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Prices Paid: Buying & Leasing Experiences Mazda5 Lease Questions
43 messages, Last post on Nov 18, 2009 at 2:34 AM
You are in the Prices Paid: Buying & Leasing Experiences Forum. Your Hosts are car_man & kyfdx
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Replying to: appcom (Mar 06, 2006 8:28 am) Below, I'm going to use a quote from www.comparelease.com (recommanded by a member from previous posts) to compare with a traditional loan. Hopefully the comparison can tell us (or me) which program is economically better. The purchase price on this example is before tax/title/license. A touring Mazda5 purchase price is $19,007. I assume $0 down payment and residual value is quoted at $9,365 and monthly lease payment is $370. A quick calculation with the financial caluclator shows that the lessor (bank) is making 8.66% annually off of this lease program. Clearly, 8.66% is higher than normal car loan rate with any decent credit. So Car Loan wins so far. Let say your intention is to keep the car at the end of 36 months, it is hard to come up with $9,365 cash at the end of the program to buy out the lease. So most likely you need to borrow from a credit union and get a 24 month loan to finance the $9,365. Eloan.com shows a lease buy out finance program for 24-36month at 7.05%. The monthly payment for this buy out loan is $419.50 until the balance is paid off. Let's compare, for a same purchase price, if you want a same $370 monthly loan payment, the finance interest rate with a long 60 month loan must be lower than 6.3% (which is obtainable as it is close to what I got on my fiance's car 6 months ago.) What do all these mean? If the car buyer is looking to keep the vehicle for a long term. A lease and the subsequent buy-out finance cost $370x36 + $419.5x24 = a total cash out of $23,388; vs. a loan $370x60 = $22,200. Clearly, Car Loan wins here as well. If the intention is to get rid of the car at the end of the lease, then your lease payments at the end of 36 months total $370x36 = $13,320. The benefit is that you don't need to deal with selling your car. All you need to do is to return it to the dealer; On the other hand, the loan payments at 36th month is the same $370x36 = $13,320, but there is a loan balance of about $8,330. If the lease residual value is a right indication of what your car is going to be worth, you can sell your car at $9,365 and pay off the $8,330 loan balance. $9,365-$8330 loan balance = cash back to your pocket $1,035. In this case, Car Loan still wins. I don't know how much tax write off can benefit the prospect, but a traditional car consumer should not look into a lease to save money. A car loan is more beneficial in any aspect that I looked into. If the above comparison is confusing to you, please ignore it. I just like to do analysis like this as a way to tell myself what's right for me and what's not. I don't mean to write a lecture for anyone. Writing the above is like I was thinking out-loud to myself.
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Replying to: mr2spyder (Mar 06, 2006 1:20 pm) |
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Replying to: appcom (Mar 06, 2006 8:28 am) What I'm saying is if your paying $500 a month for a car or a house atleast down the road you've got something to show for it. Whereas if your leasing a vehicle or renting a house (depreciation/appreciation aside) what do you have to show for it?
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Replying to: kev604 (Mar 07, 2006 8:37 am) I understand your rationale, but unfortunately, its incorrect. In a flat or depreciating real estate market, believe it or not in some cases it is actually more cost effective to rent than to buy! Like I said earlier- you have to take each choice on a case by case basis. Blanket statements like "buying is always more economical than leasing" is completely and utterly false. Whether you decide buy or lease a new car, its a losing proposition. The question is, which way do you lose the least? If you pay $25k for a car and after 3 years you have $15k in equity "to show" for it, you claim that is better than shelling out $275/mo over 3 years for the same car and having nothing to show at the end. Simple math tells us that we are in the exact same boat- $10k in the red. Which brings us to the specifics at hand. Mr. Spyder has proven (with numbers!) that buying a 5 right now is more cost effective than leasing. Like I said in my previous post, I think anyone looking at a 5 right now should consider buying over leasing. There are some excellent lease deals out there right now, just not with Mazda.
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Replying to: appcom (Mar 07, 2006 11:45 am) I would like to ad my 2 cents. I currently lease a vehicle that Im planning to return in 8 months from now. I have leased the car for three years, and I have been trouble free for all this time.........and that for me is very important. "having nothing to show for" is an old tradition and not completely true. Lease could be good for everyone, for example I don't have a businees to write off any of the interest or cost. However, this is what I see as the benefits: * Want to keep the car for a long time, but don't know how good the car is going to be. If car = good keep, if not good = return. * I pay for what I use. My payments are based on the portion that I use and that is true for the taxes as well. Finally, when leasing you MUST know the final price of the car, otherwise the payments can be based on WHATEVER THEY WANT TO. Also, do not let them change the amount that you decide and can afford to pay per month. People don't realize but an increase of $30-$50 dollars extra p/month is a big difference at the end. Try doing $50 x 36 or 48 and that's how much more profit they can make from someone that doesn't deal based on the final car price. The dealer will always try to talk to you in monthly payments. Monthly payments that are affordable and people lose perception of the actual total cost. You will say "I can pay that".
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Replying to: pisulino (Mar 08, 2006 9:57 am)
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Replying to: bob118 (Mar 11, 2006 5:03 pm) you put 4,000 down and will pay about 290 per month for 36 months. That is = to $14,500. What is the buy back amount at the end? is it only $ 5 or $6K? Im just thinking that you are paying a lot for the lease payments considering you put $4k down. But my calculations are only based on what you have provided.
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Replying to: pisulino (Mar 12, 2006 11:17 am)
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Replying to: bob118 (Mar 14, 2006 7:38 pm) If you pay 290 x 36 = $14,500 + 9 = $23,500. Is that the car's price today? - 23,500 or less?...then you will know if you are paying too much. good luck
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Replying to: Car_man (Feb 19, 2006 7:07 am) MSRP 18,935 24 months 12 k per year lease end value 12,118 initial cap cost 17,900 bank fee 595 down payment 2000 mo. payment 270.00 This is thru mazda lease program. What say you, good deal or bad? Thanks, Casey |
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