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I don't get this logic...if you buy a car for 30k and put 100,000 miles on it in 5 years you're left with a car that is only worth like $10,000 the second you have it paid off. Especially if it's a domestic with a horrible resale value. I would rather just lease a car for 2 or 3 years regardless of how many miles I put on it. Knowing that I may have to do some negotiating ahead of time since the standard per year mileage lease is 12-15k.
Just because you technically own a car doesn't mean that high mileage doesn't have a cost. You're not getting a better depreciation rate just because you own it. I've just read a lot of opinions on this lately and I don't see where buying is the better option just because you put a lot of miles on a car. I know some dealers don't want to negotiate higher mileage leases but that's another story...some dealers just have lazy salesmen.
My reason is because if I buy, I have the option of taking care of a car that I am intimately familiar with, and continuing to drive it until it is ten years old and has 200,000 on it, without having to pony up for new car again or making any more payments on this one for the next five years. While you are paying another $20K for your years 6-10. Or, to put it another way, I have just bought a very nice used car from myself for $10K, while you are buying another new one for $30K.
My reason is because if I buy, I have the option of taking care of a car that I am intimately familiar with, and continuing to drive it until it is ten years old and has 200,000 on it, without having to pony up for new car again or making any more payments on this one for the next five years. While you are paying another $20K for your years 6-10. Or, to put it another way, I have just bought a very nice used car from myself for $10K, while you are buying another new one for $30K.
Ok but what if you planned on getting rid of the car the second you paid it off after 60 payments? In my scenario you're left with trading in, or selling privately, a vastly depreciated, 5 year old, 100k mileage car. If you go the "I'm going to buy and rack up the miles on this baby" route. Imo in this case you were better off just leasing for 3 years with a negotiated higher mileage limit. At the end of a 3 year lease you still have the option to buy if you want. So again high mileage in itself does not make buying better than leasing except maybe in your case where you plan to keep a car for 10 years.
Ok but what if you planned on getting rid of the car the second you paid it off after 60 payments? In my scenario you're left with trading in, or selling privately, a vastly depreciated, 5 year old, 100k mileage car. If you go the "I'm going to buy and rack up the miles on this baby" route. Imo in this case you were better off just leasing for 3 years with a negotiated higher mileage limit. At the end of a 3 year lease you still have the option to buy if you want. So again high mileage in itself does not make buying better than leasing except maybe in your case where you plan to keep a car for 10 years.
Not many people put on 100k miles in 5 years.
You'd have to run the actual numbers to know what's worth it in your situation. Most people are still better off buying though. The cost to have a lease with mileage that high would be ridiculous.
I don't get this logic...if you buy a car for 30k and put 100,000 miles on it in 5 years you're left with a car that is only worth like $10,000 the second you have it paid off. Especially if it's a domestic with a horrible resale value. I would rather just lease a car for 2 or 3 years regardless of how many miles I put on it. Knowing that I may have to do some negotiating ahead of time since the standard per year mileage lease is 12-15k.
Just because you technically own a car doesn't mean that high mileage doesn't have a cost. You're not getting a better depreciation rate just because you own it. I've just read a lot of opinions on this lately and I don't see where buying is the better option just because you put a lot of miles on a car. I know some dealers don't want to negotiate higher mileage leases but that's another story...some dealers just have lazy salesmen.
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.
Ok but what if you planned on getting rid of the car the second you paid it off after 60 payments?
I think if you were going to do that, then you might as well lease. As a general rule, buy a car if you plan to keep it 5+ years, lease if you only want it for 2-4 years. I haven't done the exact math in your situation but it should work out most of the time.
Ok but what if you planned on getting rid of the car the second you paid it off after 60 payments?
I don't know why you would plan it that way. If you're resigned to paying a payment all the time, then keeping a car to 100k miles is probably not right, whether it's lease or buy. I don't think that guarantees it'll be in leasing's favor though if you're really going to put on 20k miles a year.
That sort of 5 years with 100k miles on it is in a no-man's land for value out of the purchase. If you've purchased that car and have paid it off at that time and distance, the best thing is to keep it another couple years at least while you reap the benefits of no payments and bet that you won't have much in the way of costly repairs. If you're going to get rid of it, the best thing to do is probably to do it sooner than that.
I haven't paid a car payment in about 7 years. That's the value of buying for me. Yes there are sometimes some costly repairs now on a 12-year-old 205k mile car, but I know its entire history and if I average that out over the years with no payments I'm still well ahead. Plus savings on insurance (no collision/comp anymore). Yes I have to balance that with the fact that I don't have the newest and latest model car, but the value I ascribe to that is less than the value I am gaining by not having a car payment.
Im driving a nine yr old acura that has been paid off for five yrs now. It just barely broke 100k miles. It has required very minimal maintenance, and is still in excellent shape, so I feel no need for a new car. Versus a lease, I've saved many thousands of dollars with this car.
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.
Totally wrong on many fronts:
Leases do not cost more than buying outright. In a lease you are only buying part of the car (hence the lower payment). Certainly cars are cost prohibitive to own out of warranty, cross that 36K/48K/50K mark and then the 3K a/c repairs, 2K air suspensions etc start to break. Add these other costs back into your cost of ownership and you will quickly see why people turn in the leased cars just before the warranty expires.
Manufacturers often "subsidize" leases to get people to buy their cars (this benefits the consumer greatly). Usually it is a new model, a less popular model or simply a bunch of unsold inventory. I will give you two examples that I leased and easily beat the guy that bought the same car.
1. 1995 Acura Integra LS - $249 mo. including tax- 30 months/30K miles/zero down. Payment to buy that car was $83 a month higher. So the lease was $7470 and I was done. The $83 difference gave me $2500 in my pocket (to essentially put down on another car). Had I bought the car, the payoff would have essentially been the value of the car so I would have spent $83 a month extra with no return at the end. Why? The car was leased in August, lease ended in Feb essentially making it a 3 year old car at lease end. I changed the oil once in that car, dealer did it free the first time and it needed an oil change when I returned it.
2. 2004 Audi A8L- 83K sticker price- Lease for $1039 month including tax-zero down 39 mo/48K miles (15K year lease essentially). Buy price at the end of the lease was over 50K! Real market value was 30K. Audi inflated the lease end buyout price with the intention of lowering the monthly payment to attract buyers. The deal breaker for them was the VW Phaeton (similar to the A8, but VW badge). The VW TANKED in the resale market and dragged the A8 down with it (since it was made in the same factory, same parent company). Audi lost 20K on every A8 they leased in 2004/2005.
Domestics aren't heavily leased for a few reasons:
A. People buy and keep them (old people buy Buick/Cadillac and barely use them for example).
B. Pickups get abused, used for work and run into the ground. Nobody is going to "baby" a truck for 3 years to prevent scratches in the bed with the fear the lease company will charge them for the bed use.
C. Camaros/Mustangs have cheap enough MSRP's that people can afford to buy them. Leasing is designed to allow you to drive a better car than you can afford!
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