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Old 07-31-2015, 09:55 PM   #41
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You said you could get it for $40,000. I said Edmunds true market price is $46,218. Looks like my price is a lot more realistic. No way you're getting a few grand lower. A few hundred sure. You might even get him down to $45,500. I'd be shocked if he would sell it lower than that.

I also got 3 years of free maintenance thrown in.
Yeah, your maintenance isn't 'free', but included in the deal. Minor point perhaps, but still...

Sent from my mobile device so please excuse grammatical errors.
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Old 07-31-2015, 10:05 PM   #42
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Originally Posted by utrecht View Post
If you wreck the car driving out of the dealership you're going to be upside down no matter if you bought or leased or how much you put down.

You're statement is the same as saying never pay cash for a car.
The difference is GAP insurance is included (or you should definitely get from your insurance company) with 95% of the leases. Your $4500 is gone if it's totaled. If you only put minimum down (about $1200 down) and total it, your out $1200 and you don't owe anybody anymore money.

link on why not to

BTW I'm all for leasing and lease one of my cars.
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Old 08-01-2015, 07:13 AM   #43
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Yeah, your maintenance isn't 'free', but included in the deal. Minor point perhaps, but still...

Sent from my mobile device so please excuse grammatical errors.
If I was 10 seconds from agreeing to the deal, but then pushed further and got him to throw in the maintenance package at the same price, then its free. Or of you want to work backwards, I paid for it but got the car $829 cheaper than I stated in my OP making the car an even better deal.
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Old 08-01-2015, 07:39 AM   #44
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We only drive about 10,000 miles a year and the lease allows me 12,000. All in, then lease sounds like a sensible deal to me. What am I missing?
Smallish observations:
-- If I own cars, I don't much think about what the odometer reads. If I want to drive cross country to see someone, I have the freedom to do that without concern that I might cross some imaginary hard line and have to start paying somebody a special charge.
-- Flexibility at the endgame. If we have high unforeseen expenses (big medical bills, etc), I'm going to want to cut back somewhere else to make ends meet and avoid selling off too many assets and putting myself in a higher tax bracket. Similarly, if the market has crumped, I may want to reduce my withdrawals a bit for a few years to give assets a chance to recover. Or maybe there's a new model of some car I'd really like, but it won't be here for another year. In all these cases, if I own my vehicle I can just ask it to soldier on for another year or two without the hassle and expense of buying/leasing another car.
-- Again, another small thing, but a car I've owned for awhile has more value to me than another used car of similar stated value. If I've driven and maintained a car I know how it has been used and cared for, know its quirks and how I fixed them last time, etc. That's valuable information. If I buy a "replacement" used car (same model, same year), I'm starting with more uncertainty, and that makes it worth less to me. This argues in favor of owning rather than leasing, because I really can't obtain a similar replacement car at the end of the lease period for the stated retained value of the lease car.
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Old 08-01-2015, 08:23 AM   #45
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Quote:
Smallish observations:
-- If I own cars, I don't much think about what the odometer reads. If I want to drive cross country to see someone, I have the freedom to do that without concern that I might cross some imaginary hard line and have to start paying somebody a special charge.
-- Flexibility at the endgame. If we have high unforeseen expenses (big medical bills, etc), I'm going to want to cut back somewhere else to make ends meet and avoid selling off too many assets and putting myself in a higher tax bracket. Similarly, if the market has crumped, I may want to reduce my withdrawals a bit for a few years to give assets a chance to recover. Or maybe there's a new model of some car I'd really like, but it won't be here for another year. In all these cases, if I own my vehicle I can just ask it to soldier on for another year or two without the hassle and expense of buying/leasing another car.
-- Again, another small thing, but a car I've owned for awhile has more value to me than another used car of similar stated value. If I've driven and maintained a car I know how it has been used and cared for, know its quirks and how I fixed them last time, etc. That's valuable information. If I buy a "replacement" used car (same model, same year), I'm starting with more uncertainty, and that makes it worth less to me. This argues in favor of owning rather than leasing, because I really can't obtain a similar replacement car at the end of the lease period for the stated retained value of the lease car.
+1

I have leased on two occasions and didn't like it because I came to the conclusion that leasing limits my "freedom" to do what I want. We were always watching the mileage (don't drive to much or incur penalties, don't drive to little or you're leaving money on the table). Then the lease terminated and we had to consider getting a different vehicle even though we really didn't want to make at that particular time. I know there are some "work arounds" for some of these issues but it seemed like the lease took the focus off of me and what I wanted to do and moved it to the seller. Also, I think it's very easy to get into a lease arrangement and more difficult to get out of the lease cycle because you have no equity in the vehicle.
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Old 08-01-2015, 08:35 AM   #46
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I knew this would turn into "I dont like leases because...xyz". This is my first lease and I wont know for a while if I will do it again or not, but the purpose of the thread was to show that leasing and buying (with the full intention of selling or trading in 3 years) cost about the same. In fact leasing tends to be cheaper. If you don't like to lease for any number of reasons, I can see that, but it shouldn't be because it costs more. Ive heard for years that leasing costs too much because you are paying for a car you will never own but Ive shown that's false.

