Guys who lease their cars...

[BoberFett]

Originally posted by: teddyminesYou are assuming that people put $0 down when signing a loan for a vehicle. Driving a beater for 4 years while putting a couple hundred into a typical savings account monthly can give you a decent down-payment. Plus you may be able to get a few thousand for the beater. Without interest, $200 over 4 years equates to $9,600. So your $30,000 car would drop down to $18,400 after you apply savings and $2000 for the beater. Your 4-year loan amount would be $450 at 8%, the same as your lease, but the car is yours at the end of the loan.

Great, then you drove a beater for 4 years. Or you could lease and drive more car sooner for roughly the same money.

Also, a beater that you can get $2,000 for after 4 years? That must have started as about an $6,000 beater. So you'd have to have that money lying around to begin with. So why spend $6,000 on a beater (plus the usual beater $1,000-2,000 in repairs) just to have slightly more money after 4 years? 4 years later, you're not too much further than you would be if you leased, only you drove a beater rather a shiny new car.

 

[Jzero]

There's good arguments for both. Do what's right for you. I'd rather know that at the end of my loan period, my car is my car, but OTOH, I don't have any intention of getting a different car for at least 5 years.

If you think of a car as an investment, however, you are thinking wrong, because you cannot make money on a new car. You can lose now or you can lose later.

With a lease, you will have a car that is always under warranty, and always fairly new. You'll pay a premium for this convenience over time, but it may be worth it to you.

If you own the car, then you'll pay less, but at the end of the day, you'll have an older car that is out of warranty and will eventually start nickel and diming you for maintenance. OTOH, you can do whatever you want to it, and you can even try to sell it for more than it's worth, or trade it in.

It's a wash.....pick whichever situation suits you. You can argue that leasing isn't a great financial prospect, but if you're worried about making an "investment" you shouldn't be thinking about buying a car.

 

[kherman]

Originally posted by: Doggiedog

Originally posted by: kherman

Originally posted by: kherman

Originally posted by: Argo

Originally posted by: CtK
i leased my car cause i dont want to drive the same car for more than 3 years
or have to deal with stuff breaking after 3 years

2002 BMW 325Ci
$450 a month
3 years 15,000 miles a year

I LOVE IT!!!

Sounds like a great deal. What are the options/downpayments?

lets do some math:

2002 BMW 325 2dr Rear-wheel Drive Coupe Ci is about $30,000
Assuming 0% interest, that's 36 payments of $835/month(not doing math for an estimated interest rate )

A 2000 BMW 325 ci coupe at trade in today with 36,000 miles is worth about $20,280 in good condition.

A 2000 BMW 325 ci coupe sold on your own: $23,905

Assume you bought the 2000 BMW in 2000 and are now trading it in for the same, new car.

If you bought the coupe in 2000(assuming you paid $30,000 which is an over-estimate) and are trading it in today for $20,000, you would haver to make up a difference of $10,000 over a three your period.

If you didn't have the trade in and went with a lease, you would do the lease for $450/month. Paying (drum roll please!) $16,200 over three years.

Still a good deal?

Do you want to pay $2,000 extra a year for the rest of your life? Start the process of owning now or be in the hole the rest of your life.

new car sources: cars direct
used car source: kelly blue book
zip used at sites: 06335

I just moticed a scenerio that is easier to see.
if you bought the car in 2000 for $30,000 and sold it on your own in 2003 for $24,000, you esentially leased the car for $6000 over three years. That's $167/month

Still makes sense? Not to me.

Impossible. Show me a $30K car that only depreciates 20% in 3 years. No way! Best I've seen is probably 60% residual.

I gave you my sources, check for yourself.

 

[kherman]

Yes, I amde lots of assumptions, but then again, I didn't want to spend hours on end looking for interest rates and doing math. I used ball park numbers based off of hard data on car valuation.

Yes, you can get a 12 month loan to pay for a car worth 30K$.

 

[bunker]

Back to the original question:

'02 Ford F-150 Extended cab
$300 month
2 year lease
15,000 miles a year

I lease because I like having a new truck every 2 years and I never have to worry about it being out of warranty. Plus with trucks they hold their value very well so the residual is high thereby making the payments lower.

I have resigned myself to the fact that I will always have a car payment, but that's fine with me because I will always have a newer car .

 

[teddymines]

Originally posted by: BoberFett

Great, then you drove a beater for 4 years. Or you could lease and drive more car sooner for roughly the same money.

