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Lease pricing....

CFRED70

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KARNUT Senior Enthusiast

KARNUT

Posted
Posted

I haven't paid interest on a car loan since they started doing that. I'm flexible so I buy leftovers and what's been on the lot the longest. Saw an interesting billboard above a use car lot, every one drives a used car.

 

 

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Havvkeye Enthusiast

Havvkeye

Posted
Posted

and let me ask you, what do you know about me and my personal situation? please enlighten me more with your wisdom. Whats right for some isn't right for all. It was the best move for me at the time and looking back now 3 years later I wouldn't have changed a thing. except maybe have got a 6.2 =P

 

All I know is exactly what you said. Your mentality about 'If I can't afford it now I should get something cheap in the near term but more expensive down the road'. Also your comment about 'stretching it' is not usually a good idea on an obligation that can have significant negative financial impacts should you not be able to fulfill it due to some other unexpected expense.

 

Your last line is absolutely correct!

 

But I disagree with you about paying cash or putting a lot of money down. Unless it is zero percent APR for the duration of the loan, you'll end up spending thousands more in interest over the course with the more you finance. This is like choosing to pay cash for something (anything) vs. using a credit card and now carrying debt. Unless you actually don't mind spending even more money in interest, this is NOT debatable. Believe me, if I was capable of paying cash...I absolutely would. It doesn't get any better than having no loan, no car payment AND free to sell/trade at anytime with equity that is the value of the vehicle.

 

I'm no financial expert, but I understand the basic principles here. As stated earlier, there are definitely benefits to leasing over buying. The issue I take is with choosing to do so based solely on the fact that you can't afford to buy that same vehicle AND in particular those that admit up front that they plan to keep/buy the vehicle after the lease is up. You'll end up paying even more and for longer. Why not just choose a lesser equipped more-affordable model? I guess it just seems crazy to me what some people will get themselves into so they can impress others by what they drive, that's all.

 

I disagree with this. It is very easy to earn more on an investment than the current sub 2% vehicle loan rates. If you can earn more than you are paying it is better to get a loan than pay cash. Personally I took a loan for 1.74% and have a fixed rate investment that I earn 3% on, it would be stupid of me to take any money from that investment to pay down the loan or buy the truck outright.

 

Credit cards are an excellent way to earn extra return on purchases and build your credit. The ONLY time you shouldn't use a credit card is when you cannot pay the balance in full each cycle or if the charge for using a card is more than you get in rewards.

 

All that aside - I would probably lease if I was not driving 20k miles a year, they do both have their benefits and it depends on the person and situation which is the better option.

Back in a Bowtie Enthusiast

Back in a Bowtie

Posted
Posted

 

All I know is exactly what you said. Your mentality about 'If I can't afford it now I should get something cheap in the near term but more expensive down the road'. Also your comment about 'stretching it' is not usually a good idea on an obligation that can have significant negative financial impacts should you not be able to fulfill it due to some other unexpected expense.

 

Do you have a 30 year mortgage? Could you "afford" a 15 year? Maybe if you got a WT instead of an optioned up rig. Maybe if you didn't go on vacations or buy material things. Affordability is relative. And opinions are like a**holes... have a nice day sir

 

 

I disagree with this. It is very easy to earn more on an investment than the current sub 2% vehicle loan rates. If you can earn more than you are paying it is better to get a loan than pay cash. Personally I took a loan for 1.74% and have a fixed rate investment that I earn 3% on, it would be stupid of me to take any money from that investment to pay down the loan or buy the truck outright.

 

Credit cards are an excellent way to earn extra return on purchases and build your credit. The ONLY time you shouldn't use a credit card is when you cannot pay the balance in full each cycle or if the charge for using a card is more than you get in rewards.

 

All that aside - I would probably lease if I was not driving 20k miles a year, they do both have their benefits and it depends on the person and situation which is the better option.

arkenzo Enthusiast

arkenzo

Posted
Posted

You lose more when you put down more, you lose less when you finance at a good rate. Just my opinion. My current auto loan is at a low 2%....If you can afford the monthly payments, do it, keep your cash available to you , not tied into an automobile, that's a ticking time bomb waiting to explode (financially). Again, I'm no Dave Ramsey preacher, never read rich dad poor dad, but my philosophy has worked out for me very well throughout my life, i'm 32 years old, have a 4 unit rental property that I bought short sale for $199,000 (now worth over $500,000 in Downtown L.A.) and have a home that I bought when the market was great in 2010 for $249,000 that is now worth over $480,000......My money is tied in property, not dumped in cars...I have no credit card debt, have 1 $30,000K HELOC that I can use in case of a pull out cash emergency, my only obligations are mortgages (utilities), car payments(insurance) and gas.

dave07 Enthusiast

dave07

Posted
Posted

At how many miles per year does a lease stop making sense? I bought the truck I'm in now and I'm looking at possibly leasing my next truck. I do about 16k miles a year right now.

arkenzo Enthusiast

arkenzo

Posted
Posted

At how many miles per year does a lease stop making sense? I bought the truck I'm in now and I'm looking at possibly leasing my next truck. I do about 16k miles a year right now.

normally you want to have a buffer zone in your mileage in case you go over your allotted miles, at 16k/yr, you might not want to lease ...

