Understanding first lease

As Viking79 pointed out, that mileage is going to kill you on a lease. Your commute alone is going to put you around 30,000 miles over the typical lease. 30,000 miles x 25¢/mile is $7500 extra you'll owe at the end of the lease.

Does this matter if you're buying the car? Yes.

You may not be able to get a loan for $18,196.80 to buy the car as it likely won't be worth that much. You'll have to have several thousand in cash to cover the difference. Of course, you can offer a lower pay-out price. However....

They'll use that $7500 extra mileage fee against you if you try to negotiate a lower pay-out. The leverage you have is that you can turn the car in if you don't like the pay-out deal. If turning it in costs you $7500, they won't be so generous with the pay-out reduction.

If you turn the car in, the leasing company is likely going to sell it at auction. Let's say it's worth $12,000. They could sell it to you for that much or at some other discounted price, or they could dig in their heels, demand $18,196.80, get the car back, pocket your $7500 in extra mileage fees and STILL sell it at auction for $12,000.

I'm not going to advise you to buy a $500 Civic, but what you'll save by BUYING a used Volt that you can pay off in three years will more than cover the cost of extra gas, by a lot.

Listen to what all of these smart folks have been advising you: DO NOT lease the Volt if you're planning to drive 30k over your 3-year allotment with your commutes alone (and then whatever extra you do on weekends). You will owe a fortune at least turn-in and the leasing company will absolutely hold that over your head like a sword if you even think about trying to negotiate a lower lease buyout!!! On top of the mileage fee, they'll hit you with excessive "wear and tear", the lease return fee, new tires, and whatever else they can conjure up to extract maximum $$$ from you. Leases are for folks that drive very little (10-12k/year or less), baby their cars, intend to trade every 2-3 years for whatever's trendy and new, and don't care that they're tossing good money in the waste bin. Based on your roughly 100-mile daily round-trip commute, your best bet is probably an off-lease 2014 or 2015 Volt. These can be had in Premier trim for $15-$18k, and will have less than 36k miles on them (many will have significantly less than that). A slightly older off-lease 2013 can be had for even less! With 48-month financing, your payment will be in the ballpark of what the lease would cost you, but you get to drive it as far as you like, there's no turn-in penalties of any sort, someone else (the bank, GM, ...) has already taken the HUGE 1st/2nd year depreciation, etc. And after 48 months, your credit will have been rebuilt to some degree and you will own the Volt outright, instead of owning absolutely ZILCH on the lease!

Bottom line on this - check cars.com or autotrader.com or edmunds.com or kbb.com or any of the other online car shopping "lots" to get a great deal on a used Volt. Heck, you might even be able to pick up a 2016 Gen 2 for not much more than a lease payment if you shop around and are willing to drive a little to save a lot

Best of luck to you with your Volt search - I have a 2015 Premier myself and prefer it over all of my other vehicles (including my convertible Corvette, my new Equinox, and everything else I own!).

Hurricanoday said:

One of my questions I wanted to ask, if my numbers are right and I buy the car after leasing won't I still be paying the same amount vs buying? Right around $28-29k?

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If you plan on buying at the end of the lease then you will lose a portion of the tax credit and you'll pay an additional $500 or so as an acquisition fee. So it rather depends on your situation. If you won't qualify for the credit for whatever reason then leasing is better since you'll get at least a portion of the credit. If you will qualify for the full credit then it's cheaper to buy.

As far as payments are concerned, you need to consider the rebates and credits. For example, the credit will give you $7500 in the first year. From a cash flow perspective that's $625/month -- nothing to sneeze at. Even over 36 months it's $208/month. When making your monthly payment comparisons, subtract $200 from your purchase payment and see how that compares to your lease deal (the lease should be lower but not by as much as you might first think).

I don't mean to pile on but I agree with DonC above, if you plan to keep the car long-term I would look long and hard at purchasing options, you may be able to get the cash flow situation into the same ballpark if you consider spreading out the tax credit over time. For example you can adust your tax withholding anticipating the credit next year and that gives you more cash flow right away. You may qualify for 0% interest from GM as well. The reason the lease seems like a good deal is *only* because the bank is taking the $7500 tax credit for themselves. If you figure that when you purchase you get the tax credit you will see that purchasing is a better deal overall. The lease is a lower payment initially perhaps but come the 3 year mark you are going to be faced with some difficult financial choices.