Trading in a Vehicle / Leasing

I've always learned NEVER to lease. At the risk of sounding like a broken record, are you familiar with Dave Ramsay? He never advises leasing. My brother, who works at a car dealership is also against leasing. Not a good deal. You're usually best off if you can sell the vehicle to a private party (b/c the dealers only give you wholesale value, then charge you retail value for the newer vehicle) and pay cash outright for your next vehicle.

Yep, you will get hosed if you lease. Sell the vehicle outright to a private person or to a one of those auto dealer type dealerships and buy a new used car. Let someone else take the new car hit. There are bound to be tons of 1 or 2 year old vehicles in like new condition and you won't take the hit with the "drive it off the dealership lot the value just dropped $5,000"!

We've leased several vehicles and owned several. It really depends on what you're looking to do. I know there is the comment about Dave Ramsey and his philosophies, but that's very general to the public as a whole.

Generally speaking, leasing is a better option for people who like to have new cars more frequently. The cost/month is generally lower, and the terms can be more flexible. The bad side is that any equity you have in your current vehicle is lost unless you plan to lease to own.

All of your equity will go into a new vehicle if you choose to purchase it, but your payment/month will likely be higher. It just depends on which you're comfortable with.

When I was laid off last year, I chose to purchase my company car. We held onto it until March and used it as equity (along with another vehicle on a new car). We didn't need a new car, but we didn't need the 3rd car either. So, we were able to save $200/month in payments with the new arrangement. Because I'm not as financially savvy as some people, I ran it by our corporate controller who said it was a great deal.

There's nothing wrong with dealer financing as long as your credit score is good. We're fortunate to have high credit scores and to qualify for most financing options. We could have either taken 0.9% financing or $1500 cash incentive. I'd never have guess the incentive to be better, but the numbers showed we saved ~$8/month with the incentive.

I'd always recommend sites such as NADA (national automobile dealer's association), Kelly Blue Book, Edmunds, Car & Driver to verify the pricing (for both your trade and the new vehicle) as well as ratings and opinions. We've walked away from several vehicles because the resale value wasn't good or because the opinions were less than favorable.

Good luck. It's not a pleasant experience, but cars are a necessary evil. With gas prices climbing again, I'd recommend taking that into consideration. I'd much rather have the 22 mpg in my old Taurus vs. the 16 mpg in my Pilot currently.

I guess I am the minority so far :-) lol - I leased once and had no problem. I had always been one to get a new/different car every few years. I traded my old car in and leased a brand new Honda Civic.....a few years later, I traded that in and got a new car. No problems... I even have a different car from that time now. I even traded it in early because I was going to go over my mileage allowance. And, no I'm not super far upside down. lol - I say just try to get the best deal possible, which I'm sure you new that.

I work in a car dealership and personally I would never lease a vehicle. It's not necessarily a bad deal for someone who wants a new car every 2 or 3 years and doesn't mind always having a car payment but that just seems like such a waste of money to me. I would much rather buy a car and pay it off in 3-4 years and then keep it for another 5 years or so.

Do as much research as you can before you even set foot in a dealership. By the time you are ready to go test drive stuff you should already know what interest rate you qualify for and exactly how much you are willing to pay for the car. Like the previous posters said, check with your bank or credit union to see what kind of rates they would offer you and compare them to what you get offered at the dealership. You can also check the car manufacturer's websites to see if they are offering any special financing rates and whether your credit score is good enough for you to qualify for them.

There are many auto loan calculators on the internet that allow you to plug in the interest rate and the loan amount and see what your monthly payment would be. That should give you a very good idea of what price of car you should be looking for.

As for the trade-in value for your car, check edmunds.com and kbb.com (just note that your car almost certainly will not fall into the "excellent" category as far as condition so don't expect to get offered that figure) Also look at autotrader.com and cars.com to get an idea of what people are selling similar cars for if you should decide you want to sell it yourself instead of trading it in.

Many people call leases "fleece"s for a reason. They are THE biggest money maker for dealers. If you have to make a change, find another way than a lease. The biggest reason people lease is because they couldn't otherwise afford the payment on the vehicle. My logic tells me that if you can't afford the payment, then you can't afford the vehicle... So if a lease is the only way you can get into the vehicle you are looking at, then you need to rethink what you are looking at and choose a different vehicle.

As far as financing, check your personal bank or credit union first. I have excellent credit (seriously) and have bought cars several times. EVERY time the dealer has sworn that they can beat my financing rate that I already have ready to go with my own financial institution. I always let them have a shot at it... and EVERY time they have failed to even come close.

The biggest thing to remember about shopping is to NEVER discuss payments when shopping. ONLY discuss the PRICE of the vehicle. They are NOT the same thing. Get the bottom line, the price, and then when you iron that out, you will have the payment determined already, depending on how long you finance for, assuming that you get preauthorization from your own lending institution.

oh.. wanted to add... another thing to consider IF you are still considering a lease... is how much you drive. There are limits to the number of miles you can put on the car without financial penalties.

Good luck shopping.

Dealerships love people that lease, they make a ton of money off leased deals. If you don't mind throwing away good money then go that route. Otherwise buy a new used car & let someone else take the hit on all that depreciation.

As far as car loans, if you need to get a loan typically the dealership will give better interest rates if you have good credit. Otherwise the info you heard about better benefits by getting financing elsewhere is false. Unless you have good 'ol green you won't get a better deal. When my then fiance got my engagement ring & wedding band at Tiffany's they wouldn't budge with price but when he showed up with a wad of cash they had smiles on their faces & deals rolled.

I also highly recommend looking into the Dave Ramsey book, he has a lot of good ideas about buying vehicles.

Selling a car out right is much much better than trading it in, you will get a lot more for it. We took our Landrover in to get a trade value & the dealership quoted us $8,000 less than we actually got for it by selling it ourselves. And we have sold 3 other vehicles outright & got so much more money for them. And they all sold within a week.

Take your time (if you have it) to do your homework.