View Full Version : vehicle leasing - pros and cons?
I love my Silverado, it's loyal as a hound dog. But it's 16 y.o. and has a lotta miles, and is only 2wd. I'd love to get a new truck, but don't want huge payments. I prefer to own my vehicles rather than "rent" them, but now I'm wondering about leasing a new truck in order to get my old ass into something nice for once. Never had a new vehicle in my life, and I could damn sure go for 4wd.
So, looking for pros/cons about leasing from those who do it/have done it. Is it really cheaper? Etc.
Great-Kazoo
03-24-2016, 02:14
You never stay within the miles specified in the contract.
It's like a rental you hope to return ,with the exterior looking as good as it was when you picked it up.
Hey Jim! I missed out on the Get Well threads, good luck to ya and I hope you're feeling better!
Mileage might not be an issue for me, I'm not much of a high mileage driver anymore.
HoneyBadger
03-24-2016, 03:49
Leasing is a really shitty financial decision. I can't think of any good reasons to lease a vehicle. You pay a monthly payment to drive a vehicle that you aren't building equity in. You're just throwing the money away. Car dealerships wouldn't always advertise leases so hard if they didn't make most of their profit margin from them.
If you'd prefer to own your vehicle, then maybe you should pay cash for it, instead of having to budget several hundred dollars a month for the next several years toward an asset that loses value faster than a burning match. If you can't pay cash for it, then maybe you shouldn't buy it. I'm sorry if that's not what you wanted to hear, but living in perpetual debt is a really miserable existence. Please don't hate me. :)
Bailey Guns
03-24-2016, 06:33
I agree leasing is a bad way to go. You still have monthly payments nearly as high as a purchase and nothing but an empty garage to show for it at the end of the lease term. I also agree with HB ^^ about how those monthly payments can drag you down. I'm back to having a payment after years of not having one and it sucks. I could do a lot with that money...like put it towards paying off my house early.
Unfortunately, I was born with the "New Truck Gene" and mother nature is a wicked witch to fight. Seriously...I'm like an addict.
I usually never leased for the reasons above. It just seemed like a bad thing. However, we did just lease the wifes car about a year ago. Here is why:
-She had a lemon of a Subaru (motor rebuilt at 20k miles and new short block recommended 10k miles later. Good Subaru 2.5i oil burning). Subaru wasn't making life easy and we wanted out of it. She had 4 years left on her loan. The lease is 3 years and will eat up her negative equity in the time. Wife like to swap cars (on top of getting bad cars) so she had some negative equity built up.
-This gives her 3 years to try the car. If she loves it, we'll buy it out. If it's a lemon, we give it back with a smile.
-The payment went down for her and she got a fully loaded Hyundai Santa fe. Buying limited the type of car due to trade in, negative equity, etc.
I'd still say that leasing is bad most of the time. It's good for eating up negative equity and avoiding negative equity if you swap cars a lot. Otherwise, I say buy.
Leasing is a bad deal, as others said. If you keep a vehicle for a lot of years, you are much better off buying. Many new car dealers have low or no interest loans.
If you want lower payments it's best to just buy a 2-3 year old vehicle that has already depreciated.
When leading you can choose to purchase the vehicle after the lease, they the residual value. So if you've gone over your mileage it won't be an issue.
ruthabagah
03-24-2016, 07:50
Pros: You always drive a new car/truck, you don't have to deal with much maintenance / warranty issues, you have payments yes, but they are always the same without repair expenses, you don't have to deal with selling/trading the car.
Cons: You will always have payments, You need to watch how many miles you put on your car, you need to keep it in excellent condition, you cannot customize it, you don't own anything when you are done paying.
UncleDave
03-24-2016, 07:59
The only financially sound reason to lease is if you are running that lease through a business that needs the tax right off. That was the original reason for leases. For a private individuals it is a horrid move as you are flushing the money. Buy a 2 year old certified preowned and you will be much better off. This is coming futon someone who was in the business for nearly 20 years and my father was for 45 years. I literally grew up in a dealership.
