With rates so high…lease or purchase?

[amm24dmb]

I have about 9K in positive equity in my current vehicle so I’m debating a used 2020 with 43K miles for $39,500 or buying/leasing a new one. If I lease that 9K is gone in 3 years if I put it all down. I could put some down and save the rest. If I buy new, even if I put all 9K into it plus some more cash I’m still left with a big car note. Thoughts? Trying to be smart here, but definitely want to unload our current vehicle as we’re concerned about reliability (2018 Durango GT that has been giving us some issues.) Thanks!

 

[chopperman1]

Lease has the same interest rate baked in that a purchase does. A purchase can be refinanced when/if rates go down, a lease cannot. You build no equity with a lease, purchase you do. Trading in a purchased vehicle yields tax credit, leases do not.

 

[TestPilot57]

Lease has the same interest rate baked in that a purchase does. A purchase can be refinanced when/if rates go down, a lease cannot.

Well, except that you CAN buy out a lease when it's up, and then essentially re-finance at the then-current rates.

That said, I would not normally lease myself (only done it once) nor suggest it. What they are best for is people that 1) know how many miles they will drive, 2) can't or don't want to put $$ down, and 3) just want a fixed cost for their automobile.

 

[Tulecreeper]

Well, except that you CAN buy out a lease when it's up, and then essentially re-finance at the then-current rates.

That said, I would not normally lease myself (only done it once) nor suggest it. What they are best for is people that 1) know how many miles they will drive, 2) can't or don't want to put $$ down, and 3) just want a fixed cost for their automobile.

While I agree wholeheartedly about the leasing, you can always pay off a financed vehicle at anytime also. I picked up my truck in March, made 5 double payments on it, then I decided I didn't want to do that anymore so I bit the bullet paid it off last week. It hurt, but no more payments.

 

[platoon2063]

Check the Ram website. I think they still have 2.9apr going on new 1500's.

 

[rvance]

Neither. Keep.

 

[GeoffG68]

I have about 9K in positive equity in my current vehicle so I’m debating a used 2020 with 43K miles for $39,500 or buying/leasing a new one. If I lease that 9K is gone in 3 years if I put it all down. I could put some down and save the rest. If I buy new, even if I put all 9K into it plus some more cash I’m still left with a big car note. Thoughts? Trying to be smart here, but definitely want to unload our current vehicle as we’re concerned about reliability (2018 Durango GT that has been giving us some issues.) Thanks!

It is almost always less expensive to fix what you have than it is to buy another vehicle unless it's rusted and basically junk. Right now I would hold off on vehicle purchases until the interest rates come back down to earth and the market settles a bit. Although I suspect you just *want* a truck. Nothing wrong with that, but they're inherently expensive both to purchase, maintain and operate. If it was me, I'd purchase the used vehicle and enjoy the fact that someone else took the losses in depreciation.

The best thing to do is decide up front the total amount you want to spend, interest, taxes and fees included, and then shop for the vehicle that fits into that price. Don't buy based on a payment per month; it's the way you wind up spending much more money in the longer term. Use a payment calculator at your bank or credit union's website to figure out how much the monthly payment would be, and then go from there.

 

[Capt Derek]

I have about 9K in positive equity in my current vehicle so I’m debating a used 2020 with 43K miles for $39,500 or buying/leasing a new one. If I lease that 9K is gone in 3 years if I put it all down. I could put some down and save the rest. If I buy new, even if I put all 9K into it plus some more cash I’m still left with a big car note. Thoughts? Trying to be smart here, but definitely want to unload our current vehicle as we’re concerned about reliability (2018 Durango GT that has been giving us some issues.) Thanks!

 

[Capt Derek]

I personally never have leased, when I bought my first new vehicle a lot of years ago, the dealership pushed the lease option really hard, I assumed then, as I do now, that anything the dealer pushes so hard is always a money maker for them , and a money loser for the customer.

 

[GeoffG68]

I personally never have leased, when I bought my first new vehicle a lot of years ago, the dealership pushed the lease option really hard, I assumed then, as I do now, that anything the dealer pushes so hard is always a money maker for them , and a money loser for the customer.

Leases are usually calculated based on MSRP, whereas for a direct purchase the selling price is usually negotiated. The dealer doesn't care how you finance the truck, he just wants every cent he can get, and most people don't know they have the right to try to negotiate the selling price even on a lease. If the dealer won't play along, then they can decide if the deal is still for them or not.

 

[CrispyBacon]

Unless you own your own company and need to write it off, there is absolutely no reason to ever ever ever lease a car.

Lease is just a fancy word for rent. You'll never get a better deal leasing than financing, regardless of the sales pitch.

 

[TestPilot57]

Unless you own your own company and need to write it off, there is absolutely no reason to ever ever ever lease a car.

Lease is just a fancy word for rent. You'll never get a better deal leasing than financing, regardless of the sales pitch.

