Lease vs. Buy
Expert [VW] Advice

You’ve always acquired your new cars ‘your’ way but the question may have gnawed at you, do I lease vs. buy? The answer is truly different for everyone.

In this iDriveSoCal Podcast Shant Bashian, from our VW partner, Ontario Volkswagen, weighs in with his expert advice. And the factors you may want to consider when making your decision to buy or lease your next new car.

And it just so happens that Ontario VW has some great options, through Volkswagen Credit, that helps sweeten your lease options…  and your buying options too!  Oh, the decision!

No worries, Shant’s happy to answer your specific questions too.  His direct line is 909-909-230-5611 and his email is SBashian [at] OntarioVW [dot] com.

Lease vs. Buy Expert Advice Volkswagen pictured as part of iDriveSoCal Podcast 161 banner

***Transcription***

Recorded @ Ontario Volkswagen in Ontario, CA

Should You Lease or Buy?

Shant Bashian: The first question’s gonna be, “What are you gonna do with the car? How many miles are you gonna put on it, and then where do you see yourself three years from?”

Then we’ll determine if you should lease or buy, and then we’ll outline both the lease and the purchase. You could see the monthly payments on both scenarios and then you decide which one is more fit for you.

Tom Smith: Welcome to iDriveSoCal, the podcast all about mobility from the automotive capital of the United States, Southern California. Tom Smith here, and I am excited to be at Ontario Volkswagen with my good pal, Shant Bashian, the general sales manager of Ontario Volkswagen.

“What are you gonna do with the car? How many miles are you gonna put on it, and then where do you see yourself three years from?”

The topic du jour today is one that’s on a lot of people’s mind when they go to buy a new car and that is just simply, “Do I buy or do I lease?” I’ve formed some personal opinions on it myself, but we are going to hear from the man here at Ontario Volkswagen.

Mr. Bashian, thank you so much for joining me yet again.

Shant Bashian: Thanks for having me Tom, and that question comes up all the time.

I find that most people know whether they want to buy or lease because they understand it now. There’s a lot of information out there.

For us, we have a different perspective regarding buying versus lease. We’re in the business and we like to get the upgraded product rather quickly, but it really comes down to this.

Shant Bashian Lease vs. Buy

Shant Bashian works the Buy vs. Lease numbers

What are you planning on doing with the vehicle? What’s the purpose of the car? How many miles are you gonna drive it?

And, are you the type of person that likes to have something new rather quickly? Do you get bored of your vehicle?

Warranty Consideration

You have to look into that. Buying a car, it’s more of a long-term commitment, really.

So, most people right now will purchase a vehicle and finance it for 60 to 72 months. Most vehicles will come with three year or four-year warranties backed by the manufacturer.

When it comes to Volkswagens, we have a six-year, 72,000-mile warranty right now-

Tom Smith: Yeah, big one.

“When it comes to Volkswagens, we have a six-year, 72,000-mile warranty…”

Shant Bashian: …that covers bumper to bumper and the powertrain.

So, when it comes to purchasing a Volkswagen throughout your monthly payment term, you are covered.

If anything should go wrong, you have nothing to worry about. There’s no additional expense to look into, but again, that’s if you’re planning on keeping the car for a long time.

Now, if you’re the type of person who likes to get something new every few years, that’s when lease comes into play. Also, some leases may be tax deductible from your income, and I advise you to check with your accountant on that.

Tom Smith: Depends on what you do, right?

Shant Bashian: Mm-hmm (affirmative).

Buy vs. Lease Ontario VW

Buy vs. Lease | Ontario VW

Tom Smith: I’ve had some buddies that have been in the sales world and they’re able to write off their entire lease payment.

Shant Bashian: You can write off the miles. I know that. I don’t know if you could write off the entire lease payment. Again, you gotta check with your accountant.

Tom Smith: Yeah, case by case.

Shant Bashian: It’s case by case, but again, so here you have, let’s say, typically a three-year lease.

You make those minimum monthly payments for three years. The monthly payment will be less than a purchase in most cases.

End of Term Options

Most cases, you’re looking at $65, $70, $80 less than a purchase, and after three years, there’s no headache. There’s no, “Oh, I gotta sell my car. Oh, I gotta trade my car in.” You walk into the dealership and you have options.

You can buy out your lease at the residual value which is set the day you sign that contract, so if you have a $21,000 car, you get into a lease of, let’s say, $200 a month and at the end, your residual value on that vehicle is $12,000, after three years your payments are done.