The "happiness" you experience from having a new vehicle will be fleeting, and pale in comparison to the "bummer" you'll experience by 1) having a payment and, 2) paying without gaining equity. If you are not yet retired, money you spend NOT funding your retirement ads years to your working career. If you'd rather work for an extra 10 years to pay for a new truck, that decision will be up to you. Good luck.
See, that's what I wanted to hear, because I've always felt exactly the same way about leasing - money down the toilet, just like renting a house. Thanks for slapping some sense into me!
My wife always says "we should just get you a new truck" and my view is, for the price of 5-6 payments on a new one, I could cherry mine out by fixing all it needs, and get a new stereo system and all the accessories I'm wanting. And a few other toys as well. But it would still be 2wd.
It's damn hard to justify getting rid of a vehicle that's fully paid for and doesn't have any real problems other than age and mileage. I was just wondering if there was an advantage to leasing I couldn't see. And of course there's higher taxes, tags and insurance.....
Another option you have is use a site like swaplease.com where you can shop for what you want and for how long you want. I think of it as a way to test drive a vehicle that you are not sure about and have no commitment.
Saying that leasing does not make a whole lot of sense for an individual but if you like to swap vehicles like ex-wives a site like swaplease.com does make some sense.
See, that's what I wanted to hear, because I've always felt exactly the same way about leasing - money down the toilet, just like renting a house. Thanks for slapping some sense into me!
My wife always says "we should just get you a new truck" and my view is, for the price of 5-6 payments on a new one, I could cherry mine out by fixing all it needs, and get a new stereo system and all the accessories I'm wanting. And a few other toys as well. But it would still be 2wd.
It's damn hard to justify getting rid of a vehicle that's fully paid for and doesn't have any real problems other than age and mileage. I was just wondering if there was an advantage to leasing I couldn't see. And of course there's higher taxes, tags and insurance.....
There is an advantage, unfortunately it's not on your side.
The only financially sound reason to lease is if you are running that lease through a business that needs the tax right off. That was the original reason for leases. For a private individuals it is a horrid move as you are flushing the money. Buy a 2 year old certified preowned and you will be much better off. This is coming futon someone who was in the business for nearly 20 years and my father was for 45 years. I literally grew up in a dealership.
^^ This ^^^
Or put another way: A lease is a tax for people who are bad at math.
Rooskibar03
03-24-2016, 09:42
Ahh the old should I lease a car question. I love hearing the same thing from everyone, you shouldn't buy it if you can't just pay for it. Leasing is stupid you don't own it. Leasing is dumb cause you have mileage limits.
Here are some facts. The average (key word being average) car loan is up to 66 months. The average trade cycle is down to 35-38 months. So guess what? If you financed a car and didn't ride the loan to term, you did the exact same thing as leasing it. But instead of leasing it you paid tax on that entire car, not the monthly lease payment. You paid interest on that entire loan, not the monthly payment, you rolled the dice that the car would be worth what you owe come the time you want to get out of it.
Here is what a lease gives you.
A a fixed monthly and total term cost. You know exactly what you are spending to drive that car for 3 years.
Tax benefit of not paying sales tax on that 50k vehcile.
A fixed exit strategy. You know what the car is worth in the end. If the value isn't there then the bank has to deal with it. You are not obligated to purchase the car.
Generally speaking the car is under warranty the entire time you are making payments.
Normally a lower payment with less cash out of pocket up front.
A car is a tool for most people, a toy for some. Let's face it, like our guns we like toys and a car is no different for some. So if you could have a new toy every few years without the risk of being upside down thousands of dollars, why wouldn't you?
If you plan is to lease and then buy the car at the end, don't. Just buy it up front, it doesn't pencil to go the other way.