Again, this only applies if you know you want a brand new car every 3 yrs or so.
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Old 08-01-2015, 08:49 AM   #47
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Great discussion as usual. Nothing to add ..
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Old 08-01-2015, 09:09 AM   #48
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Originally Posted by utrecht View Post
I knew this would turn into "I dont like leases because...xyz". This is my first lease and I wont know for a while if I will do it again or not, but the purpose of the thread was to show that leasing and buying (with the full intention of selling or trading in 3 years) cost about the same. In fact leasing tends to be cheaper. If you don't like to lease for any number of reasons, I can see that, but it shouldn't be because it costs more. Ive heard for years that leasing costs too much because you are paying for a car you will never own but Ive shown that's false.

Again, this only applies if you know you want a brand new car every 3 yrs or so.
Yes, I think the key is the 3 year remark, we bought a new Nissan Altima almost 3 years ago, mileage now about 34K. It has all the added options, a great car that is getting terrific mileage. Bought it at the end of the month from a quota type dealership. Package included free oil and maintenance for the first 36K miles.

We got an email saying they would love to have our car and sell us a new one and they were giving top dollar for trades and offering free DQ gift cards if you got a quote. When we got the free oil change, we got a quote since the grandkids love DQ...we had no intention of getting a new car. The trade value of our car seemed a little low so just for the heck of it we had the sales guy calculate what a lease on that car would cost. The number he gave us for the lease was within a couple bucks a month of the depreciation charge they were taking against our 33 month old car. This was for the total amount of the lease with all payments, taxes, and cash payments included.

We intend to keep this car for probably at least 5 more years, but at the 3 year mark not much difference at all in the monthly cost to own.
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Old 08-01-2015, 09:32 AM   #49
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Smallish observations:....
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Originally Posted by misanman View Post
+1....
I agree with your observations. In this case, I'm looking at the lease as just an alternative from of paying for the car (small up front and modest monthly payments over time with a bullet after 3 years for the lease vs all up front for the buy), so many of your observations would be not applicable (I'll know the history of the car, any residual buyout is a null since it was pay it now or pay it later and the amount isn't going to break the bank, etc.

If I take the lease cash outflows assuming I buy the car at the end of the lease term compared to the upfront cost I get an implicit interest rate of 5.3% and I think my investments will return more than that. What somewhat attracts me to the lease is the flexibility that if I don't like the vehicle after three years I can just walk away and find a vehicle more to my liking whereas if I own it and don't like the vehicle I either need to sell it and deal with the hassles of selling, trade it and take a hit or live with it.

Still thinking about it.
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Old 08-01-2015, 09:37 AM   #50
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I knew this would turn into "I dont like leases because...xyz". This is my first lease and I wont know for a while if I will do it again or not, but the purpose of the thread was to show that leasing and buying (with the full intention of selling or trading in 3 years) cost about the same. In fact leasing tends to be cheaper. If you don't like to lease for any number of reasons, I can see that, but it shouldn't be because it costs more. Ive heard for years that leasing costs too much because you are paying for a car you will never own but Ive shown that's false.

Again, this only applies if you know you want a brand new car every 3 yrs or so.

I have been reading this and will say 'of course'....

Of course leasing and buying is about the same cost for the first 3 years... what else would you expect? When you are leasing, you are paying for the defined use of the car for a 3 year period... they are pretty good at knowing what the cost of that will be and charging you...

Now, if the lease was much higher than owning, they would be no leases.... if the cost of leasing was a lot lower, then why give you that savings when they can make more profit?


The benefit of buying is that you can own the vehicle for many years and save money over the long haul...

Others have pointed out the other problems with leasing that are there, but you might not care... if you get a dink or a scratch you might not care, but with a lease you do... if you drive too much or too little you might not care.... with a lease you might... when it comes to the end of a lease you might not be ready to get a new vehicle, but you must...

The benefit that I see the most is that it takes hassle out of the game...
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Old 08-01-2015, 09:48 AM   #51
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I thought leasing would cost more, even for the first 3 yrs and apparently a lot of people here still do even after a couple of examples were laid out.

