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When the car needs new tires, I dump it and move on to the latest and greatest.
Even if you keep a car for 10 years, when you do the math, it cost you over $100/month NOT including maintenance and repairs.
For example, buy new car for $30k. Drive it for 120 months and sell it for $8k. Cost you $22k/120 = $183/month. I'd rather pay $350/month for a new car every 36 months that is always under warranty and has the latest safety. A couple sets of tires bump up your costs $10/month. Sure registration and insurance are cheaper on a 10 year old car, but if that's a concern, you should be driving a 10 year old car anyways.
I bought a 10 year old Plymouth Slant 6 Valiant in 1982 for $800
Thirty years later the car is worth many times that.
Drove it for 25 of the 30 years daily.
Installed one timing chain... less then $40 in parts and a water pump... plus normal maintenance like tires and brake linings...
Had a lifetime battery replaced 3 times for free
The 91 Pickup I drive now looks like new... not a week goes by without someone asking to buy it.
Cars don't have to break the budget...
Not knocking leases... my family has done quite well because of them... maybe growing up in the car business... new cars were never that special. One day I would drive home the newest and latest car and the next night I would drive the cheapest off the used car lot... just to keep em guessing.
Now, if someone came in with a mint condition vehicle 10 or more years old... that got me interested.
Last edited by Ultrarunner; 11-22-2012 at 01:10 PM..
Sorry you are wrong! Also some dealers have zero down payment leases...Acura has that going on right now so you clearly show your lack of knowledge on the subject. You can negotiate mileage before you buy so that's another area where you are uninformed.
More informed than you are.
I never said you couldn't negotiate leases, you obviously lack reading comprehension.
You can get zero down-payment leases but the vast majority of the time, the dealer will up your MONTHLY payment to compensate for the lack of a down-payment. Again, you lack an understanding of how leases work. Do you honestly believe that dealers are losing money when they lease a vehicle? I can assure you, they are making more by having you lease a vehicle than by having you purchase the same vehicle. You obviously don't work in a finance-related field because your breadth of economics is quite abysmal.
You're attempting to argue something you know little about, first read up on the subject than maybe you'll change your skewed view of leasing.
By all means, if you want to waste your money by constantly having a car payment, by all means I'm glad you're stimulating the national economy.
You're wrong and obviously don't understand how a lease works.
First of all, you're assuming that a car with 36K or 48K miles will become a "money pit". This is FAR from the truth and you're trying to bolster your point which has no leg to stand on. Most vehicles will exceed the 100K mile mark before any major systems start failing and if something fails before 100K miles, it's highly likely that it'll be within the first year of ownership. Modern vehicle components are built to withstand enough abuse and strain that only 1% of them would ever have a major system failure before 100K miles. Your first assumption is false.
The vast majority of leases are NOT "unpopular models" or "unsold inventory", the vast majority are POPULAR vehicles from the likes of Mercedes, Audi, BMW, Lexus, Cadillac, and Infiniti which offer vehicles that are usually cost-prohibitive for many average people to buy outright so they succumb to the leasing scheme. People are not buying average, inexpensive vehicles with leases but are normally buying higher-end, luxury vehicles that they can't afford to finance. Your second assumption is false.
You don't come out ahead by leasing a vehicle, pure and simple. To think otherwise is simply illogical.
Work on reading Speedy!
A. I gave you two specific examples where the lease beat the buy.
B. Great lease deals usually are subsidized, this due to unpopular or new models that they want to move. I didn't say all leases were subsidized by inflated buy out prices.
C. A Chevy out of warranty is manageable, a Range Rover, Jaguar, S Class Mercedes are not....those were the examples I was using.
BadWithNumbersAZ it is NOT a scheme. You're like my in-laws that are old school and don't like these new fangled lease thangs. A dealer sells a car if you turn a lease back in big deal how does that make it a scheme? If you buy a 25k car your payments are OVER 400 dollars for 60 months AND it's out of warranty before you even have it paid off (depends on manufacturer). Yeah that's a great situation to be in. Remember I'm talking about high mileage years not people that are 10k a year. You can lease one for a little over HALF that AND you still have the option to buy at the end of the lease. There is no secret formula that makes dealers win big off of a lease...I have been to about 10 dealers in the past few months and not one of them tried to a push a lease on me. I'm the one that always brings it up.
