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Your reasoning for lease vs buy

37K views 66 replies 33 participants last post by  VoltoBolt 
#1 · (Edited)
Here's what went though my head when I bought

  • Lease to buy makes no sense to me, if I don't want to buy it now why would I want the hassle and cost of leasing only to do it in three years
  • I really want to capture the full rebates where leasing usually gives you part of that AFAIK
  • In three years most of the leases will be gone (certainly the Chevy will exhaust the Federal rebate), but I'll be needing another BEV, now sans lease (in this sense the rebates continue to pay back into the future when you buy)
  • In three years the technology won't be changing that much, except possibly for self driving which I don't care that much about with my driving needs*
  • Having a lease ties me to the dealership and limits my freedom, both which I hate
  • Having a lease just kicks the can down the road, buying a car is a pain, I don't want to have to do it again in a few years
  • Any way you cut it, leasing costs more than buying. I refuse to believe when people decipher their complicated contract to claim that the leasing company is going to hand them money, and knows less about finance than we do
  • There's no sense ownership - I'm proud to own a Bolt and baby it
  • You can't mod it, I've been doing stock mods left and right

* The most common reason I hear to lease is because EV's are changing so fast - except they aren't. Analysts believe (and I agree) that the Bolt level of specifications (200+ miles LiIon + electronics) will be the standard for many years. Battery chemistry doesn't progress by leaps and bounds.

Having said all this, it is just my personal reasons. I fully believe there are good personal reasons to lease too.
 
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#2 · (Edited)
It all depends on the individual . Now for me I like having a new car every 2 - 3 years . In 2004 I started with the Toyota Prius and had 5 ending with a 2012 . Then I went for a 2015 Nissan Leaf
in sept 2014 , traded in the 2012 Prius got $20,000 for trade plus at that time I got the Georgia $6000 tax rebate and the fed 7500 rebate and the Nissan leaf cost me $15000 after dealing . BTW my 2012 Prius was a model 5 with the adaptive cruise and heads up display and cost $36000
I noticed the sticker at the time was $39000 for a 15 SL model with the 360 camera . Then comes 2017 and I check to see what my Nissan leaf is worth and its only $10000 and I only had 10k miles on it . That's when I decided to lease and got a Premier bolt for $270/month no down payment and my leaf for trade in for 36 month lease ( at least this way it also gets me to keep the car for 3 yrs ), of course after 3 yrs I will have a more expensive lease to deal with . And I would have gone with a 2018 Leaf if only it had a 60kwh battery come January cause I did sit in one and it just
felt like more luxury and not so much plastic . That's my 2 cents anyway .
 
#3 ·
Buying and Leasing are both great decisions on the Bolt depending on where you live. The reason I bought is the car in my area in California will cost me under $25,000, so the depreciation I will suffer will not be the same as the typical consumer. The other reason I HAD to buy is that I am over 15,000 miles in about 7 months. I will be putting over 25,000 miles a year on my Bolt. The mileage cost would be insane!

I think people are unfairly comparing the Bolt to the Leaf for depreciation. That simply will not happen. The new Leaf that will compare to the Bolt won't be available for a few years with a 60 kWh battery. To purchase a Model 3 will take years as well. It wouldn't surprise me to see the Bolt keep a higher percentage of its purchase value than people expect when people turn in their leases 3 years from now. The Bolt will be the only EV available on the used market at that time with a range over 200 miles.
 
#4 ·
I have leased various cars for a number of years. Even though I negotiate a low price compared to the MSRP, lease residuals are computed as a percentage fo the MSRP, not the price you negotiated. As a result, it is the rare vehicle that is worth anywhere close to the residual value (at wholesale). In fact they rarely approach the KBB trade-in-value because dealers rarely pay "book" and usually expect to pay at least $300 to $500 back-of-book. Leasing companies will not sell you the vehicle for less than the lease residual even though they will take a bigger loss selling it at auction or to a dealer as they don't want to acknowledge that the car is worth less. Maybe the manufacturer has helped them cover this loss via a payment of some type. Excess milage or under milage (either one) plus the turn in charge of around $500 helps them defray this loss.

For those that aren't aware, the lease payment is made up to two components, the cost of the funds (interest rate) and depreciation. One of the ways a manufacturer subsidizes a lease is to authorize a residual that is higher than the actual residual value would be at the end of the lease. This reduces the residual component of the payment. If you buy for the residual at the end of the lease you will have substantially overpaid for the car unless it is the rare exception that held value at or above the value used in the lease calculation. If the actual residual value is 50% of the purchase price and they use 60% of MSRP and you buy at the residual at lease end you will have overpaid substantially. Example (not exact actual prices): The Bolt MSRP is shown as $43,000, so residual at 60% at the end of 36 months is: $25,800. You actually negotiated a price of $39,000 and the actual residual is 50% of purchase price:$19,500. You would have overpaid $6,300! This is what the leasing company hopes you will do or in the alternative, roll it into a new lease on a new car where they will waive the turn in fee and any excess milage to keep you on the hook.