A lease requires some upfront thought. Don't take a 10k a year lease when you know you drive 15k. Also don't pay for a 15 if you only do 10k. You won't get anything back if you're under.
You can trade out of a lease at any time, just like a finance. A lease will work for most people, but it depends on the person and their individual circumstances.
OP feel free to PM me with any specific questions, I'm happy to help.
Rooskibar03 has some good information why a Lease would be an acceptable decision. Before you lease you need to know your 5 year vehicle use/investment plan. If you drive more than 12K a year, then a Lease is not your friend. The same goes for doing a lease beyond 2 - 3 years then wanting to keep the vehicle afterwards. If your vehicle use plan falls into either of these categories then DO NOT lease.
If you do lease you have to understand all of the numbers up front to understand if it is in fact a better deal than simply buying. Lump sum down payments, monthly taxes, mileage buy ups, residual value after the lease is done, and the "Money Factor" used for the lease all have to be taken into consideration along with the monthly payment. Way too many people focus on the monthly payment fitting their budget when they are getting shafted in other areas of the lease. For example, the "money factor" is really nothing more than the APR for the loan. If you don't know what level of "Money Factor" your credit score qualifies you for they can easily shaft you on it giving you a way higher rate that you should have. The same goes for the residual value of the vehicle after the lease is done. Technically you own the difference between the residual value and the actual value of the vehicle at the end of the lease. That is if you negotiated properly on all of the numbers. This is the equity you have built during the term of the loan and it can be used to lease/buy the next vehicle. Buying up miles beyond 12K usually results in a total monthly cost that is equal to buying the vehicle out right. Mileage penalties beyond your lease agreement can be significant (.20 - .30 cents a mile) so that has to be factored in as well.
Most people drive more miles than a lease is viable for so that in its self should negate the possibility of a lease no matter how attractive the lower monthly payment may be. If you plan on sticking with the same vehicle for more than 3 years then just buy it outright. If you want to buy new then wait for the best time of year for manufacture incentives. I hate to say it but most American vehicles lose at least $10K in value as soon as you drive it off the lot when buying new. So looking for a well maintained pre owned or lease return is probably your best bet.
Do your research before you go into a dealership so you can make informed business decisions and don't let them trick you into buying or leasing something before you are really ready. Just because you are there and invested time into working the numbers does not mean you are committed to buying the vehicle. You can walk away at any time if the numbers don't make sense. They will still have vehicles to sell the next day, week, month or year.
How fast could you fix that Wilys by spending the monthly payments of a lease on the Jeep instead? That allows you to keep your already well maintained daily driver, and put money into a vehicle that has already reached the bottom of appreciation and could be on the up since it is a collector. Not to mention you'll have a 4wd for the 5 days a year you might need one.
Martinjmpr
03-24-2016, 12:29
I've bought two new cars in my life and will never buy another. I just can't take that depreciation.
Cars and trucks these days are better than they've ever been in terms of quality and longevity. That means if you do your homework and are careful, you can buy a 5 - 10 year old used vehicle that will be just about as good as a new one, for a whole lot less money. The days when you never, ever bought an out-of-warranty vehicle are long gone, most modern vehicles can go to 150k miles with no problems and 200k miles is achievable if its well taken care of. I think this especially applies to trucks and truck-based SUVs as they tend to be "overbuilt" for the soccer-mom duty they usually see.
I used to always try to buy a vehicle with some warranty left but after doing that 2 or 3 times and never needing the warranty I realized I could save a lot of $$ by buying a bit older.
Now, are there drawbacks? Oh, absolutely. Here's one: I bought a Suburban in December. By all accounts it seemed to be a very nice condition, one-owner (Carfax certified) vehicle. Then in mid January, driving around I started hearing an awful scraping when I hit the brakes. Turns out the rear brakes were badly worn AND I had a stuck caliper to boot. Total cost was around $900 to basically replace both rotors, calipers and pads (and yes, I'm sure I probably paid too much, but at the time I was over a barrel and needed the truck back ASAP.)
