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Does that $7200 account for your trade-in? If not, then it's costing you more than that. You're not getting a $26k car for $21k.
So if you're genuine in your initial post to evaluate between keeping the old car or buy/lease a new one, what you are saying is that the depreciation of your 8-yo car plus repairs over the next 3 years will be => $7200 plus tax plus trade-in?
Yes, that's with my trade-in credit, some Mazda loyalty credits, and other dealer discounts. $7200 is with all taxes included. So...what are you saying then? How am I not getting the $26k car for $21k? What am I missing?
The fact of the matter is that I don't know what is going to go wrong with my car next. My buddy has a 2008 Mazda 3 and just had to replace a $1500 sensor on his. My thermostat sensor has also been acting wonky, so who knows how much that will cost. Who knows when my timing belt is going to snap, because it's getting to be about that time (100k miles). I'm not a psychic. For all I know, my car could end up costing me $0 of maintenance over the next few years (after I do the required $1500 of maintenance that already exists, that is), or it could end up costing me $1k,$2k,$3k, or more. And nobody here knows either.
Do I drive my car into the ground, get little to no trade-in value for it, and save money for the next car? Or do I bite the bullet and get a new car (while my car has trade-in value) where all the maintenance sans oil changes is covered for at least the first three years? This is the dilemma. Maybe I didn't make that clear in the OP. I'm pretty certain that the cost of ownership with the older car will be less than with the new car and new payments. I'm guess what I'm trying to get at is whether or not it's wise to drive your car until it dies. Is it wise to keep dumping money into the upkeep of a depreciating asset? Should you at least try to get some trade-in value for it?
Last edited by Mr. Analyst; 08-27-2015 at 09:33 AM..
You've criticized the leasing option twice now without giving any reasons as to why you think this. Can you elaborate? I've heard the dealer's perspective. What can you tell me from your perspective? Perhaps you have more experience with this than I do.
I used to work in car sales. Unlike some on this forum, I don't think leasing is always the worst way to go. Leasing is a great option if you like to trade your car in every couple of years and are relatively stable in your driving habits so you know you aren't likely to suddenly have a 120 mile daily commute instead of a 20 mile commute. However, leasing with the intent to buy the car out at the end of the lease and run it forever is a fools errand; just buy it on a 72 (or 84) month note and pay, as interest is relatively cheap right now. To lease and then buy you are paying finance charges twice; first to Mazda Credit on the lease, then to the bank in interest. To be fair, the money factor is probably almost nothing on this deal.
If you think that in three years, you will want a bigger car, like a CX-5 or something else, and want to drive a newer car for minimal financial outlay, then go for a lease.
Quote:
Originally Posted by Mr. Analyst
The residual value is set up front. It's $14,680.40. That will not change according to the dealer. So after the term of the lease, in which I will have paid $7200 for the vehicle, I will essentially have a remaining balance of $14,680.40 if I choose to buy it outright. Adding that with the $7200, the car will have cost $21,880.40 (plus whatever the interest will be on financing the residual if I finance it) when it's all said and done. Keep in mind, this is a $26k car on the lot.
Honest question: How will I be getting hosed? What do you know that I do not know? Thanks!
A lease breaks down thusly: You have the purchase price of the car, and the residual value of the car. The difference is broken up over the lease period and a money factor (essentially interest) is tacked on for the finance company (Likely Mazda Credit in this case) to make money. In this case, your money factor is probably almost nil. Any money down (ie, your trade in) goes toward reducing your payment.
I don't think that its really a $26K car on the lot. I think that if you take $26K MSRP, and subtract the loyalty credits, the dealer discount, and the Mazda rebate, you're a lot closer to to $21K. I would like to see the line items of your cost analysis for this car. Leases aren't magic. They are just another way to finance a car.
What I don't see here, is how we get from the sticker of $26K, to $21K, which would appear to be the purchase price.
In the absence of tax, title, license etc, LEASE PAYMENT=[(PURCHASE PRICE-CASH OR TRADE DOWN-RESIDUAL)/MONTHS IN LEASE]+MONEY FACTOR.
