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Leasing a car with 650 credit score (1 Viewer)

If you dint mind always having a car payment leasing is not bad.   You can usually get a nicer car for a more affordable price.

Whatever you do don't buy the car after the lease is up....  Biggest mistake I ever made.

I usually keep vehicles 9-12 years now so I dont mind buying new or slightly used

 
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.
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1)   I am not sure what kind of cars people are buying but this has never been an issue for me.  This is exactly my experience with the cars I have purchased new (or almost new).  Oil changes, new tires, standard maintenance jobs at recommended miles and the cars perform as expected.  

4)  If you are leasing the car why do you care if it holds value better than buying?  You are just giving it back so why do you care if it holds value?  It's not like you are selling it at any point and care that it's worth more. 

I hate car payments.  Leasing would lead to never getting rid of a car payment.  That seems like an unnecessary financial burden.  

 
Gally said:
1)   I am not sure what kind of cars people are buying but this has never been an issue for me.  This is exactly my experience with the cars I have purchased new (or almost new).  Oil changes, new tires, standard maintenance jobs at recommended miles and the cars perform as expected.  

4)  If you are leasing the car why do you care if it holds value better than buying?  You are just giving it back so why do you care if it holds value?  It's not like you are selling it at any point and care that it's worth more. 

I hate car payments.  Leasing would lead to never getting rid of a car payment.  That seems like an unnecessary financial burden.  
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By this statement, it shows you don't understand how leasing actually works. You're not alone, but just understand you are arguing against something you don't fully have knowledge about.

 
belljr said:
If you dint mind always having a car payment leasing is not bad.   You can usually get a nicer car for a more affordable price.

Whatever you do don't buy the car after the lease is up....  Biggest mistake I ever made.

I usually keep vehicles 9-12 years now so I dont mind buying new or slightly used
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You also don't just blindly turn the car in. It's not uncommon for the car to be worth more than the residual at lease end, especially for new models that don't have history or if your mileage is low.  The car could end up having equity that you are throwing away if you don't check.

You can either get that equity back in trade in value or you do end up buying it and selling it privately to get that equity back. On one car, I ended up with almost $8K in equity which ended up turning that lease into a joke with how cheap I ultimately paid over the course of the lease.

 
gianmarco said:
By this statement, it shows you don't understand how leasing actually works. You're not alone, but just understand you are arguing against something you don't fully have knowledge about.
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Please explain why the value matters so I can understand.  Thanks

 
Gally said:
1)   I am not sure what kind of cars people are buying but this has never been an issue for me.  This is exactly my experience with the cars I have purchased new (or almost new).  Oil changes, new tires, standard maintenance jobs at recommended miles and the cars perform as expected.  

4)  If you are leasing the car why do you care if it holds value better than buying?  You are just giving it back so why do you care if it holds value?  It's not like you are selling it at any point and care that it's worth more. 

I hate car payments.  Leasing would lead to never getting rid of a car payment.  That seems like an unnecessary financial burden.  
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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 differently.  We all spend money on certain things that others wouldn't and vice versa.  Not every financial decision is correct or optimal.  Some people own boats.  Some people own pools.  Some people buy season tickets for sports teams.  Some people hire people to clean their house or cut their lawn or fix things in their house.  Some people buy nice cars others save their money and get inexpensive cars.  Some people eat out often while others shop and cook for themselves.

We ALL do certain things where it's not a financially smart decision such as most of the above and countless others.  So, just because some choose to lease and it's not the best way to save, there's value in doing so and it's not simply throwing away money.  There are benefits to doing so.

With that out of the way, when you lease a car, having continuing monthly payments isn't a negative.  When you buy a car, you:

1)  Have higher monthly payments for the duration of the loan.

2)  Pay full sales tax on the vehicle

3)  Have to pay for the maintenance we discussed above (for example 15K, 30K, 45K, 60K miles, etc). 

So, if you keep your car for 10 years, as an example, the cost of owning the car is all of the above.  Just because you are no longer making payments at that point doesn't automatically make it better.  You add up all the payments you made, all the tax you paid, all the maintenance you paid and divide it over the time you fully own the car (say 10 years when you sell it or trade it in).  You can then compare THAT number to what the equivalent cost is for leasing.  And if you aren't keeping your car 8+ years, leasing often comes out ahead.  Some lease deals have breakeven points at 11 or 12 years because of how good they are.  Add in the fact that

1)  You can have 3-4 leased vehicles over that same timeframe with newer technology/safety/features.

2)  Take the monthly savings initially and invest it to get a higher return on having less money to shell out over the first few years you own.

3)  Have no maintenance to worry about other than oil changes

4)  Potential to gain more equity at lease end if it's a sought after vehicle

and it becomes an attractive option for some. 

