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Message
re: Current Car Lease Deals
Posted on 6/5/15 at 5:42 pm to Htown Tiger
Posted on 6/5/15 at 5:42 pm to Htown Tiger
quote:
I know many are against leasing. I spent a couple of days going over the debate with myself and have kind of settled on leasing for now. Oddly enough, I agree buying is probably the better 'investment', but when I crunch the numbers it doesnt come out to be a huge difference, and I do kind of like the idea of a newer vehicle every few years.
A car is a depreciating asset so it shouldn't be viewed as an investment at all. If you like the idea of having a new car every 3 years, and won't mind always having a payment, than leasing is fine.
Not all leases are the same either, some luxury manufacturers, primarily mercedes, Lexus and bmw, artificially inflate the residuals to make their lease deals more attractive and keep the payments relatively low. Audi doesn't do this. that's why a $60k a6 leases for $700 a month and a $60k Benz e class is closer to $550. These are luxury items and are expensive to maintain, if everybody wanted to make the smart financial decision when car buying, everyone would be driving a used Honda Civic.
Leasing doesn't work for everyone, and on the flip side not everybody wants to drive around a $10k entry level Honda or Toyota.
Edit- one thing that needs to be clarified, the residual value is not negotiable, it is set by the finance company. There are different residuals based on mileage allowance and possibly trim levels, so a dealer might be playing games by quoting you a different residual so it leaves him room to negotiate, but you can bypass this by knowing the residual of the lease deal ahead of time. Same goes for the money factor, there is a base mf that dealers can markup for extra profit, but u can't go below what the finance company sets. Edmunds forums are very helpful in finding out the residual and mf of many different makes and models.
This post was edited on 6/5/15 at 5:49 pm
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Posted on 6/6/15 at 1:55 am to Will Cover
So if you go in to lease a car, how are you supposed to know what's a fair payment? You mention going in and acting as though you'll buy it and get that price and then work backwards. Ok, so let's say the car is $50k to buy. Now you say, I want to lease it based on that price. How does the payment get worked out? In other words, how do you break down the $50k car into payments over only 3 years and know they're not adding in all kinds of "fees"? Also, aren't most of these leases just set up already with a certain price/payment?
I'm 1099 so I'm going to lease a car sometime soon. It makes more sense than buying for tax benefits, correct? I don't care about having a new car every 3 years (not that I mind) but I will drive about 10-12k miles a year and need deductions. All that stuff you mentioned in your first post, I have no clue WTF any of that means
and not sure how I would even get those numbers?
Any help would be appreciated by you guys
Eta: residual value, capitalized value, and money factor; where the hell do I find this info?
I'm 1099 so I'm going to lease a car sometime soon. It makes more sense than buying for tax benefits, correct? I don't care about having a new car every 3 years (not that I mind) but I will drive about 10-12k miles a year and need deductions. All that stuff you mentioned in your first post, I have no clue WTF any of that means
and not sure how I would even get those numbers? Any help would be appreciated by you guys
Eta: residual value, capitalized value, and money factor; where the hell do I find this info?
This post was edited on 6/6/15 at 1:58 am
Posted on 6/6/15 at 8:50 am to Sho Nuff
quote:
I'm 1099 so I'm going to lease a car sometime soon. It makes more sense than buying for tax benefits, correct?
You can deduct business use of vehicle either way (buying or leasing) depending on what kind of vehicle you buy sometimes there are tax incentives such as advanced deprecation for buying certain types of vehicles
Posted on 6/6/15 at 9:14 am to Sho Nuff
Lease Guide
I'm pretty sure that's the site I used for all my initial learning about leases. I'm also a math guy, so I could take a lot of the info and run with it on my own calculations, as well as take the promotional lease offers and back out information, etc.
A lease is actually pretty simple in theory. Payment is divided into 2 parts, lease payment and finance fee. ETA: Plus tax, which is typically applied to your payment, not the total purchase price.
Lease Payment or Depreciation Fee: (Net Capitalized Cost - Residual)/lease term
Finance Fee: (Net Cap Cost + Residual) * Money Factor
Total Payment is (Depreciation Fee + Finance Fee) * Tax Rate
Net Cap Cost is just the negotiated purchase price minus any incentives and down payment/credits, plus any fees rolled into the loan. Think of it as "the amount financed".
Residual is set by the manufacturer. Money factor is set by finance company (manufacturer). As mentioned previously, Edmunds forums is excellent for obtaining this information for your desired vehicle and trim level. Money Factor is where the dealers will try to play.
I'm not savvy on the tax advantages and when it makes sense. However, leasing will somewhat force your hand into a new car every 3-4 years. If this is not something you want to do (weighing in tax advantages), then you should consider a purchase and long term ownership.
I'm pretty sure that's the site I used for all my initial learning about leases. I'm also a math guy, so I could take a lot of the info and run with it on my own calculations, as well as take the promotional lease offers and back out information, etc.
A lease is actually pretty simple in theory. Payment is divided into 2 parts, lease payment and finance fee. ETA: Plus tax, which is typically applied to your payment, not the total purchase price.
Lease Payment or Depreciation Fee: (Net Capitalized Cost - Residual)/lease term
Finance Fee: (Net Cap Cost + Residual) * Money Factor
Total Payment is (Depreciation Fee + Finance Fee) * Tax Rate
Net Cap Cost is just the negotiated purchase price minus any incentives and down payment/credits, plus any fees rolled into the loan. Think of it as "the amount financed".
Residual is set by the manufacturer. Money factor is set by finance company (manufacturer). As mentioned previously, Edmunds forums is excellent for obtaining this information for your desired vehicle and trim level. Money Factor is where the dealers will try to play.
