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Leperflesh
May 17, 2007







Thank you. I feel vindicated!

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necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Nap Ghost

Yeah, it's part of why I don't really care about mpg increases unless I go from 25 mpg to, say, 150 mpg. I would be interested in hybrid cars more if they got me 100+ mpg hands down, but at present, they won't. So I fully intend to skip hybrids completely and go electric.

Leperflesh posted:

Surely that has to be taken into account when comparing prices?
My general points also mentioned that "green" tech is almost always only viable in "the market" by use of government subsidies. If it actually produced legit savings with serious up-front gains like what the creation of the car did for everyone in the first place, it wouldn't need a subsidy. All "green" tech does for a business is focus upon long-term sustainable business processes and that's not how the Fortune 500 execs think honestly because they're measured upon short-term quarterly profits and gains, not upon how they've done over 10+ years compared to competitors.

ynotony
Apr 13, 2003

Yea...this is pretty much the smartest thing I have ever done.

Faceless Clock posted:

Not really. This isn't an issue I had thought about before I saw that graph.

If you thought about it, it would be obvious. The problem is people don't think about it, even when gas was $5/gallon.

If I asked you objectively which was a more significant change: an increase from 15 to 25 units of anything or an increase from 25 to 35 units of anything, you'd say 15 to 25 because of larger percentage change. You probably wouldn't need more than a second or two.

Leperflesh
May 17, 2007







That's not how most people think of things that are reported as quantities. They think "Oh, this one is 20 and that one is 30. It's ten more. That one is 40. It's twenty more. If I would pay $x for 10 more <things>, I should be willing to pay $x more again for another 10 more <things>."

It takes a flip of a conceptual switch to recognize that they will generally drive a fixed distance, so an improvement in fuel economy is an improvement in some percentage of fuel used; so to halve cost, requires doubling the MPG figure. And to halve it again, you have to double MPG again, and so on; so 10-->20-->40-->80.

This really isn't one of those "anyone who doesn't get this immediately is a moron" things. That can be hard to recognize if you've always understood it 'the right way' from the beginning.

Tragic Otter
Aug 3, 2000



ynotony posted:

If you thought about it, it would be obvious. The problem is people don't think about it, even when gas was $5/gallon.

If I asked you objectively which was a more significant change: an increase from 15 to 25 units of anything or an increase from 25 to 35 units of anything, you'd say 15 to 25 because of larger percentage change. You probably wouldn't need more than a second or two.

No, it isn't obvious. I'm not good at math. You'd probably tell me "oh hey its percentages" and I'd be like "what the gently caress?"

roffles
Dec 25, 2004


I've been doing some research on financing a used car. My budget is about 15000 for a 2008 or newer midsize sedan, and while I can afford to pay for it outright, it would take a pretty big chunk out of my savings. If I can get 5% or so financing with a 5k down payment, that would be acceptable to me. In the case of getting it financed my goal would be to pay down the 10k or so balance within a year.

Anyway, so the dealer nearby is offering 4.9 APR if I finance through them, but I'm concerned about being able to identify the type of loan. I want a simple interest loan where I can pay it down early without penalty, and it seems like most auto loans are pre-computed right? Is there some standard verbiage that I should look for, I assume it's a lot of fine print and it's not going to say 'THIS IS A SIMPLE INTEREST LOAN' or 'THIS IS A PRE-COMPUTED LOAN'.

If worst comes to worst I'll ask for a copy of the loan and take it home to read it but I'm afraid I'll crack under the pressure and just sign it if he gives me the hard sell.

LorneReams
Jun 27, 2003
I'm bizarre

gently caress the dealer, I'm seeing rates at least that low at most credit unions.

Here is a rate list from my CU:
code:
36
Month
APR* Payment
Per
$1,000** 48
Month
APR* Payment
Per
$1,000** 60
Month
APR* Payment
Per
$1,000** 
2009-2010
(New & Used) 3.99% $29.52 3.99% $22.57 3.99% $18.41 
2008 (Used) 3.99% $29.52 3.99% $22.57 3.99% $18.41 
2007 4.79% $29.88 4.79% $22.93 4.79% $18.78 
2006 5.19% $30.06 5.19% $23.12 5.19% $18.96 
2005 5.69% $30.28 5.69% $23.34 5.69% $19.19 
2004 6.24% $30.53 6.24% $23.60 6.24% $19.44 
2003 6.54% $30.67 6.54% $23.73 N/A    
2002/2001 6.54% $30.67 N/A    N/A    
               
Motorcycle 10.90% $32.69 10.90% $25.80 N/A
Note that a 2008 is at 3.99%


CornHolio
May 20, 2001



Toilet Rascal

ynotony posted:

If I asked you objectively which was a more significant change: an increase from 15 to 25 units of anything or an increase from 25 to 35 units of anything, you'd say 15 to 25 because of larger percentage change. You probably wouldn't need more than a second or two.