If my goal was to save as much money as possible, then the ideal option is to buy a car, keep it for 15 years while maintaining it perfectly and hope nothing major goes wrong.  But, if my goal in life was to save as much money as possible, I would never eat out, I'd never attend a sports event, I wouldn't own a pool, and I wouldn't do countless other things that I do that allow me to enjoy some of the money I earn. 

And this is coming from someone that saves a substantial portion of my salary and I'm more on the frugal side on spending money on things. 

 
Gally said:
Please explain why the value matters so I can understand.  Thanks
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First, just read this page as it will explain it better than I can.  Should only take a couple minutes.

But, basically, when you lease, you are only paying for the depreciation of the vehicle while you have it leased.  If you lease a car that is worth $30,000 for 3 years, and that car is worth $20,000 after 3 years, you are paying that $10,000 difference plus financing charges.  That's it.  It's the same as if you bought the car for $30K, then 3 years later decided to sell it, get $20,000 for it.  It cost you $10,000 to "own" that car. 

Every car depreciates the moment you drive it off, whether you buy it or lease it.  Thus, if you have a car that has better value (i.e. less depreciation), the lease costs less.  And some cars hold their value better than others over the first 2-3 years. 

This is a big reason why "luxury" vehicles often lease well.  They often hold their value better.  As a result, it can end up being less money to lease a better vehicle.

If I lease a $30,000 car for 3 years that has a residual value of $15,000 at the end, ignoring the finance charges, the cost to lease that car is $15,000 over that timeframe.  It has a 50% residual value.  If I lease a $60,000 car that has a residual value of $45,000 at the end of 3 years, the cost to lease that car is also $15,000 over that timeframe.  Which do you think makes more sense?

So, the value of the vehicle at the end of the lease absolutely matters.

And, if the residual of a lease (which is a predicted number from the dealer/finance company) is $45,000, for example, and at the time I'm turning it in, the car is appraised at $50,000, I can get back that difference in trade-in value.  That effectively now decreases the cost of my lease even more. 

I hope I explained that well enough, although the link above does a better job, I think.

 
gianmarco said:
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 differently.  We all spend money on certain things that others wouldn't and vice versa.  Not every financial decision is correct or optimal.  Some people own boats.  Some people own pools.  Some people buy season tickets for sports teams.  Some people hire people to clean their house or cut their lawn or fix things in their house.  Some people buy nice cars others save their money and get inexpensive cars.  Some people eat out often while others shop and cook for themselves.

We ALL do certain things where it's not a financially smart decision such as most of the above and countless others.  So, just because some choose to lease and it's not the best way to save, there's value in doing so and it's not simply throwing away money.  There are benefits to doing so.

With that out of the way, when you lease a car, having continuing monthly payments isn't a negative.  When you buy a car, you:

1)  Have higher monthly payments for the duration of the loan.

2)  Pay full sales tax on the vehicle

3)  Have to pay for the maintenance we discussed above (for example 15K, 30K, 45K, 60K miles, etc). 

So, if you keep your car for 10 years, as an example, the cost of owning the car is all of the above.  Just because you are no longer making payments at that point doesn't automatically make it better.  You add up all the payments you made, all the tax you paid, all the maintenance you paid and divide it over the time you fully own the car (say 10 years when you sell it or trade it in).  You can then compare THAT number to what the equivalent cost is for leasing.  And if you aren't keeping your car 8+ years, leasing often comes out ahead.  Some lease deals have breakeven points at 11 or 12 years because of how good they are.  Add in the fact that

1)  You can have 3-4 leased vehicles over that same timeframe with newer technology/safety/features.

2)  Take the monthly savings initially and invest it to get a higher return on having less money to shell out over the first few years you own.

3)  Have no maintenance to worry about other than oil changes

4)  Potential to gain more equity at lease end if it's a sought after vehicle

and it becomes an attractive option for some. 

If my goal was to save as much money as possible, then the ideal option is to buy a car, keep it for 15 years while maintaining it perfectly and hope nothing major goes wrong.  But, if my goal in life was to save as much money as possible, I would never eat out, I'd never attend a sports event, I wouldn't own a pool, and I wouldn't do countless other things that I do that allow me to enjoy some of the money I earn. 

And this is coming from someone that saves a substantial portion of my salary and I'm more on the frugal side on spending money on things. 
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I understand that everyone views things differently with respect to disposable income (season tickets, lawn services, etc) and how to spend it.  I guess I kind of equate leasing a car to renting a house.  That money spent is lost as you don't have anything to show for it.  Putting that same money into owning the house isn't lost as you gain that back in equity over time.  I also understand that the cost of a car is more than just the payments and that buying a car has added risk as you are on the hook for repairs and maintenance and that there is a break even point money wise after some years when compared to a lease.  But as I said, it seems like the buy house vs rent a house scenario.

