This is why I lease

[Horde]

The market is funny now that people can trade in their vehicles and get great value, but that hasn't always been the case.

I lease vehicles and the terms have always varied, but in the end I never hold onto a vehicle until the end of term. I've returned vehicles after a year without any penalty and even got some money back. During the pandemic I've had 4 new vehicles (all jeeps of course).

So I'm returning my Overland (which I used mostly as truck) and am picking up this Rubicon on Tuesday. It was shipped on Wednesday and showed up at the dealer today. Really excited for the Rubicon and I've always wanted this green. The dealer gave me $3,000 equity from the Overland and EP on this one. I was told that only about 5-8% of Gladiator production makes it into Canada so I'm really happy with this deal and the vehicle.

Leasing isn't for everyone, but it's always worked in my favour.

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[AXISJT]

I think leasing isn't as big in the jeep community due to the high amount of modification most jeepers do. That's a sweet rig though man I wanted that color to but was so hard to find in a diesel with the options I was looking for.

 

[Horde]

I think leasing isn't as big in the jeep community due to the high amount of modification most jeepers do. That's a sweet rig though man I wanted that color to but was so hard to find in a diesel with the options I was looking for.

I totally agree with your modification argument. However I've found that my dealer will sometimes look the other way if the modification were done properly and adds value to the vehicle. I could never do any serious off-roading. But I'm hoping to enjoy some trails.

 

[adentmon]

4 vehicles during the pandemic? Holy cow! I thought I was bad trading my leases in every 18-24 months haha.

 

[dfwxjer]

Leasing is certainly a viable finance product for the right person. Think of it like a tool in that there's no one tool that fits everyone's needs.

Purchasing/financing a vehicle works for some, and leasing works for others. Both have their pluses and minuses. For me, I drive 3-4k miles a month so leasing is not a good option for my family. My Mojave already has tree pinstriping, and I'm sure it will get a ding or two from running trails. Not ideal for leasing in my case, but certainly doesn't make leasing bad for others.

Congrats on your new JTR

 

[staying_tuned]

I’ve never found it fiscally advantageous to lease despite noodling on the numbers well over a dozen times. I too go through vehicles quickly, it’s actually a problem hah, but yeah. It seems so absurd to me to lease but it’s likely ignorance on my part. I’ve never been upside down on a vehicle beyond my very first over 20 years ago. I get a great interest rate, put down enough to max out the down payment cap before incentivized rates are a no-go (no more than 25% with FCA) and because I typically order, I never pay close to MSRP or even invoice. My JT was just shy of 7% off invoice. EP pricing is horrendous.

So you lease and put X down and pay X a month with a mileage and condition agreement on turn-in. In most cases you pay on return but even if jeep handed you back a few grand, you’d still leave thousands on the table.

Last time I was in the finance box I was told that 95% of the folks that walk into a dealership are monthly payment buyers, meaning they are so strapped that they can only grasp what X amount means to their livelihood per month and they shoot for the moon. It’s at that time leasing (if credit permits) starts to be viable.

What is the scenario where leases make sense financially? I’m asking honestly, I have a son who just started driving and I’ve told him to stay away from credit cards, leases, lottery and 30 year mortgages. I lump them all together.

Am I just an old school simpleton?

 

[adentmon]

I don't know really. For me, I like to get a new car every couple of years so it just makes sense to me. I can lease a car with nothing down if I wanted and still walk out with a cheaper payment than purchasing. While the outcome is kind of the same I guess, throwing money at something I don't ever plan to own, it's nice to throw less money at that something.

I don't put a lot of miles on my vehicles anymore either so I've been successful in either breaking even or walking away with some equity.

 

[staying_tuned]

I don't know really. For me, I like to get a new car every couple of years so it just makes sense to me. I can lease a car with nothing down if I wanted and still walk out with a cheaper payment than purchasing. While the outcome is kind of the same I guess, throwing money at something I don't ever plan to own, it's nice to throw less money at that something.

I don't put a lot of miles on my vehicles anymore either so I've been successful in either breaking even or walking away with some equity.

Ah, very cool. So scenarios do exist with a lease where you can walk in with zero down while paying less per month than a competitive rate/term loan (also assuming no down payment) and simply return it and walk away? Thanks for posting this. I've never once heard of anything like this happening, I could see this making a ton of sense for low mile folks and/or people who aren't planning on tons of mods.

 

[mudfish]

I have leased my last 4 vehicles. I have always put ZERO down, gotten 1.2000 miles per month and I have NEVER had to pay anything at lease turn in.

When I turned in my Ram 1500 to lease my Gladiator, they bought me out of my lease and gave me an additional $7,000 toward the JT. And that was with going over by 1,000 miles, and a dented rear bumper and a couple scratches on the drivers side.

I never had to pay for any maintenance other than oil changes. Prior to leasing I would have to pay for tires, brakes, shocks, etc. Leasing allows me to avoid all of those extra maintenance costs associated with an older vehicle.

