Lease a Smart a good idea ?

[Guest Smallcar]

Hey peps im new hereI test drove the 451 and there is no doubt i really like the handling. but my concern is more about the payment method. I was wondering if leasing a Smart 451 would be the best thing since nobody know for sure how reliable the new 451 is ?I'm worried about being stuck with a car i can not resell if i decide to change later (in 3 or 4 years).do you beleive it is best to lease the 451 ?Has anyone tried to sell a Smart before ? how much did the dealer offer for your current smart ?

[Guest dipstickone]

I would say that leasing would not be a good idea for a inexpensive car like a smart. A lease requires a term, usually closed 36- 60 months , and a residual or payoff amount if you would like to keep the car once the term is up. Since the smart is under 20k to purchase and is a new model with no depreciation value yet determined and no used car value ( or wholesale value). Since production is claimed to be sold out for 2 years, and the vehicle is new with a full warranty , it would seem to make sense to shop for a good rate for a standard car loan and have the ability to sell the vehicle at any time you choice instead of being held to a lease schedule. I would expect any mechanical issue with the car , having been made since 1997 and thousands and thousands of units sold abroad.

[Guest dipstickone]

I would ___expect any mechanical issue with the car , having been made since 1997 and thousands and thousands of units sold abroad. see above I meant to say "I would NOT"

[LKern 0]

Leasing is for suckers, no offense. The fine print leaves every "out" for the company, but none for you. And fine print there is. Full disclosure: I'm a little (!) sour on leasing after what happened after my father died. Too long to explain here, it will suffice to say I will never, ever lease a car unless I were a billionnaire and wanted to keep an incredibly expensive car for 1 year and no more, and wasn't interested in the car itself.I agree with dipstickone as well. Leasing a car as inexpensive as the Smart might not be a good move. Better to getthe extended warranty and keep it. I think it added 10 bucks to my payment. Resale value, if you take care of the Smart, should be pretty good.

[Guest Smallcar]

Sold out for 2 years ? im in canada though. I was wondering if current 450 owners have tried to upgrade to 451 yet. how much were the dealers offering for the 450 in exchange...

[Calgary Guy 0]

I'm not fully conversant with the US market when it comes to leasing, however, it probably different than the Canadian market that I am conversant with. I too did not believe a lease was a good idea until i became involved with the automobile business as a network and internet manager. After four years of setting up an online presence for six major dealerships, I was deeply involved in both sales and leasing. I have since left the business to pursue other more lucrative pursuits but decided to aquire a 451 Passion. My choices/options were to pay cash or lease. I chose to lease for tax reasons and didn't hesitate at all in doing so. The important part of this decision is firstly to know as much about leasing as you can find out before you sign and deal with an up front dealer. As with any car deal, there are all kinds of vultures out there. Here are some considerations for you. Down payments only reduce your monthly payment. In otherwords, you are prepaying the lease without getting anything for your money. Make sure you are accurate in estimating your expected mileage. Post lease mileage charges are inflated substantially. Know what the residual is. In my case, I want the option of buying out to be realistic and believe I can make a buck doing so based on my knowledge of the future market.CheersCG

[Duck 16]

I can't imagine why anyone would ever lease a vehicle. Do you like paying more for things, or using something you don't own?Save up, buy a car cash, and drive worry and care free...-Iain

[SmartFella 0]

i will never lease anything again if i can help it...the smart is being bought...then when you are done paying for it...you don't have to take it back to the dealer and hand them the keys

[SmartieParts 12]

I can't imagine why anyone would ever lease a vehicle. Do you like paying more for things, or using something you don't own?Save up, buy a car cash, and drive worry and care free...-Iain

Agreed entirely. Ok, not everyone's able to be in that position, but yeah - if you can afford to buy it, then buy it. If you can't, then think twice about if you really want the payments. If you've thought twice and you still want it (of course you do!) then get a loan, not a lease.Leasing without a crystal ball is like investing in the stock market but without the investment At best, you come out around the same... at worse, they screw you. You can't beat the house, and believe me - they stack the deck. Its true that depending on the future value of the car (which you can't possibly know unless you're *special* but then you'd win the lottery and we wouldn't be having this conversation) leasing will either have you ahead of the game or behind the game at the end of the term. Guess who writes the contract details... I'll give you a hint... its not you. Its the guy that fully understands how it all works and is ensuring he's not on the losing end of the stick.Leasing has a bit of a comfort issue if you can resign yourself to renting a car perpetually and you're ok with that. I mean, it has its advantages... you never own the car, so you never have to deal with its problems."you never own the car"... ok, let's think about that. Far too many people lease cars (or whatever) with the expectation that they will buy it out at the end of the contract and then own it. Err... ok. But the guy selling (renting) you the car isn't an idiot. There's no way that at the end of the term when you add up your payments to date + the buyout that you saved money... just not going to happen. So if you expect you're going to buy at the end of the contract, well then why not buy at the beginning of the contract?The financial advantages to leasing are lost on you if you aren't writing it off for business use. Even then, the advantages are unclear (there's tradeoffs - anyone that says that leasing is a better writeoff than owning obviously isn't an accountant). There are non-financial benefits I suppose... I've never seen how it was worth it though, personally.There are also insurance implications most people don't think about. For example, if you have replacement cost insurance and write off the car you put extra money into the leasing co.'s pockets and you paid a premium to do it. Its their car, not yours - so they are the beneficiary of the insurance, not you. The ins-and-outs of that probably vary depending on where you are.Loans are easy. Leasing is easy only because they sales guy REALLY wants you to sign it. But its complicated and you really have to consider who's benefit all those tiny words are for :)Good luck! - Steven