Last edited by wanderlust76; 11-23-2012 at 07:32 AM..
It use to be business comprised the majority of leased vehicles...
Back in the 60's, almost all leases were to business... it made accounting very simple.
Leasing comes into and out of favor... sometimes, like when gas became expensive, those leasing big SUV's were more than happy to return them at the end of the lease and the lease companies collectively lost their shirts.
The person underwriting the lease is taking a gamble of future values.
Back in the 70's when cars were simply not moving during the era of gas lines... companies, like Chrysler took drastic steps to move inventory and leasing was one of these steps.
I'm in a quandary here. I drive a lot of miles - I put 400 miles a week on a car just to go to work, so for easy math 500 a week. I leased a dodge dart 18 months ago with the intent to buy the car after 18 months. I did this because I need a low monthly payment - I pay over $1200 a month in student loans (undergrad + MBA + wifes PhD), so not much is left over. I figured cars made in 2013 would last a very long time - quality has gone up for the domestics across the board. So now I'm halfway through my lease and am at my mileage allowance.
I had the transmission recalled in September, then the transmission case was cracked in January 14 and also for some reason I needed a new radiator. While the radiator was out of warranty, I talked them into fixing it ($800) for free and the trans was covered under the powertrain warranty. This thing has every electronic gadget you could want - and the bluetooth is going. A new transmitter is $1k.
I LOVE this car, and I take care of it, regular synthetic oil changes etc so these issues give me SERIOUS concerns that this vehicle will make it to 200k miles. I'm currently considering leasing a new malibu or cruze and buy it after a year. my wife has a cruze with 70k miles and we havent had a single issue. IF I do this, I'll be eating about $4k in penalty from the Dart - the buyout price from Ally is $20k, and the current market value is $14k. With some incentives and me working for a supplier I can get that $6k penalty down to the previously mentioned ~$4k. My lease payment would be about ~$370-$420 for the cruze or malibu respectively. I'd still be in this high mileage, underwater situation next year with 30k miles on my car when its supposed to be 15k, but I cant afford much more of a payment than $420-$430. Also, I need good fuel efficiency - I get 36 highway with premium fuel, 31 with regular.
Looking for some perspective.
1. Should I keep the Dart, buy it and just pay for things as they breakdown
2. Get rid of it and roll the penalty into a new lease and buy that vehicle next year
3. Get rid of it, roll the penalty into a certified vehicle
My ego says #2, but my wallet may say #3.
If you suggest #3, please suggest a vehicle that COULD go 200k+ miles and after $6k penalty would cost about $23k.
Leases will ALWAYS come out in the manufacturer's favor, they almost never benefit the customer unless you can use the lease as a write-off for a business. I never lease vehicles because:
a) Leases limit me to a term of X months and X miles. I don't want to be limited PERIOD.
b) Leases generally cost more in the long-term than buying a vehicle outright. All of my vehicles have a fairly high resale value, leasing would not help my situation.
The most popular leases are 12K and 15K mile leases at 36 months. Manufacturers KNOW that new vehicles lose the majority of their value in the first three years and then it starts to slow considerably. So YOU, the customer, is taking the hit for a LOT of depreciation while the manufacturer will take back the vehicle after the lease period and sell it for a good chunk of money to a large base who buy off-lease vehicles that are 2-3 years old.
Domestic's are retaining value quite well so your fundamental assumption that they lose value quickly is false. Look at any number of vehicles; Ford Fusion/Taurus, Cadillac CTS, Chevy Camaro, Ford Mustang, almost all pickup trucks, etc. Foreign manufacturers usually offer more attractive lease rates than domestics though.
On top of that... You also have to put the car back into decent shape (tires, repairs, paint) if it is not already when you turn it in -- that itself could be an expensive proposition.
Great thing about leasing is that the contract is transferable. So try selling your lease contract at swapalease.com or leasetrader.com. Even if you were to offer a $1000-$2000 incentive, it'll be much cheaper than buying it out.
Why not lease a Honda or Toyota? You can lease the 2014 Accord for $199/36 months (Current Offers and Leases on New Honda Cars - Official Website) plus they don't breakdown as much as GM or Chrysler. Lease payments are based on depreciation + interest, so you want to lease cars with high residual value such as Honda and Toyota.
