Who has good lease rates on appliances you wouldn't mind driving?

Younger coworker, early-mid 30s, 2 kids in front-facing seats.  Wife has a Kia Sorrento, a few years old, but in decent shape.  They need a small-to-mid size car that will handle his day-to-day 1+2 workload but does not need to cover the longer family trips with all the gear.  The new car will do 9,000-11,000 miles a year.

He's currently driving a 2007 base Cobalt that he bought new.  Currently about 150k and like all GM products of its ilk it will run another 50k at this rate but in the end it's a 13-year-old base Cobalt.  At my urging he's been driving it probably 3-4 years longer than he would have otherwise, but he's getting pretty tired of it at this point and it's getting a little haggard.

Thanks to COVID he's considering a 3-year lease or so and then either buying it out or buying a new car later once conditions have improved.  He basically has the option of leasing new or buying used with some age that will probably need work in the next few years.

So who's offering decent leases on decent cars where he won't get creamed if he decides to buy it out?  They already have one Kia and that's the first place I pointed him, but I didn't know if there were other solid options out there.  Leasing is not in my wheelhouse, really, but I want to advise him the best I can.  Thanks.

I'd check Leasehackr forums and look in whatever area he is based in. They're pretty good deals during certain months.

Awesome, thanks!  Philly-Baltimore area.

In reply to Duke :

You'll be in good hands. California and the Northeast seem to have the sickest deals.

Leases are such terrible financial decisions. Unless they are using it for a business and can use it as a tax deduction I will NEVER recommend a lease. Especially with all the 0% financing most manufacturers are doing right now. 

In reply to bobzilla :

Agreed, and I've had that discussion with him before.  But sometimes it's a workable solution in the near term, even though I would never recommend it as a way of life.  He's not averse to buying, but he's not mechanically inclined and he wants something he won't have to deal with beyond gas, tires, and oil.

bobzilla said:

Leases are such terrible financial decisions. Unless they are using it for a business and can use it as a tax deduction I will NEVER recommend a lease. Especially with all the 0% financing most manufacturers are doing right now. 

A lot of people love the fixed expenses.  $199 a month or so and that's all you have to worry about.  The BIG thing is that it's the company doing the lease (lessor?) that is taking the gamble on what the car will be worth at the end of the lease.  If you buy, and the car depreciates like a rock, you are screwed when you go to trade it in in two or three years.

No they are not for everyone, but I can see the appeal given the stability they offer.  My mom leases a new Civic every couple years and it's perfect for her:  She gets the security of having basically a new car all the time, and the security of knowing what it's going to cost to operate.

I'd have to caution anyone with small kids about entering a lease since they are responsible for repairing wear and tear inside and out.  36 months is a long time to keep a car pristine;  I paid about $1,600 in repairs when i turned in my Soul at lease-end.

In reply to Pete. (l33t FS) :

Bob ignored the other time a lease makes (relative) sense:  if you're the kind of person who (for reasons) absolutely has to have a new car every 3-4 years.

nderwater said:

I'd have to caution anyone with small kids about entering a lease since they are responsible for repairing wear and tear inside and out.  36 months is a long time to keep a car pristine;  I paid about $1,600 in repairs when i turned in my Soul at lease-end.

Thanks for that info.  I warned him that there would be a repair / reconditioning fee that would come out of his security deposit, just like an apartment. But it's nice to have relevant, direct experience.

That $1,600 was on top of the $400 lease termination fee so the car cost $2K to walk away from.  On the other hand, I would have taken a bath on depreciation if I had purchased it new so I guess it's a trade-off.

PS -- Recently my 2 year old scratched up the paint all over each of my three cars.  This kind of thing just happens sometimes.  We own them all and I'm not really sweating it, but if they were leases I'd be in a bind.

Right now there are great lease deals on Toyota's and Ram trucks. 

Duke said:

So who's offering decent leases on decent cars where he won't get creamed if he decides to buy it out?  

In general, these two statements run opposite each other.  In most general terms a lease is (new selling price - residual) = amount you are using/paying for divided by the number of months.  So a really high residual means low payments but higher buyout price.  A tanked residual means you are paying more now and it will be worth less, or have a smaller buyout at the end.  