But here's another way to look at that: With car payments on average being ~$500 (my off-the-cuff estimate) that $900 expense was less than 2 car payments. I have no payments on this truck and it runs great (and now it STOPS great too. :D ) Even in a worst-case scenario, let's say my transmission craps the bed and I need it rebuilt, what's that, maybe $2k? $3k if you're being pessimistic? Well even $3k is still only 6 months worth of payments. And every month I DON'T have a major expense is a month I get to sock another $500 into savings.
I seem to keep my vehicles about 3 - 3 1/2 years, so the thought of signing on to a 5, 6 or 7 year payment seems like a prison sentence to me.
mackbamf
03-24-2016, 12:51
Ahh the old should I lease a car question. I love hearing the same thing from everyone, you shouldn't buy it if you can't just pay for it. Leasing is stupid you don't own it. Leasing is dumb cause you have mileage limits.
Here are some facts. The average (key word being average) car loan is up to 66 months. The average trade cycle is down to 35-38 months. So guess what? If you financed a car and didn't ride the loan to term, you did the exact same thing as leasing it. But instead of leasing it you paid tax on that entire car, not the monthly lease payment. You paid interest on that entire loan, not the monthly payment, you rolled the dice that the car would be worth what you owe come the time you want to get out of it.
Here is what a lease gives you.
A a fixed monthly and total term cost. You know exactly what you are spending to drive that car for 3 years.
Tax benefit of not paying sales tax on that 50k vehcile.
A fixed exit strategy. You know what the car is worth in the end. If the value isn't there then the bank has to deal with it. You are not obligated to purchase the car.
Generally speaking the car is under warranty the entire time you are making payments.
Normally a lower payment with less cash out of pocket up front.
A car is a tool for most people, a toy for some. Let's face it, like our guns we like toys and a car is no different for some. So if you could have a new toy every few years without the risk of being upside down thousands of dollars, why wouldn't you?
If you plan is to lease and then buy the car at the end, don't. Just buy it up front, it doesn't pencil to go the other way.
A lease requires some upfront thought. Don't take a 10k a year lease when you know you drive 15k. Also don't pay for a 15 if you only do 10k. You won't get anything back if you're under.
You can trade out of a lease at any time, just like a finance. A lease will work for most people, but it depends on the person and their individual circumstances.
OP feel free to PM me with any specific questions, I'm happy to help.
This^^^^
I like having a new car every two or three years. I like knowing that I have a fixed cost for my vehicle and will never have an unexpected repair as they are always under warranty. I keep my cars in good shape but I do have kids, I drive the cars hard at times and not once have I had to pay for extra wear and tear. I have leased from several manufacturers and they are realistic about usage and they don't expect it perfect upon return. You can specify as many miles per year as you want up front, just be honest with yourself about how many miles you are going to drive and that will be included in your monthly payment and you don't have to worry about how much you drive it. I know upfront that I will never take my car on a long road trip (those are for the wife's car). Lease payments are going to be lower than purchasing the same vehicle. I like knowing that I can change cars in two or three years and will not be upside down in the car. I myself don't look for the equity in something that is going to depreciate fast anyways. Its all worth it to me, just all a personal preference.
Lease=Treating the car as a utility bill
Loan=Treating the car as an asset.
Proceed accordingly.
I know this is not realistic but my grandfather and grandmother NEVER owned a vehicle. I remember all of our homes being near a bus route/stop. We walked and took the bus everywhere! I don't know how they did it, but they made by with what they had at the time.
I know this is not realistic but my grandfather and grandmother NEVER owned a vehicle. I remember all of our homes being near a bus route/stop. We walked and took the bus everywhere! I don't know how they did it, but they made by with what they had at the time.
I have to say, there's something to be said for city living where a car isnt required. Cars eat up a ton of money between registration, gas, insurance, maintenance, etc.
