the rampant car breakins. Her apartment has a parking spot for her. She's in the NE side of SF. Is 4WD needed because of the hills? She might do an occasional road trip.

The line at the Avis/Budget car rental center is super slow. What's up with that? 

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I’ve leased two CX5 cars recently. I now lease a Nissan Rogue Sport. I never pay money down since that can be lost when you leave the lot and car gets totaled. I would divide that 3000 by 36 payments and add the 83 dollars to monthly payment amount. You are at 320 per month. With no money down I got a base model Rogue Sport 15,000 mile per year for 283 per month no money down. The base package I got is the basic model with no upgrades. It has outstanding safety features for a base model. When leasing you can save money when depreciation is low. With most Japanese manufacturers on this class of vehicle your depreciation is low enough where you should make out better at the end of the term as compared to payments on owning and then trading in after three years. Gap insurance.... gap waiver in fact is included on my Nissan lease. For these reasons I leased the Nissan Rogue sport. 
 

Now, because I have several kids I bought a minivan. I bought a Dodge caravan because depreciation is so high there is no savings in leasing. In fact it may be more expensive leasing than owning after three years. Therefore I bought. But I bought a preowned with 15,000 miles with one year. That allowed me to get into a 100,000 mile warranty which is longer than buying new. Plus the equivalent new was much more monthly. So this would be my recommendation if buying. Consider a one year old preowned guaranteed from dealer but ask if you can buy a longer warranty than new.

 

Those are things that worked for me. I have two solid functioning vehicles for less monthly and it works for me. The one I own has a longer warranty to cover me until vehicle is paid off. 

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I should mention my Rogue sport is AWD. You can get a 2wd in SF for ever cheaper. You should be able to get a 2wd rogue sport for about 230 a month, I believe. Maybe 240. 
 

I definitely think she will be fine without all wheel drive in SF. 

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5 minutes ago, East Coast Bias said:

Didn’t read the replies so may have been posted. Go read the leasehackr forums. Always Mazda CX-5s for less than that.

Yep, leasehackr is great.  And, they have some brokers there that can find deals for you and do all the legwork for a fee.  Depending on what you're looking for, it may not be a bad idea. 

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20 minutes ago, SoBeDad said:

She told me about the rampant car breakins. Her apartment has a parking spot for her. She's in the NE side of SF. Is 4WD needed because of the hills? She might do an occasional road trip.

The line at the Avis/Budget car rental center is super slow. What's up with that? 

she won't need 4WD for hills in SF.

might be good to have if she decides to go to Lake Tahoe in the winter that way she won't necessarily need chains. 

she should probably brush up on her parallel parking skills too. 

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1 minute ago, Quint said:

she won't need 4WD for hills in SF.

might be good to have if she decides to go to Lake Tahoe in the winter that way she won't necessarily need chains. 

she should probably brush up on her parallel parking skills too. 

Yes. And parking such that her car if rolls wheels take car into sidewalk ledge. 🙂

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1 hour ago, E Street Brat said:

Isn't leasing the most expansive way to go about getting a car. 

 

 

My advise would be to use the free Uber for a couple months save money and pay cash for a decent low mileage pre-owned car, 

 

 

 

:goodposting:   

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3 hours ago, jobarules said:

Ive leased and bought. Both have their advantages and disadvantages.

If your daughter can afford a lease Id prefer that option because you know it wont break down in the 3 years she has it. Its not about cost. Its about peace of mind and with our children I think thats more important.

I still haven't found an advantage to leasing.......but I also keep my cars for 10+ years before replacing.

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32 minutes ago, Gally said:

I still haven't found an advantage to leasing.......but I also keep my cars for 10+ years before replacing.

Your car never breaks down on the side of the road.

The amount of stress I had driving my old car with 100k miles on it is hard to quantify. 

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35 minutes ago, Gally said:

I still haven't found an advantage to leasing.......but I also keep my cars for 10+ years before replacing.

If you keep your cars that long, there isn't. But there are advantages. And not everyone keeps their cars that long.

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41 minutes ago, Gally said:

I still haven't found an advantage to leasing.......but I also keep my cars for 10+ years before replacing.

I've done both, currently lease.  I'll probably never go back to owning.  Leasing a 2020 Equinox right now.  

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4 hours ago, SoBeDad said:

After getting vaccinated, I'm traveling to San Francisco to visit my daughter and help her choose her first car. She didn't need a car in undergrad or the last 5 years in Boston. She's narrowed the choices to a Mazda CX-5, Honda CR-V, Toyota RAV4. Just now, a friend convinced her to also check out the Volvo XC40.  The Maxda CX-5 is at the top of her spreadsheet. The company has offered free uber and lyft to and from work during the pandemic, but a car would be useful. She's only 8  miles from work, so there's a good chance she'll be able to stay within the 10,000 annual mileage limit. 

She found out her credit score is around 650 due to an unpaid ambulance bill of $850, which she was certain her insurance paid. She just paid it. She has no debt and good income. Will a co-signor (me) be able to get her the best deal on a lease? They're offering a CX-5 for $237 a month, 36 month, $2,999 at signing. 

She shouldn’t have paid off the debt until negotiating w the debtor to also remove it from her credit report. Prob too late now. 
 

if I were her I would dispute that in writing to the bureaus. The debtors have x days to respond. If they don’t it’s gone. Since it’s paid off they may not respond. 
 