If he really intends to "lease to buy" then he'll want to look at the long-term view of what he is paying now and what he'll pay later.  He might need to juggle the numbers or bank, say, an extra $50/month now to cover some of the buyout later to keep those payments lower.

In reply to glueguy (Forum Supporter) :

Yeah, I explained that he was basically buying the depreciation, so he could pay now or pay later.  But some manufacturers seem to have a more balanced approach to that tradeoff than others do.

My plan is to continue trying to convince him that buying is the better bet, for every reason stated above, but it's going to be what it is.

nderwater said:

I'd have to caution anyone with small kids about entering a lease since they are responsible for repairing wear and tear inside and out.  36 months is a long time to keep a car pristine;  I paid about $1,600 in repairs when i turned in my Soul at lease-end.

every company is different..

My mazda had small sheet metal damage over the rear driver wheel on the lip of the wheel well and i was worried we were going to be screwed by it.. not even close..

I'd lease another mazda in a heartbeat if it made sense for my goals with miles on the car and carrying a payment.

BMW will nickle and dime you for EVERYTHING.

Ford you have to trade in back at the selling dealer if it's too close to the end and other BS.

Honda and Mazda i wil lease cars from anytime.. every state tax situation is different.

and NEVER lease from anyone who isn't a MFR, 3rd party leases are BAD for the consumer..

 

One thing to be aware of on current "deals" is the cash down.  We never do a cash down lease, so all of the cash down gets factored into the monthly payment- which isn't a big deal as most of the interest rates are pretty good for leases.

As a reminder, a lease isn't renting, it's where you buy a portion of a car, and get to keep it for some time.  The company doing the financing is the one who decides how much of the car you are buying for the time- some are huge amounts, some are good amounts.   You are always allowed to pre-pay the entire lease amount.

Anyway, I'm seeing leases for my car at less than $200/mo, but when you see the fine print, that's more like just less than $300/mo given the cash down.

The other reason one may want to choose a lease is that it's a car you have no intention of keeping forever.   My DD is one of those cars, and my wife's DD is the same- but each for different reasons.

When I started a new job back in 2014, I needed something reliable as both of my other cars, aka "rolling projects" were down. I liked the idea of the volt because it was this weird 1990s vision of the future, but I didn't want to necessarily... own it. Lease rates were good so why not? Choose car online. Go to dealer. Leave with car. Drive for 3 years. Drop it back off at dealer. 

I liked that so much, that when I got frustrated trying to buy a winter beater in fall 2017, I looked at leases. Sometimes dealers will put a crazy deal online so they can get you to the lot—like say, a new Kia Forte that usually leases for 159/mo for 89/mo. As there's always a catch, I read the fine print, which states that there's only ONE car in the dealer network this applies to. So I reverse searched the VIN, went to the dealer, and looked in the window of every silver Forte (dude there are a lot of ding dang silver fortes out there y'all) until I found it.  It is an appliance. It gets 40+mpg highway. It has bluetooth and keyless entry, but somehow no cruise control. Long and the short of it—keep your peepers peeled. Deals are out there, and I would recommend what I did to literally anyone.

As it stands, I will be returning that car early next month. As nderwater states, Kia does lump in a $400 "loyalty" payment if you don't re-lease/buy from them again(they DO mention that when you sign the papers), and although the car is in 99% shape, they often overlook any above and beyond damage if you stick with them.  Which is what I'll be doing because I already commandeered(read: ruined) the wife's car, so she's getting an SUV... with cruise control.

Be really careful, as a number of dealers are advertising extremely low monthly rates on what they term “ultra low mileage leases”.  Kind of a play on words as I see it, as “ultra low mileage” equated with a car typically conjurs up good thoughts.  Not in this case, though. 

Don't know a lot about leases since it's been 20 years plus and only leased an Explorer once. Seem to remember that exceeding mileage can be a problem. As I recall we bought extra miles on the front end to avoid higher penalty cost for extra miles at end.

