Buying or Leasing a Trac

[user 64117]

Just trying to get opinions into my head at this point. I tried to purchase a used 05 Trac but the deal fell thru. The dealer is trying to get me into a lease for what i am paying on my 06 Chevy Equinox per month. I generally get a different vehicle every 2-4 years but have never leased. For those out there that do, what should i be aware of and what do you like about it.



BTW: the deal fell thru cuz the dealer quoted me a low interest rate on the loan and no bank was able to keep the rate.



thanks in advance

DanG

 

[Thomas Rogers]

Leasing is a good deal for vehicles with a high residual. A good way to think of residual is that the "more" a vehicle holds its value during the lease period, the higher the residual is.



I can't see how any SUV today, especially a used one, would have a high residual. If anything, I would think that an '05 Trac, today, wouldn't be worth that much (low teens), and would be worth way, way less even 3 years from now (typical lease period).



For example (made up #s): If an '05 ST is work $15k now, and is expected to be worth $8k 3 years from now, the base cost is the difference...or $7k. That alone is almost $200. Add to that interest, fees, etc, and the monthly payment could easily be 50% more (around $300).



I suspect you would be looking at lease payments in the low $300/month range. Would I lease an '05 for that...NO WAY. Wait a few months, and you will be able to lease new STs for that when the late summer deals kick in.



TJR

 

[user 64117]

Sorry, i meant that i was looking at leasing a new Trac instead of buying a used 05 Trac.

 

[Thomas Rogers]

Oh, okay, DanG.



Typical leasing questions:



1. What is your monthly vehicle payment budget?



2. How many miles do you drive / month (don't be conservative)?



3. How long do you PREFER to keep a vehicle?



4. Do you VALUE being in a new vehicle that is covered by warranty, and if so, how much per month does that value equate to?



5. How much money do you have for a down payment (lease or buy) and what would that make a monthly PAYMENT if you BOUGHT look like, vs the lease payment?



TJR

 

[Carey Frennier]

THe 08 Sport Trac has a higher residual than a Lincoln MKZ and that's a fact.





15,000 per year. 36month lease.

AWD Lincoln MKZ = 48%

4WD Limited Sport TRac= 51%



That's a big difference.



A good rule of thumb that I've always used is this: If you can't afford the lease payment on a vehicle you should not buy it. It should give you a clue as to what risk you're taking in a purchase. In a lease you only pay for the portion of the vehicle you're using. Not the entire package. That's what makes it so great. You also do not have the risk of negative equity. Thank god you're not an F150 owner from 04-06 right now. Their values have dropped thousands in just a couple months. Always remember that in a lease you cannot build equity. Nor can you lose it. So any money you put down is only going to reduce your payment. You never get that money back.



I mod my vehicles a lot. I also pay for them in full or over 36 months. I keep them 3 years and sometimes 4 years. Some years I drive a ton and some years I don't drive at all. It all depends on what life throws at me. I always have 70-100% Equity in my vehicles. I still believe that leasing is the best way to own a new vehicle.



Ford'd Red Carpet Lease is excellent. It's a very good program.



However, if your credit sucks than you will be throwing a ton of money away in interest for something you will never own. On the plus side...no more negative equity! Had you bought it with no money down and a high rate...you will certainly be stuck owing more than it's worth.



What you finance and what the unit's value is are unrelated. They have nothing in common.



Hope this helps.

 

[user 64117]

1. What is your monthly vehicle payment budget? $300



2. How many miles do you drive / month (don't be conservative)? 8-9k



3. How long do you PREFER to keep a vehicle? 3yrs. i(ve had 5 vehicles in the last 15yrs. longest was 5 yrs)



4. Do you VALUE being in a new vehicle that is covered by warranty, and if so, how much per month does that value equate to? Warranty is key for me. I feel safer buying, but dont know how to put that for a value



5. How much money do you have for a down payment (lease or buy) and what would that make a monthly PAYMENT if you BOUGHT look like, vs the lease payment? $2k

 

[Carey Frennier]

If you did 10,500 that would raise the residual of any 08 vehicle via Ford, Lincoln Mercury by 3% each. That will lower your payment.



If warranty is priority for you than leasing is the way to go.



I'd say you're an ideal lease candidate. All you need now is good credit!



