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Old 01-09-2016, 04:13 PM
 
Location: Colorado Springs
4,850 posts, read 4,967,060 times
Reputation: 17348

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In retirement you know 2 things that make the lease/buy decision easier:

1. You likely have a predictable income from pension/SS and you no longer worry about layoffs.
2. You likely drive fewer miles, e.g. 10K per year.

As such, it's easy to calculate lease costs. The benefit of leasing a new car every 3 years is that the car is never out of warranty, it's easy to trade for a new one every 3 years and you get the latest safety equipment.

Does it cost more than buying? Likely, but who cares?
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Old 01-09-2016, 05:19 PM
 
Location: Wasilla, AK
7,275 posts, read 4,158,066 times
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Quote:
Originally Posted by GeoffD View Post
I just buy the 7/100k OEM extended warranty so I don't have to drive a Kia or Hyundai.
I've turned down close to $20,000 of extended warranties over the years. My unanticipated repairs during that time...about $300. None of those repairs were for Kia or Hyundai. Even Consumer Reports calls extended warranties a bad deal.
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Old 01-09-2016, 05:27 PM
 
Location: Wasilla, AK
7,275 posts, read 4,158,066 times
Reputation: 15718
Quote:
Originally Posted by Vision67 View Post
In retirement you know 2 things that make the lease/buy decision easier:

1. You likely have a predictable income from pension/SS and you no longer worry about layoffs.
2. You likely drive fewer miles, e.g. 10K per year.

As such, it's easy to calculate lease costs. The benefit of leasing a new car every 3 years is that the car is never out of warranty, it's easy to trade for a new one every 3 years and you get the latest safety equipment.

Does it cost more than buying? Likely, but who cares?
I may have a predictable income, but my mileage is anything but predictable. My last truck was over 14 years old when I sold it. It was paid off in less than two years, so I had over 12 years with no payments. I did have to replace the fuel pump and starter, but that was about $800 total, or less than two monthly payments.
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Old 01-09-2016, 06:54 PM
 
Location: Sierra Nevada Land, CA
8,402 posts, read 9,154,456 times
Reputation: 13042
Quote:
Originally Posted by Vision67 View Post
In retirement you know 2 things that make the lease/buy decision easier:

1. You likely have a predictable income from pension/SS and you no longer worry about layoffs.
2. You likely drive fewer miles, e.g. 10K per year.

As such, it's easy to calculate lease costs. The benefit of leasing a new car every 3 years is that the car is never out of warranty, it's easy to trade for a new one every 3 years and you get the latest safety equipment.

Does it cost more than buying? Likely, but who cares?
likely drive fewer miles? I think not unless one plans on having a more limited life when retired or one's commute while working was 60 miles each way. Being active means you will be driving more, not less.

And who these days buys a new car every three years. This isn't 1970.
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Old 01-09-2016, 08:38 PM
 
Location: Woodbury, MN
1,465 posts, read 1,535,796 times
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Can you afford to replace a 4 year old luxury car with a new luxury car? I think the BMW cars are listed as 'average' reliability in Consumers Reports. For me, reliably is the most important factor of a car. If the car isn't reliable, you're walking. Is the underlying reason you want a new luxury car because you want it, or is the main reason to impress strangers? I think if you have more than a million dollars in your retirement accounts, then you're more likely to be able to afford a luxury car. Otherwise, you may be living above your means.

We are in a financial position where we could afford to buy a couple luxury cars, but it doesn't make sense to spend that kind of money on depreciating assets. Usually, luxury cars are only rated at 'average' reliability or below. An exception to that rule is Lexus, which is very reliable. I've also heard that repair costs, when you need repair work done, are more expensive with luxury cars. In my opinion, most people that ae driving luxury cars, shouldn't be driving luxury cars. Many luxury car owners stretch their abilities buy the luxury cars because of their desire to build up their status to strangers. But the finances of many luxury car owners are built on a house of cards.

Perhaps a way you can test your ability to afford to buy the luxury car is, can you afford to buy the new luxury car with cash? If you can't, then buying a new luxury car may be beyond your ability. The last two new cars, we bought with cash, although we keep the cars for over ten years. Even though we can afford to buy new cars with cash, it was a mistake to buy the cars with cash. If we would have left the money in the market, our gains would have paid the car loan payments, and we would still have the principle.