[Calgary Guy 0]

As I said in my previous post, I was in the car business long enough to sell over 400 vehicles and over half of those were leased. And yes the salesman does want you to lease as it builds a solid repeat customer base, not because he makes more money. Believe me, with all the incentives on new cars, the money is in used cars for the salesperson.I have heard all of the above arguments many times and yes, if you walk into leasing blindly and at the mercy of the dealer. you will likely wind up with a lease that "doesn't fit". I particulary like the concept of "I don't own it". If you think you own a financed car, then you really don't understand the depreciatation vs value equation. I can show you that a typically financed car will not reach the point of having any equity until 30 - 36 months into payments unless you placed a large down payment.I have owned many cars myself and after being in the business, I have made money on every one of them. As I said, I could have paid cash for the Smart. but chose to lease it for tax reasons. I fully intend to make money on it as I negotiated a residual that I beleive will be below the wholesale price at the end of my lease. I will buy it out and resell it myself at retail and expect to make about $1500. There are some skills you learn in the business that do work.Having said all that, leasing isn't for everyone, especially if you are a low mileage driver.Cheers CG

[Guest Smallcar]

Forget about saving and paying cash. I'm not a doctor. It would take me 2 to 3 years to save 20k. And in 2 or 3 years god knows what can happen.. you can die of a cancer or something I don't know much about leasing, thus should i just finance ? I can probably put 2000.00 or 3000.00 cash down right now and finance the balance for 48 monthsFinancing 20k @ 48 months is about "wasting" 500.00 a month. (not so bad i say) But then again, i'll be stuck with a car for sale in few years from now and because im a bad seller i will endup selling it to the dealer. Suppose in 4 years from now i want to buy a Volvo. How likely are Volvo Dealers going to trade-in my 2008 Smart for a new 2012 Volvo model ? The Volvo salesperson knows that if he doesn't take my Smart i won't be able to buy his Volvo. right ? So he better takes my 4-5 years old Smart right ?.If only we could tell for sure that the Smart 451 is a reliable car that can last 5 or 6 years without too many repairs/maintenance it wouldn't much of a concern. I suppose i can live with a 1k margin of error. I just don't want to lose too much. I'm just trying to minimize the lost between Financing and Leasing. know what i mean ?

[a2jack 1]

Calgary. Good post best I've seen on leasing.We look into this issue each time we buy a car. but we run all our cars for business and our mileage is out of sight.I think you are right in the case of the Smart. If you hold down the mileage you will make out ,dollar-wise, way ahead. A car is a car, even something as cute as our Smarts. We really don't need to own the cow to drink the milk. A2Jack.

[Duck 16]

Forget about saving and paying cash. I'm not a doctor. It would take me 2 to 3 years to save 20k.

I'm not a doctor, either - yet that's exactly what I did, in that timeframe.

...it makes me love my car that much more. It's mine - I'm quite proud that I said "okay, I want that", and was responsible enough to put away the cash, and work tons of overtime for a few years, to save up, to buy a brand new car cash at age 23. I started putting away the money before they even announced they'd be coming to Canada. I kind of grin when people say "what are your payments on something like that" and I can truthfully say "I have no idea".

Leasing seems to be a great option for those who a) don't mind paying for something twice, or don't really care about the vehicles they drive. The buying a volvo in 4 years comment is a great example of that; if you really wanted/loved a smart, you'd be thinking about ways to make it last as long as possible...

Just my humble opinion

-Iain

Edited March 27, 2008 by Duck

[Calgary Guy 0]

A2jack - Your comment about being a high miler tells me that you should consider leasing as an option. This allows you to predict your expenses exactly, Anything under 12K per year doesn't make sense to lease but if you are in the 30 –40K range, the economics work very well if you calculate the cost per mile of ownership (not operating) compared to the fixed pre-lease price of buying extra miles.

Duck - Leasing doesn't work well if you are planning to drive the same car for more than four years. In fact, a four-year lease does not make much sense, however, a 24,30 or 36 month does if you are a driver that normally changes vehicles within that same timeframe. As I said, setting up the lease for your specific driving needs is essential to gain the benefits. The worst scenario and the one most dealers push is getting you into a lease to get the lowest possible payment for you. This is the trap you want to avoid…there is no free lunch folks.. it is done by a large down payment, usually your trade, then limiting the miles to a ridiculously low number then collecting at the end of the lease. I'm sure you have heard these horror stories.

