buy vs. lease a FFE

[vett93]

How do you guys decide between buying vs. leasing a 2014 FFE? If I lease, I plan to keep it for 3 years and 12K miles per year.

 

I have bought 10+ new cars in the past. But it may be attractive to lease a Fusion Energi Titanium. I understand the basic terms in leasing. However, it is unclear to me what my liability will be when I return the car after the lease expires.

 

Do I need to pay additional fees for minor scratches, stone chips, etc? It seems that I may be subject to dealer's scrutiny at that time. How do you guys handle such issue? Thanks.

[Russael]

I leased a vehicle once (1997 F150) for 2 years.  Road rash, normal wear and tear, and minor stone chips are usually regarded as normal usage.  Big dents, creases, things that are NOT caused by regular use and starts moving toward abuse can make it expensive for you.

 

Your liability with a lease will usually be 0 unless you go over your allocated miles or return the car with a big dent, such as having someone bump your fender or something.  I'm sure they're marginally tighter about that now... when I returned my F150, I had a crease due to someone's side view mirror on my rear fender, and they let me walk away from that.  I also had a dent on the hood from where something fell off of the garage wall (an edger) and the handle whacked the hood.  I'm sure they won't let people get away with that NOW (maybe they overlooked it because I was buying a 1999 EB Expedition 4wd, which I still have), but in most cases, you shouldn't have any liability.  Of course, you can always fix big dents and other glaring issues before you return the car.

[apm]

How do you guys decide between buying vs. leasing a 2014 FFE? If I lease, I plan to keep it for 3 years and 12K miles per year.

 

I have bought 10+ new cars in the past. But it may be attractive to lease a Fusion Energi Titanium. I understand the basic terms in leasing. However, it is unclear to me what my liability will be when I return the car after the lease expires.

 

Do I need to pay additional fees for minor scratches, stone chips, etc? It seems that I may be subject to dealer's scrutiny at that time. How do you guys handle such issue? Thanks.

Hi vett93,

 

I did not lease by FFE, but you do not necessarily have to return the car to the dealer at the end of the lease. You can trade it in to another dealer or you can take it to a place like Carmax. I heard from friends that Carmax has paid them more for their cars than what was owed on the lease so they got some money back.

 

Hope this helps...

 

Regards,

APM

[murphy]

I've never leased a car but that doesn't sound right. 

When you lease a car the leasing company owns the car.  How could you be able to trade or sell a car that you don't own???

[MC2]

I traded two leased Range Rover Sports, and both had positive equity.  When you buy a car and you finance it, you don't own the car, the bank does until the car is paid off.  Leasing the car is the same concept.  You don't own the car, the leasing company (or bank, which in most cases, the same) does.  The only difference is that when you lease the car, you are paying for the depreciation up front in the form of monthly payments and a pre-determined value of the car at the end of the lease term (residual value).  In most leases, there is a clause when you can pay-off the lease.  This is the point in which you can actually trade in the car.

Edited March 11, 2014 at 03:41 PM by MC2

[vett93]

Thanks all! The dealer wants to sell me a "wear care" package for $985. Is this something you would consider?

[meyersnole]

How do you guys decide between buying vs. leasing a 2014 FFE? If I lease, I plan to keep it for 3 years and 12K miles per year.

 

I have bought 10+ new cars in the past. But it may be attractive to lease a Fusion Energi Titanium. I understand the basic terms in leasing. However, it is unclear to me what my liability will be when I return the car after the lease expires.

 

Do I need to pay additional fees for minor scratches, stone chips, etc? It seems that I may be subject to dealer's scrutiny at that time. How do you guys handle such issue? Thanks.

 

The biggest issue I have with lease, is that you are only planning on keeping a car during its heaviest depreciation period. From a financial standpoint, you are going to take a healthy hit on buying a new car and selling it only 3 years later (the first year is the heaviest, and it goes down from there). 

 

The first question I would ask you before answering which is better is do you plan to sell the car yourself or trade it in? For the convenience of not having to market and sell your own car, you will discount the value of your vehicle that much more (wholesale value). If you plan to do this in either case then it just comes down to can you predict the future well enough on how used the car will be when its time to turn it in. Run over, and how much penalty is built into the lease terms. Come under the estimate and the residual value may be wrong, but as mentioned above you can then buy it and sell it somewhere else... either by owner or to someplace like carmax.

 

On your last question of condition penalties, I have no experience but I could guess that if you are a repeat customer buying again some things will be overlooked.

 

If you just want to drop the car they might pull out the magnifying glass.

[SteveEnergi]

Thanks all! The dealer wants to sell me a "wear care" package for $985. Is this something you would consider?

 

First, I only leased once in my lifetime and learned from that mistake.  Financially I feel it's always better to buy.  The package you mentioned is for "peace of mind" because you are leasing and don't want to get stuck paying for a ding/dent.  What does the package include?  Essentially your purchasing additional insurance but I never buy such things.

 

From what I can tell, many people at this site have leased their FFE's and I'm surprised there aren't more responses to your inquiry.

 

I mentioned earlier that for me, I think leases are not financially beneficial to me, however I did consider leasing this vehicle for one reason.  How will the battery and technology improve in the next 2 years?  The FFE may have twice the battery capacity and may even be smaller giving us more trunk space.  However, that speculation wasn't enough to convince me, so I purchased.  I tend to keep cars 7 to 12 years.

