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Message
Trading in a vehicle every couple years vs leasing
Posted on 8/20/17 at 12:00 pm
Posted on 8/20/17 at 12:00 pm
Overhead a conversation where an older guy saying that he has always just traded in his trucks for newer ones over the years. He said the first one he paid down quickly and had equity. He was saying he doesn't trade too much up and he ends up financing the same amount and his note stays below $300.
This seems like an interesting strategy vs leasing.
This seems like an interesting strategy vs leasing.
4
Posted on 8/20/17 at 12:03 pm to LSU6262
How does having a note in perpetuity seem
interesting or desirable?
interesting or desirable?
Posted on 8/20/17 at 12:10 pm to LSU6262
I don't ever consider having "equity" in a vehicle
Just an expense.
I'm more of a get a vehicle and drive it until it blows up kind of guy
Just an expense.
I'm more of a get a vehicle and drive it until it blows up kind of guy
Posted on 8/20/17 at 12:11 pm to LSU6262
It's the primary reason to lease.
Leasing should reduce the cash flow required in this situation. Provided he meets the mileage and maintenance requirements (leasing a work truck that will incur jobsite damage is not a great idea).
If planning to keep a vehicle long term, or buying used, leasing is not financially competitive. But if you trade in often for a new vehicle, it can make a lot of sense.
Leasing should reduce the cash flow required in this situation. Provided he meets the mileage and maintenance requirements (leasing a work truck that will incur jobsite damage is not a great idea).
If planning to keep a vehicle long term, or buying used, leasing is not financially competitive. But if you trade in often for a new vehicle, it can make a lot of sense.
Posted on 8/20/17 at 12:14 pm to schexyoung
quote:
How does having a note in perpetuity seem
interesting or desirable?
It's not desirable to me, but I find it interesting that this guy wants a new vehicle every year and trades in instead of leasing
Posted on 8/20/17 at 1:04 pm to LSU6262
When someone talks about "equity" in a vehicle....
I would not hire him as a financial advisor.
I would not hire him as a financial advisor.
Posted on 8/20/17 at 1:17 pm to ItzMe1972
For those not understanding the concept of replacing vehicles frequently, some companies who provide a car allowance require the car be no older than 4/5 model years and must have under a certain amount of miles (ex. 100k). I'm not saying this is the reason for this particular gentlemen's reasoning, but it is fairly common for those who use their vehicle for work.
The other reason could be the guy has a lot of disposable income and likes the new car smell. I know a guy who owns outright a few houses and has plenty of money invested. He also enjoys getting a new car every 12 months.
The other reason could be the guy has a lot of disposable income and likes the new car smell. I know a guy who owns outright a few houses and has plenty of money invested. He also enjoys getting a new car every 12 months.
Posted on 8/20/17 at 1:26 pm to LSU6262
depends on the type of vehicle too, I don't know the leasing situation for trucks, other vehicles such as BMW's have great leasing program because its a core part of their business strategy to feed into their CPO program.
Posted on 8/20/17 at 4:02 pm to LSUtigerME
quote:
mileage
This is what matters. Either you are low mileage enough to take advantage of leasing or you are not.
Posted on 8/20/17 at 10:20 pm to barry
quote:
depends on the type of vehicle too, I don't know the leasing situation for trucks, other vehicles such as BMW's have great leasing program because its a core part of their business strategy to feed into their CPO program.
This. Some cars lease great, and some horribly.
Also, there's nothing wrong with wanting a new car every few years. With as much time as some people spend in their cars, it makes sense to want all the latest n greatest bells & whistles.
This post was edited on 8/20/17 at 11:09 pm
Posted on 8/21/17 at 10:30 am to 632627
The main issue not mentioned, is sales tax. In most states you only pay sales tax on a lease on your payments. So on say a $50k car that really adds up! 10% sales tax would be $5,000. If you are paying that every 2 years as opposed to say $1,000-1500 on a $10,000-15,000 lease cost?
If all else is the same as in your mileage and usage would work with a lease, you would be better off leasing due to no sales tax upon purchase many times not to mention the huge hit in depreciation.
Now, if you want a "newish" car regularly and drive higher miles then you can do very well by getting 2-3 old vehicles with $20-40k miles and trading them back in when they hit 75-80kish miles.
If all else is the same as in your mileage and usage would work with a lease, you would be better off leasing due to no sales tax upon purchase many times not to mention the huge hit in depreciation.
Now, if you want a "newish" car regularly and drive higher miles then you can do very well by getting 2-3 old vehicles with $20-40k miles and trading them back in when they hit 75-80kish miles.
Posted on 8/21/17 at 11:45 am to baldona
quote:In many states you get tax value on your trade. If you pay 50k and trade in for 30, you get 3k or so off the taxes of your new car. You are paying taxes on the depreciation of the car, same as a lease.
The main issue not mentioned, is sales tax. In most states you only pay sales tax on a lease on your payments. So on say a $50k car that really adds up! 10% sales tax would be $5,000. If you are paying that every 2 years as opposed to say $1,000-1500 on a $10,000-15,000 lease cost?
Posted on 8/21/17 at 12:51 pm to HailToTheChiz
quote:
I'm more of a get a vehicle and drive it until it blows up kind of guy
Fine if you just use it around town. I'm wary of making a big trip in a high mileage vehicle.
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