Three years ago I leased a new car and thought it was a pretty darn good idea. I loved the fact that I could just basically “borrow” a car for three years and then give it back without any questions asked.
On Monday my lease expired and I turned it in.
Many of the benefits I listed in that first article still apply. The residual value in my contract was around $14,000. According to Kelley Blue Book, my car would only sell for about $13,000 if I tried to sell it on craigslist. That’s a great deal for me.
However, there are some really crappy things about a lease that I hadn’t considered when I first got the car. I will never lease a car again, and here’s why.
Minor Body Damage Can Mean Major Costs
When you sign up for a lease you understand that you have to give the car back in three years. That means you have to take care of the car and make sure it’s in good enough shape that you won’t get charged when you turn it in.
Personally I couldn’t care less about little dents, dings, scratches, and other cosmetic issues. The dealer does care. A lot.
In my opinion I turned the car in with only normal wear and tear (which shouldn’t cost anything), but I won’t know if Toyota agrees for a few weeks after they do the inspection. And if they say I owe them $1,000 for repairs I don’t know how I can fight it. What about $2,000? $4,000?
Maybe I’m just not very trusting, but I HATE the idea of some huge corporation telling me how much I have to pay them to fix up their car.
Oh, and remember how the dealership tried to screw me out of $1,000? I can’t help but wonder if there’s a little note in my file that says, “We tried to get an extra $1k from him and he wouldn’t budge. Get it back when he returns it.”
The next car I buy will be a used car that probably already has some minor body damage. I actually WANT a car that I can ding up a bit and not feel bad.
No One Wants to Pay Taxes, Title, and Licensing Every 3 Years
The other reason I really don’t like leasing a car is because the government doesn’t differentiate between leasing and buying. When you lease a new car, you have huge upfront costs of taxes, title, and licensing.
Paying that every three years would be worse than eating Kevin McKee home cooked meals every three years.
The government gets enough of my money from income and property taxes. I don’t need to give them even more by buying a car every three years.
Again, the next time I buy a car it’s going to be a used car that I will keep for as long as it stays alive.
No More Leases for Me
As I’m sure you can tell I will not be leasing a new car. I will be sharing Tag’s car for the immediate future. That means we have no car payment, our insurance has been cut in half, and we’ll be using less gas.
I’m hoping we can make it until we start having children before we need to buy a second car, but who knows if we’ll even last a month? We certainly CAN live with one car, but it would be CONVENIENT to have two. Only time will tell whether saving money or convenience will win.
When Toyota lets me know how much (if any) they are going to charge me for the “wear and tear” on my car I will post another update. In the meantime:
Readers: Have you ever leased a car? If so, would you do it again?
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
I have never leased a car, but why wouldn’t you pay to have the car professionally detailed, dents removed, and minor body/paint work completed before turning the car in at the end of the lease? This way your out of pocket costs are limited to what you spent on making the car presentable to the dealer prior to lease turn in, instead of being at the mercy of whatever figure they decide to come up with.
If they come up with a figure that is substantially higher than what you can have the car repaired for, ask if you can have the work completed at your cost instead of writing them a check.
Never hurts to ask!
Good question. I went to the dealer and showed them the car and asked “Does this look like normal wear and tear?” They said there was one scratch that they might charge me for and everything else looked good, so I had that scratch fixed. However, that doesn’t necessarily mean the one guy I talked to was right. It isn’t the dealer who does the review, but someone from Toyota corporate.
I only leased one car, and it was nowhere near as bad. First, at that time, the dealers were the ones that did the look-over and they were pretty lax about it. The damage would have to be pretty noticeable for them to do anything, and I believe that since the dealer examined it, you could actually go back and talk to them about it before they shipped the car off if you had any questions. Also, I happened to purchase a different car from the same dealer and I’m pretty sure that if you were agreeing to a new transaction, they were going to turn a blind eye to little stuff so that you didn’t walk away from their bigger sale.
I’m sure it was practices like that which led to the exams and such being taken away from the dealers, but those were the days.
I’m sure the corporate team would go easier on me if I were buying a new car too. I just don’t have the money right now to buy a new car.
Again, I might be worrying over nothing. I’ll have to see what they come back with and find out if they are going to charge me a bunch of money. Maybe they will come back and say I’m good! (although I’m not counting on it).
I think Leasing is fantastic, especially since you know how much you will spend on the car each month. No more random thousand dollar repair bills. I do agree it is stressful keeping the car in perfect shape, but with my lease I paid an extra $500, which covers dents and scratches above normal wear and tear and a lost key. It gives me much peace of mind. I’d rather pay $500 every three years than the completely unexpected and totally expensive car repairs.
How much do you pay every 3 years in taxes, title, and licensing fees? If I remember correctly that was about $2k when I got this lease. It might have been $1k. I can’t remember.
Wouldn’t it be easier to save that $1-2k you’d have to pay with a new lease and use it towards repairs on a car you own?
I am currently leasing my car. I did it because I wasn’t sure where I would be in the next few years and what type of vehicle I would need. I didn’t want to jump in and purchase a car that might not be able to hold my growing family. With the lease, I have an option at the end of the term. I like the flexibility. I don’t mind leasing, but I probably wouldn’t do it again.
I encourage everyone everywhere to lease cars. The last 2 cars I purchased were good value, low mileage off lease models.
The more people who lease helps to keep my purchase price down.
I come from a family that buys cars, so I have never leased on. My main problem is I drive too damn much and would crush my mileage allowance. So I buy a car, drive it until the wheels fall off and if the price is right, put them back on and drive it somemore.
I have never driven a brand new car. I guess it’s just not a priority for me. I feel like I was nuts buying a $16,000 used Honda SUV in 2000. Now I don’t see it as too bad because it’s 2013 and guess what I am still driving. It’s not a rattle trap either. If you maintain a car well and budget about a grand in repair costs a year it should last you a long time. My car drives just as well as the day I drove it off the lot. I have a pretty low mileage lifestyle so that contributed to longevity. I couldn’t ever imagine driving anything with less than 50,000 miles on it. I know people who have bought new cars that were just lemons. I figure if it’s been driven around a couple years you’ll know if it’s a lemon or not.
Any thing done to your car by the dealer is a lot more expensive than if you did it some place.
I leased my first car, but I will never make that mistake again. In my opinion the best way to go is buy, and buy used if possible. A car that’s only three years old with say 30,000 miles on it is typically the best value. If it’s been well maintained you can drive that car for the next 7 to 8 years with minimal repair costs. People seem to attach an awfully high premium to being able to swap out their car every few years, but that’s never been something that appeals to me. As long as the car is safe, in good condition, and gets decent gas mileage, I am a happy camper. The rest is just for show.
Oh man, I am so sorry. I work for an equipment leasing company (we don’t do cars, not our business) and let me tell you, leasing means big, big bucks. A lot of people I know leased vehicles they could never have purchased (BMW 3 series for example) because they thought it was a great deal. They were never more wrong.
For your sake, I hope everything comes back as normal wear and tear and they don’t charge you anything. I also hope you didn’t go over your mileage limit! Congrats on getting rid of your car payment though 🙂