Dodge Challenger Forum banner
  • Hey everyone! Enter your ride HERE to be a part of this month's Ride of the Month Challenge!
1 - 20 of 46 Posts

·
Super Moderator
Joined
·
15,259 Posts
Discussion Starter · #1 ·
How does the cost of leasing a Challenger compare to buying it, in terms of out-of-pocket costs? Or if you decide to buy a used Challenger, how much more will you save? And finally, what do those costs look like in the long run?

These are important questions for buyers who want to carefully manage their automotive expenses over the years. It's hard to give one answer that covers all people and all situations. But the question can be divided into two parts:

1. An analysis of the hard costs of three different ways to get a Challenger- leasing, buying new and buying used.
2. A discussion of some intangible, non-monetary issues that might affect your decision.

1015057


One Car, Three Financing Methods

In the first analysis, you can look at an average car ownership period at almost six years. You can then look at Edmunds.com transaction data for the financing information on a Challenger SXT, like the one pictured above. For each category (leasing, buying new or buying used), the averages are based on thousands of recent transactions across the U.S. These reveal the average cost of the car, interest rate, down payment and monthly payment.

Since most people lease for three years, two lease cycles are compared to one buying cycle for new and used cars. In other words, in the buying comparisons, the person purchased the car, financed it for five years (60 months) and then had one payment-free year of ownership.

Here's how the different deals were structured:

Leasing: The average lease is based on a Challenger SXT that sells for $24,775 (discounted) with drive-off fees of $1,154. This results in a $294 monthly payment for three years.

Buying New: When buying the same car, the average down payment on a five-year loan is $4,104. The average interest incentive rate is 1.64%, resulting in a monthly payment of $400.

Buying Used: The average price of a similar 3-year-old Challenger SXT is $15,688. The average interest rate is much higher: 6.04 percent. The average down payment is $2,304. The monthly payment is $301. (Fewer low-interest deals are available for used cars, and the credit scores of people shopping in this category are lower, according to Edmunds data.)

After six years, here are the total out-of-pocket costs of each financing method:

Leasing- $23,476
Buying New- $28,104
Buying Used- $20,364

In terms of out-of-pocket expenses, leasing costs $4,628 less over six years than buying a new car, excluding any repair costs the new car might incur. The out-of-pocket cost of buying a used car is $3,112 cheaper than leasing and a whopping $7,740 cheaper than buying a new car. Again, any costs of repair for the used car are excluded here.

Here is something essential to remember about the apparent lower cost of leasing versus buying new. At the end of two leasing cycles, the person who leases a Challenger doesn't own the car. He or she has to start a new lease-or-buy cycle. Meanwhile, the person who bought a new car now owns a 6-year-old vehicle worth about $9,687 on the private-party market, according to Edmunds data. The person who bought the used car now owns a nine-year-old car worth about $4,794.

When you deduct the current value of the new and used car from the out-of-pocket costs, the long-term cost picture changes:

Leasing- $23,476
Buying New- $18,417
Buying Used- $15,570

In this basic comparison, it appears the person who leased the two Challengers paid $5,059 more to drive these cars for six years than did the new-car buyer. Buying a used Challenger saved the purchaser $7,906 as compared to leasing during this six-year cycle. Buying used rather than buying new saved $2,847.

1015058


Related Expenses

It should be pointed out that the person who leases escapes the repair and maintenance costs- and related hassles- that owners typically encounter with aging cars. It's true that the person who leases has to pay for routine maintenance, but that is usually just oil changes and tire rotation. (Some people avoid maintenance costs altogether if they lease a new car that has a free maintenance program).

1015059


The car leaser also might have to buy a new set of tires, which could cost about $1,000. Of course, the new-car buyer typically has to pay for maintenance, too, as does the used-car buyer. The used-car buyer might have to foot the bill for some additional repairs, as well.

On the other hand, leased cars may require the driver to carry higher levels of insurance, which might offset some of the repair and maintenance costs that car leasing avoids.

Leasing's Other Advantages

While it is true that the people who lease have no car at the end of the lease, they do have the opportunity to purchase the car at a preset price (i.e., residual value) that is often the current market value of the vehicle. The finance company sets the purchase price for the leased car at the beginning of the lease. This offers the person who leases a car several advantages:

First, leasing protects against unexpected depreciation. If the market value of the car drops due to unforeseen circumstances, such as rising gas prices, this drop in value doesn't hurt the person leasing the car. Conversely, if the lease car holds its value especially well, the consumer can buy the car at a bargain price, and either keep or resell it. In some cases, people can leverage equity in leased cars.

