Overhaulin'

When is leasing a new car a good idea? When is it a bad idea?

My mom wants to trade in her 2007 Lexus ES350 and put the money down for a 3-year lease on a new 2011 BMW 5 series? Is this a good idea or should she just buy it and try to get the best financing rate she can get? How does the fact that BMW's residual value is supposedly pretty strong play into my mom's decision on leasing vs. buying?

Public Comments

1. Most financial advisers call leasing "Fleecing". I agree. I like Dave Ramsey's take on vehicles, if you need financing you can't afford it. The emphasis is on the word need. I have a loan with 0%, but I had the cash for the car. There was no incentive to pay for the car up-front so I took the loan and am gaining a small amount of interest on the cash. Some people never will own a vehicle and will never get out of a monthly payment. Find a copy of Ramseys book, and read the section on vehicles. If I repeated it it would just sound mean. If you want your money to be available for you to use, instead of just passing it on to others, his book is a good read.
2. yeah agree with scott, and to add to that u need to get rid of the debt mindstate. NEVER lease unless u have money to throw around easily every month and still save. When u own u have right to resale and incentive. leased car owners monitor mielage, usesage, etc. my friends whoo lease cars won;t even drive on far trips because "oh I don;t want o put the miles on.". THEN WHY OWN A CAR!! good resale means u should buy. keep the 2007 lexus, it's a nice car and u can get so much more usage out of it. that's my two cents. I have a 2007 accord I bought with 5K miles on it and almost have it paid off.
3. leasing is an improper word... it should be called long term renting... when you lease you never own the car...so you do everything a person who buys a car does..except in three years you either turn the car in, and have nothing, or buy the car all over again.... Leasing is only good for businesses, or if you are going from new york to la for three years, and won't need the car after that....