Should a student Buy or Lease when they graduate from college?

Most of my friends will be graduating from a college or university within the year.The question we have for our Panel Of Experts is should we buy or lease a new vehicle given the fact most of us will have good credit (thanks to our parents) and less then $1500 down? Or should we buy a used vehicle?

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Replies to This Discussion

Permalink Reply by Ralph Rasmuson on October 20, 2010 at 3:29pm

I believe leasing makes a lot of sense simply because the first car you get upon graduating will not be the car that they will keep very long. Within a two-three year period of time, these kids will be marrying, having kids, etc, and their circumstances will change. If they purchase with a 5 or 6 year loan, when they need to change vehicles, chances are good they will be upside down, have only a limited amount to put down, and put themselves behind the eight ball. Leasing for two or three years will allow them to walk away from the original car they purchase.

Permalink Reply by jim smith on October 20, 2010 at 4:08pm

I am in the automotive industry. I am also a thirty something driver. That said, I enjoy the luxuries of a lease because it allows me to drive a higher end SUV without the purchase payment. I then have the option of trading it in on a lease or purchase without being upside down. Also, I like the fact of having the new car smell with the new car warranty. My only warning is on the mileage, if you think you'll drive more than 12,000 miles per year, you need to buy mileage up front. You still come out ahead in the end. More luxuries on a car for less with lease.

Permalink Reply by JP Buzzworthy on October 20, 2010 at 4:22pm

To get even more technical. It depends on if you have decided on a car. If residual values on the car you want are crap, then buying a used one may be better. If you have your heart set on that Honda civic with great residual values, then leasing can definitely be an option.

Also, if you're more flexible, the vehicles being "PUSHED" out there with inflated Residual's are phenomenal deals right now.

I just told my mother to pass on the Jeep Compass I was going to put her in, and she leased a BRAND NEW 2011 Kia Sportage for $199 a month and 2500 due at signing. That's a total of $9700 cost of ownership over 3 years, which is $269 a month total. For a $23,000 vehicle that will be under warranty the whole time.

If you bought a used car (and lets be fair and say financed for 4 years instead of 5 to negate any negative equity arguments) you could only purchase a $10000 car with tags, tags etc...

I'd say that's a pretty good deal.

the reason it's so CHEAP is because (for you NON car dealer's on the forum) is that the manufacturer, in order to drum up business on this model, has inflated the residual value on the lease to like 65%. This means you are only buying and paying for 1/3 the car over the 3 years, instead of the normal 1/2 like in Terry's illustration.

Permalink Reply by Tia Saraceno Dorsett on October 20, 2010 at 5:25pm

On behalf of all my friend's at UNF, I would like to thank each and every one of you for taking the time out of your busy day to share your advise. This is an awesome group!

Permalink Reply by Gail Sproul on October 20, 2010 at 7:26pm

I would have to say it definetly depends on the vehicle. If there an enhanced lease program on the vehicle they are looking at then they should lease If not they need to buy. Usually with no program on the lease they may end up paying too much for the vehicle not to mention right out of college they really don't know how many miles they will put on the vehicle and that again could kill them.

Permalink Reply by Mike Diaz on October 20, 2010 at 7:37pm

If they are not planning to drive more the 15K a year, it is a good way way to get into a new car without too much initial investmenet. Just read the fine print and make sure it fits your driving habits.

Permalink Reply by Dugan Anderson on October 20, 2010 at 9:04pm

Absolutely LEASE! In many cases the payments will be NO MORE than a purchase and in some cases less (if they stay within the parameters of the lease), there is virtually NO RISK and most importantly, will there vehicle wants and needs CHANGE in the next 2-3 years? Keep the lease to 24 and no more than 36 months.

Permalink Reply by MANNY LUNA on October 20, 2010 at 11:35pm

The reallly best way is to pay cash! and if the funds are not there don't lease unlesss you plan on driving less than 12-k miles or 15-k miles a year as long as you don't go over the set mileage than it ok to lease a new car.

Buy ? Sorry New car people , if your going to buy than I would go with a Pre-owned Certified car and the #1 reason is 4,000 to 6000 less money. you can pick a nice 2009 to 2010 Pre-owned Certified car at the depreciate value! and still get a better than new car warranty with a incentivised intrest rate like 2.9, 3.9, 4.9 and really save !

Permalink Reply by Kevin "Friend Me" Bradberry on October 21, 2010 at 12:04pm

Lease because you're young, fickle, unsure, and will want the newest model about 6 months after you've been driving this one. At least if you lease for the shortest lease term that makes sense you only have about 2 and half years to go before you can turn it in. So this will also teach you patience. Plus, you're Daddy's little girl and you NEED a car that's not going to leave you stranded ANYWHERE EVER!