Leasing might make sense for businesses, but for individuals, in general, I think leases are really designed to enable people to drive more expensive cars than they should be driving.
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Old 01-09-2016, 09:36 PM
 
Location: Sierra Nevada Land, CA
8,402 posts, read 9,154,456 times
Reputation: 13042
Quote:
Originally Posted by davephan View Post
Can you afford to replace a 4 year old luxury car with a new luxury car? I think the BMW cars are listed as 'average' reliability in Consumers Reports. For me, reliably is the most important factor of a car. If the car isn't reliable, you're walking. Is the underlying reason you want a new luxury car because you want it, or is the main reason to impress strangers? I think if you have more than a million dollars in your retirement accounts, then you're more likely to be able to afford a luxury car. Otherwise, you may be living above your means.

We are in a financial position where we could afford to buy a couple luxury cars, but it doesn't make sense to spend that kind of money on depreciating assets. Usually, luxury cars are only rated at 'average' reliability or below. An exception to that rule is Lexus, which is very reliable. I've also heard that repair costs, when you need repair work done, are more expensive with luxury cars. In my opinion, most people that ae driving luxury cars, shouldn't be driving luxury cars. Many luxury car owners stretch their abilities buy the luxury cars because of their desire to build up their status to strangers. But the finances of many luxury car owners are built on a house of cards.

Perhaps a way you can test your ability to afford to buy the luxury car is, can you afford to buy the new luxury car with cash? If you can't, then buying a new luxury car may be beyond your ability. The last two new cars, we bought with cash, although we keep the cars for over ten years. Even though we can afford to buy new cars with cash, it was a mistake to buy the cars with cash. If we would have left the money in the market, our gains would have paid the car loan payments, and we would still have the principle.

Leasing might make sense for businesses, but for individuals, in general, I think leases are really designed to enable people to drive more expensive cars than they should be driving.
Yep
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Old 01-09-2016, 10:04 PM
 
Location: Wasilla, AK
7,275 posts, read 4,158,066 times
Reputation: 15718
Quote:
Originally Posted by davephan View Post
Leasing might make sense for businesses, but for individuals, in general, I think leases are really designed to enable people to drive more expensive cars than they should be driving.

Exactly.
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Old 01-10-2016, 05:44 AM
 
Location: Backwoods of Maine
7,118 posts, read 8,163,742 times
Reputation: 18774
Quote:
Originally Posted by AlaskaErik View Post
I may have a predictable income, but my mileage is anything but predictable. My last truck was over 14 years old when I sold it. It was paid off in less than two years, so I had over 12 years with no payments. I did have to replace the fuel pump and starter, but that was about $800 total, or less than two monthly payments.
This is the answer I would give to those who wonder where we get so much cash from. Answer: we don't finance or lease anything. It's hard for me to understand "lust". But it's out there, yessiree...
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Old 01-10-2016, 07:18 AM
 
Location: Colorado Springs
4,850 posts, read 4,967,060 times
Reputation: 17348
Quote:
Originally Posted by Mr5150 View Post
likely drive fewer miles? I think not unless one plans on having a more limited life when retired or one's commute while working was 60 miles each way. Being active means you will be driving more, not less.

And who these days buys a new car every three years. This isn't 1970.
So I actually fly to most places that I want to visit; without a commute, driving is less, not more.

And I agree that cars last much longer but some people just like to drive new cars. If you can afford it why not?
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Old 01-10-2016, 07:25 AM
 
Location: NC Piedmont
3,911 posts, read 2,882,516 times
Reputation: 6291
Quote:
Originally Posted by AlaskaErik View Post
I've turned down close to $20,000 of extended warranties over the years. My unanticipated repairs during that time...about $300. None of those repairs were for Kia or Hyundai. Even Consumer Reports calls extended warranties a bad deal.
Even when you get them, unless they are bumper to bumper, they are often full of exclusions. A slight tangent, but definitely related to this...
I decided to self insure our phones because we are a family of 6. Not long ago, I had to pay for a new iPhone for one of the kids. It wasn't full price because they classified it as an out of warranty repair, so I was out under $300 (EDIT - another tangent - I went to the Apple store to do this. Verizon would have been more because they would have just sold me a reconditioned one). I had a few people give me a hard time about my decision and I told them they need to run some numbers. Because I have been doing this for years, I am way ahead. I had to replace a cheap feature phone a couple of years ago and this is the first smart phone. Insurance on smart phones from Verizon is $11 month, so $66 for us and it has a deductible ($99 to $199, depending on model). Extended warranties are insurance and insurance is profitable because they charge more in premiums than the average payout. In cases where there are extremes to worry about (home, medical and liability for example) it makes sense to insure because you can't handle the worst case scenario. But for cars, phones, appliances, etc, most of us can if we budget for the possibility and save (or have good credit and can adjust the budget to pay it back).
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