I still think there would be plenty of leases even if it cost more than buying. The main thing most people see is that the monthly payments are smaller on a lease and they can drive a more expensive car. Most people cant balance a budget, let alone calculate total cost of owning or leasing a car. They just know their payments are significantly lower if they lease.

On my car the lease payments are about $300 per month lower they would be if I bought. If they were only $150 lower, the lease would cost much more than buying, but I still think a lot of people would still lease because all they see is themselves in a fancier car.
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Old 08-01-2015, 10:39 AM   #52
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I still think there would be plenty of leases even if it cost more than buying. The main thing most people see is that the monthly payments are smaller on a lease and they can drive a more expensive car. Most people cant balance a budget, let alone calculate total cost of owning or leasing a car. They just know their payments are significantly lower if they lease.

On my car the lease payments are about $300 per month lower they would be if I bought. If they were only $150 lower, the lease would cost much more than buying, but I still think a lot of people would still lease because all they see is themselves in a fancier car.
Nail meet hammer. I'm a young looking guy, and am actually still pretty young anyway. Every time I've walked into a dealership in shorts, flip flops, etc., the first question is "what kind of monthly payment are you looking for?" I assume this is the case for most folks who walk into dealerships. I usually let them continue down that road and see what all they'll offer me knowing full well if I sign on for their ridiculous financing, I'm just going to pay it off in the first month, taking their big rebate or whatever for doing so.

As I once read in some book at some point, the difference between the wealthy (and most everyone on this forum is or will be, relatively speaking) and the average person is that the average person thinks in terms of monthly inflows and outflows - they live paycheck to paycheck and think about money in terms of salary vs. monthly bills; the wealthy think about money in terms of net worth.

One is a short-term perspective (and is often very necessary to make ends meet); one is not. Leasing - with its lower monthly outflow - will almost always appeal to the person of that mindset, regardless of the long term "net worth" implications.
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Old 08-01-2015, 11:15 AM   #53
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Smallish observations:
-- If I own cars, I don't much think about what the odometer reads. If I want to drive cross country to see someone, I have the freedom to do that without concern that I might cross some imaginary hard line and have to start paying somebody a special charge.
-- Flexibility at the endgame. If we have high unforeseen expenses (big medical bills, etc), I'm going to want to cut back somewhere else to make ends meet and avoid selling off too many assets and putting myself in a higher tax bracket. Similarly, if the market has crumped, I may want to reduce my withdrawals a bit for a few years to give assets a chance to recover. Or maybe there's a new model of some car I'd really like, but it won't be here for another year. In all these cases, if I own my vehicle I can just ask it to soldier on for another year or two without the hassle and expense of buying/leasing another car.
-- Again, another small thing, but a car I've owned for awhile has more value to me than another used car of similar stated value. If I've driven and maintained a car I know how it has been used and cared for, know its quirks and how I fixed them last time, etc. That's valuable information. If I buy a "replacement" used car (same model, same year), I'm starting with more uncertainty, and that makes it worth less to me. This argues in favor of owning rather than leasing, because I really can't obtain a similar replacement car at the end of the lease period for the stated retained value of the lease car.
+2

And if I park it at local grocery store and somebody bangs/scratches it a bit I don't give a &$#@ because nobody will charge me for that at the end of the lease.

So that kinda gives me lower "mental" cost if I own a car.
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Old 08-01-2015, 11:27 AM   #54
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I thought leasing would cost more, even for the first 3 yrs and apparently a lot of people here still do even after a couple of examples were laid out.

I still think there would be plenty of leases even if it cost more than buying. The main thing most people see is that the monthly payments are smaller on a lease and they can drive a more expensive car. Most people cant balance a budget, let alone calculate total cost of owning or leasing a car. They just know their payments are significantly lower if they lease.

On my car the lease payments are about $300 per month lower they would be if I bought. If they were only $150 lower, the lease would cost much more than buying, but I still think a lot of people would still lease because all they see is themselves in a fancier car.
I think anyone remotely savvy about car-buying knows that there are plenty of heavily subsidized leases out there that make it a better deal vs. buying if you want a new car every 2-3 years (and put up with the other hassles of leasing mentioned here). E.g. I've seen recent ads for Jettas and Passats around $100 a month with $2k or so down, no way you're going to touch that buying.

For normal leases I think it's pretty much a wash, which is what I consider your $1k diff to be for a $46k car.

