I'm thinking of leasing a new Honda CRV for 36 months for $269mo. With buying, the 60mo payment would be 40% more per month. Any horror stories or pitfalls I need to be aware of? I'm aware of the mileage limits on leased cars, but that doesn't concern me too much since I'll most likely buy it or trade it in for a new one at the end of the lease. I know the CRV will worth more than $15,000 California retail 3 years from now, so it looks like a good deal. My old beater is dying and not worth fixing anymore. I'm getting to old to be messing around with someone else's headache, and buying another 12yo vehicle that needs money put in it. Average mileage for 10-12yo vehicles in California is 160,000mi. It would be nice to finally have a new and trouble free vehicle that gets good gas mileage in my old age.
My issue with leasing is we always drive too many miles. Now maybe they've changed the rules, but last time I looked, you got around 12,000 miles a year before they started adding penalties. We routinely drive our cars 24,000 or more miles a year.
If that's not your style, then there are some advantages to leasing.
The mileage limitation on a lease is set at the beginning. They are available in most any yearly mileage and it is much to your benefit to estimate, to the best of your knowledge, from the beginning. The biggest problems I have seen with leases are those folks who purchase a 10,000 mile annual lease and drive 25,000. When the lease is finished, they either owe a very large penalty or if interested in buying the cost is too high compared to real value.
Those who do drive 20,000-30,000 a year are actually financially ahead rather than financing as long as they declare the miles at the start of the lease and they are calculated in the payment. Most leases have a lower cost for the miles than what actual depreciation will cost. In the case of higher miles, a shorter term of 24-30 months is advisable.
Keep in mind you are responsible for any damage to the vehicle such as dents, scratches, upholstery tears, etc. Of course you would also be responsible if you financed but many people never get them fixed.
People will tell you that you are not building equity with a lease and therefore they are financially not wise. Factually, look at an amortization chart for a sixty-month loan and you will find after making thirty-six payments you still have no equity although you are paying 40% more monthly.
Unless you plan to drive a car for more than 100,000 miles and keep it for more than 8-10 years, you will most likely be ahead with a lease from the major auto manufacturers.
I always lease cars. I like having a new car every three or so years and leasing is the cheapest way to do that. You can always add miles at the start of your lease of you think you'll drive more. Also, even if you go over miles, if you trade your Honda in for a new Honda lease at the end, they often will cover some excess miles and things like that.
2004 National Tropi-Cal T-350, Class A, Triple slide, 330 HP Cat DP. 2006 Dodge Dakota 4x4 or
2002 Harley FLSTF Fat Boy on a Trailer or
2004 Polaris Quad on the Trailer
I have never leased a vehicle and probably never will, but several years ago (almost 20) a lady I worked with had one leased and I remember her talking something about they didn't tell her she had to pay the taxes on it every year...She wasn't happy...I never ask exactly what she meant, but that always stuck with me.
Just make sure you understand the lease. The sales tax will be included in your payment (the state can't charge you tax on money you have not spent, so that is why it is done that way). Also, you should be given a figure that will be the "residual value" of the car at the end of the lease. It should be less than the actual value, and you should be permitted to purchase the car at that price - or walk away - or re-lease.