A Ford lease will probably be done through Ford Motor Credit. So you should ask them why they couldn't honor the money factor you were given. Chances are you fell outside of a tier 0 or 1 credit rating.



If you have good prior payment history on a FMC loan and 2k down with T2 credit there may be a way the dealer can get your tier dropped so you can lease the vehicle. I just did this for a customer yesterday. All it took was $500 more down and one hour of my time schmoozing FMC!

 

[Thomas Rogers]

Dan G,



Adding it all together:



Low miles driven per year, 5 vehicles in 15 years (avg a new vehicle every 3 years), a desired payment of $300/month, high desire for a vehicle under warranty and initial out-of-pocket of only $2k makes you the PERFECT candidate to lease, IMHO.



TJR

 

[Les]

+1 - Lease...

 

[user 64117]

my only other question would be....how do i factor in a trade for the Equinox?

 

[JerryW Gilliland]

I considered leasing a new Adrenalin a few months back.

I own my own business and I've leased before (1997 Expedition which I loved so much and the residual was such that I bought it at the end of 3 the year lease and kept for another 7 years.)

The salesman worked up the figures for a 3 year lease on the STA, and much to my dismay, it was a monthly payment of $604/month.

On a 36 month loan at credit union rates with the same down payment, the payment was going to be $400 per month.

Needless to say, I walked away.

For the first time, leasing was much more expensive than buying...and I didn't want to buy.

Any explanations?

 

[Johnny O]

I have always leased my trucks. I'm self-employed and use my truck for work, so for me most of the cost is a write-off. If you like a new vehicle every few years (you do) and in this case the payment is about the same as your two year old Equinox (and you can afford it), I say go for the lease. Keep in mind that gas is not likely to get cheaper any time soon, so any SUV will effectively cost more to own and operate. One reason I have always leased is in case gas got expensive and my truck wasn't worth a hill of beans, it's not my problem.

 

[user 64117]

Any explanations?

I dont truly need to get this done. I traded my 01 Trac back in March for the Equinox. I can't say its a bad vehicle. It fits the kids and rides well, but its not a Trac.

I own a home and love to do my own work on my house. The Trac gave me every chance to do this with a moments notice. With the Equinox, i have to prepare the seats and cargo area or ask a buddy to take a ride to the hardware store with me to pick stuff up.



Im rather bummed that i couldnt get the 05 Trac as it had all options. I was only off $25/month on it but I am stretching it with a $300/month as it is.

 

[Thomas Rogers]

Jerry G,



The explanation as to why leasing would be higher than buying probably comes down to the residual. If the vehicle in question is expected to depreciate greatly over the lease term, the lease terms could actually be more expensive, monthly, than monthly payments over a longer purchase term.





Dan G, As for trading in the Equinox, that all depends. If you want/need to get rid of it, and they offer a fair price, then by all means, trade it in, and use allowance to pay it off (assuming you still owe) and any equity to go back into your pocket or to pay out-of-pocket on, or pay down the lease. Additional money paid down cuts principle and finance charges on the lease, and therefore your monthly lease costs. I traded a vehicle that we owned outright once for a new leased vehicle. The allowance for the trade covered out of pockets on the lease and we got some cash in our pocket too.



TJR

 

[Ian Dalton]

How does a lease on a truck work when you go to turn it in at the end of the lease? I mean there is obviously going to be wear and tear on the bed. How do they calculate what's reasonable wear and tear? This is what has always worried me.

 

[Thomas Rogers]

Ian,



All vehicles get turned back in with assumed "normal wear and tear", including dirty carpets, a door ding or a scratch here or there, regular wear on tires, etc.



Ford has a "Red Carpet Lease" that more or less has you making an additional lease payment up front and in return the dealer is much more forgiving of some additional minor damage and excessive wear when turned back in.



We got the Red Carpet Lease option when leasing a '04 Merc Mountaineer, turned it back in with dimples in the bumper cover, a gouge in the cover, a cracked blinker cover, a deep scratch on one fender, all total probably about $500 worth of excessive damage (parts and labor) and walked away not owing anything additional.



I turned in a '96 Blazer that was show-room clean, but a dimple on the back tailgage, again without hassle.



If you keep good cars, no worries.



TJR