One other big financial advantage to leasing is that it can offer an attractive tax deduction for someone using the car for business. An accountant is the best resource for more information on this subject.

There are aspects of leasing that are more difficult to monetize, but which appeal to some shoppers:

  • Leasing provides the enjoyment and prestige of driving a newer car more often.
  • Leasing provides a new car that has the latest performance, safety, technology and comfort features.
  • Leasing in three-year cycles means the car is always under the manufacturer's bumper-to-bumper warranty.
The Appeal of Ownership

It's hard to put a price tag on the pride of owning a new Challenger. But beyond the abstract enjoyment of possessing a highly desirable car, ownership offers several other advantages:
  • You can modify your Challenger exactly as you want without fears that you will break the terms of your lease contract.
  • Excess wear and tear, which can be charged on a leased car, is not a concern for the car buyer.
  • You have the flexibility to sell the car when you want to, not when the lease is up.
  • Once the car is paid for, you're free from the weight of a monthly car payment. You can convert that money to savings, apply it to other household expenses or set it aside as a repair, maintenance or mod fund.
  • Finally, owning a Challenger, versus leasing one, allows you unlimited driving with no mileage penalty. Leasing includes only 10,000-12,000 miles per year. After that, each mile typically costs 15 cents.
While there are many factors to consider when making the lease-or-buy decision, the best place to start is with the numbers. Do your own calculations, factor in the intangibles and the best decision for you will emerge. If you decide to buy, be sure to take advantage of great incentive deals, like Power Dollars. But whatever decision you make, you will enjoy the thrill of driving the hottest retro-styled muscle car on the road!

1015063
 

·
Premium Member
Joined
·
3,318 Posts
If you lease, you are effectively in a glorified rental program and driving someone else's car and are held accountable for how you treat it.. Although if you finance new, this is also true to a certain degree ( The bank owns the vehicle) but you have total autonomy as long as you make your payments. To me, buying a gently treated, well maintained, solid used car within your budget and paying cash is never a bad way of acquiring a vehicle.
 

·
Registered
Joined
·
117 Posts
Seems that I never Lease and only buy and tradin my cars every 3-4 years.
Buying is Cheaper welllll to me it always has been.
My last tradin was for my 2020 ScatPack after my Tradin on my 2016 Challenger RT Shaker
and to pay in Full with a check the cost was $12,000 after tradin.
If I keep my car for 3 years the cost will be around $325 a month and if I keep it longer it will be a lot less.
Then Tradin the Car for another and if you shop right then your price can be cheaper then a lease......JT
 

·
Premium Member
Joined
·
704 Posts
I'd never lease as I like to do mods to my car. I'd never get anything when I turn the car in.
 

·
Registered
Joined
·
15 Posts
If you lease, you are effectively in a glorified rental program and driving someone else's car and are held accountable for how you treat it.. Although if you finance new, this is also true to a certain degree ( The bank owns the vehicle) but you have total autonomy as long as you make your payments. To me, buying a gently treated, well maintained, solid used car within your budget and paying cash is never a bad way of acquiring a vehicle.
No, the bank doesn't own the car, you do. The bank has a security interest that must be repaid if you sell the car.
 

·
Registered
19 Challenger R/T Destroyer Gray
Joined
·
156 Posts
Having bought or leased a new car every couple of years since 1977 - my first new car - I can add some pro's and cons on leasing for you dear readers, and why I have always leased in later years.
My first new car was a 1977 Subaru DL Coupe. We learned they were awesome offroad cars well before Subaru did. LOL

Over the past couple of decades I've leased these cars:

Mercedes GLK350
Mercedes C250 Coup
Mercedes C240
Mazda 3 (two of them)
Mazda CX5
Volvo T5 TurboWagon
Subaru Crosstrek
Chevy Colorado 4x4
Dodge Challenger R/T

Yes, I leased my 2019 Challenger. Payments are $427/month plus tax. You pay sales tax on each lease payment - and yes, it's like renting the car. At the end of the three year lease I can buy it for about half of it's new cost, it will have about 15-18K miles on it. My guess it it will have a resale value much higher than what I can purchase it for. I put no money down, just the first payment and the license tags.

There are two primary reasons I like to lease: 1 - A lower monthly payment. 2 - If you don't like the car and don't want to keep it, you just give it back to them at the end of the lease. If you do like it you get to buy it, usually at an under-market price.

