Car talk!

[ForeverAutumn]

I know that there are a number of car guys here and I'm looking for your advice.

My lease is up in May. I currently drive a Ford Escape XLT 4WD 3.0 litre engine. I love my Escape. Ford is trying to pressure me into commiting to a new Ford vehicle now. I'm going to the dealership to do some test-driving tomorrow. Where Ford is concerned, I'll be looking at a new Escape, Fusion and Focus.

When I was taking out my current lease 2.5 years ago, Ford's residual was so much higher on a lease than any of the other cars that I was looking at that the monthly payments on the Ford were hard to walk away from.

I did a lot of test driving back then and I also really liked the Mazda 6, Hyundai Santa Fe and Subaru Forester. In fact, the Forester would have been my first choice except it was a little pricey once I added in the options that I wanted.

Ford has since raised their residuals (how could they not?!) making their monthly payments less competitive than they were previously. This means that they aren't the slam-dunk that they've been for me in the past and I'll be weighing all my options. A new Escape with the same options as the one I'm currently driving is $4,000 less to purchase yet the monthly payments are about the same to lease (interest rates are also the same).

In the past, I've usually leased my cars. I HATE paying for car repairs and I tend to get bored and start thinking about a new car after a couple of years. My Escape has actually been the exception to the boredom and I would consider buying out my lease if the residual weren't so high (see the irony here?).

Because my lease isn't up until May I have lots of time to make this decision, but I prefer to do my test driving in the winter when I can test the car in poor conditions. From past experience, I also know that many dealerships will buy my lease out early if they think that they can make up the cost of the lease in the sale price (which they should be able to do with my car).

So, what other vehicles should I be looking at? My husband drives a two-seater pick-up truck so my car has to be a four door and have comfortable seating in the back. I also need a car that is reliable in the snow.

What are your opinions on the lease vs. buy argument?

[Rich-n-Texas]

I'm not nor have I ever been a fan of leasing unless it was through my company, which has never been the case, so take this FWIW...

First, a personal question: Do you have kids? You say you need comfortable seating in the back, so I assume that's either because you have kids or you want room for your adult friends when driving to Rush concerts...etc. That would be a major purchasing decision in my mind.

www.kbb.com & www.edmunds.com for new and used car purchasing info. These are the sites I use when building and researching a new car purchase.

If you have no qualms about Microsoft invading your car, buy a Fusion or Focus. http://www.fordvehicles.com/sync/ Don't know if the Escape has this feature, but MS in a car is just scary to me.

The only concern I'd have about test driving in poor conditions is, for one thing, you can't get a good idea of how much pickup it's got when it merges onto the highway. If it's an auto, what will happen when you punch it and the trans downshifts? Of course you can see how well traction control works, but that's not an ideal way to test IMO.

Financing tips are beyond my realm so I'll leave it here.

Topspeed should be along shortly.

Hope this helps some.

[ForeverAutumn]

No kids. Occasional adult passengers. More often...golf clubs, curling brooms and guitars.

There's nothing like plowing your way through a big snow drift to test pick-up.

[Rich-n-Texas]

No kids. Occasional adult passengers. More often...golf clubs, curling brooms and guitars.

There's nothing like plowing your way through a big snow drift to test pick-up.

Actually that tests torque. Luckily I haven't plowed through any snow drifts since moving here to Texas 10 years ago.

BTW, did I mention that I cooked steaks out on the grill on Christmas Day?

[ForeverAutumn]

BTW, did I mention that I cooked steaks out on the grill on Christmas Day?

Yeah you mentioned it. But I don't eat steak.

Actually, since our big snow storm it's been unseasonably warm and a lot of the snow has melted. That doesn't make it warm enough to BBQ however...

[Feanor]

...
What are your opinions on the lease vs. buy argument?

In recent years I've driven Fords; witness my Taurus Wagon, below.

I've done the math. It's financially very advantageous to buy if you intend to keep the car for 4+ years. If you don't want to pop the cash, a line-of-credit, possibly mortgage-based might be an option since you can get bank prime or better. For shorter terms, 3-4 years, there is some argument for leasing.