Martinjmpr
03-24-2016, 14:38
I have to say, there's something to be said for city living where a car isnt required. Cars eat up a ton of money between registration, gas, insurance, maintenance, etc.
Well, it's money or time, isn't it? Just for example, I could take the light rail to work every day and save a fair amount of money (I've already crunched the numbers.)
What it would cost me, though, is probably 1 1/2 to 2 hours per day in commuting as well as the flexibility of leaving to and from work on my own time rather than on RTD's time. Ultimately like most of us (judging from traffic, anyway) I've determined that my time is worth the money it costs.
A few years back the wife and I took a weekend trip to Glenwood Springs. We decided it would be fun to take the train rather than drive. And it was fun, that's a gorgeous train ride. But the train left Denver at 8:00 AM and we got into Glenwood around 2:30, 6 1/2 hours later.
Driving would have taken 3 hours AND we would have had a car when we were there, as opposed to having to rely on the hotel to pick us up from the train station and being on foot to go to dinner and such (which, in a town as small as Glenwood Springs, isn't that bad.) And of course that doesn't even take into account the fact that we had to get a ride to the light rail station and leave our house by 6am. So what would have been 3 - 3.5 hours in the car became a full day of travel.
It's always money or time. ;)
EDITED TO ADD: We also didn't save any money taking the train, quite the contrary. I want to say it was at least $75 for each of us and of course we had to buy two tickets. Even at $4.00/gallon and driving my gas guzzling Suburban at 15 MPG (IOW absolute worst-case scenarios cost wise) we would have used 24 gallons of gas to drive 360 miles (180 miles each way) which works out to $96 travel costs and obviously that's the cost for both of us and all the crap we can carry.
I guess my point with all of this is that while it's true that cars cost money, what they save us in terms of time, convenience and freedom of mobility is what makes it worth it.
^I agree. I couldn't go without a car. Partly because I enjoy cars as a hobby. Partly because how the heck to you go to the range if you dont have a car?
This^^^^
I like having a new car every two or three years. I like knowing that I have a fixed cost for my vehicle and will never have an unexpected repair as they are always under warranty. I keep my cars in good shape but I do have kids, I drive the cars hard at times and not once have I had to pay for extra wear and tear. I have leased from several manufacturers and they are realistic about usage and they don't expect it perfect upon return. You can specify as many miles per year as you want up front, just be honest with yourself about how many miles you are going to drive and that will be included in your monthly payment and you don't have to worry about how much you drive it. I know upfront that I will never take my car on a long road trip (those are for the wife's car). Lease payments are going to be lower than purchasing the same vehicle. I like knowing that I can change cars in two or three years and will not be upside down in the car. I myself don't look for the equity in something that is going to depreciate fast anyways. Its all worth it to me, just all a personal preference.
I know people who lease for the exact same reasons you listed. It is a fixed line item on a budget; no worries no hassles. The best part is not worrying about being up-side-down on a depreciating asset; when you are done, you are done. For those that want to trade up every two to three years, it is a clean and easy way to go.
Personally, I buy a vehicle I want long term and squeeze every last mile out of it. Since I can do most maintenance myself, I can keep a vehicle going long after the payments are done so my total cost of ownership goes way down by the time I am done. However, I drive 25,000+ miles a year so I would be cleaned out if I put money into new vehicles.
I know people who lease for the exact same reasons you listed. It is a fixed line item on a budget; no worries no hassles. The best part is not worrying about being up-side-down on a depreciating asset; when you are done, you are done. For those that want to trade up every two to three years, it is a clean and easy way to go.
Personally, I buy a vehicle I want long term and squeeze every last mile out of it. Since I can do most maintenance myself, I can keep a vehicle going long after the payments are done so my total cost of ownership goes way down by the time I am done. However, I drive 25,000+ miles a year so I would be cleaned out if I put money into new vehicles.
This is what I do. Pay cash or pay off right away.
