Cars--buy or lease?

[FREE866]

Well, a Ford Ranger is 180 degrees different than an Audi!! Hence the turn around.

I'm not a Ford guy, but I still like the direction. These vehicles are widely available with a huge pool of parts and mechanics available to repair, if required. This keeps costs down and readily available.

Gotcha...makes sense...thank you

 

[Koolau]

I had four BMWs. Less maintenance $$$ than our US made cars/SUVs.

Older BMWs? Like 70's? They made 'em pretty good back then. Now, not so sure from what I read but YMMV.

 

[ShokWaveRider]

The simple answer is: If you are going to only keep a car for 3 or 4 years like we do ...... Then Lease. If you are going to keep it till the year DOT, then buy it.

As far as repairs, we have had 10+ leased cars (Lost count) and have NEVER, repeat NEVER had a repair or maintenance bill for any of them. worry free driving.

 

[Aerides]

?
Really we spent almost nothing on BMW maintenance because it’s included. Please offer evidence on your assertion - in detail.

Or not, because it will derail the thread?

 

[Montecfo]

My advice Is based upon following -

- cars are generally depreciating. Losing money in value as well as costs to maintain and use

-car choice is discretionary. From model to year to options

- car financing (lease or monthly) has been shown as one of the ways that middle income struggles to save enough money

So - I suggest a car that is no more than 1/2 of take home pay (regardless of source of money, i.e. inheritance). Especially early in work career - starts them in LBYM. My guess that probably means no Audi for a 21-year-old

To put a finer point in it: I think if you buy a car you can afford to pay cash for and bank the car payment, you will be able to afford a nicer car next time and avoid debt.

My first cars were new but super cheap. I could easily afford payments even in college (working as a waiter).

But then I began paying cash for used cars and have not looked back.

 

[Music Lover]

As far as repairs, we have had 10+ leased cars (Lost count) and have NEVER, repeat NEVER had a repair or maintenance bill for any of them. worry free driving.

Of course you didn't have repair bills. That happens with new cars whether you lease or own.

I have an 8 year old Acura that I bought 5 years ago. It's also has had no repairs, worry free driving. I paid about the same to buy it than what leasing would have cost for 5 years, and I can sell it tomorrow and recoup 40% - 50% of what I paid for it.

If any repairs are required, and they will sooner or later, I'm pretty sure they will be less annually than 12 months of lease payments. But over the last year have paid $0 in repairs and $0 in lease payments.

 

[Out of Steam]

At 21, she should be looking to buy a decent late model used car, maybe 4-5 years old, that she can keep for 10 years. Pay it off in 3 and be payment free for 7, during which time she saves up to buy a better car next time around.

The economics of car buying are very skewed right now. With 7 million or so cars that weren't built for the US market because of the pandemic, late-model used cars are scarce and going to stay that way for several years. That is 10 times the impact of the "Cash for Clunkers" program, and production is still well short of the pre-pandemic baseline.

Even before the pandemic, the ability to save money by buying a three or four year old car for half the price of new was going away. As far as I can see, what's out there has 60% of remaining life for 80% the price of new.

Something like a new Mazda CX-30, Subaru Crosstrek/Impreza, or Toyota Corolla Cross is probably a better deal.

 

[ncbill]

Always buy, never lease and always pay cash for a vehicle.

Leasing is a bad financial option for a couple of reasons: 1) Lease agreements don't have to disclose the interest rate you're paying, which is always higher than if you were to purchase the car and finance it yourself and 2) The basis for the amount you are financing during the lease (based on anticipated residual value) is always higher than the actual value of the vehicle. Studies have shown that on average for a 3 year lease, you're paying the equivalent of a 14% interest rate for financing the value of the vehicle during the lease term.

IIRC, the "money factor" is right there on the lease contract, as is the residual value.

Money factor x 2,400 = interest rate.

Bought out my last leased vehicle since thanks to COVID the residual value ended up much less than market value @ end of lease.

IMHO, there are no great leases (at least in my area) currently but for those who want to learn more head on over to leasehackr [sic] dot com.

 

[shafer9]

She’s young. It’s likely she’ll have an accident.
Seriously. A lease will often be a problem with that. Buy her a dependable, boring used Honda or similar almost beater with some miles on it. Let her take care of it and learn about responsible car ownership.
Audi?? Lol. Dream on, kid.

 

[Retired Expat]

Thx Howie
I should have clarified. I live in nyc. She lives in Connecticutso not city. She wants an Audi. and yeah thinking 5+ years so maybe buying a solid used car is option

Are sites like cars dot com legitimate places to go?
Thx for you help.

In CT Audi’s are common and a good choice if all wheel drive. I bought a 10 year old Q5 with 90 k miles on it and it is great after 4 years now. But be warned they are expensive to repair.

21 year old will be going camping, taking friends around moving so a strong vehicle that can haul stuff makes sense. But she should consider how much driving she will do, fuel costs and the like as well as insurance as it ,th cost more to keep and use the car the pan it costs to buy the thing in the first place….

If going the used route make sure you get the car fax report.,

 

[OldShooter]

IIRC, the "money factor" is right there on the lease contract, as is the residual value.

Money factor x 2,400 = interest rate. ...

Which neatly makes the point that a lease's terms are not made clear to potential customers. How many will know what a "money factor" is? Very few. How many will realize that they are basically taking out a loan, probably an expensive one? Not many IMO.

The goal of the salesperson is to get the mark focused on the payment amount and to obscure the price of the vehicle and the expenses of the lease.

 

[Global Wizzo]

If she drives any significant amount a lease is a bad idea. Couple of spring trips to Fl or winter ski trips and she will owe a fortune.

Buy something solid and she can swap in 5 years.

 

[ShokWaveRider]

Which neatly makes the point that a lease's terms are not made clear to potential customers. How many will know what a "money factor" is? Very few. How many will realize that they are basically taking out a loan, probably an expensive one? Not many IMO.

The goal of the salesperson is to get the mark focused on the payment amount and to obscure the price of the vehicle and the expenses of the lease.

But the smart mark knows better ......... and can capitalize on that approach. Talking from over 25 years of leasing experience.

 

[Qs Laptop]

The goal of the salesperson is to get the mark focused on the payment amount and to obscure the price of the vehicle and the expenses of the lease.

This is also true of used car sales. "How much do you want to spend per month?" is a common question asked by salespeople. So is "if I can meet your monthly payment amount can we sell you the car today?"

 

[WhenIsItTime]

This thread is great example why "If you needed to buy a car, how would you go about it?" is such a good interview question.