Buy a car ... lease a car (luxury car, 2010, convertible, CRV)

[Dave 92 LSC]

Originally Posted by YourWakeUpCall

The value of the car after 3 years is precisely the same whether your lease, finance, or pay cash. The notion that you "own nothing" at the end of a lease is a common misconception.

True to an extent, but with lease, you have to keep on leasing, which means monthly payments forever. Also 12k a year limit is not appealing to me.
I usually buy a high end car for 20-25k, keep it for a year or two and sell it for a bit less than that.
On average I add, 5-8k whenever I get a newer car. Few thousand in repairs, if needed. Beats wasting 30k on a mid priced car that I am not crazy about.

As a tax write off it’s a good thing to lease. It’s also good for those who must have a new car to keep up with the neighborhood. Image must be kept up. Consumerism on steroids.

[City Guy997S]

Originally Posted by YourWakeUpCall

The value of the car after 3 years is precisely the same whether your lease, finance, or pay cash. The notion that you "own nothing" at the end of a lease is a common misconception.

Originally Posted by Dave 92 LSC

I thought it is good for tax write offs ?
Not sure why would anyone want to loose 30k in 3 years and own nothing. Unless you can’t afford to buy a car in a first place.

This is where people don't understand leasing^^^^^


Leased a brand new Audi A8L, 84K window sticker. 0 down, $1026 a month 39 months/15K miles a year. So I blew 40K borrowing their car. That was the new body style A8 at the time. Buyout at the end of the lease was 50K, real trade value was 30K!

1. I lost 40K, put 48K miles on it.
2. Paying cash I would have lost $54,000 plus interest (if I financed) (84 MSRP - 30K end value).
3. Had I bought it I would have had negative equity almost the whole time I owned it which means if I traded it then I was carrying the debt to the new car.

On manufacturer subsidized leases (they artificially inflate the residual value to keep the payment low) the customer usually ends up driving something very cheap. An elderly family member is on her 3rd Buick Encore lease, $168 a month! Though Covid wrecked the cheap leases, she is now paying $220. It was still cheaper to lease 3 of these for 36 months than buy ONE and she is almost 80 so it really doesn't matter.

Consumer reports did this with Lexus RX's. It was cheaper to lease 3 than own one for 10 years! I've posted the link here on C/D but of course I can't find it to repost!

[YourWakeUpCall]

Originally Posted by Dave 92 LSC

True to an extent, but with lease, you have to keep on leasing, which means monthly payments forever. Also 12k a year limit is not appealing to me.
I usually buy a high end car for 20-25k, keep it for a year or two and sell it for a bit less than that.
On average I add, 5-8k whenever I get a newer car. Few thousand in repairs, if needed. Beats wasting 30k on a mid priced car that I am not crazy about.

As a tax write off it’s a good thing to lease. It’s also good for those who must have a new car to keep up with the neighborhood. Image must be kept up. Consumerism on steroids.

Actually, at the end of a lease you have the option of buying the car for a pre-negotiated amount, or you can turn it. In some cases, that amount may be far less than the car is worth, in which case it would generally make sense to pay the pre-negotiated amount and keep the car. If the opposite is true - the car is worth far less the the prw-negotiated amount - it probably makes sense to let the leasing company keep it.



Think of it this way, with a lease you're basically pay for the depreciation via the down payment and lease payments. The car is going to depreciate the same no matter if you lease, finance, or pay cash. One just has to do the math and determine which costs the least, with the big unknown being depreciation. So, it's a bit of gamble either way.



Regardless, it is simply incorrect to categorically state that leasing or financing or paying cash is always the right choice. Depending on the terms of the lease, loan, and investment ROI (if you pay cash there lost opportunity costs), either of the 3 could be the best option.

[ncole1]

Originally Posted by SouthSeasLifestyler

So, we are used to buying a car outright, but a lot of our friends are leasing a car. When asked, they say that is just the way it is done here? Not sure about that being a good enough reason! If I bought, I would be buying a new car.

So why do people lease vs buy?

SSLifestyler

Leasing is often good for people who want to drive a new car every 2-3 years and will have an annual mileage that is modest and predictable.

But make no mistake, you are still paying for depreciation.

[rabbit33]

Originally Posted by City Guy997S

This is where people don't understand leasing^^^^^


Leased a brand new Audi A8L, 84K window sticker. 0 down, $1026 a month 39 months/15K miles a year. So I blew 40K borrowing their car. That was the new body style A8 at the time. Buyout at the end of the lease was 50K, real trade value was 30K!

1. I lost 40K, put 48K miles on it.
2. Paying cash I would have lost $54,000 plus interest (if I financed) (84 MSRP - 30K end value).
3. Had I bought it I would have had negative equity almost the whole time I owned it which means if I traded it then I was carrying the debt to the new car.

Well, you've conveniently ignored the alternative which is NOT to trade off a car you've had for 39 months and only has 48,000 miles!

Actually if you'd bought this $84,000 car and kept it for 150,000 miles you'd have spent $0.56/mile in purchase cost, compared to the $0.83/mile you spent.

And if you'd bought a $40,000 car outright for the $40,000 you spent on leasing this car, then over 150,000 miles it would cost you $0.26/mile purchase cost.

Getting a new car every three and a half years is a mug's game whether you lease or buy, unless you drive for a living and actually wear it out that fast. If for personal aesthetic reasons you want to change out cars every three years, you might do better leasing, but it's like saying "I want to whack my thumb repeatedly with a hammer; should I use a 16 oz claw hammer or a 16 oz ball-pein?"

I never concern myself with the residual value of my cars, because I keep them and drive them (with regular maintenance) until they HAVE no residual value!

[rabbit33]

Originally Posted by ncole1

Leasing is often good for people who want to drive a new car every 2-3 years and will have an annual mileage that is modest and predictable.

But make no mistake, you are still paying for depreciation.

Yeah, but if you have a modest and predictable annual mileage, why are you trading cars every 2-3 years?

[ncole1]

Originally Posted by rabbit33

Yeah, but if you have a modest and predictable annual mileage, why are you trading cars every 2-3 years?

Some people actually have the money and want the latest and greatest. Others do it for business reasons (to impress upon clients, etc.)

I'd still say they are a minority though - most people are probably better off buying and holding for 6+ years (or buying used and holding 4+ years)

[rabbit33]

Originally Posted by ncole1

Some people actually have the money and want the latest and greatest....

Thing is, people come on these threads wanting monetary advice about leasing vs. buying etc., and then always comes the line "well, some people have lots of money and just want to spend it that way". Well, the people who have FU money and don't care, they're going to have a new car every 3 years - they're not asking for financial advice about which is better to do, how to get the very best deal on a bad deal, etc.

If you come on a thread asking how to save money when leasing a car every 3 years, I'm going to tell you to check your premises. As I said above, it's like saying "I plan to whack my thumb with a hammer as hard as I can every month for the next 40 years; should I use a 16 oz. ball pein or a 16 oz. claw hammer?"

[skeddy]

The Port of Baltimore is the largest car shipping port on the East Coast. It's now closed due to the bridge collapse. I'd be concerned about availability of cars to buy or lease on the East Coast.

[YourWakeUpCall]

Originally Posted by skeddy

The Port of Baltimore is the largest car shipping port on the East Coast. It's now closed due to the bridge collapse. I'd be concerned about availability of cars to buy or lease on the East Coast.

There are alternate routes. I've always felt that the Key Bridge and the east side of 695 were way are utilized, probably because it appears to be the long way around, but when factoring in traffic, takes less time than I95 or other routes. I wouldn't be a bit surprised if we hear in the coming weeks that the Key Bridge may not be rebuilt.