Is having a new vehicle every two or three years with no major repair risks more important than long-term cost? Or are long term cost savings more important than lower monthly payments? Is having some ownership (in an old money pit ) in your vehicle more important than low up-front costs and no down payment? Is it important to you to pay off your vehicle and be debt-free for a while, even if it means higher monthly payments for the first few years?

Till then,

Jean

In other words you are paying tax on the interest, you do not do this with a loan.

I also thought that you have to follow a strict maintenance schedule. Has anyone ever bought a car out of lease and gotten a good deal? Something I talked to my dad about after seeing this topic yesterday.

So yeah, beware of that. You just might be taking over the lease of someone like me!

(Over 4 year term)
New = higher payments, full warranty, most equity upon term end.
Leased = lower payments, full warranty, no equity upon term end.
Used = lower payments, NO warranty(reoccurring repair costs), least equity upon term end.

I was looking for someone to take over the lease on my acura TL. No one would take it, even with a 3K cash incentive. So I bought it out and sold it privately for the same price. A smart person would have realized that leasing and then buying it out would be better in the long run than paying for it all upfront (since the total cash cost would have been the same, but time value of money and all).

Do you research and make sure you are not paying a penny over what you would get with a dealer.

Key to the lease is to have them give you as many months of payments up front to take it over. 3 months minimum, and shoot for 6 months.

I studied leasebusters for years and found situations similar to what VanX wrote about. Many people wanted out of their lease but also expected others to defray the cost of the takeover because of large downpayments. When I looked at an older car vs. leasing a new car (or even leasing a used car from the dealer) it turned out that there were very few ‘deals’ at leasebusters.

I believe that is because lessees don’t adapt the value they place on their vehicle with all of the incentives (and pressures) that dealers have.

One advantage that taking over a lease has, in my opinion, is if you aren’t really sure that the vehicle is right for you or you have a temporary situation which doesn’t lend itself to a long term commitment with the vehicle.

For example, my wife wanted us to get a convertible and she wanted a Pontiac Solstice. But, considering she has never driven a convertible, lived through the fact it had no back seat and almost no storage, hadn’t lived through the harsh Canadian winters driving a convertible with questionable insulation, I thought it might be better to find a lease takeover with around 12-18 months left on it.

You are ‘throwing’ your money away when you buy/lease/finance a car but at least this way you have the option to walk away if the car really doesn’t suit you.

In your particular case I don’t think this applies because your choice isn’t radically different nor is it an unpopular choice of vehicle.

In case you were wondering, we didn’t go through leasebusters, we didn’t get the Solstice and we didnt’ lease. A convertible we DID get – and we love it!

You’re starting to sound like my wife! She is really pushing for new, which makes a lot of sense for a Honda or Toyota (low depreciation).

In the end – I buying a car was much more appropriate for me since I wouldn’t have to worry about the miles I put on the car. Plus I plan on driving my car for a long time.

A 2007 CR-V likely sold for about $30,000 + taxes (about $33,600) so your savings are about $8000.

45,000 km is not low mileage, it is pretty much bang on the average of 20,000 per year (the car has 27 months of use). My 2007 has 22,000 km on it. The 1995 has averaged about 17,000 km/year.

This vehicle CLEARLY does not meet the numbers you used in your New vs. Used article, else you should be able to acquire it for a bit over $19,000 (remember it is nearly 3 years old, now).

A four year lease is an expensive lease, so buying it out is not the most cost effective way to acquire a vehicle.

The current leaseholder has paid about $5000 per year for the car, and so will you for the rest of the lease. Buying new instead would have cost you ( $10,000 difference / age difference of the cars =) about $4000 per year ($3500 based on the 2007 price).

The used car has 27 months less life in it than the new, so you will have to replace it that much sooner.

Amortized costs:
New: $35,000 / 12.25 years = $2857 / year
Used: $24,668 / 10 years $2,466 / year
A difference of about $32 per month.

Plus you have the costs of moving it from Ontario (airfare, local transportation, hotel for 2 nights, gas, meals, and ferry costs). As long as this is below $3800, you will save a few pennies per month.

Once you add these costs in, the new car would have to live one year longer than the used car to reach the break-even point, so ultimately, you’re only saving 1 year’s worth of costs. Is that really so great a savings?

DAvid