Hello, everyone. I know we've had similar threads on this before. I'm picking up a Countryman in two weeks. Due to its first year weirdnesses (I think the rail will be a one year and done failure, the ridiculous e-brake, and some growing pains with the new nav system), as well as some compelling new mini models coming out in the next few years (coupe), I'm planning on keeping my Countryman probably for three years. I'm wondering if I KNOW I'm doing that, if it's worth just leasing it, and then going for a new car altogether, or does it make more sense to finance and then trade in when I'm ready. Do mini dealers give generous trades if you are buying a newer model?

 

Leasing is for people who have specific financial needs (write-offs) or people who make car payments forever. If you trade in a car the month it is paid off, you might as well lease. If you pay off a car, and then enjoy the zero payment plan for years, buy it.

Leasing is good for those making payments all the time anyway. No maintainance, not worries, just mo money forever.

 

Leasing doesn't make sense if you anticipate exceeding the mileage allocation.

 

With the exception of my MINI, I always lease. I like being able to get a new car every few years. I like not having to worry about issues beyond the manufacturers warranty. I do very little to the car... car washes, change the oil, maybe a set of new tires.

You also pay less tax on a lease as you are only taxed on the portion that you use.

There are many threads on here about this already. My advise to the OP is to not even bother with the Countryman. You listed too many issues that bother you.Leasing is not going to help that. Get something else and wait a few years for a MINI cope or a later model Countryman.

 

I couldn't agree with you more! this is a radical design/engineering change for mini and im sure the first year will be very painful for very brave first generation on takers. Honestly I cannot see the countryman holding its value and see it as a massive failure for mini. JMO of course.

If you already know your not going to keep the countryman but have to have it then i would lease it. chances are by the end of the first year or so your going to want to give it away just to put the problems behind you especially if your going to stay under the 36k mileage allotment.

Why not just get a clubman? to tell you the truth i cant even see the clubman making it through another design refresh in 2013, there is already talks that the paceman will take its place. they arnt very popular because of there looks and are very "radical" I do LOVE mine though

 

Since their release, one out of every four MINIs sold has been a Clubman.

 

I was considering a Clubman, but the back seat is still way too small for a long trip. The Countryman fits many of my needs perfectly...seating for four comfortably, apparently decent driving dynamics, etc. Weekly I have to drive between MD and NYC. I have two teenagers who still need to be carted around for the next year or so. They'll be off to college in a few. If I find that I love the car, I can always buy it out, but I'm sure I'll like the 2014 Countryman more than the 2011, or I'll be able to go for something like the Coupe at that point.

 

Mileage driven means nothing on a lease. If you go over miles do not turn it in. Trade it for something else. It has a pay off like anything else. The risk is being upside down. I have leased and bought many vehicles. I find leasing trucks works well because they hold there value. Cars were good when the manufactures provided subsidies to make the leases attractive. Those days are long gone. Smart Buy from MINI is a great deal in my opinion. Leasing a MINI is just plan stupid if you run there numbers. You paymet is over $100 month more expensive to lease. It should be cheaper! You can buy it for much less. Drive for two or three and trade it in and you should be fine. I laughed at the MINI lease. The residual value are very poor also so not attractive to lease.

 

The likely reason that the lease payment is more expensive is because tax laws allow the total lease payment to be a tax write off. Whereas if you purchase the car and wish to claim part of it as a write off you have to do it through depreciation. Dealers and lease companies know this so they charge more so that you can save more...

Basically if you are using the vehicle strictly for personal use (as opposed to business), then purchasing it is usually better than leasing.

 

This a good example of why you do not get tax advice for the U.S. off the Internet. "All" of any lease payment is not deductible unless "all" the use of the vehicle is business related and supported by a contemporaneous mileage log or vehicle usage parameters banning any personal use. There are multiple ways to deduct for business use of an auto. Lease companies do not by any means charge more for a lease so as to "save" the lessee money. At the most a deduction is basically worth less than fifty-cents for every dollar deducted.

Retail auto leasing is much misunderstood by the public and there are any number of myths commonly repeated about it. You are basically paying for the amount of usage while you have the vehicle and interest on the money you have tied up. The residual is subtracted from the purchase cost and that becomes the depreciation factor divided by the number of months your lease is for. If the estimated residual is low, you have the option to buy it and resell the vehicle. If the residual estimate is high, you can turn it back in and walk away with no penalty.