 

Best of luck,

Steve

[Dune]

We looked at leasing initially, with the primary reason being concern over the future value and faster than normal depreciation.

The early adoption of any technology comes at a premium and as fast as things tend to move early on, obsolescence can come on very quickly.

We ended up buying, mostly because we didn't want the tax break to go the leasing company.  I know that they claim it is figured into the lease deal, but the numbers didn't add up to that from what we had seen in the past (on our Volt).

I am now questioning this decision.

I fear that soon there will be many PHEVs on the market, and that as the full-electric range grows, the value of these cars will shrink.

 

I read an article a couple of days ago that said just the opposite - that the Fusion Hybrid, along with the Prius, were doing much better than the average on value after 3 years.  This was mostly for regular hybrids though, not PHEVs.  It is the added value of the pure electric range that will be the first to go, as that range increases in newer models.

 

CarMax definitely buys leased cars.  When my father could no longer drive, I took the Honda Fit that we had leased for him to CarMax.  They bought it and gave us a check for a couple-hundred dollars.  We are going to be doing the same with our leased Honda Oddysey this weekend, and the delta there is going to be in the thousands.  Both of these Hondas had/have VERY low mileage for their age.  In my experience it is always MUCH better to take a car to CarMax rather than trade it to a dealer. 

 

Regarding leasing in general, I used to think that a lease price was fixed.  That there was no negotiation involved.

I read a book in the late 90's that was called (I think) "The Insider's Guide to Buying a Car" which set me straight on the fact that a lease is just as negotiable as a purchase.  The author had worked in dealerships and was quick to point out that the dealers just love it when they can sell someone based on a monthly payment.  I helped my girlfriend back then lease a car, and everything he said would happen in the book did.  I kept asking for the cap cost, leasing rate (interest), and residual value, and he kept going back to "talk to the manager" and coming back with a payment instead.  I finally told him "As much as I appreciate what you're doing here, until I get these three numbers, this deal is not going to happen."  We ended up with a monthly payment that was more than $100 less than their first offer.  Not bad on a car that listed in the $30's.

Edited March 13, 2014 at 01:22 PM by Dune

[blars]

I was actually able to get my lease for very near what it would cost to buy the car outright with 0% interest (this figures in the $4k tax credit that is applied as a "dealer incentive" or whatever).  You get told what the residual is at the end of the lease and it is a guaranteed price that you can pay for it.  I got a 2 year lease as I wanted to try out the technology before committing to buying.  In addition, if something newer/better comes out in that time frame, I can walk away from this car 2 years from now, no money out of pocket, and get into another brand new car.  If you're leasing in the 2-3 year timeframe, you're almost always under the bumber-to-bumber warranty, so you don't have to worry about anything but regular maintenance (which for the FFE is minimal).  Here's how my lease broke down:

 

60 month 0% interest deal buying outright:

$38,176/60 = $636 monthly payments

 

2 yr/15,000 mi lease, ~$24,000 residual value/buyout

$424 monthly payments = $10,176 over 2 years

if buying out at no interest (you'll have to get a used car loan, so interest will be involved)

24,000 for 36mo @ 3% = $698 monthly payments

 

$1088 saved with the lease in the first 2 years payments ($5088-$4k tax credit when buying).

 

As far as taxes go, if you buy outright, you're usually paying sales tax on the entire sale price.  With the lease, you're usually paying taxes on your lease payments, then if buying after the lease term is up, are paying sales tax on the residual/buyout price (this varies by state), so for me:

 

Taxes for Buying

$38,176 * .07 = $2672 total taxes when buying

 

Taxes for Leasing

$424 * .07 * 24 = $712 spread out over 24 months (~$30 per month)

+ $1680 if buying at end of lease

= $2392 total taxes

 

TOTAL BUY @ 0% interest:

Payments (38,176) + Tax (2672) - Tax Credit (4000) = $36,848

 

TOTAL LEASE, BUYOUT @ 3% interest:

Lease Payments (10,176) + Tax On Lease Payments (712) + Loan Payments (25128) + Loan Tax (1680) = 37696

 

Difference of $848 over a 5-year term (in favor of buying).  I justify that additional expense by the following:

- Smaller upfront expense (payments, taxes)

- Smaller monthly payments for first 2 years of use

- Ability to choose to own vehicle after 2 years of use (I've never owned a Ford, never owned a PHEV, so, I have an easy out if I don't like it)

- First 2 years of use are covered by bumper-to-bumper warranty (Really only a benefit if I jump from one leased vehicle to another)

- Potential for positive equity at end of lease

[TujuMaster]

I almost always lease my vehicles and I leased my Energi.  Generally, a good lease takes into consideration surface scratches and small chips as a matter of wear and tear.  You do need to be wary of dings, mainly big ones, but for the most part I find leases to be hassle free.  Now leasing is an interesting situation because it's not for everyone.  But if you keep your milage low and avoid any major damage, you can possibly come out with positive equity at the end of the lease giving you more wiggle room should you decide to either trade the vehicle in for another or buy it.  And if the damage is costly at the end, you could always buy the car at the end of the lease and keep it or sell it as a private seller.

[vett93]

Thanks for all the help. I went ahead and traded in my 2008 Evo and leased a silver FFE Titanium. I can always buy the car at the end of the lease. My Mitsu Evo is the most reliable car I have owned in the 10+ new cars I have purchased, including my wife's Lexus. Hopefully, this FFE won't be too disappointing.