Purchase or Lease

[MadMan4BamaNATL]

If your options are: lease vs 10-15% down at 5% interest on a 60-72 month loan then it really doesn't matter all that much. You'll pay a few thousand extras on the lease if you keep it. The problem with leases is that if you compare them to putting say 20-30% down at 2-3% APR you end up paying many thousands more to keep the vehicle.

To be honest, there is a sizable population of people who like new cars and can afford to blow the cash having a never-ending car payment. There is also a sizable population of people who are stretching themselves for the Bronco; for them, a 3-yr lease offers an easy out if they find themselves in a pickle down the road. They also save the up-front down payment money to put into savings or debt or whatever.

Leases aren't the devil; just his little buddy.

This is just my opinion as an Economist for an investment bank, so take as far as you feel comfortable.

Leasing is smart money if you need to limit debt or debt to income ratio. My take is to never put any money down on a lease due to risk. If a leased vehicle gets totaled you'll lose a good portion of whatever you put down given normal depreciation and at what point in the lease did the total loss occur; worse if early in lease.

I also believe there isn't a "no car payment" situation in budgeting. Sure if you live in Manhattan and take public trans, trains, ride sharing; sure.

For most people, you'll need a vehicle and right now, used vehicles are dealing with massive amounts of inflation. So, even when a car is paid off, you should take care to not live off the savings and view that money exactly as "savings" meaning that you don't begin spending that money to live. What do you do with that money? Save it! You'll need it for your next vehicle.

Any car that is paid for and over 6 years old is one simple accident away from being totaled. If you save the same amount (or close to it) from your paid off vehicle, you'll have a nice down payment and a level of liquidity.

If you're income rises like most professionals annually, then you can adjust budgets to allow for some cushion from not having a car payment for a little while or a few years if lucky.

Leases are also for those with credit ratings that are above 720 to get the most favorable deals.

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[JPOPS5]

If they offer a zero down or first month payment lease I'd be interested however the lease listed on the B&P requires 10% down payment. I would have a very hard time coughing up $5k for something I'm going to give up in a few years.

This is just my opinion as an Economist for an investment bank, so take as far as you feel comfortable.

Leasing is smart money if you need to limit debt or debt to income ratio. My take is to never put any money down on a lease due to risk. If a leased vehicle gets totaled you'll lose a good portion of whatever you put down given normal depreciation and at what point in the lease did the total loss occur; worse if early in lease.

I also believe there isn't a "no car payment" situation in budgeting. Sure if you live in Manhattan and take public trans, trains, ride sharing; sure.

For most people, you'll need a vehicle and right now, used vehicles are dealing with massive amounts of inflation. So, even when a car is paid off, you should take care to not live off the savings and view that money exactly as "savings" meaning that you don't begin spending that money to live. What do you do with that money? Save it! You'll need it for your next vehicle.

Any car that is paid for and over 6 years old is one simple accident away from being totaled. If you save the same amount (or close to it) from your paid off vehicle, you'll have a nice down payment and a level of liquidity.

If you're income rises like most professionals annually, then you can adjust budgets to allow for some cushion from not having a car payment for a little while or a few years if lucky.

Leases are also for those with credit ratings that are above 720 to get the most favorable deals.

I've never leased but am considering it now. I'd definitely prefer to put nothing down as suggested by MadMan. The B/P tool let me adjust it to any amount, including 0 so I was under the impression I could choose how much to put down up front. Is this a bad assumption?

 

[OvrLnd99]

I've never leased but am considering it now. I'd definitely prefer to put nothing down as suggested by MadMan. The B/P tool let me adjust it to any amount, including 0 so I was under the impression I could choose how much to put down up front. Is this a bad assumption?

You do NOT have to put money down on a lease. Just because the calculator defaults to 10% does not mean it is required. You should really never put money down on a lease, or very little. The only time I have ever put money down on a lease was when I special ordered the vehicle or they had to go a far distance to get it, and then it was only $500.

 

[MadMan4BamaNATL]

I've never leased but am considering it now. I'd definitely prefer to put nothing down as suggested by MadMan. The B/P tool let me adjust it to any amount, including 0 so I was under the impression I could choose how much to put down up front. Is this a bad assumption?

Happy to hear this has opened your considerations to more options, so continue your research on which will work best for you.

As for an ordered vehicle, any dealership of any manufacturer will make you put some skin in the game with money down.

Whether leasing or purchasing, I've always put down $1000 when ordering my cars. That's not enough money for me to care about, but there was a time when it would have been. If you're at that point in your career, see if they'll take less like $500 to order, even when leasing.

Good luck to you!

 

[MadMan4BamaNATL]

You do NOT have to put money down on a lease. Just because the calculator defaults to 10% does not mean it is required. You should really never put money down on a lease, or very little. The only time I have ever put money down on a lease was when I special ordered the vehicle or they had to go a far distance to get it, and then it was only $500.

My bad for stepping on your post, didn't read it until I'd posted my reply to him.

Our posts confirm one another in our philosophy on leasing.

 

[BadlandsBronc21]

I will be buying it

 

[mattrb87]

The residuals on base and Big Bend are really high ( assuming it’s the same at deal time) and you can max a squatched BB at a pretty nice monthly payment. Base even better.

I plan to lease mine and I ordered an upgraded big bend, almost equal to the Wildtrak, but that projected higher residual looks to work in my favor going with the lower trim. I was debating a few days ago about just updating to the Wildtrak but I will stay right where I am. Hopefully in a few years when my lease is up, Ford will have the white interior as an option...among other things they keep showing that no one can get

 

[mattrb87]

This is just my opinion as an Economist for an investment bank, so take as far as you feel comfortable.

Leasing is smart money if you need to limit debt or debt to income ratio. My take is to never put any money down on a lease due to risk. If a leased vehicle gets totaled you'll lose a good portion of whatever you put down given normal depreciation and at what point in the lease did the total loss occur; worse if early in lease.

I also believe there isn't a "no car payment" situation in budgeting. Sure if you live in Manhattan and take public trans, trains, ride sharing; sure.

For most people, you'll need a vehicle and right now, used vehicles are dealing with massive amounts of inflation. So, even when a car is paid off, you should take care to not live off the savings and view that money exactly as "savings" meaning that you don't begin spending that money to live. What do you do with that money? Save it! You'll need it for your next vehicle.

Any car that is paid for and over 6 years old is one simple accident away from being totaled. If you save the same amount (or close to it) from your paid off vehicle, you'll have a nice down payment and a level of liquidity.

If you're income rises like most professionals annually, then you can adjust budgets to allow for some cushion from not having a car payment for a little while or a few years if lucky.

Leases are also for those with credit ratings that are above 720 to get the most favorable deals.

This is good advice, thank you. I am going to lease my bronco and was thinking of putting a few thousand down at least to minimize the monthly payment, but like you said it’s better to keep that extra in the bank, minimize your risk and just suck up the extra in monthly payment. Still have all that money in savings to do something else with. An extra $100 monthly vs an extra few thousand in savings I will change my game plan now thanks

 

[TXshaggy]

Both leasing and financing are simply financial instruments; neither is generally good or bad, but dependent on the financial particulars.

Lease MF and residual are big levers. You also pay for mileage you may not use. Financing is easier to understand as it’s rate dependent.

There may be additional state driven considerations such as sales, use, personal property that may be different in a lease.

Figure out how long you’ll keep, use, and run the numbers.

 

[Nova]

So still trying to figure out which will be better, Leasing or Purchase. What say you all?

I'm Leasing; always have... I drive a new vehicle every 2 to 3 years. It's great

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