Leasing works best if you can write off it's cost for business use on your taxes. I used to do that but no longer. Some can still do that, but the IRS has made this increasingly more difficult over the years.
It also works best if you don't drive a lot. You can pay for excess mileage upfront in your lease, but if you drive more than 15K miles a year a lease really is out of the question. I drive my cars about 8K miles a year so I'm always well under for miles, and I get a lower payment cuz I can can get a lower mileage lease, say 10K a year verses 12k or 15K. The only downside here is if you drive really low miles, we've done this, where you have 10K miles under the allotment when the lease is up - you don't get what you paid for them back, you lose out on the miles you paid for.

I really kind of got started leasing more expensive cars because the payment is substantially lower on a lease verses a buy. In essence you only pay for what you use in the car, instead of tying up a lot of your capital in a depreciating asset. I know people that have many thousands of dollars tied up in vehicles they own - some are okay with that, for others they have other uses for that kind of cash.

If you lease a popular model that holds its value well, it may well be worth more at the end of the lease than the residual. If you're under on the miles it can make it a really good buy. The downside is if you finance the payoff for any length of time, you end up taking six or eight years to pay for it. That's a long time. On the other hand, you enjoy low payments for the duration - again, not tying up your cash in a depreciating asset. If it's worth much less at the end of the lease, well then the leasor takes that hit.

Likewise if the car turns out to be a POS (piece of poop) - you're not obligated to keep it. At the end of the lease you drop it off and hand them the keys.

You have to have stellar credit to lease. Since you're 'renting' instead of buying, putting cash into the deal just makes NO sense. 'Zero drive-offs' is best - that is no money out of pocket, just sign and drive.

All of the disadvantages have been mentioned up-thread. If you want to modify your car you have to plan to buy it out at the lease end. You have to carry high-limits insurance coverage, which you may or may not do anyway, but that may drive up your insurance costs slightly. You don't really own it 'till you buy it out at the end of the lease. If you drive a lot you'll have to pay a lot of money for excess miles if you want to just turn the car back in at lease end - usually about 25cents a mile. That can add up quick if you drive a lot.
It is more difficult to trade a car in before the lease is up - you have to pay out all of the lease payments whether you keep the car or not. I find generally you're about even in about 30 months on a three year lease. A lot of car dealers will also pay the last few payments for you if you're buying or leasing a new car from them. Mercedes Benz is especially good about this - the cars cost more, hold their value well, and they can't wait to resell your lease return car - if it's nice they generally can sell them as a 'certified used car' with a factory warranty and such.

So that's what I know about leasing. I like the option, but it doesn't work for everyone. Out of my list of leased cars the only one I bought out was the Chevy Colorado. It was a four year lease and then I financed it for four years. A stupid long time to pay for a car, but I never tied up a lot of dough in it, and it only gets driven about 4k miles a year. Mostly we tow it behind a Winnebago motorhome as a 'toad'. The other car we should have bought was one of the Mazda3's - it was a car for our college student, and it was way under miles and the resale value was way over the residual, but our son didn't want to buy it and I wasn't going to pay for it for him. Funny, he ended up buying one very similar after a few years afterall. Yeah, eventually you need a car, right???
The rest of them either got traded in early, or turned back in at the lease term. The worst value of them all was the Mercedes C250 coupe. It was nearly ten thousand under the residual at the end of the lease - just handed that one back to them - we were really glad we leased that one, was the wife's car.
 

·
Premium Member
Joined
·
3,318 Posts
No, the bank doesn't own the car, you do. The bank has a security interest that must be repaid if you sell the car.
Then why do they retain the title? You don't get it until it's paid for. Whoever has legal possession of the title "owns" the vehicle. Legalese be damned. If you don't think they own the car, try missin' a couple payments and see who has possession of it. It's called a "lean" for a reason.
 
  • Like
Reactions: Rockhopper01

·
Registered
Joined
·
358 Posts
Then why do they retain the title? You don't get it until it's paid for. Whoever has legal possession of the title "owns" the vehicle. Legalese be damned. If you don't think they own the car, try missin' a couple payments and see who has possession of it. It's called a "lean" for a reason.
You just contradicted yourself and explained why the bank doesn't own it.

The bank has a lien on your car. If the bank owned it they wouldn't need a lien. I don't even think you can put a lien on your own property?

They have posession of your title (and yes the title is on your name) because they have a lien on your car as collateral for the loan.


LIEN:

a right to keep possession of property belonging to another person until a debt owed by that person is discharged.
 

