Leasing a car versus buying
For the first time ever...three years ago I leased a Kia Forte car almost out of necessity as I found myself suddenly without wheels. For the last few years I have made payments each month of $159 (not too bad) and now have less than 2,000 miles ( I do not drive much) on the car. I am due end of August to make a decision to either lease again or buy the car. I do not like knowing a car is not really mine...so I definitely am not leasing again. However, i am hearing that if there is a scratch on the car (a lot of money)...money to be paid when turning it back in...more money if the interior has any damage (it does not). and turn in fees....and I have no idea yet how much it would be down again (I put $3000 or more down when I leased)...all of this money is now down the drain..like renting a apartment. So, I think my best bet now would be to look for a good used car and just buy it if I can. Would appreciate any ideas of what other HLers have done.. Thanks..
What is the lease buyout (residual) in the car and how much is it worth? That will okay a big part in the decision of you want to look at buying it out.
Joy, if they gave you a good price to buy it at lease end, do that. Just compare to Kelly Blue book value. Then keep or sell the car.
There is a buy out price on my original contract with Kia but when I went to talk to a agent he said that was not the correct price but it was more now to buy the car. Seems to me that they should honor the buy out price on the contract???
The contract is legally binding. Don’t let them scam you. Just go to another Kia dealership and state that you spoke to your attorney and they will change attitude real quick.
Hoping my post doesn't get deleted for having a link ;) The agent sounds like a crook! If you made the mistake of telling him the milage, he was thinking how much $$ he could make.
The residual price on the lease contract is binding as stated above. Remember the contract is with the leasing company and not the dealership.
If there is mileage overage and/or damage that could mean additional fees. You can have the dealer inspect the car for an estimate, but at least from your description there should not be any wear and tear added. In fact, most lease turn-ins have some allotment already (ex. Up to $1,000 in restoration charges).
They have to honor what ever the contract says. If the buyout was fixed, then that's it. If it was based on some kind of a published book value at the time of the end of the lease it might be different. So read over that contract and don't let them push you around.
Two pieces of information that are absolutely crucial when doing a lease are how long you want it and how many miles you drive. As a second car hardly driven, typical leases are way way too many miles. Particularly a brand new car where the depreciation is so high, that few miles on it makes it a gold mine if turned back in. Chances are you should be able to buy it off the lease at a good price because you already paid for way more miles than used. Then under the circumstances most likely sell that car at a profit and use the money to buy something older but reliable enough for occasional use. I say something older because you don't want to lease again.
The information you need right now to make the best of it is the book value of the car given the enormously low mileage. You can bet a dealer is going to ask top dollar when they sell it. You need to have a good idea of what you can sell it for and compare that with the buy out price. Edmunds.com is one of the places that will give you not only book value, but estimates of what the dealer would try to sell it for, and what you can get in a private sale.
What ever your contract says the pay out is,
That’s the buyout at the end of the lease. If this sales person is telling you otherwise, they are trying to rip you off. You should be able to log in online and see it in your account too.
We leased 2 KIAs within 6 months of each other - financially at the time leasing was the best option - knowing that when the lease was up we would purchase the cars due to high mileage. The first time we went through the dealership to buy out the lease...they tacked on fees and did not give us the best interest rate, but we were naïve and thought this was our only option. Dealerships are allowed to raise the interest rates a certain percentage over what the actual bank approves the loan for - this is part of how they make their money along with the ridiculous fees to process it. The next time, we went directly to our bank for the loan and they paid KIA directly - low interest rate and absolutely no fees. Was the easiest process. The bank did everything. The only fee you will have to pay is to motor vehicle. The dealership insisted that if we paid KIA directly that we would still get an invoice for fees - which was a lie - we never heard anything from KIA after they received the payoff. You should be getting information directly from KIA on your options for when the lease is up. If you plan to keep the car - stay out of the dealership - they will rip you off.
Please name the dealer so others can avoid. Your lease is with whatever financial institution holds the title to your car. It’s on your registration. I don’t know much about Kia but I’m sure it’s something along the lines of “kia Financial North America.” At least that’s what I’d name it if I were them ;)
Anyway, the dealer does not and cannot dictate what you owe on you car as the dealer “sold” the car to Kia financial at your lease inception. Call the 800 number on the lease bill you get in the mail and ask them what your residual is. If you ask what the “buyout” is before your lease term is expired, it’s gping to be the residule given at the time of the lease inception (the amount stated in your contract) plus any payments you have left on your lease until it’s over.
Again, the Kia dealer does not own that car. Whoever you mail your lease payment to does. Call them if you want to buy the car.
I wouldn't worry about having a scratch on the car . I leased an Acura for three years and had a dent on the front fender from a deer running into it and the guy who looked it over contributed it to normal wear and tear on a 3 year old vehicle - no charge . But I would never lease again , as it felt real bad paying all that money for a car then returning it . I'd buy used before doing that again .
Checkout lease hacker forum, and do some reading about leasing.