The other component to your payment is the true interest cost of the lease. This is calculated by knowing the interest percentage of the money factor used and adding in the origination fee of the lease and the fee charged to return the vehicle at the end of the lease, if there is one. It is common to have a five or six hundred dollar origination fee and a similar fee when turning the vehicle in at the lease termination. When added together, these can be a substantial cost.

Over mileage on a lease can be easily avoided. Be honest with yourself when you start the lease about the number of miles you are going to drive the vehicle. Too many people opt for the low mileage ten-thousand a year plan with the low payment and then drive twenty-thousand a year. Obviously mileage is one of the main factors in used vehicle value and whether you own the vehicle yourself or are leasing it, drive more miles and you are going to lose more value. Actually, if you are going to drive very high mileage, you are better financially to lease than own. The mileage penalty from most lease companies does not truly account for the lost value.

Leasing for many people can be advantageous. You can drive more car for a lower monthly payment and normally stay within the warranty at all times which significantly lowers your auto expense. The only cheaper way to own the vehicle is usually buying it and driving it forever or when the wheels fall off. Whichever comes first! Buying and financing a vehicle for the now sixty-six month average term and then buying new again is a fools game. Nobody wins that scenario.

 

Jallen,

Well put. Speaking in general and not just Mini, another factor to consider is brand/manufacturer and subsized programs that might be in effect, it may be better to purchase than lease..or visa versa. For example, some cars the interest rate may be 0% for up to 60 months. While the lease MF may not be near as good. Or the lease money factor could be .00001...basically no cost...while the finance rate may be at a higher interest rate.

Someone needs to know what the manufacturer is offering in subsidized programs if any when shopping and comparing whether to lease or buy. The dealer has that information.

Also, regarding leasing and mileage, it's always less expensive to plan ahead and purchase the additional miles up front. At the end of the lease the charge per mile is much more than when buying those miles up front.

 

*Sigh*

All I was saying was that leasing can be more attractive when the vehicle is used for business purposes without having to cut an paste a book on tax law.

The right answer is it depends on the relative buy/lease terms (which the OP has provided neither) and the driver needs.

IMO a big downside to leasing is that the terms are more complicated and require forecasting (as in what is the salvage value). Is it unreasonable to expect that the lessor is going to err on the side of caution and forecast a relatively low salvage value? What follows from this is that for people who are not financially savvy, it can be more difficult to determine the value of lease terms than those of a purchase agreement. So yeah, if you have to ask then get the terms and take them to a professional.

So you're saying that regardless of the rest of the lease/purchase fees, interest rates, salvage costs, etc, a 66 month purchase agreement is always the least favorable option?

 

There are no tax cost reasons that make leasing more advantageous to corporations than purchasing nor any tax reasons that makes leasing more attractive to corporations than individuals. An actual purchase can produce more tax benefit for corporations than a lease but does require a minimal increase in accounting work. In many cases for corporations it simply becomes a capitol allocation decision and whether they want to have the liability on their balance sheet. This is only relevant because it is another "myth" that somehow leasing is only for business purposes and not the individual.

Residual values are generally set using the ALG Guide which is the industry "Bible". Contrary to your speculation, the problem for many manufacturers has been an overly aggressive posture to residuals. Raise the residual from the norm, lower the lease payment, and sell more vehicles by writing more leases. Books have been written in the past few years regarding this and literally billions of dollars lost by overly aggressive lessors.

No, I am not saying a 66 month contract is the worst choice. I use 66 months because that is approximately the average term for automobile financing today. Without a substantial down payment, there is no equity in the vehicle until sometime after the 48Th payment, on average. Another myth is that if I buy I am building equity. When it takes 48 payments to be even and the average new car trade cycle is within months of that number, the idea of "equity" goes out the door.

Leasing is not for everyone but it is also not that hard to analyze. How much does it cost up front and how much a month for how long. You simply compare that to other forms of payment available. There is an old business adage that has stood the test of time. Lease a depreciating asset and purchase an appreciating asset.