My last car I bought near new for $15,000. I drove it 13 years. I traded it in for $3,000. The only maintenance items were oil, batteries, tires, and one clutch (which I did myself for around $400 in parts and tools.).
15,000 - 3,000 + 400 = 12,400
12,400 / 13 = 953
953 / 12 = 79
$79 a month for a car I liked to drive.
You also get a break on taxes/fees as it gets older. I've never understood why the driver has to register a car and pay taxes/fees on a lease. It's not his car and won't be unless he buys it.
The best part is if we lost a job or had a bad month, I wouldn't lose the car.
I think another factor in this comes back to American's saving money. I wonder how many people save the "car payment" each month that dont have one?
Aloha_Shooter
03-24-2016, 16:10
The original reason for leases was that the auto industry needed people to buy new vehicles more often in order to keep their production lines going. They came up with leases as a way to keep the monthly payments affordable but improve their profit lines and get people hooked on the idea of changing vehicles fairly often. The write-offs as business expenses were part of the rationalization they made up for people to go ahead with leasing.
Changing vehicles every 3-4 years is fiscally stupid except in very rare circumstances and it makes no fiscal sense to lease unless you change vehicles more often than that.
Pretty obvious to me then that for my personality and lifestyle, leasing ain't for me. I want to own my things free and clear and not resign myself to "well, gotta make payments on something anyway, might as well always drive something nice". No, I'm a COB and I don't want to make payments forever. I'd rather keep my old Chevy and put those payments towards finishing my old Willys and my old Harley and buying a few old guns here and there. And improvements around the house. And around our yard.
For no more often than I need 4wd, it's not worth going into debt over. I've had this truck for 11 years and it was paid for when I drove it off the lot. Wife's SUV is paid for too. Think I'm gonna stay right where we are for as long as possible. Both are in great shape, and there's lots of good used ones out there when the time comes.
Thanks all!
Some good responses so far. Rooskibar probably has the best advice since he is in the business on some higher end vehicles. I'll toss my two cents in anyways.
If you plan on buying the vehicle outright and having it for the next ten years or more, probably best not to lease. In the end you'll end up paying more than if you just bought the damn thing.
Leasing can get you into a pretty nice vehicle for a reasonable amount of money. And if you are the type of guy who wants to drive a new vehicle every few years then leasing makes more sense to me than buying.
When I met my wife she had a car that was leased. The monthly payments were cheap. About three months before the lease was up, she was in an accident that did $13,000 worth of damage. When the lease was up we turned it in and walked away.
Most of our vehicles have been purchased brand new and financed. We usually pay them off early and then drive them for a couple of years after that and then buy another one.
My most recent vehicle was bought used. I'm thinking this might be the way I go from now on. The original sticker price on the one I bought was $42,000 and I got it four years later for $20,000. It has all the bells and whistles and was just about as clean as a new one and I got it for less than half of what the original owner paid for it.
I was in your shoes. My last truck was in pretty decent shape but was 15 years old and was about to need tires and some front end work. I could have dumped a couple of thousand dollars into it and made it all good but then I'd still have an old, outdated, 200,000 mile truck that I just put more money into than it was worth.
Well, it's money or time, isn't it? Just for example, I could take the light rail to work every day and save a fair amount of money (I've already crunched the numbers.)
What it would cost me, though, is probably 1 1/2 to 2 hours per day in commuting as well as the flexibility of leaving to and from work on my own time rather than on RTD's time. Ultimately like most of us (judging from traffic, anyway) I've determined that my time is worth the money it costs.
A few years back the wife and I took a weekend trip to Glenwood Springs. We decided it would be fun to take the train rather than drive. And it was fun, that's a gorgeous train ride. But the train left Denver at 8:00 AM and we got into Glenwood around 2:30, 6 1/2 hours later.