Not necessarily. Considering the difference between the two sets is the same, technically speaking the delta (the total amount changed) in each of the sets is the same; that is, if you equate significance with amount of change, the significance of each would be exactly equal.

Mathematically speaking, of course. It's a bit of a trick question. If you start talking about physical items rather than abstract numbers it changes the problem a bit; significance isn't just amount of change anymore. It's more of an amount of change relative to zero.

Engineer Lenk
Aug 28, 2003

Mnogo losho e!

CornHolio posted:

Mathematically speaking, of course. It's a bit of a trick question. If you start talking about physical items rather than abstract numbers it changes the problem a bit; significance isn't just amount of change anymore. It's more of an amount of change relative to zero.

Even talking relative to zero you make an assumption of additive change. When we're talking about rates, it makes more sense to talk about rate ratios and compare them to one.

slap me silly
Nov 1, 2009


Grimey Drawer

Frankly, it makes the most sense to calculate how many dollars it will cost you to commute X miles per day in a certain car. I recommend this approach, which is not fraught with logarithmic confusions.

Leperflesh
May 17, 2007







slap me silly posted:

Frankly, it makes the most sense to calculate how many dollars it will cost you to commute X miles per day in a certain car. I recommend this approach, which is not fraught with logarithmic confusions.

Exactly what I put in the chart I presented! The assumptions are a 40-mile commute and $3 gas.

slap me silly
Nov 1, 2009


Grimey Drawer

Haha, sorry, I've been reading this conversation with only one eye.

kimbo305
Jun 9, 2007

He is I, and I am him



CornHolio posted:

if you equate significance with amount of change, the significance of each would be exactly equal.


A delta on this derived metric is not a linear quantity, so it's not really an equally significant amount of change.

CornHolio
May 20, 2001



Toilet Rascal

This is from a thread in AI:

Ixian posted:

I used to work at a dealership, my brother sells cars, and my sister works for a large finance company and deals with auto loans day in and day out. I should really get around to writing that "how to buy and finance a car" thread I've been meaning to do forever.

Not that any of that would apply to you, OP, since you basically already violated every "don't" when it comes to auto loans I can think of, and the one rule you didn't violate you are about to. So here's my advice on your situation:

First, stop rationalizing and accept the situation you are in for what it is. You won't simply lose a grand or two doing this. You will take it right in the loving shorts if you try to trade it away now. Never, ever go upside down on a car loan, you will be paying that poo poo off forever. Especially in your situation where you have a terrible loan at terrible interest (72 months, $460 a month, on a 17.8k car, did I read that right?). You either have no credit or terrible credit, that much is clear, and your dealer saw you coming a mile away. They love guys like you. Guys like you make their entire week, believe me, I know. I guarantee you the bump that F&I director got for getting you a 22% APR paid for a nice little weekend getaway for him and his wife.

Here's what you do:

1) Stop acting like a moron. That means, you are in a bad situation, for christ's sake don't make it worse. If you have a lick of sense left you'll keep the car you have and start digging your way out right now. The only possible way I would recommend dumping that deal now is if someone offered you a free beater to drive and you could get away with only 2-4k owed after selling it to Carmax or a private party. Dumping it to go upside down on the loan and getting another car, even one slightly cheaper? Madness.

2) Get your poo poo right. Pay your bills on time. Especially pay your lovely car loan on time. 30 days from the due date is the limit most lenders will report you to the bureaus though they will charge you penalties and late fees out the rear end long before that. Payment history is everything and a little (good) can go a long way. A year of making on time payments won't magically raise your crappy FICO score to anything meaningful but it will help you get out from under 22% and in to something better, like 12% (which is still sky high, don't pat yourself on the back).

Pull your loan documents out now. Read them (no offense, but I'm willing to bet you didn't look to closely at them the first time). Pay attention to several details including:

Is it a simple interest loan? Most if not all "good" car loans these days are, even in states where the rule of 78's is still legal. Many sub-par and fringe credit loans - which you most certainly have - try to get around this, within the limits of the law. What is the rule of 78s, you ask? The simple explanation is it's a loan where the interest charges are packed in up front, so you pay much more in interest than you do principle for the first several months (or years) of the loan. This insures the bank gets a fat payoff even if you refinance before the end of the term. They are highly frowned upon and no half-decent bank would bother with them in the US these days - in many states they are now illegal - but they do still exist, and you may well have one.

