Does it ever make sense to lease a used car?

greer · 4th February 2005, 14:52

I'm a real estate agent and can write off 75% of my car lease payments. So, if i'm looking at used 03's with 15-25K miles and can get a good lease payment does it make sense to lease?

Or is this just a wacky idea? Thanks.

Suretyagent · 4th February 2005, 17:35

Quote:

Originally Posted by greer

I'm a real estate agent and can write off 75% of my car lease payments. So, if i'm looking at used 03's with 15-25K miles and can get a good lease payment does it make sense to lease?

Or is this just a wacky idea? Thanks.

Dear Greer:

It's not a wacky idea. In certain situations it does make sense. Having said that I'll also say that in most cases it is usually better to buy a used car than to lease one.

You might start by looking at websites that put together the people who want to get out of leases with people who want to get into leases. If, however, you find a great car that you really like that is slightly used then it can work to your advantage that that someone else has already taken the initial depreciation hit on it. You just have to be careful in negotiating the lease deal.

Make sure you understand exactly how leases work and then make sure you get all the different details of the proposed lease. What is the money factor (interest X 24) what is the residual (value of vehicle at end of lease) capitalized cost (the amount the leasing company should be buying the car for) what is the MSRP for the exact car you're looking at - this is part of the leasing equation, too. How many miles a year are you going to drive 10,000? 15,000? and how many months should you lease the car for 24? 36? 39? 48?

Armed with this knowledge then go and talk to several independent leasing companies. If you can compare a CPO car with factory lease. If available this may be the best option for you as they come with warranties. Good luck.

Derek

mottati · 4th February 2005, 19:24

You'd think depreciation would be lower at this point, so a lease should work out ok, but the interest rate is often jacked up higher than on a new lease. Also make sure you have a full bumper to bumper warranty for the entire term, wouldn't want to pay for repairs on someone else's car!
Mike

ard · 4th February 2005, 20:36

Why not write off the car expenses- independent of lease or purchase??? You can write off the finance paments, or if you buy it for cash, you can write off depreciation as well as maintenance expenses. In ANY case, the business use (and hence the deductibility) must be justified.

I would never lease, personally. Yet I write off two vehicles (one for a horse business- go figure).

Leasing would only be a good idea, financially for me, if my BUSINESS was paying for it totally out of it's profits- and I never wanted to own the car.

There is a GREAT website on leasing over at roadfly ...finance or something. You can get a much better sense of what's a good deal. They know residuals, lease factors, etc, etc.. you can learn from others sorry tales of woe...

A

Tom219 · 4th February 2005, 20:48

I leased my CPO 03 M5. My accountant said that due to the luxury nature of the car and various tax laws combined with my business use leaseing was the only way.

greer · 4th February 2005, 21:18

Here are the actual lease numbers I have been quoted at the dealer:

Cap cost-54K, 48 month lease, monthly payment 787+tax, $2187 drive off, residual 26,500, money factor 0.00245.

The car: 2003 Sterling Grey M5, 28.5K miles with shades, PDC, fold down seats. M audio and the car is in great condition. I have pulled Dealer records & car fax, no troubles.

So guys, is this a deal to say yes To?

Suretyagent · 4th February 2005, 21:20

Quote:

Originally Posted by ard

Leasing would only be a good idea, financially for me, if my BUSINESS was paying for it totally out of it's profits -

Yes, and paying for it with pre-taxed dollars.

ard · 4th February 2005, 21:30

Quote:

Originally Posted by greer

So guys, is this a deal to say yes To?

Look here, really:

http://bimmer.roadfly.org/bmw/forums...5356148-1.html

http://bimmer.roadfly.org/bmw/forums...6097929-1.html

There are new rates coming out today.

The posted rates are for new- just post a query or email tarry for a quote...

A

BmwNut · 4th February 2005, 21:32

We leased our E39, and it was around $450 a month pre tax dollars due to my fathers company. At the end of the lease, BMW wouldnt allow us to release our old car for some reason, so to finance the rest made it $600 post tax dollars, and then all of a sudden it doesnt make sense to keep the car...
Leasing a used car can be interesting, but as long as you get a good interest rate and they dont try to get tricky with the residual value of the car, there isnt anything wrong with it. I prefer to lease new cars to keep my payments down, and life moves fast for me so I dont know what I'll be doing in 4 years, so being able to dump the car then works well for me.
That deal sounded very attractive. I know many people who lease Mini Cooper S's for $500 a month (Mini of Scottsdale...), so those numbers make good sense to me. Didnt look like you were getting hit in the deal, but I've never leased an M5 so dont take too much of what I say as gospel for your situation.

KevinM · 4th February 2005, 21:35

Leasing can be a good idea...I looked into it briefly myself. I went to leasecompare.com. They are able to offer several excellent lease deals for any particular car to those with excellent credit. Leasing is more feasible for a used M5 because the residual value holds up better than in most cars, meaning your lease payment is lower. This may, of course, backfire on you if you want to purcahse the car at the end of the lease for the residual value.

Ultimately I chose to buy my car outright becuase I knew that I wanted to keep it for the long term. Interest rates for loans still seem to be better than lease interest rates as well. I have seen loan interest rates (for a used car, bought at dealer) as low as 4.25% (excellent credit); most leases are around 5.76% (excellent credit).

(Money factor X 2400 = the interest rate you are paying)