I would accept that generally, it is so. However, sometimes certain companies have been blind-sided with certain models that are not selling well, and they "limit their losses" by "paying for it" by offering abnormal leases.

Bottom line is "never say never".

 

[Docwagon1776]

I would accept that generally, it is so. However, sometimes certain companies have been blind-sided with certain models that are not selling well, and they "limit their losses" by "paying for it" by offering abnormal leases.

Bottom line is "never say never".

True. We leased my wife's current car for 13 months and then paid it off. It was right at $1k cheaper to do so than paying cash for it at time of purchase due to lease incentives available that weren't available on purchases at the time.

That said, I doubt there's any such deals on a Ram at the moment. If the OP *needs* a new truck I'd suggest purchasing is the right idea. If it can be pushed back, keep what you have and start increasing your cash reserves. You can get to the point that 'current rates' don't matter since you can just write a check and avoid the debt treadmill. I drove a 1975 beater for a couple years to help get there circa 2010. Then bought my 2012, paid it off in less than 2 years. Bought my wife's 2015, paid it off in 13 months (and, as mentioned, could have paid cash up front) For my current truck, I saved for 5 years then just wrote a check. We've got about $45k in our 'next vehicle' fund now, and will probably replace my wife's car in 3 years or so if Bronco availability ever gets sorted.

 

[roadrnnr]

Lease has the same interest rate baked in that a purchase does. A purchase can be refinanced when/if rates go down, a lease cannot. You build no equity with a lease, purchase you do. Trading in a purchased vehicle yields tax credit, leases do not.

No equity with a lease is not true. I turned in my 2018 Challenger about 7 months early and the sale wiped out about $2400 in left payments.
I just traded in another lease 9 months early and had $1500 in equity.
The second one was leased with me paying Nothing down, Taxes fees and reg all in payment.
I walked out the door with only paying first month Lease Payment.
If you negotiate right and know the Numbers they are using you can make out with a lease more often than not

 

[TestPilot57]

If you negotiate right and know the Numbers they are using you can make out with a lease more often than not

Mostly depends on interest rate, plus agreed beginning "value" and ending "value". And, of course, number of miles actually driven based on the above...

 

[jtroxler82]

I have about 9K in positive equity in my current vehicle so I’m debating a used 2020 with 43K miles for $39,500 or buying/leasing a new one. If I lease that 9K is gone in 3 years if I put it all down. I could put some down and save the rest. If I buy new, even if I put all 9K into it plus some more cash I’m still left with a big car note. Thoughts? Trying to be smart here, but definitely want to unload our current vehicle as we’re concerned about reliability (2018 Durango GT that has been giving us some issues.) Thanks!

So I’m a finance mgr for a car dealership to give you some background about myself. Money factors on leases right now are not very attractive. Used car prices are still high so I’d go new personally. Right now is not the ideal time to buy in my opinion but if you have to my advice is to look new and see who’s willing to cut you a good deal first. You can still find rates in the 5% range upto 72mo if you do you research and have tier 1 credit. You can always refinance if rates go down next year after the presidential elections.

 

[frankherche]

Ram is offering 2.9% for 72 months. That is a good rate.

 

[Sandevino]

Ram is offering 2.9% for 72 months. That is a good rate.

I took this deal last week along with 22% off of aged inventory.

 

[roadrnnr]

Unless you own your own company and need to write it off, there is absolutely no reason to ever ever ever lease a car.

Lease is just a fancy word for rent. You'll never get a better deal leasing than financing, regardless of the sales pitch.

Absolutely not true. Guessing you don't understand leasing vs buying. Is it better in all circumstances, NO but you can negotiate with a lease just like a Buy. I just ran my most recent purchase both ways down to the dollar and the difference was less than $300 buying vs lease. But money put out to purchased invested elsewhere made Leasing alot more sense on this vehicle.

 

[1stindoor]

Another thing to consider is whether or not the finance company that owns the lease will let you sell it at its current value, or what they decide the value is. We leased one vehicle, my wife's Grand Cherokee Overland edition. My wife rarely puts 10k miles a year on her vehicles (we take my truck everywhere) and we negotiated a good price on her trade in (a Mercedes C300). Her GJ had all the options. After COVID hit used car prices went through the roof, and we "owed" about $27k on her GJ. KBB and two other dealerships offered us more than $35k at the time. When we finally were ready to trade it in, turned out the bank said her car was worth $35K, and therefore we had no equity in it. We ended up buying the lease outright (paid off the roughly $27k), then turned around and traded it for a new Volvo. They gave us $34k. The sold it two months later for $36k. Win/Win/Win.

We'll never lease again. While it was a little less expensive, it wasn't the right move for us. All of her other cars have always held their value because she babies them, and has low mileage. In comparison, I normally put about 20-25k miles on my truck a year. A lease would never work for me.