Is there a pre-payment penalty? Usually on simple interest loans there isn't, but again, you probably have one anyway. Someone paying 22%, assuming they just don't default, is highly likely to try to refinance before the end of term and banks that do bad credit loans are all about squeezing water out of the stone, so to speak.

Those two things can't be changed really now that you've signed on, you just need to be informed so you know how deeply you are going to be penetrated in the rear end when it comes time to refinance.

3) Give it a year. Take care of the car and just deal with it. Make regular, timely payments. Do a budget and stick to it, you know, like adults do. After a year of solid payment history most "regular" lenders will take a look at you. They aren't going to give you the deal of the century, believe me, but at 22% you very nearly have no where to go but up at this point. Try for something in the 10% range. And while you are at it, move it down to 60 or even 48 months for the term. Personally I never buy a car I can't pay off in 36 months but that's just me. Yes, you will pay more per month, but if you remember any math at all from school you can probably deduce that you'll end up paying less, total, for the car.

You won't like this advice. You probably won't follow it. You probably already visited a Jeep dealer and had some rear end in a top hat blow smoke up your rear end about how he can make your problems go away, didn't you. I still hold out hope you'll listen to reason and get your act together. Spending the rest of your life in debt with lovely credit is no way to live. Especially over a goddamn Suzuki. A Suzuki, are you loving kidding me? You know what this bad decision could do to the next decade or two of your life if you don't start fixing it now? I mean, going in to debt and ruining your credit because your Mom got cancer or something, I could sympathize with that, even student loans, but a loving Suzuki loan? Wake up man.

edit: vv done vv

CornHolio fucked around with this message at 18:08 on Jun 10, 2010

kimbo305
Jun 9, 2007

He is I, and I am him



You should change your link to the OP of that thread to give better context.

asdf32
May 15, 2010

I lust for childrens' deaths. Ask me about how I don't care if my kids die.

CornHolio posted:


Q: What cars are better to buy, financially, than others?
A: People will always recommend Hondas and Toyotas because they're super-reliable. This is true, but they command a premium used because of this. And they still require regular maintenance, and things do still break on them. I think they're really good because they can last a very long time while being neglected, unlike many other cars.


Agree with this. There is a huge premium on Hondas and Toyotas to the point where I think people should look elsewhere for used cars especially if you're looking at newish ones. There just isn't much drive-off-the-lot depreciation here.

CornHolio posted:


Korean cars are also showing a hell of a lot of progress lately, and they're backed by a huge warranty, but this is all very recent. I would stay away from most used Korean cars like they're the plague.


Disagree strongly here. I think Hyundai and Kia are the best buys because their reputation doesn't match their quality. They have both been putting out great cars for 5+ years in my opinion and only now are people realizing it. This makes them the best used car buys. Quality and reliability numbers are proving this out and consider those warranties has huge votes of confidence by these companies for their products. Five year old Hyundai's will be priced the same as 8 year old Hondas and have less miles.

Residency Evil
Jul 28, 2003

4/5 godo... Schumi


Although I'm not ready yet, I might be looking to buy a car in the somewhat near future. Out of curiosity, is there a general rule of thumb as to what the maximum car loan you should take out based on your income? I know this is going to vary greatly based on the interest rate, but say I have a starting salary of $50k. How much room does that give me? Would a 10k car be too much in that situation?

edit: Sorry, after doing more research it seems like this is a bit of a silly question. Looking at some calculators, it looks like a $15k loan @ 3.99% for 36 months is only $450/month or so. Gives me a bit of a ballpark number, at least.

Residency Evil fucked around with this message at 23:09 on Jun 11, 2010

alreadybeen
Nov 24, 2009


I am probably going to buy a car over the next couple weeks and am trying to figure out how to find what a good price is on a used car. I am looking for 2007-2008 Hyundai Elantra or maybe a Sonata. A lot of dealers are listing these cars for between 11-13k. What is a reasonable offer to open with? I was thinking roughly 20% below their price. There seems to be a lot of information out there for finding the dealer costs of current models, but it gets much murkier with used vehicles.