You have alluded to the idea that leasing a car can earn value for you but I don't understand that aspect at all.  I suppose there is something I am missing about that part that may make leasing make more sense to me.  

 
Gally said:
I understand that everyone views things differently with respect to disposable income (season tickets, lawn services, etc) and how to spend it.  I guess I kind of equate leasing a car to renting a house.  That money spent is lost as you don't have anything to show for it.  Putting that same money into owning the house isn't lost as you gain that back in equity over time.  I also understand that the cost of a car is more than just the payments and that buying a car has added risk as you are on the hook for repairs and maintenance and that there is a break even point money wise after some years when compared to a lease.  But as I said, it seems like the buy house vs rent a house scenario.

You have alluded to the idea that leasing a car can earn value for you but I don't understand that aspect at all.  I suppose there is something I am missing about that part that may make leasing make more sense to me.  
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It's not like renting a house at all.  Because homes aren't depreciating assets like cars.  Read the link I posted above that explains that far better.

 
gianmarco said:
It's not like renting a house at all.  Because homes aren't depreciating assets like cars.  Read the link I posted above that explains that far better.
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Very interesting and I appreciate the insight.  I had no idea that the total cost you pay on the lease isn't fixed.  I thought you negotiated the monthly payment for the time you have the car (3 yr lease) and that was that.  I didn't realize there was an ending negotiation as to the value of the car and you could actually get a "refund".

 
Gally said:
I understand that everyone views things differently with respect to disposable income (season tickets, lawn services, etc) and how to spend it.  I guess I kind of equate leasing a car to renting a house.  That money spent is lost as you don't have anything to show for it.  Putting that same money into owning the house isn't lost as you gain that back in equity over time.  I also understand that the cost of a car is more than just the payments and that buying a car has added risk as you are on the hook for repairs and maintenance and that there is a break even point money wise after some years when compared to a lease.  But as I said, it seems like the buy house vs rent a house scenario.

You have alluded to the idea that leasing a car can earn value for you but I don't understand that aspect at all.  I suppose there is something I am missing about that part that may make leasing make more sense to me.  
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Let me try and explain it this way.

When you buy a car, you aren't keeping it forever.  There will come a day when you sell it, scrap it, trade it in, whatever.  So, even though you bought it, it's not like a house that you can keep "forever" that has value. 

To keep it simple, let's assume that day is 10 years after owning it.  You've paid your loan in full, you have whatever costs you put into it, you have tax, and then you have whatever you get back at the end.  After 10 years, you have $X.X cost of owning the vehicle regardless of how you get rid of it. 

Let's assume, when you average it out each month, that ends up being $300/month over the course of the 10 years.  It doesn't matter where those costs went (some cars cost more at the start, less to maintain and vice versa). And it doesn't matter that your loan ends after 5 or 6 years or whatever.  It's just the average cost to own.

Now, let's say I leased 3 vehicles over the same time frame and my overall cost ended up being $350/month for the same car. 

The lease cost me more over 10 years.  But I got some benefits for that increased cost.  Is $50/month worth it to have had newer cars, no maintenance to worry about, etc?  Well, for some, the answer is yes.  For some, the answer is no.  That's why there's no right answer to leasing vs buying except for certain circumstances.

If you drive a lot or like to keep a car 10+ years, then leasing is silly.  If you are looking to change cars every 5 years, then buying is silly.  Otherwise, it's more a matter of preference. 

Do I buy a nice phone that costs me $20/month more because of the features it has?  Well, that's up to each person.  Same goes with leasing.

ETA -- Even when you buy a car, you are essentially "renting it" because of the fact its value always goes down.  It's not like buying a home that you put money into it and you will likely get it back, if not more (unless we're talking about a collectible, which is not what this discussion is about).  The shorter you keep it, the higher that "rent".  The longer you keep the car, the lower that monthly "rent" is for the vehicle, but either way, you will almost certainly one day get rid of every car you buy.  Since you don't get back what you put into it, it's money that is gone forever for the use of that car.  Just like a lease  :)

 
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gianmarco said:
Let me try and explain it this way.

When you buy a car, you aren't keeping it forever.  There will come a day when you sell it, scrap it, trade it in, whatever.  So, even though you bought it, it's not like a house that you can keep "forever" that has value. 

To keep it simple, let's assume that day is 10 years after owning it.  You've paid your loan in full, you have whatever costs you put into it, you have tax, and then you have whatever you get back at the end.  After 10 years, you have $X.X cost of owning the vehicle regardless of how you get rid of it. 

