Truck Buying Question - Finance or Lease??

[Albertadiver]

I apologize in advance as this isn’t directly outdoors related, aside from that I will use this thing to get outdoors!

The last few vehicles I’ve owned, I’ve bought new and kept for around 4 years and then upgraded to another new one.

I don’t want this to be a discussion about brands, or buy an old beater and drive it till it drops etc. This is just my personal preference which may or may not align with others. My father buys new and keeps for 10+ years and by the time he wants a new truck he’s still only put maybe 60K on it. Unfortunately I don’t have that luxury as I do drive a lot for work and we travel as much as we can camping, hunting, etc.

The reason I upgrade to new every 3-4 years is I like to have a known payment, and with extended warranty I know the truck can self destruct and I’m still covered under a bumper to bumper extended warranty. The cost at purchase is another $1900.00 and it has more than paid for itself in my experience with my last two trucks.

I’m at the point of starting to look at trading in my current vehicle as I will be coming off warranty in the next few months, and I know the trade-in is more than what I currently owe the bank, so I’m not putting debt into debt. I might consider selling privately, although I don’t have a ton of time for that.

I’ve never considered leasing before, but the sales guy I was talking with today says I should maybe consider it but I’m a little skeptical. I think the only benefit perhaps is that every 3 years I just show up hand over the keys, and then pick up a new truck with a similar payment, provided I’m not over mileage and there is no major damage to the truck, all with an extended full warranty.

I keep good care of my vehicles so I’m not worried so much about damage at handover, and anything serious will be from a hit and run or a collision, which insurance will address. I asked for a quote for more than the standard 20k a year mileage as well.

I can get a much nicer truck with good towing and other bells and whistles compared to the truck I have now on a three year lease, for about $30.00 a month less than what I am paying by financing. If I was to finance the same truck I’m looking at, they want roughly $150.00 more a month than what I’m paying now. The financing would be 2.9% and the lease 0.9%

Is there something I’m missing? Anyone familiar with leasing? I’m not hung up on ownership because technically the bank owns my truck right now anyhow. The lease thing almost seems a bit too good to be true.

Just doing as much due diligence as I can. Any thoughts appreciated.

thx

[Trochu]

If you trading it in every three years anyway, and the interest is 2.9%, the more efficient way to lose money is likely buying it.

[CNP]

Originally Posted by Albertadiver

I apologize in advance as this isn’t directly outdoors related, aside from that I will use this thing to get outdoors!

The last few vehicles I’ve owned, I’ve bought new and kept for around 4 years and then upgraded to another new one.

I don’t want this to be a discussion about brands, or buy an old beater and drive it till it drops etc. This is just my personal preference which may or may not align with others. My father buys new and keeps for 10+ years and by the time he wants a new truck he’s still only put maybe 60K on it. Unfortunately I don’t have that luxury as I do drive a lot for work and we travel as much as we can camping, hunting, etc.

The reason I upgrade to new every 3-4 years is I like to have a known payment, and with extended warranty I know the truck can self destruct and I’m still covered under a bumper to bumper extended warranty. The cost at purchase is another $1900.00 and it has more than paid for itself in my experience with my last two trucks.

I’m at the point of starting to look at trading in my current vehicle as I will be coming off warranty in the next few months, and I know the trade-in is more than what I currently owe the bank, so I’m not putting debt into debt. I might consider selling privately, although I don’t have a ton of time for that.

I’ve never considered leasing before, but the sales guy I was talking with today says I should maybe consider it but I’m a little skeptical. I think the only benefit perhaps is that every 3 years I just show up hand over the keys, and then pick up a new truck with a similar payment, provided I’m not over mileage and there is no major damage to the truck, all with an extended full warranty.

I keep good care of my vehicles so I’m not worried so much about damage at handover, and anything serious will be from a hit and run or a collision, which insurance will address. I asked for a quote for more than the standard 20k a year mileage as well.