Lease or Buy Ontario VW

Lease or Buy | Ontario VW

You can walk in, you can turn the vehicle in and get something else. And you don’t have to worry about trying to sell it, trying to trade it, or you could buy that vehicle at the residual value of $12,000 plus tax, and then you own it.

You can finance that dollar amount, you can pay cash for it, you can sell it to someone else, you can trade it into another dealership. There’s so many options at the end of a lease.

Tom Smith: The residual is what my car’s gonna be worth at the end of this lease?

Shant Bashian: That’s correct, so your residual is based on the amount of mileage you’re planning on putting on the car.

There’s so many options at the end of a lease.”

So, if you go into a 30,000-mile lease, obviously, that’s gonna differ than a 36,000-mile lease or a 45,000-mile lease.

That’s what the lender… They say, “Okay, 45,000 miles, three years from now, this vehicle will be worth X dollar amount.” That’s your residual value.

Tom Smith: Going back a little bit further, you had mentioned, in most cases, the lease will be less, and you just touched on miles.

Mileage is a Big Factor

I’m assuming depending on how many miles you’re buying on that lease is going to be that, in most cases, situation. Is that correct?

Shant Bashian: That’s correct. Yeah, sometimes we’ll get a phone call and the gentleman or lady will state, “I need a lease and I want to get 25,000 miles per year.”

At this point, I’m like, “Okay, let me explain something. I’ll give you the numbers no problem, but you might as well buy the car,” because if you’re gonna pay a 25,000 mile per year lease, it’s the same thing as a purchase or close or maybe even more. You see?

Tom Smith: Mm-hmm (affirmative).

“…a 30,000 mile lease, obviously, that’s gonna differ than a 36,000 mile lease or a 45,000 mile lease.”

Shant Bashian: After three years, you’re planning on having 75,000 miles on that car? You’re real close to 100,000. You might as well buy the car.

Tom Smith: That’s a lot of miles?

Shant Bashian: Yeah, some people put that mileage, and those people I advise you buy the car. You don’t lease that car.

Tom Smith: That’s because?

Shant Bashian: That’s because you’re planning on driving it to the ground.

Shant Bashian Buy vs. Lease

Ontario VW’s Shant Bashian | Ask the Expert

Tom Smith: Okay, and because you’re putting so many miles on it, the value at the end of that lease term or at the end of the purchase term doesn’t matter because you put a ton of miles on it in a short amount of time.

Shant Bashian:  That is correct, so the residual value will suffer. That’s more kind of simplified, you can say. Some people say, “Oh, when I’m leasing the car, I don’t own the vehicle versus if I’m buying the car, I own the vehicle.”

Let me explain something. If you’re financing this car, you don’t own the car.

Excess Wear Waiver

Tom Smith: Yeah, the bank does.

Shant Bashian: The bank owns the car, and if you’re leasing the car, the bank owns the car.

The only difference is this; after a three year or a four-year lease term, you have options on what you can do with that car.

Because, if you’re tired of it and you want to walk away, you’re free to do so versus purchase, you are not liable.

“You scrape the bumpers, you have dings, dents, scratches, torn seats, cracked windshield. This is excessive wear and tear.”

You are tied into that contract until the end of the term, so after three years, if you’re tired of that vehicle… Or if your family grew… You have two kids now and you got a midsize sedan and that double stroller doesn’t fit anymore…

Now, trying to get out of that vehicle because you purchased it is gonna be a little bit tougher, so that’s why you gotta decide where am I gonna be three years from now realistically?

That’s how you gotta look at it.

Tom Smith: Where do people get in trouble when they lease a car and then turn around, “Oh, my God,” get a big surprise bill at the end of it?

Ontario VW Lease vs. Buy

Ontario VW | Lease vs. Buy

Shant Bashian: Two different things. Excessive wear and tear will be if your wheels have been curbed, so you try to park the vehicle, you hit that curb. You scrape the bumpers, you have dings, dents, scratches, torn seats, cracked windshield. This is excessive wear and tear.

The lender will come in and inspect the vehicle and they’ll charge you for those, so most of the time, cars come back in fairly good shape.

I’ve seen some rough cars come back in, but they had excess wear waiver. Excess wear waiver with Volkswagen Credit will waive up to $10,000 in excessive wear and tear. That’s including-

Tom Smith: 10,000?

Vehicle Return Condition

Shant Bashian: Yeah.

Tom Smith: Wow.

Shant Bashian: The only thing you need to understand about excess wear and tear, it covers excessive wear and tear.

That doesn’t mean you can return the car with a door missing or a bumper hanging off, because that’s not excessive wear and tear. That’s collision or you know …

Tom Smith: Sometimes, you need to spell out common sense, right?