Also you can download honcker app and see if leasing is worth it for you again, what I love about honcker is you don't have to put a foot in a dealership, and you can also have the car delivered to you, and the honcker numbers included taxes and whatever other fees,
A pic joint just for example (Kia forte,) I just looked at Elantra and it seemed an Elnatra will be cheaper
I'm leasing my current car, and my last car was a lease. I understand that, all factors considered, it's supposed to be financially better to buy than to lease. But for me, I find it convenient. I drive less than 10K miles per year, anyway. I don't have to do much maintenance, other than oil changes--I never even wear out the tires. And I don't really worry about it. If I owned it, I would always be worried about things like having a fresh coat of wax on it, but because it's leased, I really don't care if it rusts out, in five years.
I'm always driving a new--or fairly new--car, for what works out to be about $3,000 per year. (Or, I could buy a brand new car that would be worth $2,000 less, the moment I drove it off the lot.) For me, that works. But I wouldn't do it, if I drove a lot, or if I drove only 2,000 miles in three years.
One further bit of advice. The car dealers generally know what they're doing. Very rarely will the payoff figure on a leased vehicle be less than the Blue Book value. If it's close to book value, and you really like the car and want to keep it, then consider buying it. Otherwise, you're better off just turning it in and getting something else.
Thanks so much HLers for your great suggestions. I think I am going to make a trip soon to my bank for a start and see what they can do for me. I have already met with the Kia dealer that I leased the car from and have options on paper(guesstimates) he gave me to either turn in the car end of August or buy it.
My financing was directly thru Kia - I paid online and was always able to see what the payoff amount was if I wanted to buy it after the lease expired or at any point during the lease term. I went to Sussex Kia because my original salesperson from Mount Olive Kia was working there. Not only did they not discuss the fees associated with buying out the lease, they overcharged me by almost $1000.00. At the time, Hackettstown Hyundai was owned by the same person and the General Manager worked out of both locations. We went to Hackettstown Hyundai to talk to him and he tried to tell me that everything was right with the bill of sale - when I showed him my calculations he changed his tune and said - I see they charged you double tax. He did adjust it but I don't believe it was a mistake - they just didn't expect me to catch it. He was also the one that said if I did the buy out directly thru Kia Financing that I would still receive invoices for the fees - he told me Kia Financing was lying to me that there would be no fees - he was the liar - again - went to my own bank - got a great rate - they paid Kia Financing directly and all I had to pay was the motor vehicle fees to transfer the title. It was as simple as that. Even though Hackettstown Hyundai is not the same owner as Sussex Kia I believe the General Manager is still with Hyundai. Sussex was no better - like I said - I believe they knowingly over charged me and thought they would get away with it. I also went to Mount Olive Kia first and they tried to tell me that the bank was requiring me to purchase the extended warranty on the car in order to get the loan to buy it out because of the high mileage - another lie - I didn't believe that one for a second and he backed off when I called him out on it. I don't know why there is such bs when dealing with car dealerships - we had a great experience when we actually leased the cars from Mount Olive - the manager at the time was a good guy but he is no longer there and after the experiences we had at the end of the lease I would never go back to any of these dealerships.
I did not even bother to read the other responses in this thread simply because as soon as I saw- " $3,000 or more when I signed the lease" plus $159 a month, for 3 years and drove less than 2,000 miles.... you made a bad choice and were taken advantage of.
If you are not driving more than 55 miles a month, you have NO need for anything other than a 2-3k used car.
Heck, if you lived down the street from me I would let you use my car for free!!
Figure your monthly payment of $159, + (at least) 3k downpayment... not counting any other fees I am sure--- you are at $4.36 a mile without insurance, gas, tires, etc- call a cab or uber!!!
If I did not know that "Josh" was not my husband's screenname here on Hackettstown Life Forum...I would swear your post was from him.....Lol!!
OP, you do not really want to finance a Kia. While they're decent cars, they do NOT hold their value. You will be upside down and owe a lot more than what it is worth if you ever try to sell it down the road.
Keep in mind when you lease, you can always purchase the vehicle really at any time during the lease or at the end. So if you end up wanting to own it you could. Its usually cheaper to finance directly from the beginning vs buying out a lease but buying out a lease will allow you to extend the length of the loan as well. (which isn't usually a good thing to do but if you need lower payments, its a way to do it)
If you were going to finance stick with a different brand Toyota, Honda etc.
Example using KBB.com
2015 Kia Forte LX Sedan 4D
trade in value
$6,818 - $7,803
2015 Honda Civic LX Sedan 4D
trade in value
$9,528 - $10,645
Thanks Sunshine64 ....After weighing all options and suggestions from other HLers and friends...we made the decision to go to our bank and see what they had to say about all of this. I had already made up my mind I was not leasing again. Mostly because it was the first time I ever leased and felt after three years that everything that I put down...(over $4,000) and the $159 payments for 3 years was really money down the drain (well, almost). I am going to buy the car through the bank...they are handling everything. Thanks to everyone for all of your input...
Leasing cost us 3x as much to insure.Check out your car insurance rate quotes first!!!
