My family started the new year off with replacing our old Subaru Outback with a new, 2014 VW Jetta Sedan TDi (from the good folks at Armstrong VW).
The move was made entirely on practicality, as we sold our old car to a good home and took home a new, reliable, safe, fuel efficient car. Our fuel savings alone pays for most of the monthly lease.
The lease approach allows our family to get more car for the money. Our budget was to spend no more then $250 a month on a car, using some of the money from our previous car we sold for a down payment. At the end of the 2013 year VW offered Jetta diesel leases starting at $180 a month, with around $2200 down. Our lease was slightly higher due to us choosing a higher trim level and a 2014 model.
Purchasing this particular car would have stretched out the payment years to more than our 42 month lease and the payments would have been more than a $100 more per month. In the end we would have spent more per month, and on depreciation. We would have finished our payments just in time to sell the car and start again anyway. It's also good that the lease on this car and on most cars ends at about the same time as the standard 3/36k mile warranty wraps up.
I have a couple of options at lease end.
1. I can return the car to the dealership.
2. I can sell the car to another party if they cover the $14K that VW wants for the car at the end of the lease, to purchase the car.
3. I can buy the car at the end of lease for $14k
---Normally people opposed to leases will protest and say that leases don't make sense because:
1. You don't establish equity.
2. You can't customize the car.
3. You can't go over the mileage in the contract, without paying your arm and leg for excess mileage fees.
4. You pay dearly for excess wear and tear.
5. You always have a payment.
---My response to those protests are:
1. Depreciation is an issue if you buy, not the issue when you lease. There are no real surprises, you know what the car will be worth after the lease is up. Also, you pay only for what you use of the car.
2 . With some manufacturers, such as VW you can pay a little more per month for wear and tear protection, which covers you against dings, dents, dirt, damage up to $10,000 and even some customizing, such as window tinting.
4. You can exceed mileage in your contract without penalty if you sell the car before the end of the lease or buy it yourself. I know businessmen who do this very thing and sell their cars before the end of the lease, while also paying less to lease the car.
5. Yes you have a consistently low payment. Owning a car, however may subject you to inconsistent and sometimes expensive repairs, such as engine, transmission or electrical that are hard to plan or budget for. This may be in addition to your car payment.
With this in mind you can understand why most people lease their cars, rather than buy.
If we purchased a car we would have had the buying power to purchase a $15,000 vehicle. Which would not have had the options that are important to us, nor the reliability. The lease gave us the ability to use a $24,000 vehicle for the same amount of money.
Some cars are better than others at leasing, meaning not all cars make as much sense to lease. Also, like purchasing, leasing a car requires some of your time for research and haggling to get the best terms at the best price.
If you are in the market it's worth a look.
The move was made entirely on practicality, as we sold our old car to a good home and took home a new, reliable, safe, fuel efficient car. Our fuel savings alone pays for most of the monthly lease.
The lease approach allows our family to get more car for the money. Our budget was to spend no more then $250 a month on a car, using some of the money from our previous car we sold for a down payment. At the end of the 2013 year VW offered Jetta diesel leases starting at $180 a month, with around $2200 down. Our lease was slightly higher due to us choosing a higher trim level and a 2014 model.
Purchasing this particular car would have stretched out the payment years to more than our 42 month lease and the payments would have been more than a $100 more per month. In the end we would have spent more per month, and on depreciation. We would have finished our payments just in time to sell the car and start again anyway. It's also good that the lease on this car and on most cars ends at about the same time as the standard 3/36k mile warranty wraps up.
I have a couple of options at lease end.
1. I can return the car to the dealership.
2. I can sell the car to another party if they cover the $14K that VW wants for the car at the end of the lease, to purchase the car.
3. I can buy the car at the end of lease for $14k
---Normally people opposed to leases will protest and say that leases don't make sense because:
1. You don't establish equity.
2. You can't customize the car.
3. You can't go over the mileage in the contract, without paying your arm and leg for excess mileage fees.
4. You pay dearly for excess wear and tear.
5. You always have a payment.
---My response to those protests are:
1. Depreciation is an issue if you buy, not the issue when you lease. There are no real surprises, you know what the car will be worth after the lease is up. Also, you pay only for what you use of the car.
2 . With some manufacturers, such as VW you can pay a little more per month for wear and tear protection, which covers you against dings, dents, dirt, damage up to $10,000 and even some customizing, such as window tinting.
4. You can exceed mileage in your contract without penalty if you sell the car before the end of the lease or buy it yourself. I know businessmen who do this very thing and sell their cars before the end of the lease, while also paying less to lease the car.
5. Yes you have a consistently low payment. Owning a car, however may subject you to inconsistent and sometimes expensive repairs, such as engine, transmission or electrical that are hard to plan or budget for. This may be in addition to your car payment.
With this in mind you can understand why most people lease their cars, rather than buy.
If we purchased a car we would have had the buying power to purchase a $15,000 vehicle. Which would not have had the options that are important to us, nor the reliability. The lease gave us the ability to use a $24,000 vehicle for the same amount of money.
Some cars are better than others at leasing, meaning not all cars make as much sense to lease. Also, like purchasing, leasing a car requires some of your time for research and haggling to get the best terms at the best price.
If you are in the market it's worth a look.
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