“…with Volkswagen Credit will waive up to $10,000 in excessive wear and tear.”

Shant Bashian: Yeah, and I say that these days.

I didn’t say these things earlier in my career because I didn’t foresee it. I wasn’t expecting for people to think, “Oh, I can bring the car with front and rear bumpers missing.” It doesn’t work that way.

That’s not excessive wear and tear. That bumper’s missing. That’s a problem.

The other scenario I ran into, we tell people… They ask, “What if I go over my miles?”

Tom Smith: That’s where I wanted to get to.

Buy or Lease Ontario VW

Buy or Lease | Ontario VW

And, I figured you’d have something else to point out that I didn’t think of, and that was the excess wear and tear… But, what I was going towards is the miles, because a lot of people that I talk to are like, “Oh, I leased once. It didn’t work out. I had this huge number that I had to pay at the end of the lease.”

It’s like, “Well, wait a minute. Why was that?” It’s like, “Well, I wanted to get my payment as low as possible, so I figured I’d only drive 5,000 miles a year.”

Shant Bashian: That’s impossible.

Tom Smith: It’s like, well, no, you gotta be realistic.

For me, personally, I like leasing for getting something new all the time.  Also, what I recommend to people when they ask me is, hey, buy more miles than you think you’re gonna need.

VW Lease Mileage Flexibility

Because they’re typically way cheaper when you commit to them upfront as opposed to have to go over and then pay for them on the back end.

In the case of Volkswagen, what is that? Is there a standard number that, hey, this is how much it’s gonna cost me when I’m committing to the lease? You already said it’s 20 cents a mile on the back end.

“…once a year, you can call VW credit, and you can buy more miles throughout your lease.”

Shant Bashian: Typically, upfront mileage is 12 cents,

Tom Smith: Big difference there.

Shant Bashian: Right now, actually, once a year, you can call VW credit, and you can buy more miles throughout your lease.

So, I leased an Atlas. I have a 12,000-mile lease. It’s a three-year term, and right now, we’re averaging about 14,000 miles already.

I’ve been in the vehicle for almost two years, so all I do is pick up the phone, call VW credit, and say, “I need to buy another 3,000, or another 4,000 or another 5,000 miles.”

And they’ll calculate that mileage. I believe it was at 15 cents and then they’ll just put that into my payments.

“…all I do is pick up the phone, call VW credit, and say, “I need to buy another 3,000, or another 4,000 or another 5,000 miles.”

Tom Smith: Not all manufacturers do that. As far as being able to adjust your mileage midstream in the least, I know that not everybody does that, so that’s a great thing that Volkswagen offers, and you can do that once a year for each year of the lease or-

Shant Bashian: Yes, you can.

Tom Smith: That’s a great thing.

Shant Bashian: Volkswagen Credit leases are simple. You can return the car anywhere in the country at any Volkswagen dealer.

Tom Smith: Got it. Okay, well, a lot of great information and it sounds like your perspective, case by case basis, the factors you laid out earlier, is there anything else?

Weigh Both Your Options

Hey, I’m a new customer, Shant. Just rolled up to Ontario Volkswagen. I’m really torn between buying and leasing.

Any other suggestions or points that you want to make for me as someone considering going either way?

“How man miles are you gonna put on it, and then where do you see yourself three years from now?”

Shant Bashian: The first question’s gonna be, “What are you gonna do with the car? How many miles are you gonna put on it, and then where do you see yourself three years from now?”

Then we’ll determine if you should lease or buy, and then we’ll outline both the lease and the purchase. You could see the monthly payments on both scenarios and then you decide which one is more fit for you.

Tom Smith: All right. Well, all good information.

Ontario VW Buy vs. Lease

Shant Bashian Explains Leasing & Buying Options

Thank you so much, always, Mr. Shant Bashian here at Ontario Volkswagen. You guys are a wealth of information for the iDriveSoCal listeners and surfers if you’re coming across iDriveSoCal.com.

Thank you as always for iDrive… Oh, you know what? I think in the last podcast, we dropped your contact information. Do you want to do that here?

“My direct line will be 909-230-5611… That’ll ring directly to my office. Email is SBashian [@] OntarioVW [dot] com.”

Shant Bashian: My direct line will be 909-230-5611, 909-230-5611. That’ll ring directly to my office. Email is [email protected]

Tom Smith: Additional questions for whether or not you should buy or lease, reach out to Mr. Bashian, and again, thank you so much.

Shant Bashian: Thank you for having me.

Tom Smith: Most appreciated. For iDriveSoCal, I am Tom Smith. Thank you as always for tuning in.

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