Last post on Dec 05, 2013 at 4:40 PM
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#94327 of 95871 Re: Worst way to buy a car [stickguy]
Oct 01, 2013 (3:46 am)
Leasing is nothing more than an alternate method of financing.
So is financing through a loan shark, but that doesn't mean it's a good way to do it.
and discussion about eating early depreciation has nothing to do with leasing or buying. That is really a discussion about how long to keep your car.
That's just the thing, overall cost of ownership increases with how frequent you change cars, leasing forces you to change cars very frequently.
#94328 of 95871 Re: Worst way to buy a car [driver100]
Oct 01, 2013 (4:11 am)
It's not always about money. It's sometimes whether you can afford it,
Oh the irony of that statement.
Your first example, the issue is that overall cost of ownership increases as you change cars more frequently, leases force you to change cars frequently. Now you say this guys life is less complected but how? He still has to go through the car buying experience every three years. Its been three years since I bought a car and it will be 5 or more years before I do again (Lord willing and the creek don't rise). That means that between my two purchases he will buy 2 or three times. Basically he is going through this three times as often as me.
Not to mention he has to worry about going over the allotted miles and any dings or scratches at the time of turning in the car.
Your second example without knowing your tax situation I really cannot comment on you but the majority of my clients that have their own business either see better tax results with outright ownership or its a wash.
as for your third example the kid will be buried with the extra miles. Sure he could buy extra miles at the beginning but I don't think anyone would go that high and if they did it would likely be in the same payment range as buying if not more so. So at turn in he would have a hefty payment to make at lease end for extra miles.
Of course he could buy it at lease end (which is the best thing to do if you are tens of thousands of miles over your limit) but every financial expert I know says that's the worst way to buy a car. He would have to finance more than the car is worth to buy out at lease end. Not to mention that if he would have bought the car he would have 2 years at most in car payments, now he will have 4 to 5 more years. In short he would have taken out an 8 year loan for the car.
He would have been better off getting a used car with say 40-60K on it. The car would be just as reliable and his payments would be low and he wouldn't have to worry about that big hit he is going to get at lease end.
#94329 of 95871 Re: Worst way to buy a car [snakeweasel]
Oct 01, 2013 (5:44 am)
That means that between my two purchases he will buy 2 or three times.
All he will do is turn in his car after 3 years, and drive out in another new car for 3 years. This particular person doesn't like the buying process of wheeling and dealing. He doesn't like being told his trade-in isn't worth much for various reasons the dealer gives him. He tried selling privately and the guy test drove his car and drove it in a rough fashion. He doesn't drive many miles so will just hand the car in and he will get a new one...no down time, no negotiating.
my clients that have their own business either see better tax results with outright ownership
As I said, in my case now I prefer to own my car and it actually works out better for me....write off 30% in the 1st year. However, if someone is starting a business, and they do their own taxes, it may be easier, just to claim the monthly cost as an expense......much easier to calculate.
And, you didn't reply to the part about using your downpayment money needed to buy a car - could be used to 1) invest in your business, or 2) use it to buy a house or property which may appreciate more, or 3) invest the money in say the stock market and make more than the difference in the lease cost.
He would have to finance more than the car is worth to buy out at lease end.
In the 3rd example, that isn't necessarily true. This person did not have the money to put down on a car, so he would have to borrow money to put down on a car. Buying a used car could be a gamble, he might choose a good car but he might get stuck with one that breaks down. Getting a car with 40-60K miles on it may work and may not...not good if he loses his job because he is always late or has to take the car in for servicing.
I have seen people try to save money by buying a used car or by plowing money into their present car...it would have been cheaper to bite the bullet, get a new car, and look after it.
Buying a used car may be the wisest choice for you and for most people, but, it isn't for every one.
#94330 of 95871 Re: Worst way to buy a car [snakeweasel]
Oct 01, 2013 (8:25 am)
snakeweasel you nailed it. That's what I was trying to say but you said it so much more beautifully and eloquently. Even *driver had the good sense to get off the lease treadmill.
#94331 of 95871 Re: Worst way to buy a car [driver100]
Oct 01, 2013 (12:10 pm)
Most common phrase parents of leased cars say to their kids,"Ahhhh... careful... It's not my car." "Don't throw the football around the Civic." and," I will never buy you an air soft gun."
Yeah, best option at the time was a lease. My Buick Regal had just started leaking oil, and had been ready for a new car for a couple years. I used the Regal trade in as a down payment, and got a $79 a month payment for 3 years. Have big tuition bills this year for the kids, so the lower monthly payment was quite attractive.
So the Civic was the best lease deal, in terms of total out expense.The gas mileage is great. But, I miss the luxury, power and comfort I had in my Buick.
Will not lease after Civic lease is up. Will either buy at residual value, or turn it in.
Having to keep an eye on mileage is a bit of a pain. Borrow mother in laws car from time to time so mileage doesn't get to high.Otherwise would probably be putting around 14-15k miles a year on it. It may all come down to a big ketchup stain the day before I turn lease in... who knows. You ever get ketchup or Grey Poupon stains in your beamer?
#94333 of 95871 Re: Corvette sold in two days. [oldfarmer50]
Oct 01, 2013 (12:13 pm)
Vettes always sell fast if they are priced fairly. You got about what the market said you should. You might have gotten more but it might have taken a few months --- not worth the hassle.
#94334 of 95871 Re: Worst way to buy a car [jipster]
Oct 01, 2013 (1:55 pm)
BMWs come with vinyl seats. only cheap cars come with cloth, so stains are not such a big deal!
reminds me of a story. years ago, I was selling our Subaru wagon (so long ago, it was FWD!). Cloth insides. Private sale.
anyway, the morning of the day I was turning to over to the guy buying it, I had to pick my son up at kindergarten since he was not feeling well. Yup, you guessed it. he barfed all over the back seat. Good thing I was home that day, so I did a mad scramble to clean it up. And made sure the windows were down when I met the guy who was buying it...
#94335 of 95871 Re: Worst way to buy a car [stickguy]
Oct 01, 2013 (4:15 pm)
Semantics. from the buyers perspective, it is just another way of financing a purchase. and it does not have to be more expensive than buying a car. the key being, if you lease you lock in depreciation. With a buy and trade in after 36 months, you are at the mercy of the market.
That's just the thing, if you purchase you don't have to trade after 36 months you can keep it much longer. If you keep it much longer you can have a few years without any car payment. And the quality of cars now make getting 150K trouble free miles with few problems if any.
That's my biggest complaint about leases, it forces people to turn over cars way to fast.
#94336 of 95871 Re: More on my BMW lease [nyccarguy]
Oct 01, 2013 (4:26 pm)
I did some quick calculations myself. If I would have leased instead of buying I would have spent 4-5K less in lease payments. However I would be halfway through my second 3 year lease, currently I only have 3 car payments left. So in 3 months by leasing I would have another 15 lease payments vs no more car payments. Then after that 15 months with the lease I would have to get another lease but now I will still have a paid off car that will have a few more reliable years left.
So over the 10 year period of car ownership I would have saved thousands buying rather than leasing.