I plan on just paying with cash, should I wait to mention that and focus on price first?

slap me silly
Nov 1, 2009


Grimey Drawer

Residency Evil posted:

Although I'm not ready yet, I might be looking to buy a car in the somewhat near future. Out of curiosity, is there a general rule of thumb as to what the maximum car loan you should take out based on your income? I know this is going to vary greatly based on the interest rate, but say I have a starting salary of $50k. How much room does that give me? Would a 10k car be too much in that situation?

edit: Sorry, after doing more research it seems like this is a bit of a silly question. Looking at some calculators, it looks like a $15k loan @ 3.99% for 36 months is only $450/month or so. Gives me a bit of a ballpark number, at least.

My rule of thumb is not to buy a car you need a loan for. $450/mo is a hell of a lot of money.

Leperflesh
May 17, 2007







slap me silly posted:

My rule of thumb is not to buy a car you need a loan for. $450/mo is a hell of a lot of money.

That's pretty conservative. Loans are a reasonable way to defray the up-front cost of a large capital expenditure over time. If you can get a good rate, a 36-month term is a fine way to afford a nicer car now, instead of having to save money for three years (or more, because you need a car in the mean-time).

Residency Evil, make sure you take into account the cost of insurance and maintenance when you price out a car.

You should borrow no more than you can easily pay back. You should evaluate your total indebtedness (what else do you owe?), your obligations (do you have a child to support?) and the stability of your income (what would happen if you lost your job in a year?).

alreadybeen, always negotiate a price first, and then discuss payment methods after the price is determined. Never tell a salesperson how much you are looking to spend. Avoid answering questions about "how much you can pay per month." Actually it's best if you arrive on the lot already knowing exactly how much you will pay for a specific vehicle. Tell them something lower than that if you feel like negotiating, but be ready to leave if you can't get your price. The thing is, time is on your side. Most people for some reason lose all perspective when they arrive on a car lot and forget that there are probably dozens of dealerships in their area, not to mention thousands of private-sale cars becoming available every day.

slap me silly
Nov 1, 2009


Grimey Drawer

Yeah, that comment was at least half rhetorical. My first pass would be to try to pay cash, but there are plenty of situations where I would take out a loan for a car. I exaggerated because a large percentage of people who ask this question here are thinking it's a great idea to buy an $18k car instead of a $10k car because hey, they can get a loan for $15k and the payment is only $450/mo. That choice has a fairly substantial opportunity cost that tends to get overlooked.

artard
Sep 11, 2001


I can get a 36 month lease on a new Impreza for $0 down and $180 a month (12k miles a year allowed). I don't drive for my job but do enough driving in general that I think I'm justified in the premium of a new car for the comfort/reliability. My after-tax income is about $4000 a month. That's a pretty reasonable expense, right? It's a small percentage of my income but with so many people giving out universal NEVER LEASE A CAR EVER statements I'm just wondering why this wouldn't be a good idea. ~$6500 of lease payments spread out over 3 years to drive a new car seems pretty decent to me...

My alternative is to spend $5000-$6000 on a late 90's Legacy but I don't have enough cash right now to buy one outright and would have to take out a loan, and I don't like the idea of having a loan on a vehicle with 100k+ miles and isn't under warranty.

edit: lease, not loan

artard fucked around with this message at 03:59 on Jun 12, 2010

Leperflesh
May 17, 2007







The reason a lease is almost always a terrible idea is because you are paying almost what you'd pay to buy the car, but at the end of the term you don't own the car. And you have to pay extra for any extra miles you drive.

You make plenty of money, you can afford to just buy a car new if you save up a down payment. Which you should be able to do easily if you're clearing $4k a month after taxes.

The premium for a new car is not for "comfort and reliability". The premium you pay for a new car is for knowing precisely what has been done to it. You can buy a 1 year old car that is still in warranty for substantially less, and still have exactly the same comfort and reliability.

I think you have more alternatives than just "lease a new Impreza" vs. "buy a late 90s Legacy". That's a massive gap!

If you haven't got $5k saved up, you don't have enough savings to be buying anything. You need a cash buffer for emergencies. With your income if you can't save up a $5k down payment for a car in like 6 months at the most, you don't have enough room in your budget for a car payment, period.

artard
Sep 11, 2001


I suppose I could buy a $1000 shitbox in the short term while I save for a nicer car, but I'm planning on doing some road trips this summer and want something that isn't going to leave me stranded. I live well under my means but don't have much savings at the moment because I recently finished paying off my credit card and student loan debt.