·
Premium Member
Joined
·
3,318 Posts
I know that technically, yes the car is in your name. You are missing my point. It is that despite the legal definition, you are under contractual obligation to serve the lender/lien-holder or forfeit the item in question. I am a practical not legal sort of person. I do not consider anything really mine until no one has any claim to it under any circumstances.
Proverbs 22:7 "the borrower is servant to the lender"
 
  • Like
Reactions: Charles 236

·
Registered
Joined
·
358 Posts
Then why do they retain the title? You don't get it until it's paid for. Whoever has legal possession of the title "owns" the vehicle. Legalese be damned. If you don't think they own the car, try missin' a couple payments and see who has possession of it. It's called a "lean" for a reason.


I know that technically, yes the car is in your name. You are missing my point. It is that despite the legal definition, you are under contractual obligation to serve the lender/lien-holder or forfeit the item in question. I am a practical not legal sort of person. I do not consider anything really mine until no one has any claim to it under any circumstances.
Proverbs 22:7 "the borrower is servant to the lender"
You asked a question and challenged the previous person. I just answered your question and explained why your challenge was wrong.
You can't bandy words like "lien" and "legal posession" and then say you don't car
e about legally or technically especially when you are challenging the previous person as to thier assertion that "the bank does.t own the car.

I get your point and how you look at it etc...that doesn't make the other guy wrong and you right and it doesn't change the simple facts that the bank doesn't own the car.
 

·
Premium Member
Joined
·
3,318 Posts
You asked a question and challenged the previous person. I just answered your question and explained why your challenge was wrong.
You can't bandy words like "lien" and "legal posession" and then say you don't car
e about legally or technically especially when you are challenging the previous person as to thier assertion that "the bank does.t own the car.

I get your point and how you look at it etc...that doesn't make the other guy wrong and you right and it doesn't change the simple facts that the bank doesn't own the car.
I wasn't "challenging" anyone, I was expressing an opinion. That is what this Forum is for isn't it? Instead of trying to see where I was coming from conceptually, you have to start debating semantics. What's with the "chip". Chill.
 

·
Registered
Joined
·
358 Posts
I wasn't "challenging" anyone, I was expressing an opinion. That is what this Forum is for isn't it? Instead of trying to see where I was coming from conceptually, you have to start debating semantics. What's with the "chip". Chill.
Geez, my friend,

You quoted this post

No, the bank doesn't own the car, you do. The bank has a security interest that must be repaid if you sell the car.
and then posted this

Then why do they retain the title? You don't get it until it's paid for. Whoever has legal possession of the title "owns" the vehicle. Legalese be damned. If you don't think they own the car, try missin' a couple payments and see who has possession of it. It's called a "lean" for a reason.
That is asking a question, and challenging his post.

I already said I see where you are coming from conceptually. I Don't know what the "chip" means.. and I am chill, you might want to follow that advice yourself. I am not looking for an argument... again just answering your question of "why do they retain the title" and explaining that the bank doesn't own it.

Sure forums are for expressing opinions, and others are free to correct an "opinion" that is wrong...and if you ask a question others are free (and expected ) to answer.

Not sure what you are being so defensive about?

Sorry if I upset you.
 

·
Premium Member
Joined
·
3,318 Posts
Opinions are by definition subjective. Just because your interpretation of it is negative doesn't make it so. I stand by my opinion. I am not bothered. Just didn't expect such a " dig in the heels" dogma over a casual comment.
 

·
Registered
2021 Challenger Scat Pack, 2019 Challenger SXT AWD
Joined
·
217 Posts
Have a beer y’all, we’re all buds.
 
  • Like
Reactions: SKT PK 9 Man
Joined
·
275 Posts
If you lease, you are effectively in a glorified rental program and driving someone else's car and are held accountable for how you treat it.. Although if you finance new, this is also true to a certain degree ( The bank owns the vehicle) but you have total autonomy as long as you make your payments. To me, buying a gently treated, well maintained, solid used car within your budget and paying cash is never a bad way of acquiring a vehicle.

This is true! Some may even be saying that leasing or financing could take advantage of the continuous depreciation of the steady amount of money you're paying it off with, but hey the car's also very well depreciated too, plus interest rates just basically make it even. So yeah, buying something in cash and within your budget would still be a great idea


Mention You Are From The Forum For The Best Deals
Check Out The*All NEW BD-F25

Phone: (818) 362-2300
E-Mail: [email protected]
Website: BlaqueDiamond.com

Click here and visit our pages
IG: @BDWheels
FB:
/BlaqueDiamondWheels
 
1 - 20 of 46 Posts
Top