A recent used car is a good option if you drive low mileage. I bought my 2002 Taurus at 1 year-old and will drive it 'till it disintegrates, hopefully another 5 years at least.
...

[ForeverAutumn]

My husband and I have both had bad experiences with used cars and I will never buy another car that's not under warranty. If I were going to buy used, I'd buy out my lease. Low mileage and I know the original owner.

[Feanor]

My husband and I have both had bad experiences with used cars and I will never buy another car that's not under warranty. If I were going to buy used, I'd buy out my lease. Low mileage and I know the original owner.

I bought my car from a Ford dealer and got the balance of the original base warranty; I could also have bought an extended warranty if I'd so chosen. Former fleet cars are typically sold by dealers on this basis and they don't have the risk associated with private sales or used car dealers.

[topspeed]

Buy vs. Lease:

I'm a firm believer in buying what appreciates and renting what depreciates, therefore I lease my cars. Besides, I can write them off through my company, so there are tax advantages as well. If you bore easily and don't rack up a ton of miles, leasing makes a lot of sense.

It sounds like you would like a car/SUV that has awd to compete with your winters, right? In the cute ute arena, the Escape/Mariner is probably my favorite. The CR-V is too bizarre in appearance and the RAV4 is too expensive.

Crossovers are the next big thing as they are car based (unibody), generally handle better, and get a bit better mileage. You might consider a Nissan Murano, Saturn Vue, or Ford Edge. I really like the Mazda CX7 as it's the most overtly sporty, however it doesn't afford a ton of storage. Great interior and exterior design too. The Hyundai Vera Cruz has been a media darling, but they don't lease very well. They are much better built now, but not enought to overcome the stigma of older Hyundai's...yet.

For cars, have you considered an Audi A4 2.0? Quattro awd and the 2L turbo four is one of the truly great engines out there right now. Excellent mileage and they should lease well as the residual should be decent. BMW's are great to lease as well as they have the highest residual of any brand (according to Edmunds/KBB) and when you lease, the only things that matter are cap cost, money factor, and residual. BMW's warranty also covers everything...oil changes, wiper blades, brakes...everything for 4 years. Stay away from the M models and my experience is they are very durable.

If those aren't your cup of tea, a Suburu Legacy GT is a heckuva nice car and a sleeper at stoplight drags. That car will flat boogey! The Fusion AWD is another excellent choice. My friend just bought one this week for $23,500 out the door. V6, leather, Sync, loaded. That's a good buy.

What are the most important things to you? Speed? Space? Reliability? Convenience? Import? Domestic?

[ForeverAutumn]

Well it's about time that you showed up!

You know, I've never even considered Audi or BMW. I've always thought of them as "expensive" cars. But as a lease, they're probably in my price range. I should take a look at them.

I've never been a big fan of Toyota cars and the couple of Honda dealerships that I've been too have really turned me off. It's the old "let me talk to my manager" routine. A huge waste of my time.

The things that are most important to me are reliability, good handling in bad weather, and storage. We're often carting around a couple of golf bags or my guitar so I need a car with lots of storage space. A sun roof is also something that I can't live without as is a decent sound system (but that can be added later).

Speed is important only so far as I want enough pick-up and power to be able to change lanes quickly and safely even with passengers and the air conditioner on (I once had an Excort LX with three passengers in it, going up a hill, and couldn't get the car to pass 40km/hr with my foot on the floor!). I'm not a speed demon, but I do have a bit of a heavy foot when passing or taking off from a stopped position.

AWD isn't mandatory as long as the car handles well in the snow. I don't think that the awd has ever kicked in on my current Escape so I'd be very comfortable driving a front wd with traction control.

I'll look at some of the cars that you mentioned on-line Speedy. If it's not too cold out on Saturday, I may go out and do some test-driving. Thanks for your input and I'll let you know how it goes.

[topspeed]

I've never been a big fan of Toyota cars and the couple of Honda dealerships that I've been too have really turned me off. It's the old "let me talk to my manager" routine. A huge waste of my time

Ahh, a woman after my own heart. I can't ever see myself owning a Toyota or Toyota product. Great cars, just completely devoid of soul or personality.

Almost every vehicle has traction control these days and set of Blizzak tires can make a Mustang GT a decent winter car. A BMW 328i leases for around $367/mo, a bit more for the 328ix (awd).

