Buy or lease new luxury suv?

[Qs Laptop]

Another thing to consider, especially when talking about upwards of a $90,000 cash outlay, if buying, is tying all that money (in one lump) on a depreciable asset. Consider keeping the $90,000 invested somewhere safe, earning maybe 3% or 4%. That would earn you $225 to $300 per month. If you lease a vehicle you can consider that interest earned to help defray the cost of the monthly lease payment and you would still have access to the cash if you needed it.

 

[TrvlBug]

This thread has me thinking. We’ve generally been buy and hold car owners and currently we both have 2007 cars - a Lexus sedan and a Toyota convertible. Both are still great cars and we aren’t in the market anytime soon to replace either. We thought we might go down to one car and buy sometime in the future, but maybe leasing is actually better with all the technological changes and also the move towards EV. Hmmm…

This is what DH and I have now decided to do. We'll be replacing the SUV probably next year. The one on our short list is planning a complete redo for 2023 so we may wait until then.

I ran the lease numbers for the Tesla X and , a 3 year lease would have us pay 50% of the car's cash cost (includes taxes assuming 100% of car's value is taxed during a lease). I checked KBB for a 3 year old X value and come up with approx. 75% of it's new value. Don't know how much of that is due to current circumstances, but would think the Teslas wouldn't depreciate as much as other luxury cars. If we go with the Tesla, we'd buy instead of lease.

 

[donheff]

I was a buy and holder until 3 years ago when I leased a Lexus hybrid SUV. My justification was that I want to have the latest tech and, at 72, it’s time to blow that dough. When the lease expired the new model was not much improved - next years model will have the new tech. No other options thrilled me. So I bought out the lease for less than I could sell it for in this market. I suspect the 2022 model will be unobtainable so I will probably wait for 2023 and start the whole analysis over.

 

[Qs Laptop]

I was a buy and holder until 3 years ago when I leased a Lexus hybrid SUV. My justification was that I want to have the latest tech and, at 72, it’s time to blow that dough. When the lease expired the new model was not much improved - next years model will have the new tech. No other options thrilled me. So I bought out the lease for less than I could sell it for in this market. I suspect the 2022 model will be unobtainable so I will probably wait for 2023 and start the whole analysis over.

It is a crazy vehicle market this year. I ended up buying my leased Ram 1500 because the buyout price was $7,000 less than the book value and because of Covid I had only used 50% of my allotted miles. I shopped it around before my lease was coming due and got offers from Carvana and local dealers of $5,500 to $6,000 above my buyout number.

 

[l8_apex]

1 - Congrats on your success such that you can make this kind of decision
2 - I'm in the camp of people who think the auto industry is undergoing major changes
2a - Self-driving cars are on the horizon. Even though I enjoy driving, I know this is a big deal and a game changer.
2b - Don't count on gas prices to stay where they're at, and don't count of them going down. It's only getting more difficult to extract oil from the earth.

If the financial details look similar, I'd definitely go with a lease, knowing that 3 years from now you can easily turn it in and go with something different. If the price of gas doubles to say $7/gallon, will you still want to drive that big SUV? If electric vehicles are mainstream and the quick charge issue is solved, would you want that? If self-driving is mainstream, what about that?

I've never leased a vehicle in my life, but I'd certainly be strongly considering it right now.

 

[RetiredHappy]

I look at it from a different perspective. Assuming you are living off a nice pension and you are not living off the invested $1.6M, then just buy a car that you have set your mind on. I wouldn't worry about resale value, own vs, lease, gas vs EV. As your broker said, you can't take it with you. Just make sure that this is the car that you really like and the features are what you think they are.

Each time we buy a car we intend to keep it for a long time, pay cash and buy the extended warranty for 100K miles and 7 years but we have always traded in the car after 3 years and get a refund on the balance of the warranty. The big mistake was buying a Lexus brand new and hating it and selling it off in less than a year. We lost $25K on that car for a stupid buying decision because the features we thought the car had, were similar to our previous cars, but we were sorely dissapointed with the inferior car, in our opinion.

 

[WhenIsItTime]

You can model the financials based on lease vs buy, your intended duration to own and depreciation assumptions. Outside that, you are just getting emotional opinions.

I do this with each new vehicle transaction. Lease only made sense once and that was 20 years ago.