GrantMeThePower
Platinum Member
That's a pretty good assumption! haha
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Buy or lease?
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That's a pretty good assumption! haha
Scarpozzi
Lifer
You always have a car payment and the payment is usually along the same lines of what it would be if you purchased it and financed it.
I only purchase quality cars that have a low resale. This way, I can pay them off and use them for 3-5 years without making payments. The best part is that I can buy them half-price with 20-25k miles @ one year old.
Yes, I always have a car payment, but I can afford it so that's a non-issue to me.
The payment is not the same as if I purchased and financed. It is substantially less.
I don't like having cars out of warranty nor do I like driving used cars. A one year old car has had it's best miles already worn out by someone else. Plus no costly out of warranty repair bills. 😀
In the end, I can lease a new car every 3 years for the same price as buying and holding. Why purchase when leasing is financially superior and I always am under warranty?
dullard
Elite Member
Worst investment you could make: Buy a car every 2-3 years (or more frequently)
2nd worst investment you could make: lease a car every 2-3 years (or more frequently).
Plain and simple. Those two things above should always be considered. Thus if you are going to get a car frequently, then take the lesser of two evils - lease. If you won't get a car that frequently, leasing is almost always worse that buying (and often by a large margin).
Why? Because follow the rough guidelines above and you'll be financially the best off. There are always odd exceptions (a dealer could give you a fantastic lease or an extremely low price to buy if the dealer choose). But for almost all situations, barring those rare exceptions, you'll be financially better off.
2nd worst investment you could make: lease a car every 2-3 years (or more frequently).
Plain and simple. Those two things above should always be considered. Thus if you are going to get a car frequently, then take the lesser of two evils - lease. If you won't get a car that frequently, leasing is almost always worse that buying (and often by a large margin).
Why? Because follow the rough guidelines above and you'll be financially the best off. There are always odd exceptions (a dealer could give you a fantastic lease or an extremely low price to buy if the dealer choose). But for almost all situations, barring those rare exceptions, you'll be financially better off.
kranky
Elite Member
How can you compare leasing every three years with buying and holding? I owned my last car for 8 years, and for the last 5 had zero payments. Total repairs over the 8 years came to about $2500. By my math, I avoided about $12,000 in car payments over that time, even factoring in the repair costs.
Not having a car under warranty is not a reason to pay $200, $300 or more a month. It's not as though you can't replace it if it does turn to crap.
I'd argue your logic is false. It makes no sense to purchase a depreciating asset. But everyone needs a car. There for it makes more sense to only pay the depreciation on a depreciating asset. And since nobody knows how much the depreciating asset will depreciate by the end of the term, the lease agreement guarantees how much the asset will depreciate upfront. If the asset depreciates faster, you walk away at the end of the term. If it is slower, you can sell at the end and pocket the difference.
Ahhh cause the financing choices for cars are cash, financed purchase or lease. To not compare them is foolish.
You got lucky, but you drive an 8 year old car. I don't want to drive an old car, and yes, having something under warranty is a reason to make a payment on it. Maybe not for you, but for many it is. Try trading in a broken car... don't get too much for it.
DivideBYZero
Lifer
Shens.
GrantMeThePower
Platinum Member
😕
DivideBYZero
Lifer
Another BMW wannabe. :roll:
GrantMeThePower
Platinum Member
still confused...how am I a BMW wannabe? This would be the second BMW i've owned, and is in fact cheaper than my last car.
I wasn't posting this to do a look at me type thing. 3 series are the least expensive BMW's. I just never got the concept of leasing....this thread could be about any vehicle.
Sounds like someone is harboring some pent up issues....
Bull...... most Americans that want a new car should lease. I am a finance manager at a dealership and I see the holes that most people dig themselves into. 70% of the people that walk through our doors that have a trade in are in a negative equity situation, usually about $2000-$3000 regardless of what the vehicle is. I have seen it as great as $32000 in the last year, but those people are just plain crazy. Anyway, most Americans finance vehicles for at least 60 months and the majority for 72 months or more which means that they are in the neative equity situation for 5 1/2 years of ownership. If you think being stuck in a 3 year lease is bad, try getting out of a vehicle that is 3 years old that you are upside down on $6000. Fact is, most Americans like to drive a new car every 3 to 4 years, yet they keep coming back and financing at 66 months or more which means that they are rolling in additionl negative equity on every new deal on a depreciating asset. They keep extending the term out to 72 months, then 75, 78, 84 months, just so they can get a car payment they can live with and it just makes the negative equity situation even worse. The ONLY people that should buy are the ones that drive 20,000 miles or more in a year and people that hold on to a car for a long time (6+ years).
