Last post on Dec 05, 2013 at 6:10 AM
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Car Financing, Car Leasing
#527 of 549 Re: best bet? [kjwils5335]
Apr 12, 2010 (12:57 am)
Well, my first thought is you need a better mechanic. I while back, I was in same situation with 10 year old 100k+ miles Accord with broken AC. My mechanic pulled a used AC compressor from junkyard and fixed it for a few hundred. Many Honda models including Civics are highly desirable used cars, especially around $2-3k, and yours is still relatively young. http://www.hondabeat.com/highmiles.php
That said, you seem to be able to afford a newer car, so trade up! Besides a little more comfort, AC could be considered borderline safety feature in the desert for your baby. Looks like you're looking for a bigger car, which should further increase the safety factor. I'd suggest you make sure it has a side curtain airbag, which most SUVs after 2005 have, but depend on make/model, so check and verify.
I don't know anything useful about the Sportage or Patriot, but I think the residual is lower than the CR-V. This means that used ones go for less than the CR-V, and may be better deals if they're reliable for you. The problem with a used CR-V is the high residual/resale value, which means that while used ones have good reliability and desirability, they'll cost you more. If you're planning on keeping it a long time, just purchase a new one. You won't pay that much more averaged out over time. Whether you lease or purchase depends on a lot of factors, but the best deal you can make and cash flow are factors. In general, the purchase will be the better deal in the long run, but if you negotiate a great lease or if you sell it sooner, then a lease might come out ahead. Anyway, used CR-V is a poor compromise in my view. If it doesn't strain your finances, just buy or lease a new one and defer the final purchase for 3 years. Or go the opposite extreme and go cheap on something further along the depreciation curve.
#531 of 549 Re: Purchase a CRV used or lease? [kjwils5335]
Jul 30, 2010 (5:41 am)
My husband and I have always been warned against the follies of leasing. We have to get out of my current car (2002 Civic) because the AC goes out on it unpredictably and we have two small children (in California). The wisdom given to me in the past is that the best value is to buy a car new and run it completely into the ground. True? Now we are looking to get into something with $300-$325 monthly payments, which we could do on a 36 mo. CRV lease through the Honda dealership. We could also do it by purchasing a 2006 or 2007 CRV with 45-60,000 miles on it for roughly $16-17,000. What is our best bet? We would purchase the lease at the end and keep the car for 8 years, if it held up. Does that make it as valuable as purchasing it from the get go? Thanks for your advice.
Leasing and then buying probably not the wisest idea. Yeah, it makes it apprear more affordable, but in the long run, it cost a lot more. You usually end up paying the sales taxes twice, and the averaged interest is usually higher.
If you say you can afford $300/month, have you been putting that money away every month? A year's worth of $300/month is $3600. 5 years of stashing the money away will give $18,000 to purchase a vehicle out right, or with minimal amount to be financed.
We just financed a 2010 CR-V EX 4WD and our payments are $288/month at 2.9%. No we did not lease, we bought it.
We also have a 2005 CR-V EX AWD that has been paid off, but we have been putting the amount equivalent to the car payment into a high yield savings account. This is the repair money, and if we decide to replace the 2005 CR-V, it will be the downpayment money. Depending on how long we keep the CR-V, we may have enough to buy the next car outright with cash.
Fiscal discipline is all that is needed to live comfortably.
#532 of 549 Re: Purchase a CRV used or lease? [blueiedgod]
Jul 30, 2010 (4:38 pm)
In most states, sales tax is due only on the payment (or the depreciation of the car) and not the full amount. So if you lease, then buy, you are not paying taxes twice. You DO pay taxes on principle and interest if paying on the payment. There is the bank acquisition fee to consider as well. So you pay tax on the payment, then tax on the buyout price - not twice.
With a captive lease deal it can be a no-brainer (and very little difference in the total amount it costs) for you to lease, then buy. I have had leases for as little as 0.3% effective finance rate - heck even Honda has had 2% and less lease deals I have taken advantage of. Now, if there is a choice to take a cheap finance rate as well, then running the numbers will favor buying outright.
Some clever BMW owners will lease with a promo rate, then turn the car in and buy it back CPO from the dealer to get an extended factory warranty on it. This can work with other brands as well.
The cheapest way to possess any car is to save and pay cash for it and drive it until it falls apart. Most folks can't or won't do that, so we have lease and loan deals to consider. I always say just run the numbers, with a cheap enough lease deal and no discounted financing you might surprised and how well you can come out.
Most folks also don't keep their cars very long either. Lives and needs and wants change or they just want something new. Most folks get ripped on their trade in as well. Again, if leasing you could turn in and walk away and go get something new at lease end.
The real beauty of the lease is the bank taking the chance on the future value. Resale value goes into the tank because of problems or gas prices or whatever and you just turn it in. With a long term loan you are upside down forever with the car. If the value holds, then it becomes a bargain to buy at lease end - below market value. Folks also don't understand that any dealer can buy an on lease car (from most lease banks) before the term is up. I have make as much as $2k selling an on lease car to someone (or direct to a dealer) when the market was right. We leased my wife's Pilot for way down into the holdback (the dealer made $200 or so) and at a rate of 0.00014 (0.336% effective). After about 2 1/2 years and 37k my wife wanted something more fuel efficient, so we sold the Pilot to a dealer for $2k more than the current buyout. The market was strong for Pilots at that time (and other 3 row SUVs) and we took advantage of it to cash out and get into something else. Also a lease, also cheap, and at a good negotiated price - with a payment a good deal less than the Pilot payment - and $2k in the bank
#533 of 549 Re: Purchase a CRV used or lease? [blueiedgod]
Jul 30, 2010 (10:32 pm)
Fiscal discipline is all that is needed to live comfortably.
Fiscal discipline only gets you so far in the real world. The key to living comfortably lies entirely in how you define comfort.
SUVs and Smart Shopper
#534 of 549 Re: Purchase a CRV used or lease? [dwynne]
Aug 02, 2010 (6:57 am)
What you were able to do isn't the norm and people need to know that.
You leased the right car at the right time.
#535 of 549 Re: Purchase a CRV used or lease? [isellhondas]
Aug 02, 2010 (12:22 pm)
I have only had to turn in 2 of all the cars I have ever leased, the others were all sold for some "profit" from $0 to $2k. So I guess I just keep getting lucky?
If you get a lease deal at a below market rate, and get a good deal on the price of the new car, then you should come out OK down the road. Like I said, if your ultimate goal is to own the car and they offer discounted financing then that is the way to go. If offered a discounted lease rate but real world finance rate, then run the numbers and see how it works out. Many times I find that you are within $1k (total of all payments) or less if you lease / buy or if you just buy. With such a small difference, let the lease bank take the risks and do the lease - then decide at lease end if you really want to keep the car or not.
I am planning on keeping my latest S2000, but I leased it first due to 0.00073 MF on the lease - coupled with a selling price a little more $1,500 under invoice ($1k dealer money + > $500 into holdback).