Leasing is great for some people but not others...

 

[dfwxjer]

I’ve never found it fiscally advantageous to lease despite noodling on the numbers well over a dozen times. I too go through vehicles quickly, it’s actually a problem hah, but yeah. It seems so absurd to me to lease but it’s likely ignorance on my part. I’ve never been upside down on a vehicle beyond my very first over 20 years ago. I get a great interest rate, put down enough to max out the down payment cap before incentivized rates are a no-go (no more than 25% with FCA) and because I typically order, I never pay close to MSRP or even invoice. My JT was just shy of 7% off invoice. EP pricing is horrendous.

So you lease and put X down and pay X a month with a mileage and condition agreement on turn-in. In most cases you pay on return but even if jeep handed you back a few grand, you’d still leave thousands on the table.

Last time I was in the finance box I was told that 95% of the folks that walk into a dealership are monthly payment buyers, meaning they are so strapped that they can only grasp what X amount means to their livelihood per month and they shoot for the moon. It’s at that time leasing (if credit permits) starts to be viable.

What is the scenario where leases make sense financially? I’m asking honestly, I have a son who just started driving and I’ve told him to stay away from credit cards, leases, lottery and 30 year mortgages. I lump them all together.

Am I just an old school simpleton?

With leases the end user is paying for the depreciation on the asset at hand. That's why Jeeps have excellent lease rates because the residual value at turn-in time will be high. Leases get a bad rep because some people max out a lease payment to get in to a vehicle they couldn't otherwise afford.

On the flip side, vehicles like luxury cars are often leased by affluent customers that simply want to drive a car that's completely covered by factory warranty for the duration of their possession. They don't care about "ownership" because they know in 2-3 years they'll want the newest version with a full warranty. So they pay for the portion of the vehicle they use to have that peace of mind and no complications when the lease is done. Hand keys over, get new vehicle, drive away happy. If you fit in this bucket it's possible a lease is a solid option for you. There are far more lease terms available than the one Jeep promotes, which is usually just trying to entice people with a crazy low payment.

Clearly any type of financing can be abused/used incorrectly.


Think of it like tools. A screwdriver is a useful tool for tightening/loosening screws. It's a terrible tool for scraping paint. Can a screwdriver scrape paint off? yes. Is is the best option? no. Conversely many things can technically tighten a screw, but the purpose built screw driver will do it better and more efficiently.

 

[NachoRuby]

I tend to trade in vehicles very often, so I wish I could lease. Unfortunately, I drive way too much, at 18-20k miles per year.

 

[Mac]

I have looked into leasing, for the two new cars I bought last year the sum of the payments at the lease end were much higher than the depreciation the vehicles would have at the end of the lease term.

 

[ALVagabond]

I'm glad leasing works well for you, but that's a hard pass from me.

 

[ShadowsPapa]

My wife liked to trade every 2.5 to 3 years - always a Grand Cherokee. This time may be her last because FCA screwed up on the Grand Cherokee for 2021 1/2 model year. So this 2021 WK2 may be her last trade for a while. She likes paying cash but before we could do that it was always pay as much down as we could afford, make payments for a while - pay ahead, then pay it off after a couple of years or less. Her last trade was so clean, and low miles (2.5 years old, 13,000 miles) she got a crazy good deal.

She hates payments, so these current Jeeps were paid for before we left the dealership with them.

Leases are great for some - I prefer to own things and have them on my own balance sheet. Always been that way. It's just more simple that way.

 

[Cripton805]

Let's make it clear. None of these people turned in their leases.

They "traded" their lease. If you were to turn in a lease at the end of your term. You wouldn't get anything back. A trade in will result in a dealer making you an offer. Essentially buying your lease and paying you the difference if there is any positive equity. Only someone extremely uneducated about leases would turn in a lease with positive equity. The only time you should turn in a lease is when you have negative equity and you are within the mileage limits. You can also sell your lease at any time to anyone or a dealer. You get a payoff quote from your lender and get offers from the buyer. Same thing as selling a car that is financed. The best thing about leases is that you don't pay taxes upfront. You pay the taxes every month on top of the principal. You pay the same amount of taxes if you were to ride out the entire lease. If you finance / buy a car, you get hit with all of the taxes upfront. So you're already thousands of negative equity for the taxes, extras, doc fees, +any depreciation for being used.

With a lease. You only pay the taxes on the leased amount. Not the entire cost of the car.

It's all about the numbers, residuals, money factor rate, etc....

An experienced buyer can and will come out on top. Un-experienced buyers will get ripped off. Dealerships will tell you ZERO interest on a lease and that is true, but there is a money factor "aka rental" fee they don't tell you about.

I buy new cars almost every year. I've learned all of the shady salesman tricks and financing loopholes.

I highly encourage anyone to get educated about leases before they commit and do the math vs. a purchase.

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