I used to work in car sales. Unlike some on this forum, I don't think leasing is always the worst way to go. Leasing is a great option if you like to trade your car in every couple of years and are relatively stable in your driving habits so you know you aren't likely to suddenly have a 120 mile daily commute instead of a 20 mile commute. However, leasing with the intent to buy the car out at the end of the lease and run it forever is a fools errand; just buy it on a 72 (or 84) month note and pay, as interest is relatively cheap right now. To lease and then buy you are paying finance charges twice; first to Mazda Credit on the lease, then to the bank in interest. To be fair, the money factor is probably almost nothing on this deal.
If you think that in three years, you will want a bigger car, like a CX-5 or something else, and want to drive a newer car for minimal financial outlay, then go for a lease.
Thank you for elaborating. These are good insights.
Quote:
Originally Posted by JONOV
A lease breaks down thusly: You have the purchase price of the car, and the residual value of the car. The difference is broken up over the lease period and a money factor (essentially interest) is tacked on for the finance company (Likely Mazda Credit in this case) to make money. In this case, your money factor is probably almost nil. Any money down (ie, your trade in) goes toward reducing your payment.
I don't think that its really a $26K car on the lot. I think that if you take $26K MSRP, and subtract the loyalty credits, the dealer discount, and the Mazda rebate, you're a lot closer to to $21K. I would like to see the line items of your cost analysis for this car. Leases aren't magic. They are just another way to finance a car.
What I don't see here, is how we get from the sticker of $26K, to $21K, which would appear to be the purchase price.
In the absence of tax, title, license etc, LEASE PAYMENT=[(PURCHASE PRICE-CASH OR TRADE DOWN-RESIDUAL)/MONTHS IN LEASE]+MONEY FACTOR.
Yes, the car would be about $21k after the rebates, trade-in, and loyalty credits. That's what I said in the beginning. But the original price of the car was still $26k. As for the underlined, that's something I also have mentioned in this thread.
However, I do see your point and agree with the buy out at the end of the lease. I think a potentially good option might be to finance it for 72 months or 84 months. It would probably end up being close to the same amount in terms of monthly payments. However, I do think the Mazda dealership I'm working with have a .9% interest rate on 72 month financing options right now. So that might be a good way to do this as well since the interest is almost negligible.
Thank you for elaborating. These are good insights.
Yes, the car would be about $21k after the rebates, trade-in, and loyalty credits. That's what I said in the beginning. But the original price of the car was still $26k. As for the underlined, that's something I also have mentioned in this thread.
However, I do see your point and agree with the buy out at the end of the lease. I think a potentially good option might be to finance it for 72 months or 84 months. It would probably end up being close to the same amount in terms of monthly payments. However, I do think the Mazda dealership I'm working with have a .9% interest rate on 72 month financing options right now. So that might be a good way to do this as well since the interest is almost negligible.
So its a $24-25K; that trade value is YOUR MONEY, same as cash, (actually better as there is no sales tax on the trade value.) Just remember that.
This is the quote my local indy mechanic provided me:
$99 for an A/C recharge and dye assessment (could fix the problem, or indicate that a leak is not the problem). Could even be a broken compressor, which is expensive to replace from what I've read
~$500 to fix the power steering leak; was given a similar estimate not long ago by another chain mechanic
~$900 to fix front struts and stabilizer bar
I don't really have the tools,space, or acumen to do some of these more technical repairs. I'm happy if I can replace a head light or air filter. Otherwise, I would at least attempt to research and do it on my own.
Do the A/C recharge in your driveway for $40 - it's incredibly easy, takes 5min, even my mother could do it. Spend $40 on the "TOP NOTCH" A/C Pro @ your local auto parts store and save the money.
$500 to fix a power steering leak indicates something major is being replaced...steering rack, reservoir etc. Can't skimp on this one.
$900 for struts and a stabilizer is a JOKE. Google "2007 Mazda 3 front strut" and find the parts for $125 all day long. Then take your boxed up parts and head to another mechanic. Any indy mechanic charges ~$50/corner to install. By stabilizer bar I'm assuming they mean sway bar...which should not need to be replaced...ever. If they're referring to "end links" which are connected to the sway bar, they're $15/ea and take very little effort to replace. If the sway bar bushings need to be replaced, the bar doesn't even need to come out and the bushings will be ~$40.