Let's assume, when you average it out each month, that ends up being $300/month over the course of the 10 years.  It doesn't matter where those costs went (some cars cost more at the start, less to maintain and vice versa). And it doesn't matter that your loan ends after 5 or 6 years or whatever.  It's just the average cost to own.

Now, let's say I leased 3 vehicles over the same time frame and my overall cost ended up being $350/month for the same car. 

The lease cost me more over 10 years.  But I got some benefits for that increased cost.  Is $50/month worth it to have had newer cars, no maintenance to worry about, etc?  Well, for some, the answer is yes.  For some, the answer is no.  That's why there's no right answer to leasing vs buying except for certain circumstances.

If you drive a lot or like to keep a car 10+ years, then leasing is silly.  If you are looking to change cars every 5 years, then buying is silly.  Otherwise, it's more a matter of preference. 

Do I buy a nice phone that costs me $20/month more because of the features it has?  Well, that's up to each person.  Same goes with leasing.

ETA -- Even when you buy a car, you are essentially "renting it" because of the fact its value always goes down.  It's not like buying a home that you put money into it and you will likely get it back, if not more (unless we're talking about a collectible, which is not what this discussion is about).  The shorter you keep it, the higher that "rent".  The longer you keep the car, the lower that monthly "rent" is for the vehicle, but either way, you will almost certainly one day get rid of every car you buy.  Since you don't get back what you put into it, it's money that is gone forever for the use of that car.  Just like a lease  :)
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Exactly.  

If you are the kind of person who is going to drive a vehicle 7-8 or longer years and maintain it correctly then buy.  The fact is unlike a home right before you drive it off the lot it has the most value it will ever have.  The value will only go down every year.  For some the end result will end up saving money over the 8 years. 

To others having a brand new reliable vehicle that is always under warranty every 2-3 years with all the new bells and whistles, and without doing anything other than change the oil a couple times a year the savings over that period is not worth it.

I know many dealers from when I was at Ford and worked with dealers.    The people who clean up are the salespeople who take back a 2 year lease from some older person that has 10-15K miles on it.  They usually buy it for themselves or their family as it is like a new vehicle but 10-12K less if not more. In that situation it makes sense to buy.  Those are hard to come by though.

I got my younger daughter into 2018 loaded Ford Escape from a dealer I know.  A retired lady leased it and turned it in with 11K miles after 24 months. The lady put money down so the buyout was 18K for a 30K vehicle.  

 
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DallasDMac said:
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.
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No. She can get the loan in her name. I’d make the actual payments if my name is on it as well. She can then pay me. She’s already thought she paid an ambulance bill but unfortunately didn’t. I’m not risking my credit score over an unpaid or late month or two. 

 
I won't get into the weeds about leasing v. buying but the CX-5 is a great vehicle.  Extremely dependable, looks great, and quite zippy for the price/mpg.   

 
gianmarco said:
By this statement, it shows you don't understand how leasing actually works. You're not alone, but just understand you are arguing against something you don't fully have knowledge about.
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That's true.   I just turned in my leased Highlander six months before the end and got $2k towards the trade in as my miles were super low, which made the value higher.

 
gianmarco said:
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.
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My daughter has appointments to drive the Volvo XC40 and Mazda CX-5 tomorrow. From what I've read, the Mazda-CX5 leads in safety and for about $1,500 more than the base CX5 has FWD, and has added more safety features for 2021. And the Mazda is much cheaper. And I believe has greater residual value at 3 years - 67% versus 59%.

Is is easy to extract the pertinent info from a car sales person, such as the items in the calculation link you provided, such as MSRP, dealer fees, residual, rebates and money factor? It seems like an experienced sales person can easily take advantage, especially when my daughter wants to drive it off the showroom tomorrow and practice driving while I'm here until Monday night, while visiting a few sites - my youngest daughter just flew up from LA. She has driven a friend's Kia SUV around SF for practice.  She also wants to pickup a nice BR dresser in the SUV she found on offerup. She's really quite frugal, and can afford much more for a car, but also doesn't like the idea of being taken advantage of. 

 
I’ve been leasing for awhile. Every three years I look for the cheapest lease I can find. Last two have been Nissan Sentras. Hard to pass up $160 a month with zero down. The peace of mind of driving a new car without the hassle of repairs is worth that to me. 

 
SoBeDad said:
My daughter has appointments to drive the Volvo XC40 and Mazda CX-5 tomorrow. From what I've read, the Mazda-CX5 leads in safety and for about $1,500 more than the base CX5 has FWD, and has added more safety features for 2021. And the Mazda is much cheaper. And I believe has greater residual value at 3 years - 67% versus 59%.