I have always looked at leases a renting the use of the vehicle for a fixed period of time and cost thus allowing me to enjoy a new car periodically (every three years) and not having to worry about maintenance costs (other than standard oil changes) while I had the vehicle and recognizing I was paying a premium for this privilege. Because I was not building any equity my monthly costs were lower. I know some people on this forum have managed to select a car that was worth more at lease end but that is either because they overpaid along the way or up front or somehow managed to select a vehicle whose demand exceeded availability (very very rare). The leasing companies and the dealers are in the business to make money and it is very rare that they will leave money on the table. They wouldn't stay in business long if they did.
 
#9 ·
I have always looked at leases a renting the use of the vehicle for a fixed period of time and cost thus allowing me to enjoy a new car periodically (every three years) and not having to worry about maintenance costs (other than standard oil changes) while I had the vehicle and recognizing I was paying a premium for this privilege. Because I was not building any equity my monthly costs were lower. I know some people on this forum have managed to select a car that was worth more at lease end but that is either because they overpaid along the way or up front or somehow managed to select a vehicle whose demand exceeded availability (very very rare). The leasing companies and the dealers are in the business to make money and it is very rare that they will leave money on the table. They wouldn't stay in business long if they did.
Great explanation, thanks, that fits perfectly with what I thought was the case.

I love the story of Steve Jobs. He didn't want to have license plates and you have a six month grace in California (or did, I think I heard that's changing). Anyhow so what he did was set up a deal with the dealiership where he got a new leased Mercedes every six months and thus never had to have plates. Probably cost a fortune but who cares. I sometimes wonder if it was the continual new car smell that made him sick.
 
#7 ·
That's when I decided to lease and got a Premier bolt for $270/month no down payment
We'd have leased if that deal had been available to us. We decided not to lease because both the GM website and the dealer wanted $4000 down and $400 a month. It would equal more than $500 a month. They obviously did not want to encourage leasing at that time.

jack vines
 
#8 ·
Leasing makes sense when: 1) you fear that technology advances will make your purchase lose more value than you had hoped/planned for; and, 2) when the asset is tax deductible (business acquisition for a principal) and you wish to expense the "cost" yearly and not bother with depreciation tables/formulas and carry a "basis" down the road.

I bought.
 
#10 ·
Personally, since I drive a lot and keep my cars for an extended time, I'm going with buy.
This gets rid of the worry about mileage restrictions. Also, the Ontario government is giving $14k incentive. So definitely worth a buy at 14k off with the dealers here absorbing the incentive up front.
I'm thinking in a few years the rebates will decrease and perhaps eventually disappear as more EVs come to the market and ultimately the prices will come down anyway.
 
#20 ·
i live in arizona and would like an example of an actual lease someone has got in Arzona. don't need you to reveal Dealer just wanting to know what my possibilities are. thanks
I found it hard (impossible) to get an example lease from a dealer or anybody. It gets vague pretty quick for whatever reason. I have a thing where I can't do any financial transaction or investment where I don't completely understand it, and I'm not ever able to get enough details about leasing, so that was another problem for me. But I know lots of people seemingly happen in their lease too, so it works for them.
 
#23 ·
I was the same (and still am for the car and house), but after having bought hundreds of DVDs over a couple of decades and discovering that I've only re-watched a tiny handful of them, this old dog is starting to learn some new tricks. I've even bought a couple of Kindle books! :eek:
 
#22 ·
As for me, with these lease deals in California, per my estimation, my total payments over 3 years will be far less than the actual depreciation of the car after 3 years if I was to buy. Of course, no one knows the future for sure but it's a cheap way to get carpool lane access for another 3 years. (Had a Leaf for 3 years prior)
 
#25 ·
Car leases aren't really that complicated; they're just couched in unfamiliar language.
True, that. Car leases also can and do vary far more widely and quickly than the purchase price. If a manufacturer needs to move inventory, the lease cost plummets. This avoids "discounting the brand." If they dropped the retail price by an equivalent amount, it would be seen as cheapening the perceived value of the product. That the lease is so opaque, it can be lowered and raised on a moment's notice without ever changing the MSRP.

jack vines
 
#26 ·
;)Coming from a Prius Plug In and BMW i3, I wanted another EV. I paid too much for my 2012 Plug In, even with a large discount. Ten miles EV, but a great hybrid, still have it. I learned my lesson when I leased my BMW i3 BEV, eighty mile range, outdated, easy return. Bye BMW i3, hello Bolt. I plan to use it, enjoy it, but return after thirty six months. Lease fixed cost versus EV depreciation three years from now? I decided leasing was my best option. I could use my Prius as my daily driver, but good transportation is a cost of life and I'm willing to spend for new technology and excitement.
 
#29 ·
Considering the fact that only GM is planing on introducing another 20 EV vehicles by 2023, I consider lease a way to go as well (again keeping amount of miles in mind). To each his own though, so no rite or wrong here, just preference. Either way with extreme exceptions, the car is a depreciating asset.
So what is your monthly lease and how much down?

jack vines
As far as lease cost, I believe you can lease a base LT with 10k a year and no down payment for ~ $270 in So Cal right now. More than I am willing to pay at the moment, so willing to wait and risk not getting the Bolt this time round.
You don't want to put money down on the lease anyway for various reasons, just trust me you don't :)
 
#28 ·
;)Actually, I got a lease deal that a Tesla Model S P100D leasee would kill for.
 
