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re: Advice about leasing a car?
Posted on 4/15/14 at 7:59 pm to foshizzle
Posted on 4/15/14 at 7:59 pm to foshizzle
I have heard many lease aficionados claim that those who purchase rather than lease somehow are more greatly negatively affected by depreciation. Depreciation must be addressed in any deal; when one is in essence "borrrows" a vehicle, the lender must stringently protect their interests. A bank in a purchase scenario only worries about the vehicle's mileage and condition if there's a default. Protection in a business deal ain't free. I wonder who pays for the extra protection? The lessee.
That's why to make a personal lease work one must be able to legitimately be able to show the vehicle as a business tool or have a few other extenuating fiscal situations. And that ability is rare (<10% of folks).
That's why to make a personal lease work one must be able to legitimately be able to show the vehicle as a business tool or have a few other extenuating fiscal situations. And that ability is rare (<10% of folks).
1
Posted on 4/15/14 at 8:23 pm to soccerfüt
It appears that purchasing a "demo" car is the best financial option, especially if you are able to get a low interest rate on the financing
Posted on 4/16/14 at 7:24 am to Tomcat
Bingo. As a archetypical OT baller, I haven't done so since the early 90s, but it is the smartest play. Let someone else take the horrible depreciation for the first year or two. The problem is not getting the wrong used car with baby diapers and vomit under the seats or the previous owner's name was John Wayne Gacy.
Posted on 4/16/14 at 8:50 am to OldManRiver
quote:
You're the one who can't afford to buy one and has to lease it
It is funny how people jump to this conclusion so quickly. News flash, there are tons of high net worth individuals that lease vehicles. It's not always about not being able to afford the purchase.
Posted on 4/16/14 at 10:19 am to Douboy
I seem the same arguments in articles and forums about buying or leasing a house.
The fact is this: everyone has their own situation to deal with. Everyone has their own needs, wants, resources, etc.
To say leasing a car is "always right" or "always wrong" is quite ignorant. Just like saying people should always own a house vs renting a house is quite ignorant.
Trust me, there were a lot of people a few years ago, with underwater homes, that lost their jobs, that wanted to move out of town or out of state for a new job, that sure as heck wished they were only renting vs owning their home.
To the OP, I've never leased a car (my personal preference is I'm enjoying not having a car note right now since my car is paid off). But, I would think you would want to do the same things as if you were buying a car - research, test drive, push for a hard bargain, etc. Know your preferences, know the terminology (is a 12K mileage cap right for you, etc).
The fact is this: everyone has their own situation to deal with. Everyone has their own needs, wants, resources, etc.
To say leasing a car is "always right" or "always wrong" is quite ignorant. Just like saying people should always own a house vs renting a house is quite ignorant.
Trust me, there were a lot of people a few years ago, with underwater homes, that lost their jobs, that wanted to move out of town or out of state for a new job, that sure as heck wished they were only renting vs owning their home.
To the OP, I've never leased a car (my personal preference is I'm enjoying not having a car note right now since my car is paid off). But, I would think you would want to do the same things as if you were buying a car - research, test drive, push for a hard bargain, etc. Know your preferences, know the terminology (is a 12K mileage cap right for you, etc).
Posted on 4/19/14 at 4:41 pm to YStar
Personally, I think it's stupid to buy a car when you could lease a car, give yourself an out, and still buy the car at the end of the lease and be out of pocket for the exact same amount that you would have paid had you bought up front with no option to walk away. It's a no-brainer...anyone that thinks car leasing is like renting doesn't know what they're talking about. Leasing a car is not at all the same as leasing a home/apt.
Example...I can buy a car for 40,000, or I can lease the same car and pay 18,000 in lease payments over 3 years and then buy the car for the 22,000 residual which is set from the beginning on all leases (all a car lease is is paying the depreciation on the car). Obviously, I also have the additional option of walking.
Either way you spent $40,000 on the car...one way you were locked in and the other way you had options. The choice is obvious.
I did not include interest because you're paying interest either way, lease vs buy up front, not to mention rates are basically nothing right now anyway.
I have certainly oversimplified here, but my main point is this... Most people have no clue how a car lease works, and think it's like "renting" vs owning" . It is very different and most people could help themselves by taking the time to learn about leasing a car, because it is the way to go 9 out of 10 times.
And if you use your car for work (either self employed or no reimbursement at work), then you also get tax benefits from leasing as you can deduct all expenditures for the car, including the ENTIRE lease pmt amount.