I'm not savvy on the tax advantages and when it makes sense. However, leasing will somewhat force your hand into a new car every 3-4 years. If this is not something you want to do (weighing in tax advantages), then you should consider a purchase and long term ownership.
This post was edited on 6/6/15 at 9:16 am
Posted on 6/6/15 at 9:36 am to Sho Nuff
quote:
So if you go in to lease a car, how are you supposed to know what's a fair payment? You mention going in and acting as though you'll buy it and get that price and then work backwards. Ok, so let's say the car is $50k to buy. Now you say, I want to lease it based on that price. How does the payment get worked out? In other words, how do you break down the $50k car into payments over only 3 years and know they're not adding in all kinds of "fees"? Also, aren't most of these leases just set up already with a certain price/paymen
This is a great question. You always hear people say to not to specify if you will be buying or leasing and just to negotiate sale price of car. That's all fine and dandy but you could get the greatest price ever, but if that specific model doesn't lease well(low residual, high mf) it still won't be a good deal.
The first step is edmunds forums and browse manufacturers websites. See what cars they are advertising lease promos on. A lease promo can comprise of a few things; inflated residual, lowered mf, or cash incentives. Most leases are closed ended so you don't get stuck with some extra bill at the end for extra depreciation(this is extremely important). Use this knowledge before going to the dealer and negotiate the sale price of the car.
Also what helps is to build a relationship with a specific salesmen. I have a guy that I don't need to play games with, as he tells me what incentives there are, and which models lease out the best.
If you are interested in leasing a luxury brand, it's always the most common models(c class, e class, 3 series) that have the most aggressive lease deals.
Posted on 6/7/15 at 6:18 pm to Tigerpaw123
quote:
You can deduct business use of vehicle either way (buying or leasing) depending on what kind of vehicle you buy sometimes there are tax incentives such as advanced deprecation for buying certain types of vehicles
I was told you are able to deduct more of a % if you lease. I will need to look more into this.
Posted on 6/7/15 at 6:21 pm to LSUtigerME
quote:
I'm pretty sure that's the site I used for all my initial learning about leases.
Thanks, I'll look into it.
quote:
Lease Payment or Depreciation Fee: (Net Capitalized Cost - Residual)/lease term
Finance Fee: (Net Cap Cost + Residual) * Money Factor
Total Payment is (Depreciation Fee + Finance Fee) * Tax Rate
Net Cap Cost is just the negotiated purchase price minus any incentives and down payment/credits, plus any fees rolled into the loan. Think of it as "the amount financed".
Residual is set by the manufacturer. Money factor is set by finance company (manufacturer). As mentioned previously, Edmunds forums is excellent for obtaining this information for your desired vehicle and trim level. Money Factor is where the dealers will try to play.
Yeah, real "simple"
quote:
However, leasing will somewhat force your hand into a new car every 3-4 years. If this is not something you want to do (weighing in tax advantages), then you should consider a purchase and long term ownership.
I like the idea of having everything taken care of and just bringing it in if anything is wrong. A new car every 3 years is pretty cool but I really don't need that. It's more about the tax advantages plain and simple. Well, also you get a nice car for a "cheaper" payment as well. I know that money is gone unlike if I bought the car and I'd at least own it.
Posted on 6/7/15 at 6:24 pm to 632627
quote:
The first step is edmunds forums and browse manufacturers websites. See what cars they are advertising lease promos on. A lease promo can comprise of a few things; inflated residual, lowered mf, or cash incentives. Most leases are closed ended so you don't get stuck with some extra bill at the end for extra depreciation(this is extremely important). Use this knowledge before going to the dealer and negotiate the sale price of the car.
Will look into Edmunds and forums, thanks.
quote:
Also what helps is to build a relationship with a specific salesmen. I have a guy that I don't need to play games with, as he tells me what incentives there are, and which models lease out the best.
In Hawaii, not that many dealerships so they have you a bit there.
quote:
If you are interested in leasing a luxury brand, it's always the most common models(c class, e class, 3 series) that have the most aggressive lease deals.
Will likely look into an Audi/BMW/Infinity/Lexus type luxury sports car.
Posted on 6/7/15 at 10:05 pm to Sho Nuff
Kia is having great lease specials. You get $4k lease cash on k900, some guy leased on last month with luxury V8 package, he put $0 down and pays around $540/mo. Another customer leased a turbo sx-limited optima with $0 down and payment was around $385/mo. GL
Posted on 6/8/15 at 7:46 am to Sho Nuff
quote:
It's more about the tax advantages plain and simple.
Please tell me about these, everyone always says it is better to lease a car for "tax advantages" but when asked what they are, no one answers, maybe you can, what kind of "tax advantage" do you get from leasing a car for a business versus buying a car through a business?
Posted on 6/10/15 at 1:05 pm to Tigerpaw123
Due to these limits, it could take 12 years depreciate all of the cost a vehicle with the original price of $25,000. If you could afford a $60,000 business car, it would take over 30 years for total write-off of its cost (unless it’s a Hummer!).
Now let’s talk about leased vehicles. Since you don’t own the car, you can’t depreciate it but here’s the good news! You can deduct the business percentage of your lease payments. So if your yearly lease payment is $4,200 ($350 / month) and your business use percentage is 80%, you can deduct $3,360 on your tax return for that year...versus $2448.00 on a purchase.
Now let’s talk about leased vehicles. Since you don’t own the car, you can’t depreciate it but here’s the good news! You can deduct the business percentage of your lease payments. So if your yearly lease payment is $4,200 ($350 / month) and your business use percentage is 80%, you can deduct $3,360 on your tax return for that year...versus $2448.00 on a purchase.
Posted on 6/10/15 at 1:17 pm to Coach Guidry
Posted on 6/10/15 at 1:20 pm to blueboxer1119
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