I'm not sure what you mean by " buying the vehicle twice". You lease at a fixed rate and know what the residual is so your payment is based on what you use – including depreciation. The residual is usually set to match the expected wholesale price at the end. Remember, the dealer has to resell the vehicle and he buys it from the leasing agent at the residual price, which is usually the same as what you would get on a trade in if you owned it. This is where you can make a buck if you have any sales skills. I never trade my vehicles in because I do look after them and can easily get top dollar on a private sale. Think about this…It usually takes about 2 –4 weeks to advertise and sell the vehicle at retail price and the usual mark-up (about $2-3000) goes into my pocket and I then make a cash deal on the next car.

Your second comment about not caring about your vehicle isn't limited to leased vehicles…ask any car salesman about the condition of trade vehicles and the stories the customer tells of how good it is. It isn't only the salesman who tells fibs.

With respect the idea of paying cash for the vehicle, I consult with my accountant and decide if the cash is better used making me money other ways or tied up in owning a vehicle. This is how I arrive at leasing.

Just my thoughts….every situation is different.

[MikeT 744]

Guess what the accountant is going to say:a) invest with me in ZAP, you'll make a millionb) pay cash for your carLOLedit: freekin' smilies

Edited March 28, 2008 by Mike T

[humphryd 0]

The dealer wanted me to lease but I said no and I am happy. done 27,000 km in 10 months and was not driving it for 2 months. That would have been expensive.

[Duck 16]

@ Calgary Guy - I drive 80 000 km per year. I'm not following your logic, are you saying I should have leased? With regard to the "pay for it twice" comment, I'm refering to the fact that you're paying way, way more than what you would have if you'd just bought it outright in the first place.@ smallcar - not being able to save up for something kind of shows off the problem I think that as a race we have... where, right now, companies make it way too easy to "buy" things that we don't have money for. I have always been of the belief that if you don't have the money to buy something, you shouldn't have it. If you haven't worked to earn the money to buy something, why do you deserve to have it, you know? People who carry huge credit card balances and then can't pay them off, etc... when people go to Leon's or whatever and get a furniture set that says "DO NOT PAY A CENT FOR 19 YEARS." And then they go pay 2 or 3 times as much for the furniture, that now has dog pee all over it and a spring that pokes you in the butt! Work > make money > spend money on something you like. It shouldn't be in reverse. Better to pedal uphill and then coast downhill, instead of getting stuck in the valley without the oomph or ability to climb out.I guess I don't understand how leasing works. I just hate the thought of using something or pretending it's mine when it's not. Having a mortgage is the first time I've ever owed someone something, and I can't stand it.../rant-Iain

[MikeT 744]

That's the attitude of the Depression generation, my parents to be specific. And it is a good one.

[Kimberly 2]

That is a good attitude for most things in life. There are plenty of things we don't need. This is why I do not fall into a feminine trap of buying magazines. They just make you want to buy things.However, a house and car (not luxury ones of course) are items that financing for is not necessarily a bad thing. We do not all have the luxury of saving up in cash to buy one of these items. When you have all the usual expenses to pay (rent etc) saving up that kind of money is not always easy. Financing or leasing works for some people. I wouldn't make judgements that these people can't save or don't make enough money. Financing a car or leasing a car does not equate with wild spending. Some very responsible people financially will choose to finance or lease.It sucks to have a mortgage but it is just a necessity in today's world.

[Calgary Guy 0]

Kimberly is right on in her observation. I also came form the old school that said pay up front for everything until I learned a bit about todays economics. As I previously said, I did have the cash to buy it and chose not to.Duck; without knowing all the details of your ownership expectations, a simple yes or no won't answer your question abpout 80K per year. If you are going to drive the car until it quits, then leasing is not in your interests. If you intend to trade it off in three years, tell me what a dealer is going to offer you for a three year old Smart with 240,000 Km on it? I have a pretty good idea as I appraised many cars with that kind of mileage. It is certainly worth more to you than to him.

[Calgary Guy 0]

@ Calgary Guy - With regard to the "pay for it twice" comment, I'm refering to the fact that you're paying way, way more than what you would have if you'd just bought it outright in the first place.I guess I don't understand how leasing works. I just hate the thought of using something or pretending it's mine when it's not. Having a mortgage is the first time I've ever owed someone something, and I can't stand it.../rant-Iain

i guess on the surface, this might seem true but in fact it isn't The total of my lease payments plus the residual plus the interest on the lease is a precise amount that I know up front. Add that to my tax advantage and I am saving money over buying it outright. This doesn't include the investment of my capital that I didn't lay out.CG

[Duck 16]

I still don't get it. Even if you're "Only" paying $10 000 over say 3 years, at the end of 3 years, you have nothing, and are out 10k. How did that end up being less??-Iain

[Calgary Guy 0]

Lets assume I do pay $10,000 over three years...what do you think a three year old Smart with 75 K on it is worth?

[Guest Smallcar]

Presuming the car cost 28k total After 36 months most cars lose about 60% of the initial invoice value. So after 36 months it may worth around 12k top ?

Edited March 29, 2008 by Smallcar

[Duck 16]

I don't follow this logic at all, and my head hurts.-Iain