The simplest way to look at it is this. Just about everyone always has a car payment. You might as well pick the lowest payment cuz you're always gonna be paying it. This guy flat out said that he'll probably want out of this car in 3 to 4 years, his round trip commute is not that long and he says that he does not foresee it changing. I guess he could finance it at 60 or 72 months to get the same payment as a 36 month lease, but why would he want to do that? Here's the math:
BMW 328xi - Looking on Edmunds it has a TMV of $34910
Wells Fargo Bank says that it has a 36 Month Residual Value of 55% with a money factor of .00220 for a prime customer on a 15000 mile a year lease. With no money down and considering no trade, the payment would be $582.02. The same thing on a 48 month @ 6.25 is $872.69. If I know I'm getting rid of it in 3 or 4 years to just pick up a new payment, which one makes sense? If he has $2000 in cash or equity in a trade, then his payment is $532 vs $801. Take the $250 a month and put it somewhere useful where it will appreciate rather than into a car where the end result is depreciation on an investment. If he changes jobs and has to start driving more, you can always call the lending company and have more miles rolled into your payment. Most people don't know that.
Sorry this is so long, but most people that don't like leases just don't understand them. True they don't work for high depreciation vehicles like a Ford Focus or Chevy Cobalt, but for something like a BMW there's no question which way he should go.
-Brett
And yes there is something wrong with buying a depreciating asset. dullard made a case that buying a car is a bad investment. It is, nothing to argue about there. Therefore it makes more logical sense to pay depreciation on the investment than it does to assume the risk of the investment.
I'm not wasting time financially justifying it. I already did the math. If you did, you'd probably come to the same conclusion.
Again, how many times do I have to say leasing is cheaper than buying??
The reasons for leasing are threefold, cheaper than buying, always have a new car, and always under warranty.
You're absolutely 100% correct. Ever since I learned about leasing and I saw other people turning in cars with negative equity, it only furthered my belief that leasing is what most people should do.
The only problem with it, is you have to have good credit and you don't want to turn in a car that you are already upside down on.
Otherwise, for most Americans, leasing would give them cheaper payments and the new car every few years that they are going to buy anyways.
As far as going over mileage, my current lease says that if I go over the limits I pay 15 cents per mile. If you do the math, that's cheaper than buying too. Either way I'm ahead.
mugs
Lifer
Repeating it won't make it true.
Did he really now? :laugh: No, no he definitely did not.
This is what he said:
Worst investment you could make: Buy a car every 2-3 years (or more frequently)
2nd worst investment you could make: lease a car every 2-3 years (or more frequently).
The implied option 3 is to not replace your car so frequently, which is the best decision financially.
Yeah, it makes a lot more sense to repeatedly pay the first three years of depreciation on a car than to take advantage of the fact that cars depreciate much more slowly as they age. 😕
I think the problem here is that you think kranky was lucky to have a car that ran for 8 years. It's not the 80s anymore. Cars last a long time nowadays. My car has been out of warranty for 30k miles, and it has never been touched by a mechanic. :Q Keep up with routine maintenance, and a good car will run reliably for a long time. Like kranky said, it's crazy to spend $200 or $300 a month to keep a car in warranty. If you're that worried about it, you can buy an extended warranty.
I won't criticize a person for wanting a new car every 3 years. That is a personal decision, and it's none of my business. But you can't say leasing makes more financial sense than buying and holding.
Sure, it makes more "sense" to buy a 2-3 year old vehicle, keep it for 8-10 years, rinse, and repeat.
It also makes "sense" to live in your parent's basement, wear those acidwashed jeans that still fit, and eat nothing but top-ramen....
Bottom line: What always makes the most "sense" isn't always the most realistic...
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