I can get a much nicer truck with good towing and other bells and whistles compared to the truck I have now on a three year lease, for about $30.00 a month less than what I am paying by financing. If I was to finance the same truck I’m looking at, they want roughly $150.00 more a month than what I’m paying now. The financing would be 2.9% and the lease 0.9%

Is there something I’m missing? Anyone familiar with leasing? I’m not hung up on ownership because technically the bank owns my truck right now anyhow. The lease thing almost seems a bit too good to be true.

Just doing as much due diligence as I can. Any thoughts appreciated.

thx

You have no equity in a leased vehicle. I presume you are including the equity of your used vehicle to buy into the lease? After three years you will have nothing in equity to reduce your next lease.

Read this: http://www.bankrate.com/finance/auto...y-traps-1.aspx

[MK2750]

I too like to trade every 2 or 4 years. I use my car for work and tried the lease route as the payment is a write off. The last couple of times I purchased low mileage lease backs that are as new and find this the most cost effective option while writing off the depreciation.

I know you don't want to talk brand but it is important. I run a Toyota Camry although I would rather drive a domestic sedan. It isn't that a domestic wouldn't last or is unreliable, it is the massive depreciation. Right from the minute I drive off the lot I am right side up when buying Toyotas this way and a long ways ahead when it comes time to move on. If I was using a domestic a lease might look more attractive.

Stuff happens and it is nice to know I can get away from a vehicle whenever I want without losing my shirt. I see lots of folks trying to unload leases on Kijiji.

Having said all that, the redesigned 2018 Camry XSE is calling to me.

[Albertadiver]

Originally Posted by CNP

You have no equity in a leased vehicle. I presume you are including the equity of your used vehicle to buy into the lease? After three years you will have nothing in equity to reduce your next lease.

Read this: http://www.bankrate.com/finance/auto...y-traps-1.aspx

Good point, and great article. This is exactly the sort of thing I was looking for.

[Albertadiver]

Originally Posted by MK2750

I too like to trade every 2 or 4 years. I use my car for work and tried the lease route as the payment is a write off. The last couple of times I purchased low mileage lease backs that are as new and find this the most cost effective option while writing off the depreciation.

I know you don't want to talk brand but it is important. I run a Toyota Camry although I would rather drive a domestic sedan. It isn't that a domestic wouldn't last or is unreliable, it is the massive depreciation. Right from the minute I drive off the lot I am right side up when buying Toyotas this way and a long ways ahead when it comes time to move on. If I was using a domestic a lease might look more attractive.

Stuff happens and it is nice to know I can get away from a vehicle whenever I want without losing my shirt. I see lots of folks trying to unload leases on Kijiji.

Having said all that, the redesigned 2018 Camry XSE is calling to me.

I'm looking at F150's. I've driven dodge and GM through work and so far I like the F150. Haven't driven tundras and they aren't really what I like. I guess I could snoop in a dealership and see what they are like, but I understand they are much more $$

[FISHBATTEREDBEER]

I considered a lease on a truck yrs ago and my accountant said NOOOO.Often there are stipulations on kms and wear and tear things that have to replaced when the lease ends,tires ,windshield etc. As mentioned above you will have zero equity at the end of the lease.At the end of the lease there is an option to buy but you will pay more than if you would have bought it.

[MK2750]

Originally Posted by Albertadiver

I'm looking at F150's. I've driven dodge and GM through work and so far I like the F150. Haven't driven tundras and they aren't really what I like. I guess I could snoop in a dealership and see what they are like, but I understand they are much more $$

You and I both bought new trucks in 2010. I still have mine as it is a second vehicle and there is only 100,000 K on it. I like my Chevys when it comes to trucks and it hasn't given a lick of trouble. I will probably keep it for a few more years and it is long ago paid for. Trucks are a personal thing and I don't mind paying a little more to get what I want. I haven't tried the Tundra either as I just don't like the look of them.

[Albertadiver]

Originally Posted by MK2750

You and I both bought new trucks in 2010. I still have mine as it is a second vehicle and there is only 100,000 K on it. I like my Chevys when it comes to trucks and it hasn't given a lick of trouble. I will probably keep it for a few more years and it is long ago paid for. Trucks are a personal thing and I don't mind paying a little more to get what I want. I haven't tried the Tundra either as I just don't like the look of them.

