Leasing Nets More Car for Monthly Dollar

Should I lease or buy isn’t as age-old a question as which came first, the chicken or the egg, but it undoubtedly has more application to your everyday life.  As vehicles get more sophisticated, complicated and expensive, leasing is increasingly seen as the right solution by those acquiring a new car.  These days one of every three vehicles is leased, and the key reason is very simple – leasing a vehicle enables you “to drive more car” for your monthly expenditure. 

The divide between the monthly payment on a vehicle lease compared to the monthly payment when financing a vehicle continues to widen, particularly as manufacturer’s suggested retail prices (MSRPs) and transaction prices continue to grow.  The contrast is most stark in case where the carmaker puts the vehicle on sale by offering a promotional lease that it subsidizes.  These “subvented” leases are the offers you usually see advertised on TV and online.  Choosing a vehicle with a low-cost lease is the best way to reap the advantages of today’s heavily competitive marketplace.

Swapalease.com, the nation’s largest online lease marketplace, analyzed monthly payment terms on some of today’s most popular leased vehicles and compared them to the monthly payments in a 60- and 72-month finance programs.  The 60-month loans carried a 3.50% interest rate and the 72-month loans were at 3.75%. The payment analysis reflects average down payment terms already baked into the deals for both the lease and finance offers.

The results are pretty stark and offer compelling evidence as to why so many consumers are opting to lease rather than buy.  For example, if you leased a Volkswagen Passat 1.8TS you'd pay $149 per month for 36 months. However, if you bought that same car and financed it for 60 months, your cost would be $360.94 each month.  If you financed it over a longer period of 72 months you'd still pay $308.16 each month.

The Volkswagen Passat is just one of more than a dozen vehicles Swapalease.com analyzed to point out the current monthly cost advantages of leasing instead of buying.  Among luxury cars, the monthly price differential is equally telling.  A Mercedes-Benz E300 4MATIC, a truly amazing luxury sedan, will cost $902.40/month over the course of a five-year (60-month) loan or $770.44/month over 72-months, but in a special 27-month, low-mileage (10,000 mile/year) lease, the monthly payment is just (?) $589.00.

The reliable Toyota Corolla is now being offered at $199/month on a 36-month, 12,000 mile-per-year lease. That same car is financed over 60 months would cost 301.36/month and over 72 months would cost $257.30. 

Looking for a luxury SUV?  The Acura MDX is currently being promoted with a 36-month, 10,000-mile-per-year lease with a monthly payment of $409.  Should you buy that same front-drive vehicle it would cost you $741.60 over 60 months or $633.16 over 72 months.

While the monthly payments are startlingly lower in the lease scenarios, it should be noted that leases bring with them no equity for the payer.  At the conclusion of the finance process (e.g. 60-months) the driver owns the vehicle.  That is why obtaining a vehicle with a promotional lease deal is especially valuable to people who like to drive a new car every three years or less.

2018 Honda Civic Type R Car Review

The 2018 Honda Civic Type R is like no Civic you’ve ever experienced, at least if your driving experience has been confined to North America. For many years enthusiast drivers in other markets have had various performance-oriented Civic Type Rs to fuel their automotive fantasies, but here our Civics were very reliable commuter modules and little more. Then late in the 2017 model year, American Honda finally authorized the hot hatchback for U.S. audiences.  And now, after the limited-run 2017 went well, Honda has just introduced the ever-so-slightly tweaked 2018 version, one part pure performance sports car and one part practical four-door hatchback, all for the bargain price of $35,000.

Let’s begin with the performance portion of the equation, because the bang for buck is nearly off the charts. First there’s the 306 horsepower and 295 lb.-ft. of torque output of its 2.0-liter dual overhead cam direct-injected VTEC turbo engine.  It helps the new model jet from zero to 60 miles per hour in less than five seconds, and it makes the Type R the most powerful Honda ever sold in America in the bargain.

But there’s more to the Type R than just straight-line speed.  Its ingenious Adaptive Damper System continually adjusts suspension damping at all four wheels to enable an otherworldly 1.0 g lateral acceleration number, essentially racecar-like cornering grip.  The ADS is an integral part of the three-mode driving system that offers comfort, sport and +R modes, the last for track use. The system modifies damping, throttle response and steering assist to match up with the driver's chosen setting.  If you’re wondering how 306 horsepower can be channeled through the front wheels without killer torque steer, Honda has the answer in the dual-axis strut front suspension design.

When ordering your own Type R be prepared to shift gears yourself.  Flying in the face of the dual-clutch automatic trend in sports machines, the Type R offers a short-throw, 6-speed manual as its only transmission choice, accompanied by a limited-slip differential.  Despite the throwback transmission, the Type R is equipped with a bevy of new-as-tomorrow electronic driving aids.  Included on the list are Vehicle Stability Assist (VSA) with traction control, advanced four-channel antilock brakes, electronic brake distribution (EBD), brake assist and an indirect tire pressure monitoring system (TPMS).   It’ll even help you park with its multi-angle rearview camera with handy dynamic guidelines.