Is is easy to extract the pertinent info from a car sales person, such as the items in the calculation link you provided, such as MSRP, dealer fees, residual, rebates and money factor? It seems like an experienced sales person can easily take advantage, especially when my daughter wants to drive it off the showroom tomorrow and practice driving while I'm here until Monday night, while visiting a few sites - my youngest daughter just flew up from LA. She has driven a friend's Kia SUV around SF for practice.  She also wants to pickup a nice BR dresser in the SUV she found on offerup. She's really quite frugal, and can afford much more for a car, but also doesn't like the idea of being taken advantage of. 
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67% residual is fantastic.

You need to ask them what the money factor is. You already have the residual, it seems. Then just ask any additional fees (acquisition, document, tag and title). You can calculate the monthly payment at that point. MSRP will be known for the vehicle and then what the negotiated price of the car (cap cost).

If you have that info, no, they can't take advantage because you can figure out the payments on your own using that calculator. If numbers don't match, then they are doing something. That's why you need to know how it works before signing and leasing. 

Either help her or point this stuff out to her and let her learn. It's really not hard and it's good real life practice.  

Good luck to you and her.

 
Also, fwiw, this can all be done over the phone or email. They give you the relevant numbers and then you just negotiate the price of the car. You can often pull up the exact car online and price everything out before you call.

Go to Truecar, for example, plug in your car and options and you'll see what it's selling for in your area. Use THAT to base your negotiation on. Once you agree on a price, then you just show up, review paperwork, and sign. I've had all my leases done in a couple hours from home with a few phone calls and then I just show up to finalize.

 
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gianmarco said:
67% residual is fantastic.

You need to ask them what the money factor is. You already have the residual, it seems. Then just ask any additional fees (acquisition, document, tag and title). You can calculate the monthly payment at that point. MSRP will be known for the vehicle and then what the negotiated price of the car (cap cost).

If you have that info, no, they can't take advantage because you can figure out the payments on your own using that calculator. If numbers don't match, then they are doing something. That's why you need to know how it works before signing and leasing. 

Either help her or point this stuff out to her and let her learn. It's really not hard and it's good real life practice.  

Good luck to you and her.
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Thanks for all the great advice. When I get back to Miami, I'd like ask you how to improve the terrible lease my roommate has. She's paying over 600 a month for an Audi lease on a preschool teachers salary (~38,000). It all started when she was way over miles on her previous lease. And a friend referred her to the Audi guy who "helped" her get out of paying fees for miles. If you do this for a living, I'm sure she'd pay a fee, if there's a better path forward. She also shoulders blame for not going the Hundai or Corolla route on her previous lease, which was for  Lexus around $430 a month.

 
SoBeDad said:
Thanks for all the great advice. When I get back to Miami, I'd like ask you how to improve the terrible lease my roommate has. She's paying over 600 a month for an Audi lease on a preschool teachers salary (~38,000). It all started when she was way over miles on her previous lease. And a friend referred her to the Audi guy who "helped" her get out of paying fees for miles. If you do this for a living, I'm sure she'd pay a fee, if there's a better path forward. She also shoulders blame for not going the Hundai or Corolla route on her previous lease, which was for  Lexus around $430 a month.
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Lol, no, I don't do this for a living. I just do it every couple years when it's time to change vehicles. 

Getting out of leases is difficult. There are websites where you can swap/get out of your lease and others will take over. But you are going to lose out doing it as you won't get full value unless it's a good lease. The other possibility is if the value of the car is higher than the payoff.

You can request a payoff amount at any time in the lease. It's not perfect, but it's essentially the residual amount plus the sum of the remaining payments as an estimate. You can get the exact number at any time from the leasing finance company.

If you get the car appraised (or just use something online like kbb or blackbook or whatever) and it's worth more than the payoff, then you can get out of the lease. Find a new car and then use that car as a trade in. The dealer will essentially buy the car (they will assume ownership of the vehicle by sending the payoff amount to the lease company) and then sell it themselves. But that obviously won't happen if the car is worth less than the payoff.  Depending on how bad the lease is, it may still be worth it if you can get out only having to pay a small difference being underwater.

But, just because the lease is $600 doesn't mean it's bad. As a general rule, any lease payment (not including tax) that is $1 per $125 worth of car (MSRP) is a good deal. So, if tax on that is $50, and her lease payment is $550, then if the MSRP of the car is $70,000, it's a good lease deal.

ETA -- Leasehackr calculator is great. It's another resource to look at payments and see how good a deal it is. If you can get that leasehackr score high, you can see how it can be better than buying in some cases.

