Overhaulin'

BUYING (Mortgage finance) V/S LEASE?

I want to know the very exact difference between getting a car on finance loan i.e installments and getting a car on lease. Some say it is cheap to lease. After the lease period what about the payment I have made do I get any percentage of what I have paid. Plz can sumone illustrate an example. Thanx!

Public Comments

1. Leasing may be a cheaper monthly payment, but when the lease is over, either you have to pay up the balance of the total, which is usually more than just buying the vehicle upfront, or you have to give the car back. Leasing also can come with a monthly mileage limit. And to answer your question, when the lease is up, you do not get any of your money back. In the long run, it makes more sense financially to buy your vehicle with a loan.
2. In the short term leasing may look attractive to you because monthly lease payments will more than likely be less than the monthly payments of a purchase agreement. Why? Because with a lease you are essentially only paying for the part of the car you are going to use. Typically lease durations are 24, 36, or 48 months. Do not sign up for a lease beyond 48 months. Actually anything beyond 36 months is pushing the value of the lease. Don’t let the car salesman get you into a longer lease just because they make your monthly payments look more attractive. Remember time costs you money and the car’s residual value will plummet and you loose all the advantages of leasing and still be left with nothing in the end. -------------------------------------------------------------------------------- Leasing is good only if you plan on keeping the car for 3-4 years in my opinion and if you don't exceed the mileage allowed.It can be quite costly and in the end you will have nothing to show for the money you've spent. No, you do not get a percentage of what you paid once the lease is over,however you will most likely be given a chance to purchase the vehicle with a percentage of the money you paid go towards the purchase.
3. When you lease you are making payments on the car only for the duration of the lease at which time you have to return the car or make a large payoff to keep it. It generally results in a smaller monthly payment lease you are effectively financing only that port of the depreciation for which you actually own the car. When you buy a car you are financing the entire purchase price, but you do own the car after the loan is paid off, and the car presumably has some trade-in value or residual value left after the loan. Some things to be aware of when leasing a car. Most leases allow for a certain amount of mileage on the car. Since higher mileage vehicles are worth less, there is generally a charge for any additional miles over the allowance. If you before you sign the lease that you will put additional miles on you can sometimes "lease" additional miles for less than they cost after the turn-in (but these may not be refundable if you don't use them so beware). Also be aware that you are generally expected to turn a car in good condition and you could be charged for damage or excessive wear. It can also be costly or difficult to turn-in a car before the end of the lease. Finally when it comes time for a new car you won't have a car to trade-in (unless you bought the car at the end of the lease). My wife and I leased our 2 previous vehicles, but I don't think I would do it again. However, for some people leasing makes good sense. EDIT: I just noticed the subject line again and realize you may be thinking of using a mortgage refinance to buy the car. When you use a car loan you are pledging the car as collateral for loan - if you don't make the payments they can repossess the car. If you use money from a loan on your home then you are in effect using the home as collateral. Then if you don't keep up with the payments you could lose your home. IF you are refinancing at 30 years you are then effectively financing that car over 30 years instead of 4 or 5 years, long after the useful life of most cars, and over the 30 year period (if you were to stay in the home that long) you would probably end up paying more in interest. While it can seem attractive to use ones home like a big ATM machine, I strongly recommend you thing twice before doing so. While refinancing a home and paying off higher interest loans can sometime make sense, doing so and continuing to rack up more debt is bad and can ultimately lead to financial ruin.