If you’re seeking to stay connected, you’ll be pleased to learn the Civic Type R includes Apple CarPlay and Android Auto compatibility plus the Honda Satellite-Linked Navigation System with voice recognition.  Those connections are accessed from a roomy and airy cabin that also offers substantial cargo room behind the rear seats.  And speaking of seats, the driver and front passenger seats are specially designed, high-bolstered units with suede-like upholstery in black and red. Fuel economy of 22 city/28 highway/25 combined won’t induce you to sell your Prius, but then the Prius won’t rocket to 60 mph in five seconds either.  In fact it’ll take about twice that long.

In the 2018 Honda Civic Type R Honda is offering a vehicle with distinctive looks, a convenient and comfortable interior and a level of performance that rivals the best from Audi, BMW and even Porsche, all for $35K.  We don’t know why Type R took so long to get here, but we’re sure glad it did.


Best Car Lease Deals This Month

If what you are seeking in life is the best car lease you can get, you might find exactly what you want this month. Consumers looking for an affordable car lease right are likely to find not only find a car to love but also a lease payment to love, according to data compiled by Wantalease.com, the nation’s first online marketplace for new auto lease deals.  The website says prices on most of today’s popular leases have held steady from last month, and last month’s lease deals were very favorable to the consumer. In all, 24 make-models (e.g. Honda Accord) maintained their monthly lease payments and terms from the previous month. For those shopping the economy end of the new-car market, 16 make-models are currently offered for $200/month or less, and three vehicles are currently offered for less than $150/month.

Among popular choices, the Honda Civic LX, Volkswagen Passat 1.8T S and Volkswagen Jetta S are all currently leasing for less than $150 per month on Wantalease.com. In fact, the Volkswagen Jetta S is now being leased at an eye-popping $109 per month, making it the most affordable lease vehicle for October.  At that price point, the Jetta S monthly lease payment has decreased in price by 5.78% since last month.

Looking for prestige at a bargain price?  Three “entry-level” luxury cars are currently offered at less than $300/month. The Audi A3 2.0T FWD Premium and the Lexus IA 200t (turbo) are DT Editors’ favorites and both are priced at $299/month. If 300 bucks is too rich for your blood, the Acura ILX small sedan is currently being leasing at $199 per month, the same price it has maintained since August of this year.  The softening car market and some weakness in Acura sales has prompted the continuing “sale” on the ILX.

The Ram 1500 Express Crew Cab 4X4 with the 5'7'' cargo box was the vehicle that saw the largest price drop in October. If you are looking for a lot of vehicle for your money, it is currently offered at $189/month. That represents a whopping 39.58% decrease in price compared to last month, making it the most affordable vehicle in the large pickup segment. On the other side of the ledger, the Toyota Corolla SE compact sedan saw the largest increase in monthly payment.  The $199/month lease payment represents a18.65% increase versus the September payment.

“Prices on popular leased vehicles are remaining steady as we head into fall,” said Scot Hall, executive vice president of Wantalease.com. “As the holiday season approaches, as well as end-of-year deals, more dealers will try to find ways to attract lease shoppers looking for presents for loved ones or just a good deal on a vehicle to close out 2017.”

Should You Buy or Lease?

There is no simple correct answer to the lease/buy question, just as there is no simple answer to the question: should I wear a white sweater while eating spaghetti Bolognese? Making the right decision for yourself is a matter of your personal desires, values, current financial status and your ability to avoid making a mess of things.

Auto leasing has been around for decades and once upon a time offered small business owners significant tax advantages. Those days are long gone, but leasing has caught fire in the last few years, spurred by manufacturers who use special lease deals to promote their vehicles. Industry experts estimate that next year leasing will represent as much as 35% of the new-car market. Among the luxury brands it's often as high as 80%.

Certainly with this kind of acceptance in the marketplace, leasing must offer the consumer some advantages. Indeed it does, although you must remember that hula hoops and mood rings, among other essentially worthless items, have also enjoyed wide consumer acceptance over the years. Like chili pepper, leasing is neither inherently good nor bad; it simply depends upon how it and your system react together.

One of the key advantages of leasing is you only need a comparatively small amount of cash to initiate a lease. Let's say you don't have much money in the bank and no trade-in vehicle, but you do have reasonably good credit. You can walk into your local dealer, sign on the dotted line for a lease and drive out with a luxurious leather-lined Lithemobile 200LX with very little difficulty. If, on the other hand, you want to buy that self-same Lithemobile 200LX you will have a very difficult time.

