car purchase vs. lease then purchase: how do I evaluate the options?

[carhelpusa]

I am in the market to purchase a new vehicle valued at $70,000. The dealer has offered to finance the purchase for 6 years at a 3% rate. Alternatively, I am allowed to lease the vehicle for 3 years for $600 a month. After the three year lease, the dealer will sell the vehicle to me for $45,000 using the same terms (6 years @ 3% rate). Which option is better and how do I evaluate these options?

 

[carhelpusa]

Annuity Question

I have a question about buying a financing a car vs. leasing and and financing a purchase.


I have recently been in the market to purchase a new car. The dealership has offered to let me finance a $68,000 @ 2.75% for 72 months if I put $7,500 down. I have calculated my monthly payment to be $912.47.


Alternatively, I can lease the care for 36 months for $599 a month if I put $7,500 down. After three years pass, I can purchase the car for $43,000 @ 2.75% for 72 months.


Which is the better option?

 

[stapel]

I have recently been in the market to purchase a new car. The dealership has offered to let me finance a $68,000 @ 2.75% for 72 months if I put $7,500 down. I have calculated my monthly payment to be $912.47.

How did you obtain your monthly payment? Assuming this amount to be correct, what did you obtain as your total payment (down-payment, plus monthly payments)?

Alternatively, I can lease the car for 36 months for $599 a month if I put $7,500 down. After three years pass, I can purchase the car for $43,000 @ 2.75% for 72 months.

Do the same computations here as you did above, to obtain the monthly payment for the "after three years" portion. What do you get for your total payment?

Which is the better option?

Are you supposed to take into account the expected value of your money, so that you're considering what you might earn if you invested your money differently?

When you reply, please include a clear listing of your steps and results so far. Thank you!

 

[Otis]

After the three year lease, the dealer will sell the vehicle to me for $45,000 using the same terms (6 years @ 3% rate).

Read that contract very carefully.

Also, google keywords dealership lease scams.

 

[JulianSpringer]

I was asking myself the same leasing or a loan. I haven't taken the final decision yet but I think I will choose to get a loan from https://www.moneyexpert.com/car-finance/personal-contract-purchase/ the reason is the lowest rate of 2%. Moreover, I own the car and I can do whatever I want. When leasing I don't the right to change anything. When buying a car like 2018 Ford SUV, paying monthly 800 for three years isn't it a good deal? It seems to be one of them. So, yes choose the best option for yourself or listen to my piece of advice.

 

[tkhunny]

It's not that easy. One must also factor in:

1) Maintenance Costs - who is paying for what?
2) Travel Plans - lease mileage limitations can be a problem.
3) The actual lifetime of the vehicle. In this case, a three year lease followed by a six year loan? Wow!! Do you REALLY intend to maintain the vehicle for NINE YEARS?!
4) Resale Value - Three years and the value drops from $70K to $40K? I find that rather unlikely. Maybe, I suppose, but I'm not personally believing it without WAY MORE information.

If you just want to consider the cash, that's not too difficult a problem. Just map out the cash flows and see how you feel about it.

 

[HallsofIvy]

I am in the market to purchase a new vehicle valued at $70,000. The dealer has offered to finance the purchase for 6 years at a 3% rate. Alternatively, I am allowed to lease the vehicle for 3 years for $600 a month. After the three year lease, the dealer will sell the vehicle to me for $45,000 using the same terms (6 years @ 3% rate). Which option is better and how do I evaluate these options?

Ouch! When I bought my first NEW car (I had previously bought a used car for $600) I paid $2400 for it!
(And I kept that car for 12 years.)