Also, a beater that you can get $2,000 for after 4 years? That must have started as about an $6,000 beater. So you'd have to have that money lying around to begin with. So why spend $6,000 on a beater (plus the usual beater $1,000-2,000 in repairs) just to have slightly more money after 4 years? 4 years later, you're not too much further than you would be if you leased, only you drove a beater rather a shiny new car.

You're right when you say you'd have to have $6000 lying around to begin with. Personally, I'd buy that beater with cash or a very small loan. For some, this is simply not an option. Also, it doesn't bother me to drive a beater for 4 years knowing that I will be able to afford to have a smaller loan for a better car, and own it.

 

[SyahM]

IMO buying the car is better because you have the convenience of modding it, overclock it etc. Plus, you'll never know how much you'll be driving during a year, I know I drive more than 15k per year so leasing wont work for me.

 

[Armitage]

Here's an idea ... buy a car and keep it more then 3 or 4 years and watch the savings pile up.
Any good quality car, well taken care of, should go at least 100,000 miles without significant problems. If you drive 15K/year, that's about 7 years. If you're lucky, you'll get another 100K out of it.

So, compared to a 4 year lease, that's at least 3 years with NO car payments, and cheaper insurance.
What could you do with an extra $400/month. $14,400 + interest for 3 years.

Personally, when my current car was paid off 6 years ago (3 year loan), I kept making the payments into my savings account. When I needed a second car last year, I paid a much bigger down payment then is typical, so saving lots on interest.

Seriously, replacing a car every 3 or 4 years is absurd.
It's transportation. Get over it.

Obviously I think leasing is completely absurd.

 

[kherman]

Originally posted by: bunker
Back to the original question:

'02 Ford F-150 Extended cab
$300 month
2 year lease
15,000 miles a year

I lease because I like having a new truck every 2 years and I never have to worry about it being out of warranty. Plus with trucks they hold their value very well so the residual is high thereby making the payments lower.

I have resigned myself to the fact that I will always have a car payment, but that's fine with me because I will always have a newer car .

Cars are not "good debt".

I'm not going to get into it, but from a long term financial standpoint, having a monthly car payment for hte rst of your life is a VERY bad financial decision. Whether it is a lease or a loan is immaterial.

The way trucks are made, you should be able to get any full size and have it last you 10 years. You can always put in new seats if they get worn out for minimum $BLING$ Why do you need a new truck every two years. Keyword here is need.

 

[kherman]

Originally posted by: ergeorge
Here's an idea ... buy a car and keep it more then 3 or 4 years and watch the savings pile up.
Any good quality car, well taken care of, should go at least 100,000 miles without significant problems. If you drive 15K/year, that's about 7 years. If you're lucky, you'll get another 100K out of it.

So, compared to a 4 year lease, that's at least 3 years with NO car payments, and cheaper insurance.
What could you do with an extra $400/month. $14,400 + interest for 3 years.

Personally, when my current car was paid off 6 years ago (3 year loan), I kept making the payments into my savings account. When I needed a second car last year, I paid a much bigger down payment then is typical, so saving lots on interest.

Seriously, replacing a car every 3 or 4 years is absurd.
It's transportation. Get over it.

Obviously I think leasing is completely absurd.

MOST LOGICAL THING SAID EVER!
This is my opinion too.

A car is a need, but a new car ALL the time is a want unless it is required for business purposes, at which time, you are most likely driving a company car.

I am in a dilema right now myself. I have a truck right now with 93K miles on it and worht about $7000 ($5500 as a trade in). I want a new truck (about 25K$). $300 payments for the next 5 years makes me want to throw up. Why? $300*5*12 = $18,000. no interest or taxes, etc. $18,000 will help out greatly in a downpayment of a new house 5 years from now. (that will be my second house). $3600/year more can be invested by not adding the debt involved with a new car.

Some poeple view new cars as NEW CARS. I views new cars as just another bill.

It's also matter where I am in life. If I was 50, kids done with college and not ever going to move again, i'd spoil myself. For now, i'll suffer, so when I'm 50, I can be a spendthrift.

how's it go. Spend your money now, have the same lifestyle the rest of your life. Save now and you can gradually have a better lifestyle as time goes on. Alot can be learned in the first chapter of Warren Buffet's bool

bascially when it comes to cars, you can always lease that $30,000 BMW for the rest of your life. I'd rather get that $10,000 junker now. Then get a $15,000 vehicle then 25K$ then 30K$ then 40K$ then 50K$, etc

So you'll always have your BMW 3-series, so when i'm 50 you'll still have the BMW 3-series and I'll have the 7-series. maybe a SICK sports car. Who knows?