So, new car always under warranty, no unexpected service bills for Dad, no unsafe road side hazards for daughter. Not to mention, your last name looks familiar, so I'm sure your Pops can drum up one heck of lease payment for you with a residual enhancement, sign and drive, no inception fee, short term lease,with leather and a sun roof that "residualize" in the least term. 720 beacon score is no problem I'm sure, so There you go... It's lease then...... and If Dad tries to high gross you, I have about 1,200 other dealer client friends who would like to do a courtesy delivery at his dealership for you. LOL..............kidding of course!

Permalink Reply by Tia Saraceno Dorsett on October 21, 2010 at 2:29pm

Kevin, Thank you for your feedback, it is similar to what my Dad has told me. I am meeting with several friends today to share the feedback we have received from the Auto Experts on this great site. I have been very fortunate to have Father activity involved with my vehicle selection and funding.
Unfortunately most of my friends are lost when it comes to making an Automotive purchase.
I am sure we will have more questions in the future.

Kevin Bradberry said:

Lease because you're young, fickle, unsure, and will want the newest model about 6 months after you've been driving this one. At least if you lease for the shortest lease term that makes sense you only have about 2 and half years to go before you can turn it in. So this will also teach you patience. Plus, you're Daddy's little girl and you NEED a car that's not going to leave you stranded ANYWHERE EVER!

So, new car always under warranty, no unexpected service bills for Dad, no unsafe road side hazards for daughter. Not to mention, your last name looks familiar, so I'm sure your Pops can drum up one heck of lease payment for you with a residual enhancement, sign and drive, no inception fee, short term lease,with leather and a sun roof that "residualize" in the least term. 720 beacon score is no problem I'm sure, so There you go... It's lease then...... and If Dad tries to high gross you, I have about 1,200 other dealer client friends who would like to do a courtesy delivery at his dealership for you. LOL..............kidding of course!

Permalink Reply by Kevin "Friend Me" Bradberry on October 21, 2010 at 2:31pm

Any time.

Permalink Reply by Geoffrey Veit on December 20, 2010 at 11:08am

I agree with kevin but there are a couple of points I would make that I did not see in his reply. Mileage is one. If you are taking a job that requires 25 or 30 thousand miles a year then leasing might not be a good choice. If you build the miles into the lease the payment would be huge. If you pay the mileage at the end you would owe a fortune. My opinion is that if your driving up to 20,000 miles a year, leasing probably works but build in the miles or at least some of it.

Secondly, don't accept a lease over 36 months. In the first 36 months most quality vehicles will require only oil changes and are under factory warranty. No tune ups, mufflers, brakes, tires. Usually your only expense in the first 36 months is basic maintenance and you get a new car at 36 months so your vehicle always looks good.

One other point is that with all the changes in the auto industry, the resale value of the unit can be the biggest cost. Market, reputation and repair record can have a huge effect on what you get for a trade in value or how hard it is to sell, if you sell your own car. If you are leasing, resale value isn't something you need to worry about. It is a concern of the leasing company. not you. My vote is for leasing 36 months or less. If you are buying, plan on keeping the unit 8 years.

tia saraceno said:

Kevin, Thank you for your feedback, it is similar to what my Dad has told me. I am meeting with several friends today to share the feedback we have received from the Auto Experts on this great site. I have been very fortunate to have Father activity involved with my vehicle selection and funding.
Unfortunately most of my friends are lost when it comes to making an Automotive purchase.
I am sure we will have more questions in the future.

Kevin Bradberry said:
Lease because you're young, fickle, unsure, and will want the newest model about 6 months after you've been driving this one. At least if you lease for the shortest lease term that makes sense you only have about 2 and half years to go before you can turn it in. So this will also teach you patience. Plus, you're Daddy's little girl and you NEED a car that's not going to leave you stranded ANYWHERE EVER!

So, new car always under warranty, no unexpected service bills for Dad, no unsafe road side hazards for daughter. Not to mention, your last name looks familiar, so I'm sure your Pops can drum up one heck of lease payment for you with a residual enhancement, sign and drive, no inception fee, short term lease,with leather and a sun roof that "residualize" in the least term. 720 beacon score is no problem I'm sure, so There you go... It's lease then...... and If Dad tries to high gross you, I have about 1,200 other dealer client friends who would like to do a courtesy delivery at his dealership for you. LOL..............kidding of course!