Leasing vs. Buying New for a car...

[dullard]

Originally posted by: Argo
So to sum up, first and foremost LEASING ONLY MAKES SENSE IF YOU WANT A NEW CAR EVERY 2-3 YEARS...So for some of you to make broad statements like "leasing is only for idiots", well, that just shows how ignorant you are.

It all goes back to what I originally posted:

Originally posted by: dullard
[*]Generally, the very worst possible thing you can do with your money is to buy a new car every year or two.
[*]Generally, the second worst possible thing you can do with your money is to lease a car.
[*]Everything else is case dependant. Avoid the two situations above and you'll probably be just fine.

IF you must get a new car all the time, leasing is probably better. Duh. No one is denying that. However, doing that is in many senses idiotic. You'd be financially much better off buying a car and using it for 5+ years. That is what so many people here are arguing. Don't lease, buy a car and use it for 5+ years. No one NEEDS a new car every year, two years, or three years.

Yes, there are reasons to want a new car. However, there are many reasons not to get a new car that often. The definition of idiocy is to ignore the reasons against it when making your decision.

 

[batmang]

Originally posted by: scorpmatt
I prefer to buy used, see thread here: Link

even if I bought a "newer" car, it would be used. Cause you get raped if you buy "brand" new, no miles.

i agree. unless your buying something that REAAAALLY holds its value its not worth taking a hit on a new car.

value drops about 2-5k the moment to drive off the lot. once that odometer hits 1 mile, you lost up to 5k value.

 

[dullard]

Originally posted by: batmang
value drops about 2-5k the moment to drive off the lot. once that odometer hits 1 mile, you lost up to 5k value.

That blanket statement is often false. Look at Civics for example. 2 year old Civics are often selling for nearly the price of a new Civic. Maybe $2000 lost at most (assuming the car is in comparable condition). That is a far cry from losing $5000 the instant you drive the vehicle.

 

[vi edit]

Here's how it breaks down for me -

My wife's 2005 Highland lease looks like this:

It was a 31,000 vehicle. Actual agreed to price was $28,270.
We paid $611.83 in taxes.
$398 in registration fees.
$470 for gap insurance (required)
$400 to cover the balance on the car that was traded in.

So that's a total of $29,679.83. That's the gross capitalized cost.

It's a 3 year lease with a 12,000 mile a year allowance. Monthly payments total $12,130.20 with actual payments being $336 a month. With our upfront taxes, gap insurance, and registration, we have a total incurred cost of $13,780. The residual on the vehicle is $17,883.

If we were to take this same exact vehicle and finance it over 60 months @ the 4.9% they were offering it would look like this:

$28270 + $398 + $400 + $1413.5(sales tax) = $30,481.

At a financed price of $30,481 and interest rate of 4.9% over 60 months the monthly payment would be $573.83 a month.

At the end of 36 months I would have paid $17,388.42 in Principal and $3269.46 in interest for a total payment of $20657.88.

The remaining balance on the car would be $13,093.08.

With my lease, I saved $6877.68 in payments. If I were to take that $6877.68 and dump it back into my buyout price of $17,883 I would have a balance of $11,005.32.

With the 60 month loan I still owe $13,093. Even if I factor in the additional $900 in sales tax that I'd pay on the residual balance of $17883 I'm STILL $1000 ahead in the lease.

There's your numbers.

The lease is cheaper. The ONLY disadvantage to is the milage restriction. We easily stay within those limits because of my wifes distance from work.

And with the lease I don't have to pay for new tires, brake pads, windshield wipers, belts, blah blah when we are done. Always under warranty, always have the latest saftey improvements.

If you like having a new vehicle every few years, with the right lease they are cheaper. Period.

For us, vehicles are our guilty pleasure. We are very thrifty in other areas of our life. For us, we are doing this the cheaper way.

 

[dullard]

Originally posted by: vi_edit
Here's how it breaks down for me...

Now do the same calculation but have the vehicle for 6 years. Then come back. The lease is much, much more expensive. Why can't you see that? Of course if you get a new vehicle every 3 years, leasing is often better. But we are trying to say if you DON'T need a new vehicle every 3 years, then leasing is the most expensive option. What is difficult to understand there?

 

[vi edit]

Now do the same calculation but have the vehicle for 6 years. Then come back. The lease is much, much more expensive. Why can't you see that. Of course if you get a new vehicle every 3 years, leasing is often better. But we are trying to say if you DON'T need a new vehicle every 3 years, then leasing is the most expensive option. What is difficult to understand there?

At the three year point, where I can either turn in the keys or balloon payment the balance I'm still ahead of the financing by over $1000. Even if I do end up keeping the car the lease saved me $1,000 when you compare principals. And I'm not even factoring in money I could have made off of the saved $6877.68 in payments with the lease. At the least I'll call it wash because I'll likely be paying a higher interest rate than 4.9% on the financed balloon balance.

Either way you look at it, with my lease I save either $6877.68 in payments in three years time, or I save over $1000 over the course of the vehicle if I choose to buy it out and keep it till it dies.

Again, the only negative is the milage restriction. And that's something that is a non-issue.

 

[Argo]

Originally posted by: dullard

Originally posted by: Argo
So to sum up, first and foremost LEASING ONLY MAKES SENSE IF YOU WANT A NEW CAR EVERY 2-3 YEARS...So for some of you to make broad statements like "leasing is only for idiots", well, that just shows how ignorant you are.

