Can Someone Please Explain Leasing/Financing??

[solaris=amazing]

Hey everyone, i've been driving used cars for the past 3 years (i'm 23/late starter on driving) and would like to maybe lease (or finance..differance please??) a newer car later next year, maybe april/may etc. Can you explain to me how it all works.. If you have, or ARE leasing or financing now please enlighten me if you could.

The cars that i would really like to get is the following..

05 dodge neon SRT4-around like 22/24G's.

04/05 Lancer EVO-i believe it's just over 29/30G's

Or 02-05 WRX Sti from suburu-i think it's around 30G's.

Out of those three, i'd really love the lancer evo, i love the awd and styling of it. But, i feel myself leaning towards the SRT4 because it is cheaper-AND i love the body style, plus i'd put on a stage3 from mopar to be over 315 HP.

Driving record is clean-no tickets at all, just a one fender bender (no moneys paid out) and a bad accident in which was settled that the other party was 100% in the wrong (old lady passed red light causing $2500 damage to my car, and totaled her *rented* 04 dodge neon).

I have my own insurance of coarse, and i know already that it will have to be up'ed to full coverage.

Would putting down like 3G's help me at all-that much?? What month/rate would you guess for each car etc. Also, whats the thing about after the lease, you have the option of BUYING the car..?? Could i trade the car in after like 2 years if i wanted??

Any help you could give, is greatly appreciated.. Websites explaining all this etc??

[Importboom]

If you lease you arent really buying the vehicle its really just paying for what you use on it... you get package deals by miles you put on it... and at the begining you figure a percentage of what the vehicle will cost 18,000 after say a 3 year lease and 15,000 miles and you pay lets say 400$ a month. and you can choose to finance it or give it back basically its like renting it. Financing is like buying it like a payment plan and how you will pay for it etc.all the numbers and figures are just random.

[curtis73]

I might be able to help some since I used to sell cars, but ironically I've never leased or financed a vehicle. I always buy junk and fix it up

Financing is simply a loan where the car itself is collateral. The bank holds the title and you make payments to the loan. When the loan is paid off, they give you your title. It is equivalent to buying a house. You get a loan where the house is the collateral and pay it off a month at a time

Leasing is like a long term renting an apartment. The dealer holds the title, you pay into the account. You are basically paying for the depreciation you are causing the car. It works out to be more than the actual depreciation, but its basically a rental. At the end of the lease term you have a couple options. If you've stayed within the mileage and wear limits, you can surrender the car and stop payments. Unlike an apartment, leases also have a guaranteed buy price at the end of the term. If you lease a new car that costs $30k for 36 months, they decide on an end-buyout price when you buy it; say $20k. After the three years, you have the option of buying it for the pre-arranged price. A lease can sorta be summed up as financing that only lasts for the length of the term and you have no equity in the car.

Each buyer is different. Credit scores, amount of down payment, trade, and income all play huge roles. For each person, the best method is dependent on all of these factors. Myself, for instance... I have no credit. The credit I do have is OK, but my income is steady. I am probably wisest to save my pennies and buy with cash. I could get a loan, but my interest rate would be very high.

Leasing is a good option for some beginners. It takes less credit and often less down payment to lease. The benefit is that you can make payments on a car which boosts your credit. Then, three years (or however long the lease is) later you have the option to buy the same car at 2/3 its original value with better credit.

Take a look at all the numbers and add them up. Financing can be a six year obligation, but with today's rates it may actually save you money. If you liquidated $30k worth of stock to pay cash for a vehicle, you have to look at what interest income you've lost over the next 6 years. My guess is that its more than the 3% you would be paying on a car loan. Or if you have $30k cash from the lottery, it might be wisest to invest that $30k and get a low-interest loan for the car. You might make 6% on the investment and only spend 3% on the loan. If you just spend the cash on a car, its just gone. The car company invests it and makes 6% A lease is sometimes the only option, but its rarely the wisest. Look hard at the deal. If you decide to lease then surrender, you've just spent money that doesn't come back since you have no equity in the car. If you decide to lease then buy, you've just paid $9600 into a lease contract and you're going to end up paying another $20k on a used car. Leases are also usually pretty restrictive in mileage allowances and wear. They have to be returned in darn near pristine shape or they pull more money. Much like not getting your security deposit back from an apartment. The other BIG issue with leases is what type of car you buy. Folks who leased a 1987 Buick GNX turbo probably got a killer deal. The buyout would have been based on a pretty standard depreciation, but the GNX held its value almost 100%. Conversely, leasing a used Cavalier is probably going to bite you in the butt. The car will be worth much less than the buyout most likely.

[solaris=amazing]

Guys, thanks a million. Thanks for putting in simply to, cause my brain is mostly wood :-)

If i am going to do this, i'd have to go with the financing. Because i love cars, and will not get tired of it-and it's worth it for me to keep it in the end. Alot of my friends are keeping me away from such things like financing, leasing etc. But i want a new car damn it :-)

I love those three cars i mentioned, mainly the evo-but i'm thinking i'd like the srt4 better because i've always loved american better. FWD is probably the worst car to have decent speed in also, but i'm so used to FWD it's not even funny.

Only time will tell, but i feel myself leaning towards a finance.. Or, maybe by early next year, i'll decide to get pre-owned 97 SS with a LS1, who knows. That car i loved for the past year. Now i'm on the srt4, mainly cause i love small, lightweight and fast.