I leased a car and have one more year before the lease is up. I was talked into the lease rather than buying because the account manager convinced me that I would suffer the depreciation on a new car. My question is, should I buy this car so I will have at least some equity? Once the lease is up, I just walk away with nothing. Thank you, Katie
The one thing you must realize when you lease vs a standard purchase of a vehicle you will normally have a much lower investment and a lower monthly payment. This is because you are only making payments on the depreciation of the vehicle and not the entire vehicle. As a result you are not in a position to build any equity as you do not pay for the entire vehicle. You need to go to one of the websites that can give you a value of your current vehicle (being sure to include the condition and mileage), compare this figure to the price you have to pay to purchase the vehicle (you are in essence, purchasing your own used car). Edmunds.com, KellyBlueBook.com are two sites you might use. If the figures are close and you like the vehicle and it is mechanically sound then a purchase can be a good idea. However, if the buyout is considerably higher than the current value of the vehicle it may not be such a good deal. Leasing is a good deal if you consistently trade every 2 to 3 years and don*t want to invest any of your own money. Keep in mind this is like "renting" your vehicle. A lease needs to be taken to the end to be equitable as you are responsible for all payments that were included in your original contract.If you keep your vehicle for a long time, you need to consider a standard purchase. Do all your homework via the internet and you will not be "talked into" something that does not suit your needs or lifestyle.
〉 Answered on Feb 21st, 2009 by Jessie L Thatcher, F&I and Sales Specialist at Reynolds and Reynolds Company (Retired)