I'm stuck on subarus because my family and I have driven many of them and they've always been great, and I think an Impreza is the nicest (new) car you can buy for under 20k (especially when you need a car that can handle adverse weather).

artard fucked around with this message at 04:08 on Jun 12, 2010

Leperflesh
May 17, 2007







That's great that you've paid off your debt!

Maybe you could rent a car for your road trips? How long are you planning to be driving?

So you have no car at all right now? The thing is, a lot of people rationalize buying or leasing a new car when they have no cash because the dealers are in the business of making that more convenient than having to go out and get something else, which requires cash.

But they can afford to do that because they are getting a lot of profit off of you. Chumps give dealerships huge profits; smart people save their money. In the long run you'll be far, far better off saving up a few thousand now, rather than pissing away money on a lease.

Remember that you can also get a loan for a used car, through your bank or a credit union. Maybe even a low or zero down loan, if your credit is excellent. It might be worth getting a loan for like a $6k used car, which would give you really really low payments. Then you can save money for six or nine months, and then sell that thing, pay off the loan, and have all the cash you need to buy that new car you want (or better yet, a 2 year old car still under waranty that is like new).

There are tons of $5-6k cars that are reliable enough to take on worry-free road trips and drive in comfort.

Throatwarbler
Nov 17, 2008

Oct 3, 2016 00:06: SO I'm also in 1st year classes and it's going pretty well I think.

Dec 9, 2016 15:46: Well I just took my first law school final exam. I think I've made a huge mistake.

artard posted:

I can get a 36 month lease on a new Impreza for $0 down and $180 a month (12k miles a year allowed). I don't drive for my job but do enough driving in general that I think I'm justified in the premium of a new car for the comfort/reliability. My after-tax income is about $4000 a month. That's a pretty reasonable expense, right? It's a small percentage of my income but with so many people giving out universal NEVER LEASE A CAR EVER statements I'm just wondering why this wouldn't be a good idea. ~$6500 of lease payments spread out over 3 years to drive a new car seems pretty decent to me...

My alternative is to spend $5000-$6000 on a late 90's Legacy but I don't have enough cash right now to buy one outright and would have to take out a loan, and I don't like the idea of having a loan on a vehicle with 100k+ miles and isn't under warranty.

edit: lease, not loan

http://forums.somethingawful.com/showthread.php?threadid=3213538&userid=0&perpage=40&pagenumber=5#post368677717

Tragic Otter
Aug 3, 2000



Leperflesh posted:

The reason a lease is almost always a terrible idea is because you are paying almost what you'd pay to buy the car, but at the end of the term you don't own the car. And you have to pay extra for any extra miles you drive.

What is the value of owning a car? A car constantly depreciates. If you own it, it will always be worth less tomorrow than it is today. Plus, chances are that unless you really do keep your cars forever, you never will actually own the car. The bank will own the car. The average period of ownership for a person who buys a new car is 39 months. The average new auto loan term is 64 months.

You absolutely do not want to buy a new car. You are exposed to a huge amount of risk when doing so. That risk is the car's depreciation. When you lease, there is no risk. Everything is already laid out for you. What you pay each month, what you pay now, and what you'll pay if you want to buy the car later. No trying to gamble on what the car's resell value will be in five years, which is where people lose the most money.

The average American person trades in a vehicle for something different every 39 months. The average person also ends up with $4,700 in negative equity when they go for the next new car. The reason they have that negative equity is that they purchased a car, and it deprecated quicker than they paid on the loan.

Artard, if you really do have a good budget and you can afford it, lease a new car. Yes, you could buy a $1000 poo poo box. But uh, then you would own a $1000 shitbox. And you very well may end up paying $1000 or more over the next year keeping that shitbox on the road.

Magic Underwear
May 14, 2003




Young Orc

Faceless Clock posted:

What is the value of owning a car? A car constantly depreciates. If you own it, it will always be worth less tomorrow than it is today. Plus, chances are that unless you really do keep your cars forever, you never will actually own the car. The bank will own the car. The average period of ownership for a person who buys a new car is 39 months. The average new auto loan term is 64 months.

You absolutely do not want to buy a new car. You are exposed to a huge amount of risk when doing so. That risk is the car's depreciation. When you lease, there is no risk. Everything is already laid out for you. What you pay each month, what you pay now, and what you'll pay if you want to buy the car later. No trying to gamble on what the car's resell value will be in five years, which is where people lose the most money.

The average American person trades in a vehicle for something different every 39 months. The average person also ends up with $4,700 in negative equity when they go for the next new car. The reason they have that negative equity is that they purchased a car, and it deprecated quicker than they paid on the loan.