I also find that there are way better deals to be had on 2-3 year old off-lease vehicles and that's my market, I'd rather someone else take the new car hit.
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Old 08-01-2015, 11:31 AM   #55
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I agree with your observations. In this case, I'm looking at the lease as just an alternative from of paying for the car (small up front and modest monthly payments over time with a bullet after 3 years for the lease vs all up front for the buy), so many of your observations would be not applicable (I'll know the history of the car, any residual buyout is a null since it was pay it now or pay it later and the amount isn't going to break the bank, etc.

If I take the lease cash outflows assuming I buy the car at the end of the lease term compared to the upfront cost I get an implicit interest rate of 5.3% and I think my investments will return more than that. What somewhat attracts me to the lease is the flexibility that if I don't like the vehicle after three years I can just walk away and find a vehicle more to my liking whereas if I own it and don't like the vehicle I either need to sell it and deal with the hassles of selling, trade it and take a hit or live with it.

Still thinking about it.
Having mortgage loans or car loans under assumption that I will earn more in my investments does not make much sense to me.

It is like investing on margin... because I will earn more than margin interest.

BTW you can sell car on craigslist pretty easily (If you have title to it)
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Old 08-01-2015, 11:49 AM   #56
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I thought leasing would cost more, even for the first 3 yrs and apparently a lot of people here still do even after a couple of examples were laid out.

I still think there would be plenty of leases even if it cost more than buying. The main thing most people see is that the monthly payments are smaller on a lease and they can drive a more expensive car. Most people cant balance a budget, let alone calculate total cost of owning or leasing a car. They just know their payments are significantly lower if they lease.

On my car the lease payments are about $300 per month lower they would be if I bought. If they were only $150 lower, the lease would cost much more than buying, but I still think a lot of people would still lease because all they see is themselves in a fancier car.

Well, you could have me on the monthly pmts.... I had a BIL who would say the same thing after buying a new car every 3 years... 'my monthly payments went DOWN'.... well, OK....


But, with a lease you are only paying for the decline in value over the lease... when you buy a car you are paying for the whole car in a shorter time frame than its life expectancy.... now, most people are underwater on car loans because their value is dropping so much more in the early years than the later...


The thing is.... I do think that most people who lease are paying up for the lease... they do not negotiate price... they see the monthly pmts and can hack it so they sign... so they might be paying a thousand or more than they needed to pay....
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Old 08-01-2015, 12:49 PM   #57
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I think anyone remotely savvy about car-buying knows that there are plenty of heavily subsidized leases out there that make it a better deal vs. buying if you want a new car every 2-3 years (and put up with the other hassles of leasing mentioned here). E.g. I've seen recent ads for Jettas and Passats around $100 a month with $2k or so down, no way you're going to touch that buying.

For normal leases I think it's pretty much a wash, which is what I consider your $1k diff to be for a $46k car.

I also find that there are way better deals to be had on 2-3 year old off-lease vehicles and that's my market, I'd rather someone else take the new car hit.
I would agree that if you don't mind a gently used car, buying one coming off lease is probably the best way to go.
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Old 08-01-2015, 01:12 PM   #58
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If I have GAP insurance, does it ensure that I pay nothing at the end of the lease (other than the surrender fee or excessive mileage)? In other words, if my car has any large dings, dents, scratches, gets wrecked, someone keys it, the seats are excessively worn or whatever else could cause the car to be worth less than expected when I return it, does the GAP insurance cover all of that?
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Old 08-01-2015, 01:25 PM   #59
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If I have GAP insurance, does it ensure that I pay nothing at the end of the lease (other than the surrender fee or excessive mileage)? In other words, if my car has any large dings, dents, scratches, gets wrecked, someone keys it, the seats are excessively worn or whatever else could cause the car to be worth less than expected when I return it, does the GAP insurance cover all of that?
I believe exclusions and coverages will all be spelled out in the GAP insurance policy.
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Old 08-01-2015, 02:31 PM   #60
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Having mortgage loans or car loans under assumption that I will earn more in my investments does not make much sense to me.....
Let me see if I can make sense of it for you. I refinanced just before I stopped working. My loan rate is 3.375%. Since the day I refinanced, my portfolio has earned 10.22% per annum according to Quicken. I'm way ahead. Even if we had a 20% correction tomorrow I would be way ahead.

If I lease the car rather than buy it I'll have ~$22k still invested that I would not have if I buy. The interest rate implicit in the lease payments and residual is 5.3%. It is simple leverage. I'm confident that my portfolio will earn more than 5.3% a year over the next 3 years but i concede that there is a small chance that it might not, but I'm willing to take the risk given the likely reward.

It is a little different from buying on margin. If I buy on margin, I borrow to buy more. With the car lease, I "borrow" to keep from liquidating some of what I currently own. In both cases, these 'bets" are modest compared to my NW so if they go sideways or even south it is not the end of the world.
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