BTW, for leasing you should really consider Lease-By-Tel (www.leasefax.com). I purchased my M3 from them and it was a terrific experience. As an internet purveyor, they have lines to dealerships all over the country. You tell them when you want the car and they'll find the dealership with the corresponding build slot. Everything is done by phone and fax; no haggling, no moronic "I need to talk to my manager" BS. Simply pick your car and options, let them know and they deliver the car to your doorstep. It's pretty cool.

Oh, did I mention they beat my best dealer quote by $200/mo?

If you're interested, PM me and I'll give you my guy's private number.

[ForeverAutumn]

Ahh, a woman after my own heart. I can't ever see myself owning a Toyota or Toyota product. Great cars, just completely devoid of soul or personality.

Almost every vehicle has traction control these days and set of Blizzak tires can make a Mustang GT a decent winter car. A BMW 328i leases for around $367/mo, a bit more for the 328ix (awd).

BTW, for leasing you should really consider Lease-By-Tel (www.leasefax.com). I purchased my M3 from them and it was a terrific experience. As an internet purveyor, they have lines to dealerships all over the country. You tell them when you want the car and they'll find the dealership with the corresponding build slot. Everything is done by phone and fax; no haggling, no moronic "I need to talk to my manager" BS. Simply pick your car and options, let them know and they deliver the car to your doorstep. It's pretty cool.

Oh, did I mention they beat my best dealer quote by $200/mo?

If you're interested, PM me and I'll give you my guy's private number.

You know, I actually considered a Mustang but my husband drives a two seater and we really need one car that seats four comfortably.

I would love to call your lease guy, but I'm in Canada so I don't think that he'll be able to help me. Thanks for the offer though.

Also car prices are considerably higher here. I just ran a quote on that 328i (coupe) that you mentioned and the purchase price (with the options that I want) is $50,000 before tax (add 13%). Compare this to the US site where the same car is only $41,000. At the Canadian price, I would have to put $6500 down to get the payments into my monthly budget.

[kexodusc]

Buy vs. Lease:

I'm a firm believer in buying what appreciates and renting what depreciates, therefore I lease my cars. Besides, I can write them off through my company, so there are tax advantages as well. If you bore easily and don't rack up a ton of miles, leasing makes a lot of sense.

Bingo.

Some people get great value out of owning a vehicle for longer than 4 years. That can't be disputed. For those of us who cycle through vehicles more often, don't rack up high mileage, or beat the snot out of them leasing can have tremendous advantage. In my case, the lower payment on a 4 year lease of my Accord saved me more money than the difference in final year payments and resale value of the vehicle at the end of year 5 had I bought it and financed for 5 years. And best part was, I would have been able to lease a brand new car instead of making payments on an older vehicle. More new car for my money....that's in limbo right now...but I digress...

I really liked the Nissan Rogue I drove, FA, could be worth a look.

As for Toyota - I'm number 3 in the can't seem to like it category. My favorite Toyota of the past few years had a Pontiac badge on it. It's also the best car GM never built.
The new Matrix looks like it has potential though...

[ForeverAutumn]

Thanks Kex. I've only purchased two cars in my life. The first was the used lemon that was my very first car. The second was my Escort GT which I purchased when the lease was up because I loved it, wanted to lease another, but they had stopped making them by then...so I bought my own used car.

Other than that, I've always leased. I was just looking for confirmation that was the right thing for me to be doing.

I looked at the Matrix and it's sister, the Vibe, back in 2005. I loved the look but hated the drive. They felt like small cars and I didn't want another small car.

How do you guys feel about Mazda's?

[Feanor]

Bingo.

Some people get great value out of owning a vehicle for longer than 4 years. That can't be disputed. For those of us who cycle through vehicles more often, don't rack up high mileage, or beat the snot out of them leasing can have tremendous advantage. In my case, the lower payment on a 4 year lease of my Accord saved me more money than the difference in final year payments and resale value of the vehicle at the end of year 5 had I bought it and financed for 5 years. And best part was, I would have been able to lease a brand new car instead of making payments on an older vehicle. More new car for my money....that's in limbo right now...but I digress...
...