Artard, if you really do have a good budget and you can afford it, lease a new car. Yes, you could buy a $1000 poo poo box. But uh, then you would own a $1000 shitbox. And you very well may end up paying $1000 or more over the next year keeping that shitbox on the road.

That's great and all but it's disingenuous to say "oh you lose money in depreciation with a new car" without mentioning that you pay for it in a lease, too.

Car dealers are not stupid. They would not offer leases if they didn't get something out of it. So yes, you do lose money in depreciation when you buy a new car. But that same exact depreciation is built into the price of a lease. I think it's a line item, even. And I doubt that they make too many mistakes estimating depreciation either, so you're not too likely to get worthwhile buyout price.

We can go around and around about buy vs lease, let's at least be clear about the facts.

For my money, I say don't buy new or lease or even buy a shitbox. Buy a 2-3 year old model. It will be past the steepest part of the depreciation curve, should still be in decent condition, and may even have a warranty on it still.

Tragic Otter
Aug 3, 2000



Magic Underwear posted:

That's great and all but it's disingenuous to say "oh you lose money in depreciation with a new car" without mentioning that you pay for it in a lease, too.

When you lease you pay an agreed upon amount which is based on an estimate of what depreciation will be. You don't pay the actual depreciation. This is a big difference and the reason why leasing rocks.

Arzakon
Nov 24, 2002

"I hereby retire from Mafia"
Please turbo me if you catch me in a game.


Faceless Clock posted:

What is the value of owning a car? A car constantly depreciates. If you own it, it will always be worth less tomorrow than it is today. Plus, chances are that unless you really do keep your cars forever, you never will actually own the car. The bank will own the car. The average period of ownership for a person who buys a new car is 39 months. The average new auto loan term is 64 months.

You absolutely do not want to buy a new car. You are exposed to a huge amount of risk when doing so. That risk is the car's depreciation. When you lease, there is no risk. Everything is already laid out for you. What you pay each month, what you pay now, and what you'll pay if you want to buy the car later. No trying to gamble on what the car's resell value will be in five years, which is where people lose the most money.

I get that the average person that buys a new car sells it 39 months later with 4K in negative equity. That does not mean leasing is better, it means that the average person is a loving moron.

I'm perfectly ok with someone leasing a $40K Nissan Altima because they are an idiot for buying it in the first place. They are going to pay a bunch for the depreciation in the lease or they are going to overpay for the car when buying it. For people wanting these types of vehicles the answer is almost always buy an old one where some fool already took the hit.

We aren't talking high cost vehicles with steep depreciation curves we are talking about a cheap rear end base model Impreza. If he wants to drive it forever he will come out ahead buying it and if he wants to drive something for 36 months he should buy a cheap piece of poo poo instead. Also, don't bother looking for a car that was priced at the bottom of the barrel new 2-3 years later because they just don't lose that much value. Especially true when you are looking at popular cars (Exception being Korean, depreciation makes those pretty incredible deals right now). With $5K down you can finance just about any base level car for the same as it would cost to lease, and get the benefit of not having to do a buyout after 3 years or pay attention to mileage. And years 5 until the car dies he won't make another payment.

I care absolutely nothing about how much my car will depreciate in value. I look at it as I am spending $17,000 to drive a car for 10-12 years to 150k miles at which point I'll be 40 and buy something else in cash. If I'm lucky I'll get 2-3K back from selling it too. But the biggest benefit is not having a car payment for 5-7 years.

Throatwarbler
Nov 17, 2008

Oct 3, 2016 00:06: SO I'm also in 1st year classes and it's going pretty well I think.

Dec 9, 2016 15:46: Well I just took my first law school final exam. I think I've made a huge mistake.

Arzakon posted:

I get that the average person that buys a new car sells it 39 months later with 4K in negative equity. That does not mean leasing is better, it means that the average person is a loving moron.

I'm perfectly ok with someone leasing a $40K Nissan Altima because they are an idiot for buying it in the first place. They are going to pay a bunch for the depreciation in the lease or they are going to overpay for the car when buying it. For people wanting these types of vehicles the answer is almost always buy an old one where some fool already took the hit.