My dad bought a 2500HD Gm a year ago with the big V8 6litre engine. I REALLY like his truck but for me driving around Calgary and using parkades etc that's a pretty big truck. The F150's seem a little less expensive and I like the ecoboost.

My current truck is pretty bare bones which is why I have my eye on the next step up. I think if I found a nice optioned truck that was reliable I might be inclined to keep longer than 4 years. There is something to be said not having a big vehicle payment. You can pay a lot of debt and set aside some for repairs for what a 700+ a month payment is.

[MK2750]

I haven't taken one for a drive, but really like the look of the Canyon/Colorado and you can even get one in a diesel if you like. They are nearly the same size as a regular pickup from a few years ago. They would be nicer for city driving as the full sized trucks are getting huge.

[morinj]

As you stated, you like to rotate your vehicles every 3 to 4 years!!! To avoid expensive extended warranties, and having to sell your vehicle on your own lease your vehicle! Their is no such thing as pride in ownership, if you ever end up in the situation were you feel that you've purchased a lemon, you can take pride in knowing that you can bring it back!

[roper1]

A few pickup drivers I know went the lease route & severely regretted it. There is a large, large cost to driving new every 3 years, and it could well be worse for you with lots of KM driven! I would research very carefully, might save yourself thousands $$.

[Albertadiver]

Originally Posted by MK2750

I haven't taken one for a drive, but really like the look of the Canyon/Colorado and you can even get one in a diesel if you like. They are nearly the same size as a regular pickup from a few years ago. They would be nicer for city driving as the full sized trucks are getting huge.

I'm towing a #7500lb trailer so I need a half ton minimum. Test drove a Colorado 5 or 6 years ago and found them very tight inside.

Originally Posted by morinj

As you stated, you like to rotate your vehicles every 3 to 4 years!!! To avoid expensive extended warranties, and having to sell your vehicle on your own lease your vehicle! Their is no such thing as pride in ownership, if you ever end up in the situation were you feel that you've purchased a lemon, you can take pride in knowing that you can bring it back!

Not sure if I follow what you are saying? I do look after my vehicles and all regular maintenance etc. I try to keep it clean and presentable inside and out. I would call that pride of ownership.

I am prepared to keep my existing truck if I can't find something that makes sense to me.

[Albertadiver]

Originally Posted by roper1

A few pickup drivers I know went the lease route & severely regretted it. There is a large, large cost to driving new every 3 years, and it could well be worse for you with lots of KM driven! I would research very carefully, might save yourself thousands $$.

Good points, exactly why I'm looking into it because I've never considered leasing before. I figure the old saying of 'too good to be true' might come into play here.

[Hooter]

My family has always said that leasing a vehicle is just renting it. And like others have said, you don't have any equity in it when the lease is over. Basically, leasing vehicles is for people that can't actually afford them. You basically pay every month and once you're in a lease it's tough to get out because you don't have any equity to actually buy one. Just my thoughts.

[HyperMOA]

I would never lease a vehicle unless I could write it off as a business expense. I however, am not in your shoes. If you trade in your truck the minute you aren't upside down on your loan, there is really no reason for you not to lease. Its basically what you have been doing. I assume you have never owned a vehicle outright (I mean purchased new) and probably offer very little equity into your trade-in, when you do trade-in. So basically whatever is cheaper per month is likely your best option.

I would like to state that I am not saying leasing is a good option. Owning and driving it until it drops is the best option in my opinion. Just for your situation I think you best pick the cheapest payment. Also, really look over the paperwork to exit the lease.

[Roadhunter]

We have done both a couple of times. Leased a 2004 F350, 2007 Chev Silverado 1500, Purchased a 2006 F350, Leased a 2006 Escape, purchased a 2015 F350. I think that if you can lease a vehicle for the similar cost or less I would prefer this. Add the extra care package so they will forgive small dings and tire wear. If you think about it you will need to save quite a bit of cash to put the down payment on a $60,000 truck. We bought our last one but it was a good deal. After 6 years we will need to buy another(need is relative) one and all of the money we spent is gone just like a lease. It is not an investment but an expense so look at it that way.