 
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fruity pebbles said:
No. She can get the loan in her name. I’d make the actual payments if my name is on it as well. She can then pay me. She’s already thought she paid an ambulance bill but unfortunately didn’t. I’m not risking my credit score over an unpaid or late month or two. 
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Totally get that. My daughter failed to make a few payments on a college loan I was a cosigner on. My FICO has never recovered fully. I told her, never EVER do that again. Come to me for help. Kids.

 
wilked said:
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. 
 
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Especially since she is 8 miles away from work and has free Uber rides.

Leasing or buying new/newish cars is not a great idea for a lot of people, but especially a young person in this situation.

Cheap car just makes too much sense. It only needs to get her eight miles, and if it breaks down she's got a free ride that'll be there in 5 minutes.

 
fruity pebbles said:
I’ve been leasing for awhile. Every three years I look for the cheapest lease I can find. Last two have been Nissan Sentras. Hard to pass up $160 a month with zero down. The peace of mind of driving a new car without the hassle of repairs is worth that to me. 
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That is the way to go.  When leasing don`t be choosy.  Get the best vehicle you can for the least amount of money. Any brand new vehicle is nice.

 
SoBeDad said:
My daughter has appointments to drive the Volvo XC40 and Mazda CX-5 tomorrow. From what I've read, the Mazda-CX5 leads in safety and for about $1,500 more than the base CX5 has FWD, and has added more safety features for 2021. And the Mazda is much cheaper. And I believe has greater residual value at 3 years - 67% versus 59%.

Is is easy to extract the pertinent info from a car sales person, such as the items in the calculation link you provided, such as MSRP, dealer fees, residual, rebates and money factor? It seems like an experienced sales person can easily take advantage, especially when my daughter wants to drive it off the showroom tomorrow and practice driving while I'm here until Monday night, while visiting a few sites - my youngest daughter just flew up from LA. She has driven a friend's Kia SUV around SF for practice.  She also wants to pickup a nice BR dresser in the SUV she found on offerup. She's really quite frugal, and can afford much more for a car, but also doesn't like the idea of being taken advantage of. 
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Update?

 
gianmarco said:
Update?
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No lease yet, maybe next weekend.

She drove the Volvo XC40,  liked it a lot, but the monthly payments were more than she wanted - in the $580 to $650 range. The salesman was great and showed us his computer screen with the factors that determine the lease payments, including the resale or residual value., and money factor. Thank you for the info and links you provided, they helped us to be more prepared.   The salesman tried multiple ways to reduce the payment, including pricing some loaded new 2020s with good rebates. But lower residuals made it a wash compared to pricier 2021s without rebates. He even tried to qualify her for a $1,000 health worker rebate as a biotech worker. Don't think that will go through - she needs to ask her employer.  The salesman agreed with your reasoning on no money down unless there are debt to income issues, which is not her case. He ran her credit and said it was 50-50 to qualify on her own due to 2 small debts; he gave her the same advice others gave above about deleting these debts.  I would cosign, but she wants to qualify on her own.

Then we went to Mazda and she drove the new smaller CX-30 and CX-5. She liked the CX-5 and the leasing payments were in line with what she was willing to spend. The sales team knows that she is ubering to work (but not that her company is paying for it) so they seemed aggressive to make a deal. We walked out and they've texted her better terms a few times - the latest is $500 down and $350 a month for a mid-level trim 2021 CX-5 with 10k miles per year. And yes, the residual is better on the Mazda than the Volvo, I think it was close to what I posted above, like low to mid 60s versus high 50s.

 
SoBeDad said:
No lease yet, maybe next weekend.

She drove the Volvo XC40,  liked it a lot, but the monthly payments were more than she wanted - in the $580 to $650 range. The salesman was great and showed us his computer screen with the factors that determine the lease payments, including the resale or residual value., and money factor. Thank you for the info and links you provided, they helped us to be more prepared.   The salesman tried multiple ways to reduce the payment, including pricing some loaded new 2020s with good rebates. But lower residuals made it a wash compared to pricier 2021s without rebates. He even tried to qualify her for a $1,000 health worker rebate as a biotech worker. Don't think that will go through - she needs to ask her employer.  The salesman agreed with your reasoning on no money down unless there are debt to income issues, which is not her case. He ran her credit and said it was 50-50 to qualify on her own due to 2 small debts; he gave her the same advice others gave above about deleting these debts.  I would cosign, but she wants to qualify on her own.