I have two goals in life. Retire at 45. Have a gragually imporving life style. What can get in the way of it? Always having to pay off debts, like car loans/leases. Cars are pure costs. Pure Cost = something that depreciates from the day you aquire it.

 

[Rob9874]

I have a lease on my Durango. I got it before the No Interest deals. With no interest, it's definitely a more difficult decision. But I look at it this way:

If you buy a $32,000 car (what I paid) with no interest for 5 years, your payments would be $533/month, assuming no money down. After 3 years, you've paid $19,188, and you still owe $12,812 over the next 2 years.

I'm leasing (with interest) and I pay $493/month. After my 3 year lease, I've paid $17,748, but I'm out. I miss out on the equity, but I don't owe for the rest of the vehicle. The person who bought the car owes $12,000 for a car that lists at $16,000. So if you lease, you miss out on that $4000.

But if you did pay 5% interest, the scenario is different. That $32,000 car is now $603/month, and after 3 years, you still owe $14,472 for a car that's only worth $16,000.

Also, if you bought a Toyota (which I will next time), your resale value will be much higher, making more sense to buy also. But each individual case is different, and for me, it made more sense to lease.

 

[kherman]

Originally posted by: Rob9874
I have a lease on my Durango. I got it before the No Interest deals. With no interest, it's definitely a more difficult decision. But I look at it this way:

If you buy a $32,000 car (what I paid) with no interest for 5 years, your payments would be $533/month, assuming no money down. After 3 years, you've paid $19,188, and you still owe $12,812 over the next 2 years.

I'm leasing (with interest) and I pay $493/month. After my 3 year lease, I've paid $17,748, but I'm out. I miss out on the equity, but I don't owe for the rest of the vehicle. The person who bought the car owes $12,000 for a car that lists at $16,000. So if you lease, you miss out on that $4000.

But if you did pay 5% interest, the scenario is different. That $32,000 car is now $603/month, and after 3 years, you still owe $14,472 for a car that's only worth $16,000.

Also, if you bought a Toyota (which I will next time), your resale value will be much higher, making more sense to buy also. But each individual case is different, and for me, it made more sense to lease.

Well, after you were to finish paying for the car in 5 years, you could keep it for two more, then trade it in and repeat. now you have your car's value as a down payment the rest of the time you go buy a vehicle.

This is not the case with a lease. This raises a good point. When leasing, you get the car for 5.0 years and the next lease is for 5.0 years ......

if you buy a car, you get it for 5.0+ years, then the next for 5+ years .........

 

[Rob9874]

But see, that's my choice as a consumer, to forfeit the equity in a car to be able to drive a new one every 3 years. My Durango is 3 years old now, and I have to take it into the shop all the time. (Another reason I'll be buying a Toyota next time). Currently, I am leaking power steering fluid. My car grinds every time I make a turn, and I have to keep a bottle of fluid in my car so I can fill it a few times a week. I need to take it in, but haven't found the time. Also, my back windows won't roll down. I think the motor is out. I am 1500 miles away from my warranty expiring. I can't wait until my lease is done, and I can get into my new car! I'm not so frugal that I need to drive a car into the ground to save money.

 

[kherman]

Originally posted by: Rob9874
But see, that's my choice as a consumer, to forfeit the equity in a car to be able to drive a new one every 3 years. My Durango is 3 years old now, and I have to take it into the shop all the time. (Another reason I'll be buying a Toyota next time). Currently, I am leaking power steering fluid. My car grinds every time I make a turn, and I have to keep a bottle of fluid in my car so I can fill it a few times a week. I need to take it in, but haven't found the time. Also, my back windows won't roll down. I think the motor is out. I am 1500 miles away from my warranty expiring. I can't wait until my lease is done, and I can get into my new car! I'm not so frugal that I need to drive a car into the ground to save money.

It's not about being frugal, it's about saving money and not wasting it. Oh well, I want to retire at 40-45 years of age. That's my goal. What's yours?

 

[StageLeft]

Seriously, replacing a car every 3 or 4 years is absurd.
It's transportation. Get over it.

I agree. If you want a new car every few years a lease may be the best option (or not), but why want it that frequently? I KNOW that too few people realize exactly how costly it is to replace a car that frequently, otherwise they wouldn't do it. You're doing yourself no good to be getting a new car every few years while short-changing yourself of other things in life like a nicer house.

The difference between keeping a car for 3 years and 5 years (buy it over 60 months) is very significant.

Or heck, how about buying it and paying it off and not having a bill for it that month? There is something very fine about not having car payments, and from a warranty standpoint although it's nice to have a car under warranty financially speaking a used car without one is gonna cost you a hell of a lot less than making monthly payments on a car just because it has that warranty.