[Albertadiver]

Originally Posted by HyperMOA

I would never lease a vehicle unless I could write it off as a business expense. I however, am not in your shoes. If you trade in your truck the minute you aren't upside down on your loan, there is really no reason for you not to lease. Its basically what you have been doing. I assume you have never owned a vehicle outright (I mean purchased new) and probably offer very little equity into your trade-in, when you do trade-in. So basically whatever is cheaper per month is likely your best option.

I would like to state that I am not saying leasing is a good option. Owning and driving it until it drops is the best option in my opinion. Just for your situation I think you best pick the cheapest payment. Also, really look over the paperwork to exit the lease.

Thx - My family has two vehicles. The car we keep pretty much till it is toast. We have a 7yr old Fusion and it's going strong and a great driver. Not planning on selling anytime soon and in the next few months it will be ours free and clear. (bought used)

For the truck, this is our 'good' vehicle that we rely on for towing our travel trailer and for most of our road trips.

Originally Posted by Roadhunter

We have done both a couple of times. Leased a 2004 F350, 2007 Chev Silverado 1500, Purchased a 2006 F350, Leased a 2006 Escape, purchased a 2015 F350. I think that if you can lease a vehicle for the similar cost or less I would prefer this. Add the extra care package so they will forgive small dings and tire wear. If you think about it you will need to save quite a bit of cash to put the down payment on a $60,000 truck. We bought our last one but it was a good deal. After 6 years we will need to buy another(need is relative) one and all of the money we spent is gone just like a lease. It is not an investment but an expense so look at it that way.

Years ago in my youth, I bought a used Jimmy, and a few years later saw another shiny newer used Jimmy that I really liked. The sales guy showed me that I could keep similar payments if I extended out the months of of the term. I ended up putting debt into debt and it took me a LONG time to get out from under that stupid mistake.

Fast forward, I've been strict about never buying another vehicle unless I had a decent downpayment and my trade-in was more than what I owed the bank. On one occasion I had a deal with a dealership to trade in a dakota for an F150 and I ended up putting on autotrader at a very reasonable price and got more than the trade-in offer and made a better deal at the dealership.

If I sit down and really examine need vs. want, this is solidly in the want category. I'm pretty frugal with most things, but sometimes you gotta have a nice truck

Based on what i've been looking at, I'm leaning towards financing because If I can't afford the level of truck I'd like by financing, it wouldn't be a good idea to lease I think.

[morinj]

Realize that all manufactures in Alberta are aware that vehicles receive rock chips, the manufacturer will allow a $500 wear grace on leases, reason being is that , the $500 to you is only dollars to them, also before you lease realize that upon return of your lease, that you will have to have a proper crack free windshield, ( that can usually be purchased for around $300, if need be) and 60% tread on your tires. This is all wear and tare stuff that you would have to replace anyway. The extra care package on a vehicle really is only gona benefit the next person to buy your vehicle, as their is a 5 year warranty on paint! You can add this cost to your lease but you will be paying the whole dollar value. If you are towing a trailer, this another good reason to lease, as you are taxing your tranny and suspension. You can also purchase extra KM on your lease at inception, for considerably cheaper, better to purchase them before you drive off the lot then when you bring it back. I leased a Acura, and purchased extra km, upon inception of my vehicle at .14$ vs .18$ if I was to pay for them when I brought them back! Buying those extra 30000km before hand saved me $1200. Remember to study your allowances, and good luck with your purchase!

[midgetwaiter]

Originally Posted by Albertadiver

I can get a much nicer truck with good towing and other bells and whistles compared to the truck I have now on a three year lease, for about $30.00 a month less than what I am paying by financing. If I was to finance the same truck I’m looking at, they want roughly $150.00 more a month than what I’m paying now. The financing would be 2.9% and the lease 0.9%

If you want to directly compare the numbers it's pretty easy using Ford's website. I put together a 2017 F150 with the options I would like and it comes out to $45,799 with taxes.

