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..........Usually, this means paying for 50% of the car's value for 3 years of use. Compared to paying 100% for 10+ years of use.
100%? More like 120%. Or 150%.
In the first place, most people will finance. Sometimes a lot! Gotta factor that in.
In the second place after 10 years you will have repaired it a few times. After that, repair can be dicey. Depends an awful lot on who has been driving it and how attentive he has been for the 10 years. Are you ready to replace a 10 year old turbocharger?!
I would never lease either, but because I like to own a car so that I can make modifications on them. For example, add a towing package or running boards on a truck, a better stereo Cat-Back exhaust system or nicer wheels on a car.
You can do that on a lease. Heck, I remember I sold a tacoma that had $2K worth of stuff added onto it and built into the lease payment. It was residualized but he got his running boards and TRD wheels.
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Originally Posted by mustangman66
I guess I looked at it as why would I buy it at the end of my lease if I can buy one off the lot for less. If the buyout was less than what a used example was going for, it would have made sense to buy it. You are right though, I would have lost money if I had purchased it at first, but thats why when I purchase a vehicle I am very particular with what I buy and consider the resale value. Nissan would never fall into the category of a good buy in my opinion.
If your intent is to buy it at the end of the lease to keep driving it then you're likely stretching out the payment where more than you could afford if you wished to purchase it. That's the most expensive way to buy a car all things considered I'd say.
Of course, some folks hope that the car is worth more than the buyout number and intend to buy out the lease to sell the car. That's a different animal. Of course, the financial prognosticators at the financial company hope to peg the buyout number acurately. In the case of your Nissan, the bank ended up writing off a loss on the sale of the car given that it was likely sold at an auction. Being too far off the wholesale value in the other direction means they left some money on the table; most buyers nowadays are savvy enough to take advantage of any equity in the vehicle either at sale or trade in.
In the first place, most people will finance. Sometimes a lot! Gotta factor that in.
In the second place after 10 years you will have repaired it a few times. After that, repair can be dicey. Depends an awful lot on who has been driving it and how attentive he has been for the 10 years. Are you ready to replace a 10 year old turbocharger?!
They're not that big a deal, 2-3k. BMW double that. If you've got a hot V setup is where you might want run away. You're probably up around 10-12k but you should have run away from that before ever buying it. The 335/340 straight six is pretty reliable. It's not that likely you'll need to do a turbo since they're not junk like the N63 V8 after about 60-80k the oil lines are all baked solid and the seals cracked so the turbos are not getting enough oil and most of what they get is leaking or getting blown into the intercooler which isn't doing anything as it's coated with oil.
A 3-series nowadays is 60k for a 340 with leather and a few options. Even if you have to spend 5k on replacing the turbo it's not the end of the world. If that's the end of the world for you, you shouldn't be in any kind of BMW. Get a Corolla.
Do it again when the "asset" unexpectedly decreases in value.
The terms of the lease are set up so that they rarely lose money. The leasing company protects themselves with lot of restrictions against minor damage and mileage overruns.
The 84 month banknloan is indiffierent to how you are treating your car. If you are driving it 40,000 miles per year getting it dinged and not changing your oil, then of course you may not be able to sell it for the principal balance left on your loan. But how you treat your car is your business, not that of the financier.
100%? More like 120%. Or 150%.
In the first place, most people will finance. Sometimes a lot! Gotta factor that in.
Get a car that you can afford a sizable down payment on, and can finance in under 3 years. This may mean getting a Corolla instead of a Lexus or Silverado. This may even mean getting a used car, which I understand the used market isn't great right now, but still. The bad car market will eventually end but a lease-trap could last a really long time.
Totally depends on the lease, some are great (subsidized by the manufacturer) and some are simply awful.
Leasing just tells you UPFRONT how much you are going to pay to drive the car.
Buying gives you more flexibility but leaves the total cost open ended (meaning you don't know what it will cost you until the end/sale)
I've done both, just depends on your needs and budget.
Best lease: Audi A8L - $1053 a month/39 months - so I paid 41K to borrow a 84K car. End of lease the buyout was 50K, reality was the car was worth 30K at best. So if I paid cash I would have lost 54K (plus tax) in the same 39 months. It was a wonderful car, the manufacturer subsidized the lease to get them out the door, I was ready to sign up for another one but the lease was more realistic, $1400 a month for the same car on a new lease. I passed.
It's remarkable how much people's understanding of leasing has evolved (at least on C-D). It wasn't long ago that this thread would have been overrun with people who sincerely believed leasing is always a bad idea because "you don't own the car at the end of the lease". Which, of course, has nothing to do with whether or not a lease makes sense. Now, if we could only enlighten the "I always pay cash" crowd.
Totally depends on the lease, some are great (subsidized by the manufacturer) and some are simply awful.
Leasing just tells you UPFRONT how much you are going to pay to drive the car.
Buying gives you more flexibility but leaves the total cost open ended (meaning you don't know what it will cost you until the end/sale)
I've done both, just depends on your needs and budget.
Best lease: Audi A8L - $1053 a month/39 months - so I paid 41K to borrow a 84K car. End of lease the buyout was 50K, reality was the car was worth 30K at best. So if I paid cash I would have lost 54K (plus tax) in the same 39 months. It was a wonderful car, the manufacturer subsidized the lease to get them out the door, I was ready to sign up for another one but the lease was more realistic, $1400 a month for the same car on a new lease. I passed.
This is exactly what I came here to say. Purchasing and leasing are both gambles, except with leasing, your downside risk is capped.
The actual "cost" to use the car is the depreciation that you experience. Leasing, loans, and even straight cash purchases are different ways to pay for the depreciation. Leasing caps the depreciation- you never pay more than the amount of the lease. Whereas buying new for cash or loan does not have this protection. Many manufacturers take a bath on leases just to pad their revenue. I got an email today that Nissan is giving a 97% residual right now on Frontier King Cabs on 18 month leases. That means they are betting that the trucks will only lose 3% of their value in 18 months. I highly doubt it- they just want to sell "units" to keep their stock price going.
Sure, buying new and holding it until it's worthless is going to get you a car for longer than leasing will, but the same can be said of buying a 3 year old used car and holding it until it's worthless, which is another way to gamble on the speed of depreciation. To use City Guy's example, nobody should be buying a new car ever under any circumstance, if the only thing that matters is experiencing the least depreciation. But clearly there's more to it than that, as we can see by all the new cars being sold.
This is exactly what I came here to say. Purchasing and leasing are both gambles, except with leasing, your downside risk is capped.
Well, I am not so sure your downside risk is as capped as you think it should be. If you take out a 36 month lease which permits 30,000 miles you could end up facing a sizeable penalty for mileage over-runs. Also some parking lot dents can't be ignored or passed along in a sale of the vehicle as minor imperfections.
The leasing company has a room full of actuaries trying to calculate the terms of the lease so that on average they don't lose money.
The principal attraction of a lease is the low monthly payment which can only be duplicated by a long term bank loan (usually 84 months). If you compare the contractual buyout for the lease and the remaining pincipal for the 84 monh loan, you will see the are almost identical.
But if you drive the car 45,000 miles in the first 36 months (instead of 30,000 miles) and you get some parking lot dings, the downside of selling the car and paying off the loan is much less than the cost of paying the mileage overrun penalty fees with the lease and the repairs.
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