Then we went to Mazda and she drove the new smaller CX-30 and CX-5. She liked the CX-5 and the leasing payments were in line with what she was willing to spend. The sales team knows that she is ubering to work (but not that her company is paying for it) so they seemed aggressive to make a deal. We walked out and they've texted her better terms a few times - the latest is $500 down and $350 a month for a mid-level trim 2021 CX-5 with 10k miles per year. And yes, the residual is better on the Mazda than the Volvo, I think it was close to what I posted above, like low to mid 60s versus high 50s.
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Have her look at a couple BMWs. They lease really well. The X2 might be right up her alley and I think can be had for similar if not less than the Mazda. Or the i3.

 
cool thread.  i'm a fan of buying CPO cars, with less than 10k miles. they are fully warranteed.  never had an issue on the mechanical side.  i pay a little more for the CPO, but it's worth it to me.  i had a guy at a dealer, that would keep an eye out for me.  we called it, looking for unicorns.  can't stand the depreciation of new cars.  may look at leasing for the next one/s

 
DA RAIDERS said:
cool thread.  i'm a fan of buying CPO cars, with less than 10k miles. they are fully warranteed.  never had an issue on the mechanical side.  i pay a little more for the CPO, but it's worth it to me.  i had a guy at a dealer, that would keep an eye out for me.  we called it, looking for unicorns.  can't stand the depreciation of new cars.  may look at leasing for the next one/s
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This is what I have been doing also. But I have never seen a car with a 650 rating 😀.

 
SoBeDad said:
No lease yet, maybe next weekend.

She drove the Volvo XC40,  liked it a lot, but the monthly payments were more than she wanted - in the $580 to $650 range. The salesman was great and showed us his computer screen with the factors that determine the lease payments, including the resale or residual value., and money factor. Thank you for the info and links you provided, they helped us to be more prepared.   The salesman tried multiple ways to reduce the payment, including pricing some loaded new 2020s with good rebates. But lower residuals made it a wash compared to pricier 2021s without rebates. He even tried to qualify her for a $1,000 health worker rebate as a biotech worker. Don't think that will go through - she needs to ask her employer.  The salesman agreed with your reasoning on no money down unless there are debt to income issues, which is not her case. He ran her credit and said it was 50-50 to qualify on her own due to 2 small debts; he gave her the same advice others gave above about deleting these debts.  I would cosign, but she wants to qualify on her own.

Then we went to Mazda and she drove the new smaller CX-30 and CX-5. She liked the CX-5 and the leasing payments were in line with what she was willing to spend. The sales team knows that she is ubering to work (but not that her company is paying for it) so they seemed aggressive to make a deal. We walked out and they've texted her better terms a few times - the latest is $500 down and $350 a month for a mid-level trim 2021 CX-5 with 10k miles per year. And yes, the residual is better on the Mazda than the Volvo, I think it was close to what I posted above, like low to mid 60s versus high 50s.
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Have you bounced that payment of leasehackr?

 
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fruity pebbles said:
I’ve been leasing for awhile. Every three years I look for the cheapest lease I can find. Last two have been Nissan Sentras. Hard to pass up $160 a month with zero down. The peace of mind of driving a new car without the hassle of repairs is worth that to me. 
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I wonder what overall cost per mile you get with this kind of deal.  I have a 12 year old car (purchased) and I am running at about 18 cents/mile counting purchase price, gas, and upkeep - everything but insurance.

 
Sand said:
I wonder what overall cost per mile you get with this kind of deal.  I have a 12 year old car (purchased) and I am running at about 18 cents/mile counting purchase price, gas, and upkeep - everything but insurance.
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What are you using for a gas price? If figuring at $2 a gallon........purchase over 36 months is around $5500, gas $1800 at 40 mpg, upkeep minimal...some oil changes. Around 21 cents a mile. Granted the insurance is a little higher as is registration. 

 
IMO leasing is for older folks who have means and always want a reliable vehicle with guarantees.  It's generally about the worst financial move you can make with cars, but I do get the attraction.  That said, you have a meh credit score for a reason.  I would not do this.  

 
fruity pebbles said:
What are you using for a gas price? If figuring at $2 a gallon........purchase over 36 months is around $5500, gas $1800 at 40 mpg, upkeep minimal...some oil changes. Around 21 cents a mile. Granted the insurance is a little higher as is registration. 
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I figured 2.50/gallon, but that's close enough to see that it's competitive.  Thanks for the calc.

 
FishTacoTuesday said:
IMO leasing is for older folks who have means and always want a reliable vehicle with guarantees.  It's generally about the worst financial move you can make with cars, but I do get the attraction.  That said, you have a meh credit score for a reason.  I would not do this.  
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I would say the worst financial move you can make with cars is what my neighbor seems to do - buys new, then trades in for a different new car every few years focusing only on whether he can afford the monthly payment.  He or his wife will decide they want a new car one morning, then be driving it home that evening.  He would be much better leasing.

 
fruity pebbles said:
What are you using for a gas price? If figuring at $2 a gallon........purchase over 36 months is around $5500, gas $1800 at 40 mpg, upkeep minimal...some oil changes. Around 21 cents a mile. Granted the insurance is a little higher as is registration. 
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After paying for my teenager's insurance nothing really seems high anymore.  i could get a Lambo and think the insurance was reasonable.