Assuming $0 down a 72 month finance at 2.99% gives me a monthly payment of 696 for a total of $50,122. A 36 month lease with 25,000km at 0.99% gives me a monthly payment of 733 for a total of $26,388. Double that for 2 leases to cover the same period as the finance option and you are looking at $52,776. We've paid out $2654 more over the two lease periods. A quick look around kijiji puts 2011 F150s of similar specs at about $15,000 so lets use that as a residual value for our financed option. So leasing in this relatively simplistic scenario has cost us an additional $17,654 or $264/month.

Chances are you're going to spend a bit more than that on the lease; the second one will probably be a bit more expensive, you will have to turn it over with some wear items replaced you might ignore on your own vehicle, etc. This is a decent starting point though.

[Albertadiver]

Originally Posted by midgetwaiter

If you want to directly compare the numbers it's pretty easy using Ford's website. I put together a 2017 F150 with the options I would like and it comes out to $45,799 with taxes.

Assuming $0 down a 72 month finance at 2.99% gives me a monthly payment of 696 for a total of $50,122. A 36 month lease with 25,000km at 0.99% gives me a monthly payment of 733 for a total of $26,388. Double that for 2 leases to cover the same period as the finance option and you are looking at $52,776. We've paid out $2654 more over the two lease periods. A quick look around kijiji puts 2011 F150s of similar specs at about $15,000 so lets use that as a residual value for our financed option. So leasing in this relatively simplistic scenario has cost us an additional $17,654 or $264/month.

Chances are you're going to spend a bit more than that on the lease; the second one will probably be a bit more expensive, you will have to turn it over with some wear items replaced you might ignore on your own vehicle, etc. This is a decent starting point though.

Thanks! A realistic presentation of the numbers. I'm not the best at accounting so this is the sort of thing that I was looking for advice on.

[morinj]

Originally Posted by Albertadiver

Thanks! A realistic presentation of the numbers. I'm not the best at accounting so this is the sort of thing that I was looking for advice on.

I don't want to stir a pot but this is not a realistic representation of how it would work. Your monthly payment will lower considerably the longer your lease will go so will your risiduel value. Say a lease over 36 months costs you $700 month, you wouldn't double that if you were to say go 72 months. That same lease for 700$ a month at 36 months would be more like 550 at 60 mints. On a 36mnt lease your risiduel may be 49% were as your risiduel value at 60 months may be 25%. Forgive the candidness but this info is completely wrong! Talk to your dealership and have the explain all your options!

[midgetwaiter]

Originally Posted by morinj

I don't want to stir a pot but this is not a realistic representation of how it would work. Your monthly payment will lower considerably the longer your lease will go so will your risiduel value. Say a lease over 36 months costs you $700 month, you wouldn't double that if you were to say go 72 months. That same lease for 700$ a month at 36 months would be more like 550 at 60 mints. On a 36mnt lease your risiduel may be 49% were as your risiduel value at 60 months may be 25%. Forgive the candidness but this info is completely wrong! Talk to your dealership and have the explain all your options!

I was doing the example as leasing a second new vehicle after 3 years, not doing a second lease on the same truck. That option never occurred to me.

[MAC]

If I recall correctly, you use your truck for work daily, The only way I would ever lease is if it would pay as a right off for tax.
Alot of variables come into play depending on mileage, repairs and such.
For me as a work vehicle I still buy, only used 2 years or less and drive it 5 to 10 years. repairs, fuel and depreciation all factor at tax time. Never saw a real use for lease myself. As said only renting.

This article appears to cover the topic well with the calculations you need to use.

http://madanca.com/blog/is-it-better...ess-in-canada/

This is for Canada

MAC

[morinj]

Originally Posted by midgetwaiter

I was doing the example as leasing a second new vehicle after 3 years, not doing a second lease on the same truck. That option never occurred to me.

My bad, you were talking about leasing out two vehicles and not having anything to show for in the end, meaning at the end of a 72 months finance you would own a vehicle that has x amount of value vs turning in a second lease! This I understand!!! A $50000 truck 6 yrs old with 150km on it does Infact have value!!! This is a good observation!