Driving would have taken 3 hours AND we would have had a car when we were there, as opposed to having to rely on the hotel to pick us up from the train station and being on foot to go to dinner and such (which, in a town as small as Glenwood Springs, isn't that bad.) And of course that doesn't even take into account the fact that we had to get a ride to the light rail station and leave our house by 6am. So what would have been 3 - 3.5 hours in the car became a full day of travel.
It's always money or time. ;)
EDITED TO ADD: We also didn't save any money taking the train, quite the contrary. I want to say it was at least $75 for each of us and of course we had to buy two tickets. Even at $4.00/gallon and driving my gas guzzling Suburban at 15 MPG (IOW absolute worst-case scenarios cost wise) we would have used 24 gallons of gas to drive 360 miles (180 miles each way) which works out to $96 travel costs and obviously that's the cost for both of us and all the crap we can carry.
I guess my point with all of this is that while it's true that cars cost money, what they save us in terms of time, convenience and freedom of mobility is what makes it worth it.
This is true for people who live more than 10 miles from work, which is most people. I personally didn't want to move closer to my job back when I worked in an office, and I wasted hours, days, and weeks sitting in traffic on I-25 because of it. That is getting into a different discussion all together though, especially since Ron already revealed his big plans. ;)
Personally, I enjoy the convenience of having more vehicles than I need, but only because they are paid off and don't really cost me anything just sitting around at my house. It is a luxury though, and I try to treat it as such.
HoneyBadger
03-24-2016, 19:17
Some good responses so far. Rooskibar probably has the best advice since he is in the business on some higher end vehicles. I'll toss my two cents in anyways.
Best advice? More like "most biased advice". He's one of the few people here who has something to gain by "selling" a lease as a good product. It's not. It's an awful product. Sorry Rooski.
Most of our vehicles have been purchased brand new and financed. We usually pay them off early and then drive them for a couple of years after that and then buy another one.
Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.
Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".
spqrzilla
03-24-2016, 19:20
I think automobile leases are a bad idea. Here's the basic point: do leasing companies lose money? If not, where did their profit come from?
mackbamf
03-24-2016, 19:29
I think automobile leases are a bad idea. Here's the basic point: do leasing companies lose money? If not, where did their profit come from?
That logic applies to any business not just automobile leasing companies.
Best advice? More like "most biased advice". He's one of the few people here who has something to gain by "selling" a lease as a good product. It's not. It's an awful product. Sorry Rooski.
Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.
Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".
While that's true, this isn't really a financial advice thread. Also, he was just asking about the difference between buying and leasing. If instead he had asked, "I'm interested in learning more about the relationship between spending money for the explicit purpose of appearing well off to others while briefly enjoying a nearly immeasurable increase in luxury at the expense of requiring that I voluntarily enslave myself into unnecessary additional years of working life," them you nailed it. ;)
HoneyBadger
03-24-2016, 20:08
While that's true, this isn't really a financial advice thread. Also, he was just asking about the difference between buying and leasing. If instead he had asked, "I'm interested in learning more about the relationship between spending money for the explicit purpose of appearing well off to others while briefly enjoying a nearly immeasurable increase in luxury at the expense of requiring that I voluntarily enslave myself into unnecessary additional years of working life," them you nailed it. ;)
[ROFL1]
Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.
Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".
Eh. To each their own.
For me it is worth it to have vehicles that are reliable and under warranty so that I don't have to worry about the wheels falling off, my wife being stranded somewhere, or me having to dish out money for repairs.
Vehicles are kind of like firearms. Some people don't mind dropping big coin on a high end rifle or handgun and other people are perfectly content buying lower cost firearms.
Eh. To each their own.
For me it is worth it to have vehicles that are reliable and under warranty so that I don't have to worry about the wheels falling off, my wife being stranded somewhere, or me having to dish out money for repairs.
Vehicles are kind of like firearms. Some people don't mind dropping big coin on a high end rifle or handgun and other people are perfectly content buying lower cost firearms.
Agreed. I also think leasing certainly has a place, just not for most people.
Eh. To each their own.