 

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12 minutes ago, FairWarning said:

I've done both, currently lease.  I'll probably never go back to owning.  Leasing a 2020 Equinox right now.  

Same here (well, don't have an Equinox).  After leasing now over the last 12 years, I don't see going back to owning.  For those wondering what advantages there are:

1)  I haven't had to do maintenance (other than oil changes) in 12 years.  Our cars haven't had to be in the shop except for a couple quirky issues that were all covered under warranty.  The only thing I've had to pay for, other than the lease, are for tires.

2)  Having new cars/new technology ever 3 years.  Not a huge deal to "upgrade" every 3 years, but after 10 years, it starts to add up.  And I'm not talking about just things like standard bluetooth or push start technology.  It's things like blind spot detection, automatic brake detection, lane detection, backup cameras, cross-traffic warnings, etc.  These kinds of safety features get added every couple years.  After owning a car for 10+ years, you end up missing out on a lot of those.

3)  With a wife and kids, having those safety features and knowing a car is unlikely to break down is peace of mind.  That's hard to put a price on.

4)  You can typically get nicer cars that hold value through a lease at better value than buying.

Leasing isn't for everybody.  But, it makes sense for some people and makes more financial sense if you don't keep and take care of your cars for a long time.  Especially if you know what you're doing, which isn't difficult to learn.

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10 minutes ago, gianmarco said:

Same here (well, don't have an Equinox).  After leasing now over the last 12 years, I don't see going back to owning.  For those wondering what advantages there are:

1)  I haven't had to do maintenance (other than oil changes) in 12 years.  Our cars haven't had to be in the shop except for a couple quirky issues that were all covered under warranty.  The only thing I've had to pay for, other than the lease, are for tires.

2)  Having new cars/new technology ever 3 years.  Not a huge deal to "upgrade" every 3 years, but after 10 years, it starts to add up.  And I'm not talking about just things like standard bluetooth or push start technology.  It's things like blind spot detection, automatic brake detection, lane detection, backup cameras, cross-traffic warnings, etc.  These kinds of safety features get added every couple years.  After owning a car for 10+ years, you end up missing out on a lot of those.

3)  With a wife and kids, having those safety features and knowing a car is unlikely to break down is peace of mind.  That's hard to put a price on.

4)  You can typically get nicer cars that hold value through a lease at better value than buying.

Leasing isn't for everybody.  But, it makes sense for some people and makes more financial sense if you don't keep and take care of your cars for a long time.  Especially if you know what you're doing, which isn't difficult to learn.

Also, the perks are nice. Get free drinks, muffins, snacks, oil changes, tire rotations. Mazda was great at that. Nissan is ok. Though it took some negotiating to get that in. Also, we should have a thread about buying experiences. 
 

I have had a terrible time in negotiations with Toyota. Nissan was an all day but got the deal. With Honda and Mazda the negotiations where crisp and hit or miss. They didn’t want spend more than needed to get deal done. Didn’t hassle if I left. Toyota wanted where me down all day and I still left. Nissan wanted wear me down but I got my deal. 
 

I design micro chips for automotive. I buy Japanese because their demands are difficult... in particular when it comes to tolerances and safety. 
 

However, they all buy from just couple people. But at the buying end they seem treat things differently. I will likely buy from Nissan again. Though Honda was what I bought for long time. Now though, price too high for me. 

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Also I’d like to say. I am now investing into a situation where when my kids go college we can drive. I want it tiny but mommy wants a class c rev. So I’m looking for good class c even for cheap. On verge of kids go college. And they’ll be all over. But I want them stay here in New England. 

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My oldest said where was the best place you took a class. I said UCBerkely. He’s now convinced no matter what I teach him. He was once young. Now he is 20 LBs heavier and he has bigger feet at 15 years old. So there goes my ski boots. 

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7 hours ago, fruity pebbles said:

If it were me, I’d make the payment myself each month and have her pay me. 

But then she'll make all those payments without building her credit.

Edit: AI am assuming you mean for him to take the loan in his name to get better terms.

Edited by DallasDMac
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3 hours ago, wilked said:

She shouldn’t have paid off the debt until negotiating w the debtor to also remove it from her credit report. Prob too late now. 
 

if I were her I would dispute that in writing to the bureaus. The debtors have x days to respond. If they don’t it’s gone. Since it’s paid off they may not respond. 
 

 

Yeah, get this removed first.

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18 hours ago, gianmarco said:

It doesn't affect the interest rate or anything else.

That said, if you don't know about leases, I'd recommend reading about it. I'm happy to point you in the right direction or even review the lease terms.

You negotiate a lease the same as you do buying a car.  Just because that's advertised doesn't mean you can't do better. Same way you don't buy a car as advertised. You still negotiate the price of the car with a lease.

My daughter just leased a 2020 Ford Fusion in December for 189.00 a month sign and drive. 12K miles a year.   So her total payout will be around 4600 for 24 months.   The depreciaiton in 2 years is more than that.   I do get employee discount for any big 3 vehicles from my job so that does help. In Metro-Detrot the lease deals are unreal in December.    My wife is driving a Grand Cherokee Limited for 279.00 a month sign and drive with 15K miles.  Sticker was over 40K.  At those prices it makes no sense to buy.

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