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SyChO 01-14-2004 12:07 AM

Leasing: Pros and Cons

I now drive a 93' PRO that my dad bought me for $2,000. It has A/C & Sunroof etc. but man is it a boring car to drive (automatic). I was looking to buy a sports car (Integra GSR, Prelude, Celica) but the prices are high and the insurance are killer. Luckaly for me I saw the MZ3 on TV and went to go see it at the dealership... wow! From then on it became the only car I wanted.

Now the thing is, I don't have much of a budget and I am only considering leasing the MZ3, but like anything there are pros and cons to this. So my question to you all is "what are they"? By the way I don't plan on doing the buy back.

I really need to understand this well, cuz it will determine what my final decision will be...

I appreciate all feedback, good or bad! Thank you in advance!

EDIT: Thread title and moved to Pricing :twisted:

rpc180 01-14-2004 12:29 AM

Leasing: Pros and Cons
Pros and Cons to leasing?

Well, with leasing you will need to get full coverage insurance since the car doesn't actually belong to you. Leasing will give you lower payments, though I'm not sure how much lower. The total you will be charged for leasing is the deprecation value of the car for the amount of time you lease and any leasing fees, taxes, titles, registration, etc. Warranty should be the same.

Financing means they will charge you for the total retail amount of the car in the given time frame. You will also be charged a financing fee. Taxes, titles and registration as well. Insurance can be somewhat less since the car's title now belongs to you.

Anyone else feel free to add (or correct) this!

If you're looking for positives and negatives about the MZ3 itself, the forums very well developed in almost any topic from the engine to the fog lights.

cowtown 01-14-2004 02:31 AM

Leasing: Pros and Cons
Well I lease and even though I don't use it as a tax write off I enjoy the flexibility it gives me. Knowing how I am in that I am a fickle car owner (I never own cars for more than 3 years on average it seems) leasing made sense. Since I knew that I would be changing cars regularly I picked up my last three cars through a lease.

The nice things about leases.

1. Lower payments. For instance in my case my car would have been $550cdn per month or so to finance over 5 years. My lease is currently only $438+Tax per month

2. You only pay tax on the amount you pay per month. Because of this you only pay for the taxes on the car you "buy/rent" which is typically around 50%

3. If you decide at the end you don't like the car or want something else you simply hand the keys back to the dealer. If you own the car you are generally stuck with worrying about trade in value or having to sell it privately, which I hate.

4. If you do own a business or work in a profession such as sales you can write off a portion of your lease costs as expenses and get a tax break on that.

Now for the cons.

1. You never really own the car. You can in most leases excercise a buyout option (at any time you like though you may incur penalties if it's early). You could pay for the car with cash or finance out the balance. In my case I determined that I would pay the same amount to finance out my remaining balance of my Protege5 over 3 years that I would leasing a new vehicle. So basically since I was doubtfull I'd want the Pro5 for a total 6 years I dumped the PRo5 and got the 3 and my payments only bumped up a slight bit (mainly because the 3 is more expensive a car). If I had bought it out though I would have had about 55% of the car balance left which was a little less than what the car was worth (The car was currently worth $1500 more in trade than the lease balance).

2. doing mods is hard to do. If you lease and plan to turn in your car it's often impossible or difficult to do any drastic mods to your car. For instance bolting on body kits would be a big no no. Basically anything that cosmetically alters your car (outside of regular accessories) is considered bad. You can do performance mods but don't do any that are drastic or non reversible since you'll just be really throwing money away at that point in time.

3. As cited you are required to have a minimum insurance level on a leased car. In my case the insurance requirements were actually a smidge less than what I have by default for the last 6 years anyways so it didn't affect me.

Now rather than putting money into a car I wouldn't want I can simply continue to rent the vehicles I want for the time being. Is it necessarily the fiscal way to go? Probably not but a car is rarely ever an investment, you'll always loose money so whether you throw it away now or then is up to you. Perhaps when I get a bit older and more likely to stick with a car long term (or get a Mustang or Lightning) then I might purchase because I will probably enjoy and modify those vehicles. For now the 3 is a great car and I'll enjoy it a lot. I'll do some minor mods that I can reverse easily and enjoy my $120 smaller payments every month which I can use for insurance, gas and taking my wife out to dinner.

winningblue 01-14-2004 08:19 AM

Leasing: Pros and Cons
When I graduated from university I leased my first new car, a Sunfire. I did it because the payments were cheap and I knew that I wouldn't be keeping it. I just needed something I could afford until I had saved for something better. Here's my biggest problem with leases though. A typical lease allows 20,000 kms per year. That works out to being able to drive about 56 kms a day. After 2.5 years of having the Sunfire, I was already at 70,000 kms. If I wanted to give the car back at the end of the lease, I would have had to pay 12 cents for every kilometer I was over 80,000. It would have been a lot to pay out at the end of 4 years, just to give the car back. Also, it was out of warranty, and I'd had nothing but problems with it.

So I ended up paying out a bit now, and rolling the rest into my lease for my 3. The only reason I leased again was I couldn't roll money from the Sunfire lease into a purchase of my 3. I'll probably still end up being over the 80,000 allowed kilometers at the end, but I'm more likely to keep this car.

SyChO 01-14-2004 11:46 AM

Leasing: Pros and Cons
Cool, cool... alright so I guess my profile is good for leasing. I thank you all for your help.

Talk to ya later. :)

cowtown 01-14-2004 12:37 PM

Leasing: Pros and Cons
Mazda does offer different levels of milage on their leases as well so if your not the type that has to put on 100kms a day driving here and there you can go for a smaller maximum milage lease and save some more money that way. I think mine's about 20,000kms a year, they may have one that's bigger but I'm not sure. At the rate I was going I maybe would have been under my limit on my Pro5, I was averaging about 17,500kms a year with a couple of 1000+km road trips a year.

04M3S 01-14-2004 05:36 PM

Leasing: Pros and Cons

Originally Posted by "rpc180"
Pros and Cons to leasing?

Well, with leasing you will need to get full coverage insurance since the car doesn't actually belong to you....

...Insurance can be somewhat less since the car's title now belongs to you.

This is not actually true, most (if not all) lending institutions will require you to keep full coverage insurance on the vehicle, as long as they have a lean on the vehicle. And they actually hold the title until you make your last payment.

Not sure if this is just a VA/US thing, but I doubt it, it makes sense for them, because if you total your 3 and stop making payments, the bank will have nothing to repo/sell.

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