I am looking for someone who is somewhat familiar with car leasing - especially Honda. I know that the sales people at the dealership do not give out all the details since they just want a sale. We have a 2008 Honda Accord LX with 50K miles. This vehicle is financed not leased. My wife got this car before we got married and she didn't have excellent credit so she got a bad finance deal. As it stands we owe about 18K and the KBB trade in value is 13K. The dealership really wants our used car for some reason. I guess these used Honda's are in high demand and they can sell them for a lot more than they are getting it for. Obviously we are upside down on this car so we can't sell it or even re-finance it. The dealer said that they could give us a new Accord in place of this one and our payments would pretty much be the same. Of course that means a new finance term so Honda would end up getting more interest money. My wife doesn't really want another Accord. She said that if she was going to get a new car it would have to be a Honda Pilot and we don't want to pay anything more than what we do now. So that is when the dealer offered Leasing and started telling us how great it is and so on...We can trade our Accord in and get a new Pilot with 0 down and keeping the same monthly payment as we have now. I know that there is a penalty if you go over the mileage limit which in this case is 15K/year. The way I calculated on the Accord we did about 20K a year BUT the sales person said that it is no problem as long as at the end of the term we trade in this lease for another Honda. If we do this there is no mileage penalty no matter how many miles we rack up. I asked about insurance requirements and it looks like we already have the coverage which meets the minimum. I heard bad things about leasing but this does not sound bad which makes me wonder if I am missing something. Can someone please advise if this is a bad deal or not? We are not planning to mod the car and we don't normally keep the cars for a long time anyways...maybe 3-4 years then get a new one and with this we would give away a car that we are upside down on and out of warranty and get a new one...
Leasing is dumb for the most part. You might want to look at the pros and cons for your own situation, but I think leasing a Honda is just a terrible idea. Don't worry about going over the miles, you can always buy more miles right before the lease is up. There might be lease return fees, you'll have to buy new tires, can't have dings and scratches over a certain amount. It's just not worth the hassle. You're worried about re-financing and more interest, what exactly do you plan on doing after the 3 year lease is up? You'll get another one and continue to throw money away. Personally, I buy cars and I pay cash. IMO that's the only way to deal with cars. I'm not into Hondas, but I find it difficult that they aren't giving out good financing rates right now. Now I'm not saying don't lease, if it's right for your situation, then it might be in your best interest to lease. And if you do want to lease, DO NOT PUT ANY MONEY DOWN, DO NOT TELL THE DEALER YOU ARE LEASING WHEN NEGOTIATING THE PRICE (do you your own homework. I can give you a leasing spreadsheet I created if you'd like. It seems like everyone who tells me their "great" lease rates are spending on average $150 more a month. It's ridiculous really. Don't look at the monthly payments and be satisfied), PUT DOWN A SECURITY DEPOSIT (WHICH IS 100% REFUNDABLE EVEN IF YOUR CAR IS TOTALED), which will lower your rate a few basis points. I'm sure there are more things to discuss but that's all I can think of for now. But again, it's all up to you. If you're going to get a new car every few years anyways and if Honda's currently giving out a good residual and interest rate, then it's probably better to lease. But since your dealer's pushing for it, well, they don't call them stealerships for nothing....
Leasing is fine if: 1. You like having a new car every 3 years. 2. You don't put a lot of miles on your cars (> 15K). 3. You don't mod your cars. 4. You aren't prone to putting excessive wear and tear on your car. 5. The lease has a favorable money factor (this is the lease equivalent of APR). 6. The vehicle has a favorable residual value. 7. You don't live in Texas or Illinois. These two states (and there may be others) require that you pay tax on the entire agreed upon selling price of the vehicle, where other states only require that you pay tax on the lease payments.
Who cares if you're upside down on your car? It's 2 years old. Drive it until it falls apart. You'll get your money's worth. If you buy every 2-3 years you'll ALWAYS be upside down.
This. Very rarely will you have equity in a vehicle unless you buy it outright. It's a Honda. It will run forever and you'll still be able to sell it in a couple of years. Don't lease. You'll get screwed many different ways.
Some really good advice in here. Buying a car is probably the worst investment many people make. And you're talking about leasing a car.. lol. For the average American who makes modest money, it's financially unwise NOT to buy a cheap, used, reliable, and fuel efficient car like an Accord or a Camry and drive that into the ground.
"the sales person said this" "the sales person said that" leasing = renting renting is for the extremely poor, or extremely wealthy...
When we bought my wife's GX470 we actually leased it. But we leased with intention of buying it. The only reason I leased it was because it was near Christmas and Lexus had a deal they were paying for the tax.
It's not as simple as people are making it out to be. Leasing does have benefits and can sometimes be economically viable, though not always. It seems you have three basic options: (a) Keep your current car (b) Buy a new car with the trade-in (c) Lease a new car with the trade-in What you need to do is figure out, over whatever time frame you're interested in (3 yrs, 5 yrs, 20 yrs, whatever), the following: (1) The present value total of how much total you'll be spending (2) What you will be driving during that period (3) What you will have at the end of that period For example, if you're saving $5k by having them give you $18k for your $13k car, that's a plus for options (b) and (c). However, option (c) means you own nothing at the end of whatever time frame you look at. Options (a) and (b) leave you with a car. Option (c) means you'll likely have new cars the whole team which means warranties, no worries, etc. There are advantages and disadvantages to each, and not all of it is a money decision. But figuring out #1-#3 above for each of your options will give you a better sense of how much you are paying for what you're getting.
and sometimes for smart people who don't overextend themselves in mountains of debt only to get their homes foreclosed, cars repossessed, etc.
Cool. Thanks for the advise. There is nothing wrong with our 08 Accord. We are just going to keep it and keep making payments. Hopefully in a few years it will still retain its value since its a Honda and all.
It really depends on you. If you're one of those people that gets a new car every few years and never pays one off, then leasing makes sense. If you're only planning on keeping a car for 3 years anyways, then your payments will be far less each month than it would be if you financed. You also would not be upside at the end of the 3 years, which you very well could be if you finance. It obviously makes the most financial sense to buy a car, pay it off, and keep it as long as possible. But if you know that isn't going to happen, leasing makes sense.
You don't ALWAYS need to "trade-in"... do you? (even if you already have a car) I've bought cars without trade-ins. I've never leased.
You don't ALWAYS have to chime in with a smartass answer... do you? I've read posts and understood their gist. I don't always correct them.