We aren't talking high cost vehicles with steep depreciation curves we are talking about a cheap rear end base model Impreza. If he wants to drive it forever he will come out ahead buying it and if he wants to drive something for 36 months he should buy a cheap piece of poo poo instead. Also, don't bother looking for a car that was priced at the bottom of the barrel new 2-3 years later because they just don't lose that much value. Especially true when you are looking at popular cars (Exception being Korean, depreciation makes those pretty incredible deals right now). With $5K down you can finance just about any base level car for the same as it would cost to lease, and get the benefit of not having to do a buyout after 3 years or pay attention to mileage. And years 5 until the car dies he won't make another payment.

I care absolutely nothing about how much my car will depreciate in value. I look at it as I am spending $17,000 to drive a car for 10-12 years to 150k miles at which point I'll be 40 and buy something else in cash. If I'm lucky I'll get 2-3K back from selling it too. But the biggest benefit is not having a car payment for 5-7 years.

No, he will still be ahead (albeit only marginally, by the value of the lease option) even if he keeps the car forever. I explained why in my post from 5 pages ago. Faceless Clock is correct, leasing is ALWAYS better than buying a new car, with no exceptions. Your problem is that you are still thinking of it in terms of month to month payments, without considering the whole picture.

Throatwarbler fucked around with this message at 13:52 on Jun 12, 2010

alreadybeen
Nov 24, 2009


Throatwarbler posted:

No, he will still be ahead (albeit only marginally, by the value of the lease option) even if he keeps the car forever. I explained why in my post from 5 pages ago. Faceless Clock is correct, leasing is ALWAYS better than buying a new car, with no exceptions. Your problem is that you are still thinking of it in terms of month to month payments, without considering the whole picture.

Throatwarbler, I thought we discussed this earlier. A lease is not always better. It depends obviously on the cost of the lease vs purchasing. This is definitely NOT an absolute. You have this idea that because a lease is an option it is always the better option. This is just a plain fallacy.

Throatwarbler
Nov 17, 2008

Oct 3, 2016 00:06: SO I'm also in 1st year classes and it's going pretty well I think.

Dec 9, 2016 15:46: Well I just took my first law school final exam. I think I've made a huge mistake.

alreadybeen posted:

Throatwarbler, I thought we discussed this earlier. A lease is not always better. It depends obviously on the cost of the lease vs purchasing. This is definitely NOT an absolute. You have this idea that because a lease is an option it is always the better option. This is just a plain fallacy.

Yes, and as we discussed earlier, you are correct that it is possible to get a "bad" lease deal, just as it is possible to get a bad purchase deal, but this doesn't really have any bearing on the decision to buy or lease. The guy who leased a $40k Altima obviously did not a get a good deal, but does that mean he should have BOUGHT a $40k Altima?

I don't think we are disagreeing here, maybe I should modify my statement thus: A lease is always better, as long as you are also negotiating for the lowest price, just as you would in a straight purchase. You should always be looking for the lowest price regardless. Yes, the second bit was an assumption but I don't think it is an unreasonable one.

Leperflesh
May 17, 2007







That's just it. The discussion here seems to be "which is better, leasing a new car for three years, or buying a new car and then selling it three years later".

What this discussion always seems to miss is that both of these are terrible ideas.

If you buy a new car it should be your intention to drive it for the entire life of the car. This is BFC, where we discuss what is the best financial decision, and financially it is a bad idea to choose to own (or lease) a car only during the steepest part of its depreciation curve.

There are many intangible reasons why it might be great to buy or lease a brand new car. I bought a new car in 2005 and I don't regret that decision - but I am not one of those people who sells their new car after 39 months of ownership, either. I'm going to drive my car until it can't be driven any more, at which point I will buy another new car, and when that one reaches the end of its life, I'll be at retirement age at least.

There is a 'sweet spot' where reliability is balanced by price, and that spot is going to be different depending on what a person's tolerance for reliability for their new-to-them car might be. The sweet spot is more or less never at the "brand new" point.

The problem then with leasing is that you really can't lease a two- or three-year-old car (at least not as far as I'm aware). Hence, leasing is bad.

-If you're gonna own the car for its whole life, paying for it in cash is the best option, and getting a very good financing deal is second-best. Leasing it can be competetive on price, but often not, especially if there is a chance you'll go over the mileage limits.

-If you're not gonna own the car for its whole life, you should buy a used car to protect as much of your "investment" as possible. Exactly how used is a function of how much you can afford to pay (and lose in depreciation) vs. how reliable the car has to be vs. what class of car you want.

Tragic Otter
Aug 3, 2000



Leperflesh posted:

If you buy a new car it should be your intention to drive it for the entire life of the car. This is BFC, where we discuss what is the best financial decision, and financially it is a bad idea to choose to own (or lease) a car only during the steepest part of its depreciation curve.