In reply to Duke :

I recently had a very good experience buying a 2019 Grand Caravan from Hertz.  My vehicle was on the Hertz sale lot just before they filed for bankruptcy. I have noticed now that they have filed, te prices seem to be back up.  But, that should be changing soon.  You see, Hertz has to sell 182,500 cars before the end of the year; from Aug - December.  This means they are about 1 month into it.  I have not idea if they are on track but my suspicion is that they are not.  Certainly, near Thanksgiving things could get really crazy for them.  

I paid $15.090 for what is now selling at Hertz for $18.190 for the same car, same miles, at same location.  Here is a current Philly sample for $17,299

The best deals that Hertz seems to have are cars they have tons of and those seem to be Grand Caravans as well as a lot of Kia/Hyundai products.  Their Elantra/Forte/Optima prices seem to be good now and could get better.  For your cautious buyer it should be noted that both these models have a 6yr/60k manufacturer's powertrain warranty that transfers to the new owner! 

Here is a'19 Elantra in Philly for $15k w/ 19k miles.  If he adds 8k per year for 3 years that is 24k more plus 19k = 43k and the car will be 4 years old.  He could keep it another 2 years before he hits the 6yr/60k warranty mark.  

So, is it a good deal?  I check that by pricing out a 5yr old 50k model...  In your area this 2015 Elantra w/ 54k miles is asking $11k. So lets be critical and say that 4 yrs from now the Elantra is only worth $9k via private sale.  If bought for $16k after taxes the loss to depreciation would be $7k over 4 years.  That is $1,750 per year or $145 per month.   That is cheap ownership.  He also has a powertrain warranty throughout his entire ownership.  Unless, of course he keeps this car for 10 years which might be a great idea.  

Other notables... 

Forte w/ 12k for $14.6k 

Optima w/ 24k for $15.8k

My father-in-law got pushed into a lease at 80 years old by some relative.  $3k cash down and his $3k old LeSabre and $199 a month and title and plates.    Then a turn in fee and in the end - he hated the whole process.  I tried to talk.......

In reply to einy (Forum Supporter) :

Yes, I've warned him about being careful and honest with the expected mileage.  Thanks, though, for the reminder.

In reply to John Welsh (Moderate Supporter) :

Thanks for the legwork.  I remembered your success with the GC and I also recommended that.  It looks like he's taking that option pretty seriously.  He was just looking at ex-Hertz Rios, but I suggested that for not a lot more money he could get a lot more car with the Forte, or even the Optima if the budget permitted.  His kids ain't getting any smaller and 10 years is a long time to spend wishing you hadn't cheaped out by that extra little bit.

Looks like the Forte is the slightly bigger his Cobalt, the Rio is a bit smaller, and the Optima is a bit bigger than the Forte.

Thanks to everybody who made comments or suggestions. 

Hey, I just noticed one thing:

The Forte is a CVT, while the Optima is a 6-speed traditional TC automatic.

I generally loathe CVTs.  He's not going to care as long as it does car things without fuss.

But does anybody know the long-term reliability of Kia's CVTs?  That he will care about.

In reply to Duke :

I too would avoid the Rio/Accent twins.  Not that they are bad but, yes, that they are smaller than his Cobalt (at most the same interior size.)  Slight money more gets you into the bigger Forte/Elantra twins which are the Civic/Corolla competitors.  Then, just a little more gets you into Optima/Sonata twins which are Accord/Carmy sized competitors.

Also worth noting, Hertz offers $300 off for AAA members and the AAA packages are like $60/$100/$150 with the middle package being the best value.  There might also be a discount for Hertz Gold Members and I think that is free to join (I did not try this discount.)  

Also see in my GC thread that Hertz tried to hit me with a bigger interest rate.  Arrive prepared with your own financing if needed.  

Edit: I did not realize CVT.  That must be new.  How about the Elantra?

Kia Soul too...$14.2k w/ 20k

In reply to John Welsh (Moderate Supporter) :

Dunno about the Elantra; I will check.  Oddly enough for 2019 the Rio and the Optima are 6-speed TCAs, while the Forte is a CVT.

Elantra is 6 spd... $14.3k