 
East Coast Bias said:
Have you bounced that payment of leasehackr?
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I just created an account in leasehackr and see some good deals on a mid-level trim CX5. But I'm not sure what trim the dealer was offering her in their latest offer. Great web-site. I'll speak to her and try to help - she mainly wanted my help in test driving and to be in the car with her while driving around SF in the new car. But it didn't happen. It can be a daunting process to buy or lease a car, a first car in this case. And driving around SF was anxiety producing for me. 

 
FishTacoTuesday said:
IMO leasing is for older folks who have means and always want a reliable vehicle with guarantees.  It's generally about the worst financial move you can make with cars, but I do get the attraction.  That said, you have a meh credit score for a reason.  I would not do this.  
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My daughter's score is low because of 2 small debts. One was a $300 Macy's debt that just reappeared on the report after a long absence. The other was an $800 medical bill that she was aware of, thought the insurance paid,  but apparently procrastinated about. No CC debt, no student loans, good income. I also see younger people wanting to lease who are afraid of mechanical breakdowns and know almost nothing about cars. As @gianmarco and others posted above, with leasing there's peace of mind, the latest safety features and with a good lease it could be comparable or better financially than keeping a new car for 5 or 6 years. She was initially thinking about a good used car,  the CPO route mentioned above. Meanwhile, I plan to keep my 2015 Corolla for many more years.

 
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. 
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Mrs got her first shot yesterday, she also wants to travel and take some time off from the hospital. I hope this is a great journey for you, I assumed you were driving but maybe you are flying? I didn't fly much pre-covid, can't imagine getting on a plane right now. 

 
gianmarco said:
He's getting a car that's probably worth about $20K more for only $55/month more.
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Except he never has any equity in the car, right?

I'm cheap so buy 6-8 year old vehicles I'd never be willing to pay for new, but I've always been curious about this.

 
SoBeDad said:
My daughter's score is low because of 2 small debts. One was a $300 Macy's debt that just reappeared on the report after a long absence. The other was an $800 medical bill that she was aware of, thought the insurance paid,  but apparently procrastinated about. No CC debt, no student loans, good income. I also see younger people wanting to lease who are afraid of mechanical breakdowns and know almost nothing about cars. As @gianmarco and others posted above, with leasing there's peace of mind, the latest safety features and with a good lease it could be comparable or better financially than keeping a new car for 5 or 6 years. She was initially thinking about a good used car,  the CPO route mentioned above. Meanwhile, I plan to keep my 2015 Corolla for many more years.
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I disagree strongly

Most wealthy folks I know don't have car payments one way or the other. A lot of folks I see struggling are trapped under car payments of all kinds. 

My 21 year old son bought his Ford Ranger truck for $1,000 and I don't know what year it was, he definitely got a sweet deal but it needed some work and it's had a couple things here and there I was happy to help but the fact is he doesn't have a car payment and he's investing all that car money he would be spending on other things. 

Glad you got vaccinated 👍 

Glad you get to see your family in San Fran 

 
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Dinsy Ejotuz said:
Except he never has any equity in the car, right?

I'm cheap so buy 6-8 year old vehicles I'd never be willing to pay for new, but I've always been curious about this.
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I don't understand the question and how it relates.

My statement was more about the fact he's getting more car for his money. Can you explain what you were asking?

 
CletiusMaximus said:
I would say the worst financial move you can make with cars is what my neighbor seems to do - buys new, then trades in for a different new car every few years focusing only on whether he can afford the monthly payment.  He or his wife will decide they want a new car one morning, then be driving it home that evening.  He would be much better leasing.
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That is the only reason I see for leasing.  If you are always going to have a car payment because you buy so often then leasing seems to be the perfect alternative.  

 
gianmarco said:
I don't understand the question and how it relates.

My statement was more about the fact he's getting more car for his money. Can you explain what you were asking?
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He's getting more car to use, but doesn't actually own any of that car via his payments, right?  It's 100% rental?

ETA:  if it helps, I buy used high-end used and then drive them until the wheels fall off.  So not exactly a candidate for leasing to begin with, but I've always wondered if any of the leasing payment accrues back to you in some way?

 
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fruity pebbles said:
If it were me, I’d make the payment myself each month and have her pay me. 
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That's what I did with my son when he got his truck. I just made it clear that if he was ever late with a payment (car or insurance), well, i have a new truck. Its been two years and I haven't had to worry about it yet.

 
Where is the thread on car buying?  Can't find it.  Found it

 
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