Leasing
I have to admit we are big-time leasers.
We've leased 5 of our last 6 cars. Currently both the Odyssey and the Murano.
In the end I'm sure it is more expensive but there is a value to leasing that we enjoy that people focused only on numbers only don't always appreciate.

Frankly the value of being in a new car and the flexibility of being in the RIGHT car at the right time almost makes it worth it.

All our lease terms have been for 36 months. It's a sweet spot since many warranties are that long. Often leasing companies will extend it to 39 to reduce payments. Three years also turns out to be a good length because three years seems to be the time our eyes start roaming for a new car. We also always get a 15,000/yr contracts rather than 12,000/yr. You pay a little more for 15k but we find that is how much we drive. Going over 12k and paying per-mile excess fees would be worse.

Our first lease was an Explorer. Jane wanted something bigger so she moved up to an Expedition next. Then she felt it drove too much like a truck so we moved to an Odyssey. Now she doesn't like the mini-van stigma and may very well move back to an SUV late next year. We'll most likely get a car with a DVD player next as well.

The Explorer, she claims, is actually her favorite car so far. I'm thinking the Honda Pilot (which I considered) might be sweet next time around but believe it or not she keeps mentioning a Suburban! You see how fickle consumer's are? It's fun though, to have choices.

My first leased car was an Acura Vigor. I loved it. It was my chick-magnet car (for me) and was what I was driving when I met Jane (see it worked). After three years and a new baby, I felt I should be in a more "practical" car so I walked into a Chevy dealership and negotiated a good deal on a Lumina. Negotiations actually included having them purchase my Vigor for more than the residual value! Of course I lied and told them it was paid for. In the end they didn't care, but I got the price-difference.

I missed my Vigor. I realized that I had been spoiled and in the future would be happiest only in at least a "near-luxury" car like the mid-line Acura. Jane loved my Vigor too and never liked the four-door Lumina. She said it was a Grandfather car. Ouch! On the other hand, her comments paved the way for my next car; the new Acura CL. The CL was a sportier version of the Vigor. We loved it. Three years passed and my car was growing up and starting school, oops that's my kids; anyway my lease was about to expire. Each year the bank that "owns" the car and holds the title tries to get you to buy the car. I didn't really consider it.

This past school year, I was taking David and Kristen to preschool three days a week and was doing the car-seat fire drill moving car seats between my car and Jane's car. Eventually we left one in my car and had David in a seat-belt only. It was still a bit of a hassle getting David and Kristen in the backseat of my 2-door. And I certainly couldn't ever use my car if I had all three kids since it wasn't safe for Cassidy to be in the front-seat with the passenger air-bag.

The Murano on paper and in practice was the perfect car for me. It had the performance and luxury of the Acura's I was accustomed to. It has 245/hp! I loved the styling, it was spacious and I could fit my whole family! Talk about getting your cake and eating it too! I can see myself purchasing this style of car, but being a brand new model, I felt leasing was the way to go. In my mind, if I'm pretty certain I want to keep a car more than three years, that's when I'll switch to buying (not if I want to impersonate a Grandfather ;-) ). Right now there are lots of "cross-overs" like the Murano so in three years the choices should be interesting.

Our first lease was with D&M Leasing out of Austin. I really liked the guy we worked with (Jeff) and even after moving to Austin we continued to get cars from him. He has relationships with banks and dealerships and I feel the Dallas area offers more choices. He personally delivers the car and drives the old car back to Dallas!

Leasing can be kinda complicated but be assured there is still room for negotiation. The price of the car, the interest rate of the loan, the residual value assigned by the bank giving the loan (or the dealership), the mileage allowance, free oil-changes (offered by some leasing agents, not D&M), all allow some wiggle room in the final monthly payment. Jeff is always forth-coming in sharing and explaining all the data in the lease contract. I really trust him.

I try to have several model cars in mind and consider the residual value when making my decisions. Hondas have great residual values which of course means our payments are lower since we're basically "paying" the difference of the car price and the residual value after three years. I always call Jeff for advice and his insights on cars/values are always valuable. I never put any money down (capitalization reduction) to lower my montly payments. I think it kinda defeats the purpose of leasing and the fact I can leave that money somewhere else (or spend it) is one of the big advantages of leasing. The lower payments of course is the other obvious benefit. We simply would not be able to afford the cars we want (both of us) had we had to purchase.

After contacting Jeff a few months before my CL's lease was up and researching what car I wanted, I decided to go visit a Nissan dealership to drive a Murano to see if it lived up to it's expectations. It did. My intent was to simply go back home and give Jeff the go-ahead to find the Murano with the options I wanted. The dealership of course was not going to let me go without trying to sell me. They succeeded, but only because I had done my homework and recognized a good deal when they offered it to me. I had already gotten a quote from Jeff and knew that the Murano was going to be a little more than the Acura CL. The dealership was able to beat Jeff's quote but only after I rejected their first two offers. Actually, I had a figure in mind that I set low which I didn't think they could meet but they did, with a little negotiation. I rejected their first offer because they matched my target monthly payment by extending the lease to 39 months. The second concession I asked for was to increase the mileage allowance from 12k to 15k. The sales guy was young and the fact he didn't point those two items out gave me the ammunition to reject their offer (you know how it is, they make you sign a paper stating you agree to a price so they can 'take' it to their manager).

I felt bad about having to tell Jeff I wasn't doing the Murano with him. He may very well have been able to match the lower offer if given a chance, I'll never know. The dealership valued the Murano more than the bank, however, and was starting with a higher residual value than I think Jeff was getting quoted.


Benefits of leasing (I put a lot of value in the "service" and time-saving benefits):
1. Lower monthly payments (about $200-$300 lower though it depends on interest rate and downpayment used for purchase)
2. No down-payment
3. Enjoy new cars every three years
4. I can easily switch to a different car when I get tired of my current car or it doesn't fit our lifestyles.
5. Don't have to hassle with repair bills or the HASSLE of taking cars into the shop for repairs
6. I love being able to call Jeff, tell he what I want, and he delivers it. I trust I'm getting a good deal. Though I'm confident of my negotiating skills and have experience buying cars, I'd just rather not hassle with it.
7. I don't have to worry about selling any cars.
8. I know ahead of time what I'm paying for. Buying a car and selling it later, you don't know what it will be worth. The Expedition was a great deal because Banks overestimated what Expeditions would be worth. We probably could have bought it from them at below the residual value.

Downside of Leasing:
1. You have to watch your miles
2. You have to take care of your cars or you'll be hit with "excessive-wear" charges
3. You pay more compared to buying and keeping a car many years