Example...I can buy a car for 40,000, or I can lease the same car and pay 18,000 in lease payments over 3 years and then buy the car for the 22,000 residual which is set from the beginning on all leases (all a car lease is is paying the depreciation on the car). Obviously, I also have the additional option of walking.
Either way you spent $40,000 on the car...one way you were locked in and the other way you had options. The choice is obvious.
I did not include interest because you're paying interest either way, lease vs buy up front, not to mention rates are basically nothing right now anyway.
I have certainly oversimplified here, but my main point is this... Most people have no clue how a car lease works, and think it's like "renting" vs owning" . It is very different and most people could help themselves by taking the time to learn about leasing a car, because it is the way to go 9 out of 10 times.
And if you use your car for work (either self employed or no reimbursement at work), then you also get tax benefits from leasing as you can deduct all expenditures for the car, including the ENTIRE lease pmt amount.
This post was edited on 4/19/14 at 4:44 pm
Posted on 4/19/14 at 5:51 pm to JPLSU1981
How do the taxes work with a lease??
Posted on 4/19/14 at 6:02 pm to JPLSU1981
You have way over-simplified; leases are based on mileage and vehicle condition limits, no leasing company will design and agree to a 36 month lease on a vehicle that will put them (the leasing company) at exactly the same position as someone who paid three years on the same vehicle.
A leasing company HAS to be right-side up at the end of the term; they do that one of two ways: higher payments to keep ahead of the actual value curve of the depreciating asset (the vehicle) or setting a high residual value. Either way, the lessor stays ahead of the lessee.
Like the Carnies say "Nobody rides for free.".
If leasing were such a great deal for a majority of folks, a bunch more folks would have them. For < 10% of folks are they a good deal; for the rest of us, nope.
A leasing company HAS to be right-side up at the end of the term; they do that one of two ways: higher payments to keep ahead of the actual value curve of the depreciating asset (the vehicle) or setting a high residual value. Either way, the lessor stays ahead of the lessee.
Like the Carnies say "Nobody rides for free.".
If leasing were such a great deal for a majority of folks, a bunch more folks would have them. For < 10% of folks are they a good deal; for the rest of us, nope.
Posted on 4/19/14 at 6:29 pm to soccerfüt
Depreciation (your lease payments) + residual = total value of car.
If they set a high residual, your payments are lower. If they set a low residual, your lease payments are higher. In either case, it is basically dollar-for-dollar increase/decrease.. In either case, and excluding interest of course, depreciation + residual = the value of the new car.
All one is paying for when leasing is the depreciation. You don't pay "extra." You will be out exactly the same amount of money when you buy as the person that bought up front.
Most folks have the wrong perception of car leases, and don't truly know how they work. Most people simply think you're renting a car and have nothing to show for it at lease end.
If they set a high residual, your payments are lower. If they set a low residual, your lease payments are higher. In either case, it is basically dollar-for-dollar increase/decrease.. In either case, and excluding interest of course, depreciation + residual = the value of the new car.
All one is paying for when leasing is the depreciation. You don't pay "extra." You will be out exactly the same amount of money when you buy as the person that bought up front.
quote:
If leasing were such a great deal for a majority of folks, a bunch more folks would have them.
Most folks have the wrong perception of car leases, and don't truly know how they work. Most people simply think you're renting a car and have nothing to show for it at lease end.
This post was edited on 4/19/14 at 6:37 pm
Posted on 4/20/14 at 1:05 am to BACONisMEATcandy
quote:
I have never looked into leasing but how would that help? I'm confused and am sure I'm missing something
a lease is renting a car. your payment is the predetermined depreciation(residual) of the sale price plus interest(money factor). the money factor is interest paid on the depreciation and the loan(monthly payments). a one pay lease lowers the money factor by eliminating interest on the loan.
some vehicles have better lease programs as they either decrease the depreciation, lower the money factor, or both.
either way, the first thing to determine is sale price of the car.
for best lease programs, the edmunds user forums are pretty helpful.
Posted on 4/20/14 at 5:12 pm to JPLSU1981
quote:
And if you use your car for work (either self employed or no reimbursement at work), then you also get tax benefits from leasing as you can deduct all expenditures for the car, including the ENTIRE lease pmt amount.
That's me. Do you know what the difference is between leasing and buying on that? Just wondering. You still get tax benefits even if you buy a car, right?
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