I have an elderly, but in good health friend. She does minimal driving, but is concerned about mechanical failures while on the road. She currently has a 10 year old vehical and has limited income. I suggested leasing, which she is open to. But her concern is if she were to pass away before the lease is up, will her family or estate be responsible to satisfy the terms of the lease? Does anyone know the answer to this?
@ Parental Unit. As far as I know...you have to fulfull the obligations of your contract when you lease. I had two more payments left on a 3 year lease and they are included that amount in the purchase price of the vehicle as I am buying the car before the lease time is up and did not complete the payments for the time period stipulated in the lease..I will never lease again...
Your welcome Joyful. Glad it worked out for you.
Parental Unit, you can purchase credit life insurance, as Jdem suggested. You can also inquire at the auto dealer, as to whether such insurance is included in the lease agreement. As far as I know, there is usually an included insurance fee, that will guarantee that the lease is paid off, in the event the car is totaled in a collision, but it may also include life insurance and/or an option to purchase it directly through the dealer.
Thank you for all the replies and info. I guess she will have to ask these questions to the dealer if she decides to persue this route. She doesn't want to make things any more difficult for her children than necessary. I personally never wanted to lease. But I thought for her with limited funds, it might have been an option.
At the end of buying a car - you own a car.
At the end of leasing a car - you own nothing.
I like to own the vehicle when I pay it off. That's when the honeymoon starts.
If the honeymoon starts 3-4 years later, why not just buy a 3-4 year old car? You take a big hit in depreciation those first couple of years. Lots of good bargains out there when the car companies gave aggressive leases where the buyout isn't attractive.
Leases often get tied together with new cars. There's no reason why you can't lease a used car. Buying isn't always so great when you figure you tied up $30-40k on a new car for the same time period your lease might tie up $8-9k. If you don't have that cash and credit is at a premium, it can be a good deal. But a lease requires good planning. It's based on depreciation and usage. If you don't have a good handle on your mileage it can be a disaster in either direction. Use too little and you paid way too much. Use too many and there is a big hit on overage. (kind of like guessing wrong on a cell phone bill - minutes on your contract are cheap, minutes over cost double or more)
New cars aren't always a good idea. Even if you need reliability, the good cars still have it after a few years. But they don't have the huge depreciation loss. You have to pick wisely because not all cars have that reliability. It's all a matter of how well educated you are about the whole process and what your goals are.
Can you re-lease the same car after the original lease is up? I don't see that option in the paperwork.
When I've had a lease the options that come in the expiration later have always said that. It's not part of the original lease because you would never sign that. The amount of the depreciation is all different and you would never pay the same monthly payment on the older car. So you just have to negotiate a completely new lease with different terms. You can also go into most dealerships and they have any number of cars turned in off the first lease that they will lease to you.
Lots of posters are thinking about this the wrong way. Almost everyone “leases” whether they know it or not.
If you buy a $30,000 car, drive it for 8 years and sell it for $10,000 you “leased” the car for 8 years. It cost you $20,000 over 8 years or $200 per month to “own” that car.
"Almost everyone “leases” whether they know it or not." -Consigliere
So who doesn't lease then if it is "almost everyone" who does?
Consigliere, that's more of a "mortgage" than a lease. A lease is a specific type of contract situation that does not fit the scenario you provided. The fact that you are allowed to "sell" the property at the end is pretty much the exact opposite of a lease.
I think his point was total cost of ownership and it can end up more expensive in the end
Ianimal, I’m using the term lease like rent. Unless you use all of the vehicles life, and you only use a potion, you’re paying for that portion.
Joe Friday, the person who buys the car new and drives it until the cost of repair outweighs the value of the car.
So, you're saying that no one actually buys a house unless they keep it until it falls down? If they sell it at any point before that, then they were only renting it?
Sounds like an argument that sounded good in your head when you were tripping on acid. You should go back and listen to the tape again (-;
Ian, I’m tripping on acid? You got the wrong guy. And you’re so tied to your house/mortgage idea that you can’t hear what I’m saying.
Cars are depreciating assets. Houses/property are investments. If I buy a typical home and stay in it for 15 years, the house will most likely be worth more money because it’s value increased with inflation. Show me a 15 year old car that was driven daily that is worth the same or more than it was when it was purchased. You lose money with any car you daily. Whether you spend that money buying new, buying used or leasing, you’re paying per mile to drive that car. If you sell the car, turn it back in or give it away, you only payed for the period that you drove the car.
A house isn't a depreciating asset? It might have a life cycle far longer than that of a car, but I can assure you that they all eventually get to zero.
Houses are depreciating assets. Ultimately, it's the land quality and location (and/or capital improvements, which cost money) that increase the value. (That and the increasing population driving up demand.)
In addition, some cars are worth far more, now, than they were when purchased years ago.
Ultimately, whether you buy or lease a car depends on your own usage, economics, and overall happiness. As Aristotle noted, many centuries ago, in the end, all we really want is to be happy. So if you balance out all of the dollars and cents, even if it is financially more advantageous to (for example) buy a car versus leasing one, if the convenience of leasing makes you happier, and you can afford it, then it may be worth it to you.
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