#30 ·
I like to own my cars and not be tied to any contracts. I've known many people that
had leases and they've all been over the mileage limits. Some have managed an early
out by leasing another one, but it's just borrowing time.

I like being able to sell my cars when, I feel it time for a change and not be stuck with
something I don't want to drive anymore. It's simple..... A lease is good for a business.
They can write it off and swap em out at the end of the term or buy it then.

A lease for me would take all the pride of ownership and flush it down the toilet. The car
would be nothing more than an appliance and lose all the personal connection with me.
 
#32 ·
1. If the car gets totaled then your insurance will pay off the the lease but you won't get your down payment back. So if you put $5K down and total the car driving off the lot then you are out $5K.
2. Interest rates are low (<2% APR). If you have good credit then you can invest your down payment money and get a better return than the interest rate on the lease. Or you can apply it to a higher APR loan to get better use out of your money.

That isn't to say putting money down is never a good idea. But the down payment is one way that dealers obscure the actual amount of money you'll pay and make it hard to compare leases between dealerships. So be sure to run the numbers against what a 0 down lease would be.
 
#35 ·
sorry to muck up your thread, but a quick question.

I live in arizona i am looking for the best lease possible. don't need to know the benefit/disadvantages of leasing vs buying just the best lease possible here. in arizona
examples would be helpful and specifics would be nice.

thanks in advance
 
#38 · (Edited)
I do not like leasing and, prior to leasing my Bolt, I had always owned cars outright. But, for those who want the short version, I pictured the Bolt as paying for a service rather than gaining ownership.

Lease benefits (in my book): No worry about depreciation. Not locked-in, beyond the lease, to this version of technology. Didn't want to get much money tied into this car. Beyond avoiding major damage I'd be responsible for at lease end, completely detached from any concern for the car's wear and tear.

Now to get more verbose:

My logic was always pretty simple (and applies to more than just vehicles). If I have the money, why borrow it from someone else and pay them for the privilege. But, my logic was also associated to purchasing vehicles I couldn't lease, such as a second hand car, or that I knew I wanted to own for many years and would be putting little mileage on (under 3k/yr). Mind you, I'm also very meticulous in taking care of my vehicles and put a great deal of importance in doing everything I can to help them retain value.

With the Bolt I applied different logic. I needed an actual commuter car, that I didn't care to rack-up miles on or worry about depreciation because of driving more or less. Also, at this juncture, with the developments in the EV field and potential for scary post-warranty bills, I can not say I will still want to own my Bolt after the 3 year lease is up. Just think of all the vehicles that will be available. Model 3, Porsche Mission-E, Volvo going 100% zero emission. There will be great options to choose from then, at every budget level, that we do not have now! Basically, I picture leasing this car as paying for a service rather than gaining ownership.

I've been enjoying my first month of ownership very much. The car does good and I'm happy we got it. However, I'm disappointed in the interior quality. It's VERY chevy. Hard plastics everywhere and some pieces of the dashboard (left side next to the side window) already detaching. Not sure it'll look super pretty three years from now. Just confirms I'm happy to have gone with a lease.
 
#39 ·
I leased because there will be rapid progress in EV land in the next 3 years - which is likely to accelerate deprecation of the "used EV" market and older EV's will have both aged and have less features/capabilities than new EV's - let's be honest there is rarely a big difference between a 2014 car vs. a 2018 car - but there will be a big difference between a 2017 Bolt and a 2021 VW eGolf+++ - in terms of drive train, battery, and general tech included with the car...

I want to insulate myself from potential downside on the depreciation due to rapid progress in EV tech. Worse case there isn't progress and I only paid slightly more than owning the car outright and can buy my existing car or a slightly newer model for very little out of pocket delta from actual ownership.
 
#40 ·
I leased because there will be rapid progress in EV land in the next 3 years - which is likely to accelerate deprecation of the "used EV" market and older EV's will have both aged and have less features/capabilities than new EV's...
I'm not entirely convinced that this is true. If you look at the history of the first generation Leaf there have been only relatively small incremental improvements in range and cost and virtually no improvements in features. I think it's quite possible that GM has upped the ante with the Bolt and, while the other manufacturers struggle to get into the same league, that we may be in for another 3 to 5 year period of relatively modest improvements.

I hear things about Toyota and a new battery, but I'm inclined to discount that news until I see something a little more concrete. I've seen so many "amazing new battery!" stories over the past 5 years that I've become pretty inured to them.

I suspect that the largest innovations over the next few years are going to come in the form of features and software, including improved phone connectivity (wireless Android Auto / Car Play), increasing automation features, added value by rolling out software feature improvements to existing cars, etc. Those kinds of changes are more about convenience that what the car's basic parameters (range, cost and power consumption) are.
 
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