I'm still on an old car that is paid off; later this year I hope to get a late model maxima (not new) still well under warranty with fairly few miles on it. I can then use my 93 sentra as a second car when needed and the maxima to have a nice new one; I would then plan on keeping it for a long time. I'd feel sick knowing that I'm locked into payments on a vehicle for three years when by the end of it I'll own nothing and have a smaller 401k than I otherwise could have had if I wasn't leasing for the rest of my life!

Before you go changing your car every 3 years you should ask yourself if everything else in your life is taken care of: House, retirement, money for kids college, or family vacations, etc.

 

[bunker]

The one thing you are all assuming in your arguments against leasing is that we are all just barely scraping by and need to save money.

I'm out of this thread. The man asked for people's leasing terms and it's turned into people telling others what they should do with their money.

 

[Rob9874]

Originally posted by: kherman

It's not about being frugal, it's about saving money and not wasting it. Oh well, I want to retire at 40-45 years of age. That's my goal. What's yours?

Mine used to be retire at 45, when Intel stock was at 75. Now I'm not so sure.

Assuming you start working at 23, you have 22 years until you're 45. You should have about $3 million to retire comfortably. I'm not so sure I can accumulate $3 million in that short amount of time. Regardless if I save a few thousand by driving my car for 10 years. I just assume I'm going to have a car payment every month for the rest of my life, and I'm willing to live with that.

 

[kherman]

Originally posted by: Skoorb

Seriously, replacing a car every 3 or 4 years is absurd.
It's transportation. Get over it.

I agree. If you want a new car every few years a lease may be the best option (or not), but why want it that frequently? I KNOW that too few people realize exactly how costly it is to replace a car that frequently, otherwise they wouldn't do it. You're doing yourself no good to be getting a new car every few years while short-changing yourself of other things in life like a nicer house.

The difference between keeping a car for 3 years and 5 years (buy it over 60 months) is very significant.

Or heck, how about buying it and paying it off and not having a bill for it that month? There is something very fine about not having car payments, and from a warranty standpoint although it's nice to have a car under warranty financially speaking a used car without one is gonna cost you a hell of a lot less than making monthly payments on a car just because it has that warranty.

I'm still on an old car that is paid off; later this year I hope to get a late model maxima (not new) still well under warranty with fairly few miles on it. I can then use my 93 sentra as a second car when needed and the maxima to have a nice new one; I would then plan on keeping it for a long time. I'd feel sick knowing that I'm locked into payments on a vehicle for three years when by the end of it I'll own nothing and have a smaller 401k than I otherwise could have had if I wasn't leasing for the rest of my life!

Before you go changing your car every 3 years you should ask yourself if everything else in your life is taken care of: House, retirement, money for kids college, or family vacations, etc.

Something you said reminded me of a book. Rich Dad, poor Dad. maybe antoher one. In it, it states, that a majority (90%) of the most wealthy people in america got that way buy BUYING USED CARS! Nice cars, but used to save mucho-cash. I'm sure they are less informed than the rest of us

 

[StageLeft]

Originally posted by: bunker
The one thing you are all assuming in your arguments against leasing is that we are all just barely scraping by and need to save money.

I'm out of this thread. The man asked for people's leasing terms and it's turned into people telling others what they should do with their money.

Oh well, it's anandtech

I don't think you or other are scraping by but I bet most of the people who lease are not making adequate retirement contributions. In fact I bet that most people regardless of lease or not are not saving enough. AMerica as a whole has a lot of CC debt and little to no savings, so stopping leasing is one way to free up some money. I know I sure as hell am not going to rely on social security and a pathetic $100k to retire on.

 

[ElFenix]

1) cars are not an investment or an asset. just like your alarm clock. (some old jags and MGs are, but thats neither here nor there)
2) leasing sometimes comes out ahead of buying it and selling it after 3 years (depends on how much you get screwed), but usually not.
3) leasing is the easiest way to get screwed by a car dealer. if you don't have a laptop sitting right there with leasing software you're going to get screwed. you'll spend a while negotiating down the price and then they'll hide that they're still charging you MSRP. the leasing software will usually tell you how much it would be to buy the car.

 

[kherman]

Originally posted by: Rob9874

Originally posted by: kherman

It's not about being frugal, it's about saving money and not wasting it. Oh well, I want to retire at 40-45 years of age. That's my goal. What's yours?

Mine used to be retire at 45, when Intel stock was at 75. Now I'm not so sure.