[schmedlap]

The effective current annual interest rate applied to both scenarios being relatively equal (as is now the case): If you are able to take a substantial expense deduction for tax purposes on your vehicle expenses (say 50% or more), and put fairly large miles on, leasing is better as you can deduct against the entire payment (not just the interest) and recover the entire GST percentage (if you are a registrant). If not, and the vehicle has an average or better value retention, you are better off to purchase (own) and finance.

Leasing can be a trap that is better for the dealers and manufacturers, as they roll you over every 2-4 years and obtain your equity, while you just sink more in their trap. But it can have net advantages in the right scenario. If you utilize a qualified accountant in your business/occupation, ask them about the best alternative for you.

[chasingtail]

Not sure if your current vehicle is still the Ford Ecoboost but if it is mine had 250,000 km with out any issues what so every, sold it and bought another, wish I just kept it. The one I have now I'm going to try to make it 400K. You should be safe for another couple years with your current vehicle, sometimes trucks that made it to 100K with out problems are more reliable than new ones.

[HyperMOA]

Originally Posted by midgetwaiter

If you want to directly compare the numbers it's pretty easy using Ford's website. I put together a 2017 F150 with the options I would like and it comes out to $45,799 with taxes.

Assuming $0 down a 72 month finance at 2.99% gives me a monthly payment of 696 for a total of $50,122. A 36 month lease with 25,000km at 0.99% gives me a monthly payment of 733 for a total of $26,388. Double that for 2 leases to cover the same period as the finance option and you are looking at $52,776. We've paid out $2654 more over the two lease periods. A quick look around kijiji puts 2011 F150s of similar specs at about $15,000 so lets use that as a residual value for our financed option. So leasing in this relatively simplistic scenario has cost us an additional $17,654 or $264/month.

Chances are you're going to spend a bit more than that on the lease; the second one will probably be a bit more expensive, you will have to turn it over with some wear items replaced you might ignore on your own vehicle, etc. This is a decent starting point though.

I agree with you 100%, however the OP states he trades his truck before any sizable equity is built. He never keeps the truck 6 years. If you redid the situation and have him trade it for a new truck after 3 years I think the number would get ugly.

[Albertadiver]

Originally Posted by chasingtail

Not sure if your current vehicle is still the Ford Ecoboost but if it is mine had 250,000 km with out any issues what so every, sold it and bought another, wish I just kept it. The one I have now I'm going to try to make it 400K. You should be safe for another couple years with your current vehicle, sometimes trucks that made it to 100K with out problems are more reliable than new ones.

You have a good point there. I've been speaking with 5 different dealerships and seeing what they have available. My interest in a shiny new truck might exceed my budget, so I may just end up keeping my current truck.

Originally Posted by HyperMOA

I agree with you 100%, however the OP states he trades his truck before any sizable equity is built. He never keeps the truck 6 years. If you redid the situation and have him trade it for a new truck after 3 years I think the number would get ugly.

I seem to be making changes with my main vehicle every 4 years or so, but if I found the right one that worked well, I think I'd lean toward keeping it. For our car, we keep it for about 8 years or so. It's nice to not have a payment that's for sure. One thing I am adament about is that I need to get at least a few thousand bucks in trade-in value after paying off the existing loan.

That's basically where I'm at now. Depending on what the trade-in is offered, and the dealer discounts on the new will make or break the transaction. I hate negotiations and haggling so I just tell them what I need and if they can make it work then great. If not, I'll keep looking, or leave it alone for a few months and have a look later on.

Appreciate all of the opinions on here. I'm leaning away from leasing at this time because of what I've been reading and in talking to my accountant yesterday.

[iliketrout]

I just bought a new 2017 Ram, traded in my 2010 F150 for it. Got 18K off the sticker price plus 0% financing for 48 months and got a great trade-in value. I doubt I would have even came near those deals on a lease, especially the finance rate, although to be honest I didn't even consider a lease.

Hopefully the Ford guys will bargain too!