If you want great gas mileage then get the Honda Civic. I have a 2013 Civic and regularly get 50MPG on the highway. The 2014 has improved gas mileage and only $159/month.
I'm in a quandary here. I drive a lot of miles - I put 400 miles a week on a car just to go to work, so for easy math 500 a week. I leased a dodge dart 18 months ago with the intent to buy the car after 18 months. I did this because I need a low monthly payment - I pay over $1200 a month in student loans (undergrad + MBA + wifes PhD), so not much is left over. I figured cars made in 2013 would last a very long time - quality has gone up for the domestics across the board. So now I'm halfway through my lease and am at my mileage allowance.
I had the transmission recalled in September, then the transmission case was cracked in January 14 and also for some reason I needed a new radiator. While the radiator was out of warranty, I talked them into fixing it ($800) for free and the trans was covered under the powertrain warranty. This thing has every electronic gadget you could want - and the bluetooth is going. A new transmitter is $1k.
I LOVE this car, and I take care of it, regular synthetic oil changes etc so these issues give me SERIOUS concerns that this vehicle will make it to 200k miles. I'm currently considering leasing a new malibu or cruze and buy it after a year. my wife has a cruze with 70k miles and we havent had a single issue. IF I do this, I'll be eating about $4k in penalty from the Dart - the buyout price from Ally is $20k, and the current market value is $14k. With some incentives and me working for a supplier I can get that $6k penalty down to the previously mentioned ~$4k. My lease payment would be about ~$370-$420 for the cruze or malibu respectively. I'd still be in this high mileage, underwater situation next year with 30k miles on my car when its supposed to be 15k, but I cant afford much more of a payment than $420-$430. Also, I need good fuel efficiency - I get 36 highway with premium fuel, 31 with regular.
Looking for some perspective.
1. Should I keep the Dart, buy it and just pay for things as they breakdown
2. Get rid of it and roll the penalty into a new lease and buy that vehicle next year
3. Get rid of it, roll the penalty into a certified vehicle
My ego says #2, but my wallet may say #3.
If you suggest #3, please suggest a vehicle that COULD go 200k+ miles and after $6k penalty would cost about $23k.
Leasing a car is the worst financial decision one can make , seconded by financing a car. Unless you have the money saved up to buy it outright off lease, you'll finance it for another 3 or 4 years. If you add that up plus what you have into the lease, you will likely have spent $5000 or more than the MSRP on the car was originally.
I understand having student loans and not a lot of money after paying them (granted I don't pay $1200 / mo), but taking that money and buying something cheap, used that you don't have to finance and throwing the car payment money at student loans will benefit you greatly in the long run.
Made the mistake of financing a car, myself. Will not do it again. Granted, with the low interest rate, rebates available *only* when financing and paying the car off early ... I didn't make it as bad as I could have.
Leasing a car is the worst financial decision one can make , seconded by financing a car. Unless you have the money saved up to buy it outright off lease, you'll finance it for another 3 or 4 years. If you add that up plus what you have into the lease, you will likely have spent $5000 or more than the MSRP on the car was originally.
I understand having student loans and not a lot of money after paying them (granted I don't pay $1200 / mo), but taking that money and buying something cheap, used that you don't have to finance and throwing the car payment money at student loans will benefit you greatly in the long run.
Made the mistake of financing a car, myself. Will not do it again. Granted, with the low interest rate, rebates available *only* when financing and paying the car off early ... I didn't make it as bad as I could have.
You don't understand leasing. The point is to have zero money invested in the car. Keep all of your cash in investments, which help pay for the peanuts $400/month lease payment. Investing is to allow you to live a better life, which for me includes driving a decent new $30-35K car every 3 years.
Now if you have a quarter million in your checking account, writing a check for a car is no problem and you probably aren't missing out on investing that $35K.
$35K invested at 5 years with 6% gain is a $12,000 gain over those 60 months. So now I have $47K in my bank account and paid $24,000 in lease payments ($400/mo*60). The guy who paid cash has nothing to show, unless he sells his car for $15K. My $47K is only going to keep growing and my lease payment will be essentially "free".
Last edited by PokerMunkee; 04-15-2014 at 03:38 PM..
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