re: Leasing vs Buying a new car

Buying a car and having equity....borrowing a car for thousands of dollars then giving it back.....hmmmm

You can buy a one model year old car, let someone else eat the first years depreciation and actually end up with some equity if you purchase. People always lease to get a lower payment, but never get to a point of being payment free.

Both of my vehicles are paid for. My point is a lot of people talk about never owning a vehicle when you lease yet they trade every few years.

quote:

---

real estate doesn't depreciate the moment you buy it...generally

---

You're right, no it doesn't... A vehicle does depreciate; however, you will get "something" in return for it... A lease you don't get jack shite...

Like I said in a previous post... When we traded in my wife's 09 Acadia, we got 15K for it, and also got the sales tax break on that 15k with the purchase of my new truck... Can you do that with a lease...?

quote:

---

I would say to get your moneys worth it would be to buy a certified pre owned vehicle.

---

I agree with this as well, two previous purchases were cert. pre-owned; however, I bought a new truck in July, It had 10k of incentives off the sticker price, on a vehicle with just 11 miles on it.. Couldn't do that with the pre-owned, and I got a lower apr rating...

Just have to find the best deal that's out there....

This seems to come up every month

quote:

---

You're right, no it doesn't... A vehicle does depreciate; however, you will get "something" in return for it... A lease you don't get jack shite...

---

And you also pay a hell of a lot less over the life of the lease...does your meager trade in value justify the up front additional cost?

That's the big question, and it all hinges on the depreciation of the car and how long you've owned it. If you are trading up every three years, you are going to be very hard pressed to do better than the cash balance numbers of a good lease. If you hang on to your vehicles for a longer time...5+ years or so...then buying might edge out leasing.

This is where the self proclaimed financial gurus will chime in and tell you it's a terrible idea to get a new car every few years. Strictly financially speaking, they're right. If all a car means to you is point A to point B, then get a used Camry, maintain it well, and drive it until the wheels fall off. If you enjoy car ownership and driving, aside from the fact that it enables you to get to work in the morning, then I don't need to tell you that very often automobile purchases are made for just as much subjective reasoning as objective.

quote:

---

With the 15 and 10 K off in incentives, I saved 25k on the MSRP of the new vehicle...

---

No, you saved $10k from the incentives. You put the $15k from your trade in towards the down payment. This then dropped what you owe as the remaining balance on the vehicle by $25k.

While this does drop your monthly payment amount, you still paid that $15k for the new vehicle. With current interest rates being so low you don't save as much over the life of the loan.

Lease works if you anticipate the vehicle will depreciate more than the dealership suggests


That way you can dump it after 3 years and let the dealership deal with the negative equity, and you walk away with nothing owned, which is probably better in that situation.


I'm sure that doesn't happen too often, but was probably more common when they had better leasing deals.

quote:

---

no it doesn't... A vehicle does depreciate; however, you will get "something" in return for it... A lease you don't get jack shite...

---

This isn't necessarily true. It is possible to have equity in a lease when the term expires. Let's say you have a 36 month /15k mileage lease and the residual value is pegged at $25k. You only put 12k mileage per year on it so you're 9k under at lease end. If the vehicle held its value well you could have value of $30k plus on your hands. So you have option of returning the vehicle and using the equity for your next lease purchase, or selling it outright and paying off the lease company and leaving with some money in your pocket.

Now this scenario doesn't happen often but it can and does. I'm currently about 8k under my mileage with about 6 months left in my term. I should have a small amount of equity built up by lease end.

quote:

---

LINK

Good thread from the money board

---

That's a great thread on the subject. There are posters spouting off stupid shite in this thread that need to go read that thread to get a better understanding of leasing vs buying.