This is not realistic. There are many reasons you might want to get rid of a car before its life as through (that can be twenty years or more these days). And yes, while it will be less expensive to buy a used car overall, you're missing the fact that the person who asked the question initially can afford to lease a new car. I'm aware this is BFC, but if we were just framing everything purely on the basis of financial decision making here, there would be a sticky post at the top of the forum telling everyone to live and shacks and eat rice for every meal while sticking all the money saved into our retirement accounts.

Leperflesh posted:

There are many intangible reasons why it might be great to buy or lease a brand new car. I bought a new car in 2005 and I don't regret that decision - but I am not one of those people who sells their new car after 39 months of ownership, either. I'm going to drive my car until it can't be driven any more, at which point I will buy another new car, and when that one reaches the end of its life, I'll be at retirement age at least.

Okay. So what are you going to spend the money you saved by doing this on? Is it going to all go into a savings account? If not, then why is this such a good decision?

Leperflesh posted:

There is a 'sweet spot' where reliability is balanced by price, and that spot is going to be different depending on what a person's tolerance for reliability for their new-to-them car might be. The sweet spot is more or less never at the "brand new" point.

I don't know what to say about this because it basically sounds like an old wives tale. It sounds like something which might be true, but there is no actual evidence to support it.

Leperflesh posted:

The problem then with leasing is that you really can't lease a two- or three-year-old car (at least not as far as I'm aware). Hence, leasing is bad.


Unless you want and can afford a new car. Which, like I said, Artard can do. He is asking about a $180 a month payment on $4000 a month after-tax income - come on!

Leperflesh posted:

-If you're gonna own the car for its whole life, paying for it in cash is the best option, and getting a very good financing deal is second-best. Leasing it can be competetive on price, but often not, especially if there is a chance you'll go over the mileage limits.

Not, it isn't, because you have no way of knowing for sure when you buy a car that you will be keeping it for you whole life. No one is perfect. Maybe you end up making a mistake and the car isn't as good as you thought. Maybe you have a kid and your needs change. Maybe the car turns out to have a completely unexpected defect (Hello, Toyota owners!).

Further, there is no weight to the mileage limit argument. If you go over mileage on a lease, it costs you money. If you go over mileage on a car you own, it also costs you money in the form of added depreciation and additional maintenance. Either way, you're paying.

Leperflesh posted:

-If you're not gonna own the car for its whole life, you should buy a used car to protect as much of your "investment" as possible. Exactly how used is a function of how much you can afford to pay (and lose in depreciation) vs. how reliable the car has to be vs. what class of car you want.

You can save money buying used. But you end up with a used car. If you can afford to lease the new car, why shouldn't you? Again - what else is that money going to be used for? If it isn't going into a savings account I don't think you can call it better financial decision.

moana
Jun 18, 2005

one of the more intellectual satire communities on the web


Faceless Clock posted:

So what are you going to spend the money you saved by doing this on? Is it going to all go into a savings account? If not, then why is this such a good decision?
Is this argument seriously "You're going to spend the money on other things anyway so it might as well be on a car payment"?

Tragic Otter
Aug 3, 2000



moana posted:

Is this argument seriously "You're going to spend the money on other things anyway so it might as well be on a car payment"?

The argument is that he can afford a $180 lease payment. If he wants to lease a new car, it is a financially sound decision for him to do so, even if buying a used car would cost less overall.

Don Lapre
Mar 28, 2001

If you're having problems you're either holding the phone wrong or you have tiny girl hands.


There is still risk in leasing a car. You could have a lifestyle change and need to put more miles on it than allowed. You could be in an accident or damage the car and have to pay penalties and fees when you return it.

BlackRider
Dec 28, 2004


Edit: nevermind. I don't want to get into this.

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Tragic Otter
Aug 3, 2000



Don Lapre posted:

There is still risk in leasing a car. You could have a lifestyle change and need to put more miles on it than allowed. You could be in an accident or damage the car and have to pay penalties and fees when you return it.

But you have the same risk if you don't lease the car.

If you put more mileage on a car you buy you have to pay for it through additional depreciation. That is why leases have the mileage limits in the first place.

If you lease you have to have gap insurance. So if the car is totaled you are not on the hook for anything. If the car isn't totaled you just get it repaired like you normally would.

I suppose you do have the option of buying a car, getting it damaged and not repairing it, but that doesn't make a lot of sense to me. I have a hard time thinking of a scenario where you wouldn't have to just pay your insurance deductible.

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