It all goes back to what I originally posted:

Originally posted by: dullard
[*]Generally, the very worst possible thing you can do with your money is to buy a new car every year or two.
[*]Generally, the second worst possible thing you can do with your money is to lease a car.
[*]Everything else is case dependant. Avoid the two situations above and you'll probably be just fine.

IF you must get a new car all the time, leasing is probably better. Duh. No one is denying that. However, doing that is in many senses idiotic. You'd be financially much better off buying a car and using it for 5+ years. That is what so many people here are arguing. Don't lease, buy a car and use it for 5+ years. No one NEEDS a new car every year, two years, or three years.

Yes, there are reasons to want a new car. However, there are many reasons not to get a new car that often. The definition of idiocy is to ignore the reasons against it when making your decision.

Why is it idiotic? You're arguing from your point of view and applying your set of circumstances to everybody else. Lots of people make enough money to be able to afford a new car every 2-3 years without any financial strain. Whats wrong with that? That's the reason we all go to work and try to make our lives better? Otherwise why not just stay home do nothing but smoke pot all day?

 

[iamwiz82]

Originally posted by: Argo

Originally posted by: dullard

Originally posted by: Argo
So to sum up, first and foremost LEASING ONLY MAKES SENSE IF YOU WANT A NEW CAR EVERY 2-3 YEARS...So for some of you to make broad statements like "leasing is only for idiots", well, that just shows how ignorant you are.

It all goes back to what I originally posted:

Originally posted by: dullard
[*]Generally, the very worst possible thing you can do with your money is to buy a new car every year or two.
[*]Generally, the second worst possible thing you can do with your money is to lease a car.
[*]Everything else is case dependant. Avoid the two situations above and you'll probably be just fine.

IF you must get a new car all the time, leasing is probably better. Duh. No one is denying that. However, doing that is in many senses idiotic. You'd be financially much better off buying a car and using it for 5+ years. That is what so many people here are arguing. Don't lease, buy a car and use it for 5+ years. No one NEEDS a new car every year, two years, or three years.

Yes, there are reasons to want a new car. However, there are many reasons not to get a new car that often. The definition of idiocy is to ignore the reasons against it when making your decision.

Why is it idiotic? You're arguing from your point of view and applying your set of circumstances to everybody else. Lots of people make enough money to be able to afford a new car every 2-3 years without any financial strain. Whats wrong with that? That's the reason we all go to work and try to make our lives better? Otherwise why not just stay home do nothing but smoke pot all day?

I agree. We save money and we can still afford to get new cars. I see no problem with that. It's not a race to die with the most money in the bank. I'm going to enjoy myself now and when I'm retired.

 

[TomKazansky]

Never lease - unless the offer is too good that it requires you to take out a calculator and do some math.

 

[abc]

Originally posted by: envy me

Originally posted by: NutBucket

Originally posted by: envy me

IIRC leasing is better than financing if you have a business because you can write off the payments and I beleive that you end up saving more money through leasing that way.

Buy it yourself and lease it to your company😉

You just gave me a great idea 🙂

so you're going to write up a contract to 'yourself' with all lease terms and such?

on one hand you're making car payments to the dealer via finance, assuming you didn't buy it straight out cash.... .

then on the other hand you're making lease payments to yourself from 'your' company?

 

[vi edit]

so you're going to write up a contract to 'yourself' with all lease terms and such?

on one hand you're making car payments to the dealer via finance, assuming you didn't buy it straight out cash.... .

then on the other hand you're making lease payments to yourself from 'your' company?

You'd be amazed at the number of "leasing" companies out there.

Basically if you have $25,000 in cash laying around you can "lease" a car/equipment to a business and sit there and cash in on the interest. It's better interest than you make from a bank and you could wind up with a vehicle worth more than the buyout at the end that you can make money off of after the lease is up.

If you have cash laying around and have a credit worthy (and responsible) leasee, it's not a bad way to go.

It's a way of generating cash flow through a "business".

 

[Koing]

Originally posted by: vi_edit
The thing is...for some people cars are items of luxury and frivilous expense. If you own your home(or at least pay a mortgage), put away a big chunk of earned income into mid & long term investment, don't carry any credit card or revolving credt debt, and still have money to toss around, who cares if leasing isn't as "smart" a choice as buying?

If you don't like keeping vehicles more than a couple years, always have that upgrade it, and always want to be under warranty, they ARE the smart way to go...assuming you get a GOOD lease. Not all leases are created equal.

People spend money on stupid sh!t all the time. Going out to eat instead of cooking at home or packing a lunch. Going to a movie for $15.00 for two people instead of waiting 3 months and renting it on DVD for $3.00. Buying $500 video cards that are worth less than $100 in a year. Buying name brand designer clothes instead of more "value" brand ones for a fraction of the price.

Ect.

It's just one more way to spend your money on something you like.

And if you fit the right criteria it's actually the better choice.

I wouldn't go that far!

Probably half price in that time 😛

Koing

 

[Excelsior]

Originally posted by: scorpmatt
I prefer to buy used, see thread here: Link

even if I bought a "newer" car, it would be used. Cause you get raped if you buy "brand" new, no miles.

 

[Koing]

Originally posted by: Excelsior

Originally posted by: scorpmatt
I prefer to buy used, see thread here: Link

even if I bought a "newer" car, it would be used. Cause you get raped if you buy "brand" new, no miles.