For me it is worth it to have vehicles that are reliable and under warranty so that I don't have to worry about the wheels falling off, my wife being stranded somewhere, or me having to dish out money for repairs.
Vehicles are kind of like firearms. Some people don't mind dropping big coin on a high end rifle or handgun and other people are perfectly content buying lower cost firearms.
I feel like I'm driving an old Singer 1911.
And I love it.
I think automobile leases are a bad idea. Here's the basic point: do leasing companies lose money? If not, where did their profit come from?
That logic applies to any business not just automobile leasing companies.
He's simply suggesting that the Plymouth Prowler is the wisest vehicle purchase, on account of Chevrolet losing money on every one of them.
You can find lease deals that are cheaper than buying, but it is not common. Since the lease deal lists the residual value you can make a rough estimation if you would come out ahead vs buying the vehicle and selling it 3 years later. You would also have to account for potential cosmetic damage on lease turn in. A lease is convenient but usually you are paying for the convenience.
spqrzilla
03-25-2016, 11:32
That logic applies to any business not just automobile leasing companies.
No, not at all. When you buy a car and finance it, the finance company makes money on interest and everyone hopefully knows that. A leasing company borrows money to buy the car, pays the lender interest on the borrowed money, and then charges you monthly payments. By leasing, you have introduced another party into the deal, and their profit into your costs.
spqrzilla
03-25-2016, 11:33
He's simply suggesting that the Plymouth Prowler is the wisest vehicle purchase, on account of Chevrolet losing money on every one of them.
The Canyonero is better.
ColoradoTJ
03-25-2016, 11:50
Best advice? More like "most biased advice". He's one of the few people here who has something to gain by "selling" a lease as a good product. It's not. It's an awful product. Sorry Rooski.
Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.
Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".
Don't forget the money due at signing.
Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".
Depending on the vehicle and market conditions, a person can easily lose that and more between depreciation and trade-in loses. When I purchased my 6yr old Yukon Denali, it lost 64% of its MSRP value so I got a steal on it...would have sure sucked for the original owner who dumped it on trade.
Pretty obvious to me then that for my personality and lifestyle, leasing ain't for me. I want to own my things free and clear and not resign myself to "well, gotta make payments on something anyway, might as well always drive something nice". No, I'm a COB and I don't want to make payments forever. I'd rather keep my old Chevy and put those payments towards finishing my old Willys and my old Harley and buying a few old guns here and there. And improvements around the house. And around our yard.
For no more often than I need 4wd, it's not worth going into debt over. I've had this truck for 11 years and it was paid for when I drove it off the lot. Wife's SUV is paid for too. Think I'm gonna stay right where we are for as long as possible. Both are in great shape, and there's lots of good used ones out there when the time comes.
Thanks all!
You might want to look at 5-10yr old trucks. Depending on what you want, you can find great deals on them as well as great financing. However, the low fuel prices keeps the market high on them right now; next crash...that won't be the case and you can pick one up cheap.
You might want to look at 5-10yr old trucks. Depending on what you want, you can find great deals on them as well as great financing. However, the low fuel prices keeps the market high on them right now; next crash...that won't be the case and you can pick one up cheap.
Yeah, that's the basic plan in the back of my mind. Got my 2000 Silverado in Dec 2004, just under 100k miles. Was owned by a district judge in OK that did a lot of highway driving, so it was in pretty good shape. Most used trucks in OK are farm/ranch or oilfield trucks and beat to hell from dirt roads. The selection around here seems pretty good.
Like I said though, I could put 2k into fixing my truck up a little at a time and get a lot more life out of it. It's been fully paid for since I first put my ass in the seat. Long story, but I got a helluva deal on it. And I'm cheap enough to squeeze every last mile out of it.
OctopusHighball
03-26-2016, 18:29
In a lease, you are literally purchasing the depreciation.
As stated by Uncle Dave, possibly fine as a business decision. Perhaps not from a personal finance decision.
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