Assuming you start working at 23, you have 22 years until you're 45. You should have about $3 million to retire comfortably. I'm not so sure I can accumulate $3 million in that short amount of time. Regardless if I save a few thousand by driving my car for 10 years. I just assume I'm going to have a car payment every month for the rest of my life, and I'm willing to live with that.

I'm 26 so I have about 20 years. 45 is a more realistic age to retire, while 40 is a goal I don't desire to work towards. 40 would be lucky. 50 should be doable.

The only tech stock I ever bought and would consider at this time is LLTC. INTC should be fine for the long term hold. You get dividends, so you should be fine. I'm going to get into REITs and Banks ASAP. INTC is subjectto pricing wars. Just like cars

I have an investment strategy involving covered calls and possibly covered puts, but I am basically a long term holder. I just want my dividends so I can diversify my portfolio.

bunker's correct. This is a big flame war. Time to stop talking. CAn't tell people how to live their lives

EDIT:
my plan:
- Buy stocks that are consistant performers. Both in the past and projected to be in the future.

- Essentilly, get better than 10% annualized gains in captial appreciation of stock prices. (S&P does about 10.5% yearly). I hope to get this number over 12%

- Get an average of about a 2%-3% yield.

- Place covered calls, in order to get additional income of 2+% yearly.

- Put $6000+ in the market yearly. As time goes on, perosnal contributions will increase.

I have an excel spread sheet somewhere that actually does this math for you, including assumed taxes and stuff. I have it fairly planned out.

 

[kherman]

Originally posted by: Skoorb

Originally posted by: bunker
The one thing you are all assuming in your arguments against leasing is that we are all just barely scraping by and need to save money.

I'm out of this thread. The man asked for people's leasing terms and it's turned into people telling others what they should do with their money.

Oh well, it's anandtech

I don't think you or other are scraping by but I bet most of the people who lease are not making adequate retirement contributions. In fact I bet that most people regardless of lease or not are not saving enough. AMerica as a whole has a lot of CC debt and little to no savings, so stopping leasing is one way to free up some money. I know I sure as hell am not going to rely on social security and a pathetic $100k to retire on.

Funny you mention credit card debt. We were tlking aboutthat yesterday at work. The average credit card debt in the U.S is OVER $4,000. That is a clear sign that far too many people don't have budgets and are goingto work into their very old age.

 

[StageLeft]

Originally posted by: kherman

Originally posted by: Skoorb

Originally posted by: bunker
The one thing you are all assuming in your arguments against leasing is that we are all just barely scraping by and need to save money.

I'm out of this thread. The man asked for people's leasing terms and it's turned into people telling others what they should do with their money.

Oh well, it's anandtech

I don't think you or other are scraping by but I bet most of the people who lease are not making adequate retirement contributions. In fact I bet that most people regardless of lease or not are not saving enough. AMerica as a whole has a lot of CC debt and little to no savings, so stopping leasing is one way to free up some money. I know I sure as hell am not going to rely on social security and a pathetic $100k to retire on.

Funny you mention credit card debt. We were tlking aboutthat yesterday at work. The average credit card debt in the U.S is OVER $4,000. That is a clear sign that far too many people don't have budgets and are goingto work into their very old age.

More worrisome is that half give or take (at least 1/3) of adults have no savings. NONE!!

 

[teddymines]

Originally posted by: Skoorb

Seriously, replacing a car every 3 or 4 years is absurd.
It's transportation. Get over it.

I agree. If you want a new car every few years a lease may be the best option (or not), but why want it that frequently? I KNOW that too few people realize exactly how costly it is to replace a car that frequently, otherwise they wouldn't do it. You're doing yourself no good to be getting a new car every few years while short-changing yourself of other things in life like a nicer house.

You're assuming people would give up having a new car in exchange for a house. Some people are pretty comfortable living in an apartment and leasing a car. While that may not be your choice, it is theirs, and there is a market to support them.

I do happen to agree with you in that building equity and using cash is something that is becoming less popular. It will, I fear, be the demise of many in the future.

 

[StageLeft]

You're assuming people would give up having a new car in exchange for a house. Some people are pretty comfortable living in an apartment and leasing a car. While that may not be your choice, it is theirs, and there is a market to support them.

Some people do like this. At my old apartment where I was paying $540/month rent somebody had a "5 year resident" signpost in front of their place along with a brand new high end lexus. Needless to say after 5 years of apartment dwelling perhaps a person should consider a condo, but really people like them are merely falling victim to their own insecurities. Instead of enjoying a comfortable sizely residence they'd rather live below their housing means so that when not at home they can make it appear to others that they are better off than they really are. That's why also you'll see a nice new lincoln or caddy in the projects from time to time.

Course that's just my opinion!