They're taking you for a bath. Go to an indy mechanic!
Do the A/C recharge in your driveway for $40 - it's incredibly easy, takes 5min, even my mother could do it. Spend $40 on the "TOP NOTCH" A/C Pro @ your local auto parts store and save the money.
$500 to fix a power steering leak indicates something major is being replaced...steering rack, reservoir etc. Can't skimp on this one.
$900 for struts and a stabilizer is a JOKE. Google "2007 Mazda 3 front strut" and find the parts for $125 all day long. Then take your boxed up parts and head to another mechanic. Any indy mechanic charges ~$50/corner to install. By stabilizer bar I'm assuming they mean sway bar...which should not need to be replaced...ever. If they're referring to "end links" which are connected to the sway bar, they're $15/ea and take very little effort to replace. If the sway bar bushings need to be replaced, the bar doesn't even need to come out and the bushings will be ~$40.
They're taking you for a bath. Go to an indy mechanic!
That was an indy mechanic! This wasn't like a Firestone or Goodyear. It was some podunk shop on the outskirts of town. I'll keep shopping around though.
I bought a 2006 Odyssey new and it doesn't have a major problem, so I have no reason to get rid of it. I'm not a huge fan of new car designs in general. My daily driver is a '96 Jeep with 272k miles that I bought in '03 - same thing. No major problems, no reason to get rid of it.
This board is the most rabidly anti-payment car board around, so I don't think you're going to get unbiased, objective answers.
Um, just because many of us don't like car notes doesn't mean we don't have important points to make. Besides, you're inferring that since posters such as myself don't want to pay a car payment, your opinion (I believe it is anyway), that buying new is the best thing, is somehow objective. Your opinion is just as subjective as ours, because opinions are inherently subjective.
As for the answer to OP's question, it sounds like the repairs are fairly minor. Why not get another estimate from another mechanic to see if you can get a lower price? Your car has barely been broken in. At 93K miles, you could probably log another 100K on it without spending a ton on fixing it. Even if it ends up costing the full $1500 to fix, that's only about 4 months of typical car payments (cough, cough). And that doesn't even count the extra money each month you have to pay on comp and collision coverage insurance for cars that have a loan on them.
You've criticized the leasing option twice now without giving any reasons as to why you think this. Can you elaborate? I've heard the dealer's perspective. What can you tell me from your perspective? Perhaps you have more experience with this than I do.
The residual value is set up front. It's $14,680.40. That will not change according to the dealer. So after the term of the lease, in which I will have paid $7200 for the vehicle, I will essentially have a remaining balance of $14,680.40 if I choose to buy it outright. Adding that with the $7200, the car will have cost $21,880.40 (plus whatever the interest will be on financing the residual if I finance it) when it's all said and done. Keep in mind, this is a $26k car on the lot.
Honest question: How will I be getting hosed? What do you know that I do not know? Thanks!
Leasing/buying makes little difference. Thing is you're constantly buying/leasing a new car every 2-3 years, which is the most expensive years of using a car whether you own it or lease it. If you're just going to turn over a car every 2-3 years, leasing isn't a bad way to do it if the mileage limits work for you. Sometimes leasing and buying is cheaper, sometimes buying is cheaper, but usually they're close enough to consider a wash.
MSRP isn't relevant to most discussions as most cars do not sell for MSRP. Generally if you can get a good lease deal on a car you can also get a good purchase price on the car that's likewise well below MSRP. On a lease you negotiate capitalized cost (cap cost) just like you negotiate the purchase price of a car you're buying. Lease deals typically aren't $0 up front, although maybe the lease you're looking at is. A more standard advertised lease deal would be something like $3,000 up front ($2,800 + first $200 payment) and then TTL gets added onto that number. Often the specials are what they are. The cap cost is already negotiated down as a factory promotion and the dealer may not be willing to go any lower. Other times they will. Go with whatever is cheaper but don't base it off MSRP, base it on what you can actually buy the car for which is almost always less than MSRP.
That was an indy mechanic! This wasn't like a Firestone or Goodyear. It was some podunk shop on the outskirts of town. I'll keep shopping around though.
Oh man. You definitely need another quote or two!
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