If I'm not mistaken, the cost of money that pay on a lease is close to that on a chattel loan such as car loan, so there isn't much to choose in that respect, lease vs. buy, and the convenience of lease easily makes it the way to go if you're going to flip vehicles every 4 years. If you can finance at a lower rate, say around prime, then buying might still be the better way to go.

Since for me an automobile is a necessity, not a luxury, I have to go for the lowest cost. Since I can't charge any part of the cost to business and drive quite low mileage, this consists of:

• Settling for a utilitarian vehicle
• Buying a late-model used vehicle with residual warranty
• Keeping it for a long time
• Purchase it using an equity-secured line-of-credit.

[kexodusc]

Thanks Kex. I've only purchased two cars in my life. The first was the used lemon that was my very first car. The second was my Escort GT which I purchased when the lease was up because I loved it, wanted to lease another, but they had stopped making them by then...so I bought my own used car.

Other than that, I've always leased. I was just looking for confirmation that was the right thing for me to be doing.

I looked at the Matrix and it's sister, the Vibe, back in 2005. I loved the look but hated the drive. They felt like small cars and I didn't want another small car.

How do you guys feel about Mazda's?

Forgot about the tax - you pay less tax on the lease too...only 13% of the amortized amount rather than the full value of the vehicle. That's usually a few thousand bucks savings right there.

I could be getting 2 new cars this year if we stick around. The Mazda 3 Sport has been high on my wife's list for awhile now, the CX-7 was fun to drive, but I couldn't help but feel it was a bit overpriced, I liked it until I checked out how much it sold for. That's just my uneducated opinion, maybe it'll knock you off your feet? Maybe I'm still out of touch with Canadian prices. Just didn't seem like a $32K vehicle to me but what do I know?

In terms of awd/SUV's, the Suzuki Grand Vitara was fun too. I dont' know what kind of reviews it gets, I just them. It was a lot cheaper than the CX-7 as I recall.
I'm not much of an SUV fan, but I think if I was going in that direction the Grand Vitara would be up there.

If I was buying a mid-size sedan, I'd probably get a Nissan Altima like everyone else. Though I have high hopes for the new Malibu.
Those little Suzuki SX4 AWD's seem to be very popular too.

[topspeed]

How do you guys feel about Mazda's?

Huge fan.

Mazda takes that Zoom-Zoom stuff seriously. They are very much like BMW in this respect, just priced a lot more sanely. Also, as a former Miata owner, I can testify that they are as reliable as the sunrise. I'm considering replacing the M3 with a Mazdaspeed3 and if you like the Vibe/Matrix, you'd love the Speed3. 262hp, 0-60 in 5.5s, tenacious handling, 30mpg, and an interior and exterior and are best in class, IMO. I'm trying to talk the wife into a CX9, but she's got her heart set on the gorgeous Buick Enclave (can't blame her, really). As you don't like "small cars," you should consider the new 6 due this summer. Here's a photo of the new car.

[kexodusc]

If I'm not mistaken, the cost of money that pay on a lease is close to that on a chattel loan such as car loan, so there isn't much to choose in that respect, lease vs. buy, and the convenience of lease easily makes it the way to go if you're going to flip vehicles every 4 years. If you can finance at a lower rate, say around prime, then buying might still be the better way to go.

I have seen examples on a number of vehicles depending on the program lease/purchase finance rate and the lease residual, where buying would make more sense regardless. My wife's parents bought a Sunfire several years ago where the lease payment was only marginally less than the purchase payment at 0% interest...the caveat being you had 1 extra year of payments on a purchase plan, but the vehicle was owned and could be used as a downpayment towards the next vehicle...

Since for me an automobile is a necessity, not a luxury, I have to go for the lowest cost. Since I can't charge any part of the cost to business and drive quite low mileage, this consists of:

• Settling for a utilitarian vehicle
• Buying a late-model used vehicle with residual warranty
• Keeping it for a long time
• Purchase it using an equity-secured line-of-credit.

Just curious - the last few leases I've had have been 2.7% and 3.1% on Hondas. The current Accord has 2.9% lease rate. Those are well below prime.
Is your bank giving you a rate that low, or are the vehicles you're looking at demanding higher finance rates?