Another advantage of leasing: you can structure the lease term to match your trading cycle. If you normally purchase a new car every two years, you might be better off with a two-year lease. (You might also ask yourself why you feel the need for a new car so often when the typical car is now under warranty for at least three years. In other words, if the manufacturer thinks it's good for at least three years, why don't you?)

Leasing also works to the advantage of those who don't know what to do with their current vehicle when the time comes to acquire a new one. You don't have to weigh the advantages of trading it in at a dealership versus selling it yourself, and you don't have to go through the selling-it-yourself hassles of running want ads and meeting with prospective buyers. You don't even have to decide when to do all this. It's spelled out in the lease contract. Most often you have two simple options: 1. you take the car back to the dealer and wave bye-bye or 2. you pay the dealer (or finance company) the amount specified in the lease agreement at the time the lease was established and you keep the car.

One of the biggest reasons for the popularity of leasing is the fact that for the same monthly payment, you can lease a significantly more expensive vehicle than you can buy. Even if you have a good credit rating, most banks and other financial institutions will expect you to put place a down payment of 10%-20% on a car. This is to protect them in case you go berserk, start keeping company with the lead singer in a grunge band and refuse to make the payments. If they are forced to repossess the car they have a 10%-20% head start on recovering their money. What this means is that to qualify for a car loan most people have to have $2,000 to $5,000 minimum in cash or in equity in their current vehicle.

That puts a lot of people out of the car-buying picture. But wait a minute! Now there's the possibility of leasing. You might not have much money to put down, but you might have a good credit history that gives the financial institutions the warm, fuzzy feeling you’ll make the monthly payments.

When you lease, you'll have the use of the car over a specified period of time, but, according to the lease terms, you must maintain the car, insure it and limit the miles you put on it. At the conclusion of the lease period, the financial institution will get back a reasonably well-maintained, late-model, low-mileage vehicle. That’s what we call a tangible asset. Meanwhile, you’ll have to initiate another lease or somehow pony up enough scratch to buy a car.

The Key Purchase Advantage

You can look at the lease experience as a positive one. After all, it allows many people to drive vehicles they otherwise could not have afforded for a period of time. What's more, they didn't have any hassles trying to sell the cars, trucks or sport-utility vehicles when the term was up. And they didn't have to go into his pocket to pay for major repairs, since, through the first three years of a lease, the vehicle was under manufacturer’s warranty.

Compared to the numerous advantages of leasing, there is only one key advantage to purchasing your next vehicle–as you make payments, you build equity in a real asset. For many people, however, this one advantage of buying far outweighs all the advantages of leasing.

Look at it this way. Would you rather lease or purchase your home? Sure, by owning the home you have to put up with all the hassles that are involved–maintenance, upkeep, repairs–but you're also building equity in a real asset for yourself and your family. When you purchase the vehicle you, not the financial institution, take the risk on the value of the vehicle at the conclusion of the financing term, and for this risk you are very often rewarded. Your payments will cease and you will have a real asset, a real asset you can continue to drive for months, if not years, payment-free. And studies show that driving your vehicle until it essentially has no re-sale value is the most cost-effective way to have auto transportation.

In most instances, you are better off purchasing a car than leasing it if you can afford to make the down payment and the higher monthly payments when compared to leasing. Of course, lease payments should be lower than the monthly payment on a purchase since in leasing you are only obtaining a part of the vehicle’s life, not the vehicle itself. The important difference that favors purchase -- you take a risk on the future worth of an asset, and you most often gain a reward for taking that risk.

That said, there are still a few instances when it's better to lease than buy. Among them are:
  • You simply can't afford to purchase your dream vehicle but you're confident you can make the lease payments through the end of the lease term. (Always plan on staying with a lease through the end of its term because it is very difficult and expensive to terminate a lease before its completion.)

  • You feel the quality and dependability of the vehicle is a bit "iffy," but you'd still love to have it. Leasing allows you to try it out for a couple of years. If you love it at the end of the term you can buy it; if you hate it you just drop it off and say good-bye.

  • You need to have a bright, shiny new vehicle every two or three years. (It's okay to admit you're shallow.)

  • The manufacturer is making a lease offer that's so financially compelling that you can't afford to pass it up. Many manufacturers now put models on sale, not by lowering the price, but by offering special lease deals.

  • You can't stand the hassle and the bargaining involved in selling your old car and buying a new one.

We wish it were simpler to decide whether to buy or lease, but a car acquisition is one of the most complicated financial deals most of us will make. Since each of our financial circumstances isn't the same, neither is the right answer to this important question. But the information we've provided should help you determine where you fit on the lease-buy continuum.

-- Jack R. Nerad

Nerad is the author of The Complete Idiot’s Guide to Buying or Leasing a Car, which is available at retail bookstores nationwide as well as at Amazon, Barnes and Noble and other online outlets.