Buy Or Leasing Your Personal Vehicle

ultimatetouch

Do you guys buy or lease your personal vehicle and why? I was going to buy an suv but when I look at the loss of driving it off the lot..it seems like a waist.

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Ultimatetouch
Illinois Remodeling Company, Kitchen Remodeling Chicago, Room Additions Illinois

Mike Finley

I've leased probably 8 times. When I bought new and only wanted to keep a vehicle for about 3 years I always leased. Used I financed. The wife has leased probably 5 Honda Accords all of them were nice cars not stripped and the lease payments were around $250 a month. (how could you go wrong!) Unfortunately her Honda days are over.

Keep in mind all lease rates start off being figured based on the resale value of the vehicle, you pay for the depreciation, so the cars that hold their value the most traditionally have lower payments (less depreciation during your ownership) - Honda leases well - Kia sucks.

Then the manufacturers mess with the equation by changing the residual (what the car is worth minus the depreciation at the end of the lease) they used to do this a lot more, but it caught up to them.

I used to be able to lease a Oldmobile Bravada (Twin to the Chevy Blazer) for the exact same model the Olds would lease $250 a month cheaper than the exact same Chevy version. Why? Cause Olds was trying to blow those Bravadas out the door at that time.

More info then you needed. But I lease new if I am going to keep for 2-3 years. If I'm going to hold it longer I would finance. If used always finance.

thom

I just buy it. Forget the lease, forget the payments. Buy it.

Last time I financed was a new 1980 p/u. Payments were a pita. Paid it off after several months. No more pmts.

Heritage

I've leased twice...never again. I was always happy while I had the car, then i kicked myself when I had to give it up and the car was gone. Personally, if I can't afford to buy it out-right, then I won't lease it or finance it.

This would change if I had a few hundred thousand sitting in the bank and I had amazing credit and the financing company offered me something like 1% financing. Then I'd rather finance...but I won't ever lease again.

Also, look into buying a demo. They usually only have around 1k on them and their "driven off the lot depreciation" is already hacked off.

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Toronto General Contractor-Renovation Blog-Contractor on Facebook-Renovation on twitter-Contractor Youtube

KentWhitten

Well, a little story about a lease I had. I'm not embarrassed to tell this. I leased my truck, payments were low, I was happy. We got in a little bind, got behind on payments a little.

Day 90 or whatever it was, I went outside to go to work and.....gone. No warning whatsoever.

They don't care. If you are late on your payment which is not under a lease, then they bend. Lease, nope. Come get your stuff. And if anyone has had repo's, they know that like your custom radio that you put in is theirs...not yours.

But this was my problem, and I have to live with it. I'm just telling my experience with it. Also, if you go over your mileage, I understand you get penalized.

crb555

Car payments.... my philosophy is just don't have them.
Buy what you can afford. Make the payments to yourself.

Once you are able to buy your first new car with cash, from then on, its real easy.


About lease companies repo'ing.... well... dont be late... certainly not 90 days. Especially if you put in a custom radio or something... sounds to me like that money would have been better served going into a rainy day fund, or something.

I dont care if you are a owner, master of your trade, or a min wage laborer.. EVERYONE should have 3-6 months living expenses in the bank. It's not that hard to do.... just save 10% of your income, and in a few years you will be tremendously better off... You would be amazed how fast the money accumulates.


Crb5

AtlanticWBConst

Tried it once in '94: I'm anti-leasing

...If I'm making ANY kind of payments........when I'm done, I want to have something to show for it.....

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- Build Well -

MattCoops

Better to pay it in full cus you spend more when you pay as you go.
Although you can build some good credit (if you make payments on time), and get those hefty construction loans a lot easier.

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Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

Teetorbilt

If you are going high mileage look at renting. I know of a couple of national salesmen that do this. There are advantages, I believe that one guy told me that it's 100% tax deductable plus you get a new car every year.

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You can't solve you're problems with the same level of thinking that created the problems.

Albert Einstein

PressurePros

Rule #1 in accumulating wealth. NEVER buy anything that depreciates.

I hear the anti leasing thing very often and when I ask the person why they dislike leasing they never have an answer. Its just what someone else said to them. The "I'll have something at the end of my payment" arguement. Yeah you will have a 4000 lb hunk of steel that you have to market, show and sell. If you keep it, you have a vehicle with no drivetrain warranty. If you trade it in for something else you are going to lose even more equity because you will be paid wholesale for it. In any of the above, you have already paid the depreciation and put equity into a lousy source.

I appreciate the candor of the above poster but c'mon. You don't like leases because you got behind 90 days on your payment and they repossessed it? That doesn''t make any sense. What would you do if a customer didn't pay you for 90 days?

I rarely buy brand new vehicles but when I do its always via lease. I sold cars for a few years after college so I know what to look for in money factors and rates. I prefer to buy vehicles with high residuals on an open ended lease. If you are going to accumualate a ton of miles on a vehicle you can negotiate that at signing.

Leases get a bad rap and there really aren't too many reasons not to do it. The tax benefits have fallen significantly but, for me, its still a winner.

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Ken Fenner
Pressure Washing PA
Roof Cleaning Services PA

Mater

hmmmm..What's worse? Being covered with honey and put on a red ant hill or leasing. Okay, I'm done. Note to self: Never, ever lease

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These tools have been purchased with wages from the entrepreneurial spirit. If you've sat back and let another "negotiate" your hourly wages, these are not for you.
-Rob

Teetorbilt

You will always pay top $ for a new vehicle no matter how you aquire it. If you want to save, buy one with the 'new' knocked off of it.

I was in car sales for a year and my wife made it to F&I (7 yrs.).