[kexodusc]

Huge fan.

Mazda takes that Zoom-Zoom stuff seriously. They are very much like BMW in this respect, just priced a lot more sanely. Also, as a former Miata owner, I can testify that they are as reliable as the sunrise. I'm considering replacing the M3 with a Mazdaspeed3 and if you like the Vibe/Matrix, you'd love the Speed3. 262hp, 0-60 in 5.5s, tenacious handling, 30mpg, and an interior and exterior and are best in class, IMO. I'm trying to talk the wife into a CX9, but she's got her heart set on the gorgeous Buick Enclave (can't blame her, really). As you don't like "small cars," you should consider the new 6 due this summer. Here's a photo of the new car.

Now THAT's more like what the new Accord SHOULD have looked like...droooooolll....

[Feanor]

....

How do you guys feel about Mazda's?

I owned a rotary-engined RX-2 back in the day, viz. the mid-70s. On the up-side, it was a blast to drive and pretty reliable. On down-side, I had a couple of instance of very bad maintenance work by the dealers, and it used a heluva lot of gas for a small car.

Mine was sky-blue and had North American-style windows, but otherwised looked like this
...

[ForeverAutumn]

Huge fan.

Mazda takes that Zoom-Zoom stuff seriously. They are very much like BMW in this respect, just priced a lot more sanely. Also, as a former Miata owner, I can testify that they are as reliable as the sunrise. I'm considering replacing the M3 with a Mazdaspeed3 and if you like the Vibe/Matrix, you'd love the Speed3. 262hp, 0-60 in 5.5s, tenacious handling, 30mpg, and an interior and exterior and are best in class, IMO. I'm trying to talk the wife into a CX9, but she's got her heart set on the gorgeous Buick Enclave (can't blame her, really). As you don't like "small cars," you should consider the new 6 due this summer. Here's a photo of the new car.

Now that's pretty! But those low profiles don't look very snow friendly to me.

[GMichael]

I drove a Mazda MX3-GS from 1992 till 1999. I put 196,000 miles on it before I sold it. It was still in great shape and ran like new. Never had any work done to it other than brakes at 125,000, a tune-up at 140,000, and oil changes every 5k with synthetic oil.
The low profile tires it came with weren't great in the snow, but I bought 4 extra rims and put snow tires on them. They lasted for several seasons and worked great. I was driving 55 miles (one way) to work every day. And that was on a narrow winding road with lots of hills. I would have bought another, but at the time, they were going through changes and didn't have any models that interested me. I've been looking at the Mazda 3, 5 door (which is a subcatagory with less hp than the Mazda 3 Sport) for my next car.

[GMichael]

Not bad looking for an "economy car."

[Feanor]

...

Just curious - the last few leases I've had have been 2.7% and 3.1% on Hondas. The current Accord has 2.9% lease rate. Those are well below prime.
Is your bank giving you a rate that low, or are the vehicles you're looking at demanding higher finance rates?

No, the bank charges me much more than that. But the lease rate perhaps means little in itself. The cost of money has to be determined based on the cash price you would pay for the car after discounts and haggling, not the nominal price for lease determination. The possibility exists that Honda's strategy is to promote leases over cash sales, but I'm sure I don't know reason they might have for doing that.

It was some time ago and I wasn't for Hondas, but I at the time I had a pretty exact I idea of what the least cost would be, and a fairly good idea of the cash price would be for a given model. I used net present value methods to determine the implicit interest rate of the least versus cash sale, and that interest rate was in the consumer loan range, several APR percentage points above prime.

[ForeverAutumn]

What a rip off! I was just on the Mazda site running some prices. The interest rate to lease a Mazda 3 Sport is 4.4% for 36 months. The rate to lease a Mazda Speed3 is 5.9% for the same 36 months! I don't understand the different rates. The cost of borrowing for Mazda should be the same regardless of car. It doesn't make sense to me.

Oh, and they're running a promotion so that I could purchase the Mazda Speed3 for zero financing up to 60 months and only 1.9% for longer periods. At those rates I'd consider buying over leasing. 5.9% vs. 0%. I don't get it.