Tribs77 Enthusiast

Tribs77

Posted
Posted

You lose more when you put down more, you lose less when you finance at a good rate. Just my opinion. My current auto loan is at a low 2%....If you can afford the monthly payments, do it, keep your cash available to you , not tied into an automobile, that's a ticking time bomb waiting to explode (financially). Again, I'm no Dave Ramsey preacher, never read rich dad poor dad, but my philosophy has worked out for me very well throughout my life, i'm 32 years old, have a 4 unit rental property that I bought short sale for $199,000 (now worth over $500,000 in Downtown L.A.) and have a home that I bought when the market was great in 2010 for $249,000 that is now worth over $480,000......My money is tied in property, not dumped in cars...I have no credit card debt, have 1 $30,000K HELOC that I can use in case of a pull out cash emergency, my only obligations are mortgages (utilities), car payments(insurance) and gas.

 

I think you've got that reversed.

 

example figures with your 2% rate.

 

Vehicle/loan amount: $40,000

Rate: 2%

Term: 60 months

 

$0 down, total amount paid in interest = $2,067

$10,000 down, total amount paid in interest = $1,550

$20,000 down, total amount paid in interest = $1,033

$30,000 down, total amount paid in interest = $517

$40,000 down, total amount paid in interest = $0

 

If you insist on not keeping your money tied to a vehicle, I find it odd that you would support any kind of leasing where you are binded by that contract, could potentially be penalized if you are forced to back out, and you have zero equity. Then repeat the process lease after lease? That makes no sense. You are always tied, aren't you?

 

Vehicles depreciate the same whether you buy or lease.

 

When you OWN the vehicle, should circumstances force you to ditch it, you have whatever money it's value is at the time to put in the bank. The same can't be said for the lease.

jrhoyt84 Enthusiast

jrhoyt84

Posted
Posted

I think you've got that reversed.

 

example figures with your 2% rate.

 

Vehicle/loan amount: $40,000

Rate: 2%

Term: 60 months

 

$0 down, total amount paid in interest = $2,067

$10,000 down, total amount paid in interest = $1,550

$20,000 down, total amount paid in interest = $1,033

$30,000 down, total amount paid in interest = $517

$40,000 down, total amount paid in interest = $0

 

If you insist on not keeping your money tied to a vehicle, I find it odd that you would support any kind of leasing where you are binded by that contract, could potentially be penalized if you are forced to back out, and you have zero equity. Then repeat the process lease after lease? That makes no sense. You are always tied, aren't you?

 

Vehicles depreciate the same whether you buy or lease.

 

When you OWN the vehicle, should circumstances force you to ditch it, you have whatever money it's value is at the time to put in the bank. The same can't be said for the lease.

But what is that value of that vehicle in 3 years?

 

 

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jrhoyt84 Enthusiast

jrhoyt84

Posted
Posted

We can all agree to disagree here. I leased because I wanted to keep as much cash in hand as possible, I put on low miles per year, and I want or plan to upgrade every few years. So leasing works for me. If we want to keep talking about how bad of a deal leasing is, buying a brand new vehicle is generally seen as a terrible investment also. If we were all doing the best thing financially when it came to buying a vehicle, we would all be buying 2 or 3 year old vehicles, with large down payments, and keeping them till the wheels fell off.

 

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jrhoyt84 Enthusiast

jrhoyt84

Posted
Posted

For the record I don't give two shits what anyone does with their money. Haha. If u want a new vehicle every two years, go for it. Keep it for 10? More power to ya.

 

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Tribs77 Enthusiast

Tribs77

Posted
Posted

But what is that value of that vehicle in 3 years?

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Depends. $20-30k? At least it's yours to choose what next.

 

Also, consider how much has been saved in the bank by not having car payments?

mxzeatr Enthusiast

mxzeatr

Posted
Posted

I think you've got that reversed.

 

example figures with your 2% rate.

 

Vehicle/loan amount: $40,000

Rate: 2%

Term: 60 months

 

$0 down, total amount paid in interest = $2,067

$10,000 down, total amount paid in interest = $1,550

$20,000 down, total amount paid in interest = $1,033

$30,000 down, total amount paid in interest = $517

$40,000 down, total amount paid in interest = $0

 

If you insist on not keeping your money tied to a vehicle, I find it odd that you would support any kind of leasing where you are binded by that contract, could potentially be penalized if you are forced to back out, and you have zero equity. Then repeat the process lease after lease? That makes no sense. You are always tied, aren't you?

 

Vehicles depreciate the same whether you buy or lease.

 

When you OWN the vehicle, should circumstances force you to ditch it, you have whatever money it's value is at the time to put in the bank. The same can't be said for the lease.

You can have equity in your lease. If my buyout is 26k, but the market has similar trucks selling for 30k, I can sell the truck for 30k and end up with 4k in my pocket...

 

Granted it doesn't always work like this, but I have a buddy who does 2yr 20k leases, and he always sells them and ends up with a few k in his pocket.

 

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KARNUT Senior Enthusiast

KARNUT

Posted
Posted

I love it when people judge other people for their preferences. Me for instance, I worked in a successful family business, that required lots of hours of work. Lucky for me I'm a car nut because I rewarded myself a new ride every two years. I didn't have time for any other hobby to spend money on but drove a lot every day. I would bet the people who keep their vehicles a long time are either very frugal or just spend it foolishly on something else.

jrhoyt84 Enthusiast

jrhoyt84

Posted
Posted

Yup it goes both ways. I've got a brother in-law, and all he buys it's seriously saved from the salvage yard junk. The more unreliable the better. I think he's nuts for putting his family in that, and he thinks I'm nuts for having a vehicle payment. As a side note, he doesn't drive junk because he can't afford any better, he's just that much of a tight wad.

 

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