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You can't solve you're problems with the same level of thinking that created the problems.

Albert Einstein

PressurePros

Enlighten me. Maybe I over spent for my degree in economics. Maybe every financial advisor I have ever met was an idiot. I'm open to suggestion as long as it is based upon fact not silly catch all analogies with no data to back it up.

Leasing is not for everyone. I agree with others about having little to no debt and Teetor's assesment.. let someone else pay the depreciation, buy used. But.. that wasn''t the question.

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Ken Fenner
Pressure Washing PA
Roof Cleaning Services PA

MattCoops

Can't see spending all that money and having nothing at the end of it.
It's kind of like paying a bunch of rent on an apartment, then moving when the lease is up.
There goes your hard earned bucks.
I rather have something tangible to show for money spent.

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Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

Chris Johnson

I've done both the lease and buy, in my younger days I would lease - 2 yr period and at about 18 months take it back and start looking for a new vehicle, now I'm a little older and wiser (I think) now I usually wait till the end of the model year and one of the big three will knock the price down and offer 0% financing, so now I get my 60k pick up for around 46-48k, throw in my 4 year old trade (now worth 17500) gives me a payment of a little over $ 600.00/mth - Looks good on my credit score and I drive my truck for another 4 years and repeat.

I agree I am only getting wholesale when I trade my vehicle in, but for the price difference I don't mind, I don't want to get home at night and have every Tom, Dick and Harry out test driving my truck. Plus you get the sales tax savings (Not much, but better than nothing).

To me it's habitual to have a $ 600/mth truck payment - Cost of Doing business - Much like renting your shop or warehouse

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Chris

AtlanticWBConst

Just because I don't like leasing doesn't mean I like to buy new.
I never buy new.

Bought my 2001 Dodge Ram HD 2500 with only 35K on it 2 years ago for only $10K (paint splatters on it) ...$500.00 Maaco Black paint job fixed that.....and I got myself a HD truck for about 1/4 the price of a new one. I also went out and bought a 100K bumber to bumper warranty on it for $1500 - for peace of mind too.

That's just me....

Leasing works for some people.....buying new works for others.... I like "used" but "babied"....

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- Build Well -

ruskent

I always thought leasing was bad because my dad told me it was.

I been looking in the paper at the lease deals. One dodge dealer was leasing new ram 1500 quad cabs for 200 a month for 27 months with nothing down. Basicaly you get to drive a new truck for a year and a half for 5400 bucks. If you bought that truck new you'd pay like 2k along in just taxes when you drove it off the lot.

PressurePros

Matt,
Don't believe the hype. Look at it this way.

The Buy

Matt buys SL500 for $60,000. Puts down $10,000 dollars of his hard earned money (or trades his vehicle in). Payment is $1100 month over 60 months. After the five years Matt has spent $76,000. Vehicle is worth $35K at end of loan term.[B]Now Matt has to try and sell a five year old car for $35,000. He puts it in the paper and it may take months to find a real buyer that has the cash. When he finally finds a buyer after many no-shows, tire kickers, lost sleep and wasted time, it has only cost Matt $76,000 to get back $35,000. Net loss = $41,000. Thats not a tangible its a pure liability.

The Lease

Ken leases the same vehicle and his trade in or cap cost reduction is also $10K. Ken's payments are $600/month. Ken takes the extra $500 per month and sticks it in the bank (the worst possible investment to prove a point) at 5% annual compunding APR. After the five years Ken spends $46,000 on the lease. But !! by investing the money he saved by not buying a depreciating "tangible" his bank account has grown by $35,450. Ken's net loss for driving the same vehicle as Matt .......

$10,550.00. Thirty thousand dollars less net loss than Matt! (and Ken doesn't have to worry about marketing and sellng a $35,000 boat anchor. He walks into the delaership and hands them the keys.)


Leasing is a hidden gem of finance. Most people bad mouth because everyone spews the same rhetoric. I live, eat and breathe numbers. If I didn't think leasing was a benefit to my personal wealth building agenda I would not do it. I wouldn't stick the money in the bank either. I would take the $500 and put it into my marketing where I get a 1000% return.

Here are the calulators I used for my numbers. Play with your numbers if you don't believe me.

http://www.edmunds.com/apps/calc/Cal...ktid=ga9911278

http://www.edmunds.com/apps/calc/Cal...ion=lease_calc

https://www.fairwinds.org/wizards/CompoundSavings.asp

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Ken Fenner
Pressure Washing PA
Roof Cleaning Services PA

crb555

Thats a pretty compelling argument for leasing.

But I am a high mileage person.... I have put 57k miles on my truck since I bought it in 05... it had 5000 miles on it when I got it.

The wife has 24k miles on a 06 Jeep.... again, it had 4k miles on it when I bought. It was my understanding that the leases only made sense for 12k /yr drivers. We live way out in the country.

I just pay cash... then make monthly payments into a investment fund.

I sell the vehicle privately when I am tired of it / want a new car... and rinse / repeat. I have never not had enough cash to buy another car when I wanted one since the first car I did that way.

I have not run the numbers, and guess I'm going to glance at it... but I figure my total cost to drive to be on the low side. I earn a pretty steady 8% on that payment I make to me...so that knocks my cost down some.. plus I sell the old vehicle.. Usually around 100k miles.


Crb5

KentWhitten

No, sorry, I should have been more clear. I wasn't 90 days late, I was late one month, like a few days, got caught back up, no problems. 90 days after whenever they figure, they came and got it. I was still making the payments in this 90 day period (at least 2 more payments). Their repo was in the works and waiting for the legal time or something. I never got anything....a notice, a call, nothing.

But true, I should not have been late. I'm sure everyone here has been late at least once in their lives