lease verses own...help (auto, SUV, fuel, best)

[kelly237]

I put this in the finace forum with no post so I thought maybe it belongs here.

Am I calculating lease verses own correct??
I have been calculating whether we would be better off selling our car and leasing and I was hoping someone could tell me if I am thinking correctly about the costs of owning verses leasing.
We own outright a suv worth 20K that gets 20 MPG.
It seems when I add :
1)lost interest if 20 K were invested, (166/month)
2) 3k/year depreciation on suv, (250/month)
3) $100 -$200 extra gas suv costs because of MPG
4) possible repair/maintenance costs
.... I am getting over $500 (even using 100 gas figure)

Why wouldn't it be better to lease something for 300/month
that gets 30 MPG or better ?

Another reason leasing makes sense to me is that auto companies are going to be coming out with much better MPG autos making the lower MPG cars depreciate faster.

My goal is not to be in more car than I can afford, but to be as frugal as I can be while still driving a car with the latest safety features.

Please someone tell me if my post makes sense.

[+] Rate this post positively

[sean98125]

You own your car and you can keep it indefinitely for only the cost of gas, licensing and maintenance.

You can lease a car, throw $300 a month toward it and have to pay for gas, repairs and licensing as well. At the end of the lease term the only thing you have left is a bill for damage and whatever miles you drove over the lease amount.

Depreciation only matters if you are depreciating on your taxes. If you aren't going to sell the car that you own, it's irrelevant. Besides, when you are leasing your entire payment is going to cover depreciation. You aren't buying anything.

If you really want to be frugal, sell the $20,000 SUV that you own and buy a used car with good fuel economy for about $10,000 to $12,000. Pay cash for it. Put the $8,000 to $10,000 that you have left in cash into an investment, and pay your $300 lease payment into that investment. You can either spend $10,000 on a lease and have nothing to show for it, or you can spend $10,000 and have a car that you can drive for years and years and then sell and make some money on when you're done with it.

It sounds like you're trying to convince yourself (or your spouse) that it makes sense to get a new car. Financially, it doesn't and if you are an individual it almost never makes sense to lease a car.

[golfgod]

Leasing is a bad deal, any way you look at it. If you're truly "averaging" 20 mpg (doubtful unless you do mostly freeway, that's not too bad. Owning a "new" car, owned or leased is always a bad deal. I agree with sean, sell the suv (if possible) and move down to a better mileage car, or small suv.

golfgod

[JFRRACING]

Originally Posted by sean98125

You own your car and you can keep it indefinitely for only the cost of gas, licensing and maintenance.

You can lease a car, throw $300 a month toward it and have to pay for gas, repairs and licensing as well. At the end of the lease term the only thing you have left is a bill for damage and whatever miles you drove over the lease amount.

Depreciation only matters if you are depreciating on your taxes. If you aren't going to sell the car that you own, it's irrelevant. Besides, when you are leasing your entire payment is going to cover depreciation. You aren't buying anything.

If you really want to be frugal, sell the $20,000 SUV that you own and buy a used car with good fuel economy for about $10,000 to $12,000. Pay cash for it. Put the $8,000 to $10,000 that you have left in cash into an investment, and pay your $300 lease payment into that investment. You can either spend $10,000 on a lease and have nothing to show for it, or you can spend $10,000 and have a car that you can drive for years and years and then sell and make some money on when you're done with it.

It sounds like you're trying to convince yourself (or your spouse) that it makes sense to get a new car. Financially, it doesn't and if you are an individual it almost never makes sense to lease a car.

Man, this guy has got it nailed to a tee. i couldn't have said it better my self. i would strongly advise this. with the price of everything going up , i know the last thing i would want right now is a payment. if you follow this advice you would be ahead of the game.

[kelly237]

Not convinced... Here is why.
Depreciating does matter because that car I own is worth
less every year. I think to figure yearly cost you have to figure in what the car is losing in value every year.

Quote "You can lease a car, throw $300 a month toward it and have to pay for gas, repairs and licensing as well. "

I don't factor in anything that would be the same for lease or own.
I am going to license , buy gas , and pay for routine maint either way.
If I lease I will be under warranty and will not have huge repair bills.

If owning cost more per month than leasing , It is saving money.

[shadowfax1997]

I agree with everyone else - either keep the SUV or sell and get smaller/cheaper car. You haven't mentioned how many miles you drive monthly/annually. That would make a consideration in whether a 30mpg car is that much better than a 20 mpg.

[Bummer]

Originally Posted by kelly237

Am I calculating lease verses own correct??

We own outright a suv worth 20K that gets 20 MPG.

This one point says it all, Kelly!

Since you own your SUV outright and you have already realized the initial depreciation which is also the most severe.

My advice . . . try to minimize your driving, maintain your SUV in top condition and KEEP IT!

Good Luck!

[kelly237]

Originally Posted by Bummer

This one point says it all, Kelly!

Since you own your SUV outright and you have already realized the initial depreciation which is also the most severe.

My advice . . . try to minimize your driving, maintain your SUV in top condition and KEEP IT!

Good Luck!

Is it possible that owning without payments is an emotional verses a
financial issue. When I hear "throwing money away" but don't see
the math to support it I think that is possible.
Sort like owning a house outright even if you could have a 5%
loan and that money could be earning twice that.

[kelly237]

Originally Posted by Bummer

This one point says it all, Kelly!

Since you own your SUV outright and you have already realized the initial depreciation which is also the most severe.

My advice . . . try to minimize your driving, maintain your SUV in top condition and KEEP IT!

Good Luck!

Also , we bought it at 30 K miles to avoid the initial depreciation.
I think depreciation rates are going to change drastically because of better
MPG autos coming on the market.

[Bummer]

Originally Posted by kelly237

Is it possible that owning without payments is an emotional verses a
financial issue. When I hear "throwing money away" but don't see
the math to support it I think that is possible.
Sort like owning a house outright even if you could have a 5%
loan and that money could be earning twice that.

Not a good comparison, Kelly.

Generally speaking (not quite in today's market), homes usually do not depreciate as many vehicles do.

However, a vehicle's most severe depreciation is realized the first year of two of ownership and then, if well maintained, the rate of depreciation drops considerably.

Since it appears you've already decided on a new vehicle . . . BUY, definitely not lease, is your best bet.