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Repost from AI.Throatwarbler posted:I admit that most online resources tend to frame the argument in a ridiculously stupid fashion that misleads a lot of people. TL;DR - Leasing a car is always better than buying a car. Plenty of people seem to have objections to this but none of them seem to be able to put numbers on paper or otherwise show a scenario where I am wrong.
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Nov 20, 2009 18:05
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I should have posted the second part which address your points.T0MSERV0 posted:I guess that the only comment I'd have regarding this is that if you're going to have car payments either way, they you're at least somewhat right. The one area where this can come back to bite you is if your lease agreement has condition restrictions (fewer than X miles, no scratches etc.) since the penalty fines for these terms can be somewhat high and can directly hurt your bottom line, making the deal far less favorable. This is irrelevant. Of course, as part of your agreement, there needs to be a limit on how far you can drive the car. Mostly the limits are within what a typical person drives the car within the period. If they are not, again, see my point 3. Your car with mileage y is worth x at the end of the lease term, regardless of the mode of ownership. If you feel that the total amout of depreciation you are paying at the end (i.e. all your payments plus the mileage cost) is greater than the actual depreciation, then simply buy the car out and sell it on the used market. Remember, it's an OPTION, NOT AN OBLIGATION. quote:I'd also point out that if you buy your car outright, new or used, you will end up with a better deal than if you do any sort of payment option since you will not have the interest working against you. You do need to factor for the opportunity cost of having the money tied up, but that would need to be weighed on a case-by-case basis. I admit that this really does confuse a lot of people, because the TMV calculation used for a typical lease is not very intuitive. Again, the TMV calculation is irrelevant to the buy vs lease argument. You are paying the interest rate you are paying, regardless of whether you lease or finance. This bit confuses people because in a typical lease, what actually happens is that you borrow the entire purchase price of the car (less downpayment and such), and pay interest on that amount, but since you are only repaying the principle up to the agreed-upon depreciation amount, i.e. the declining balance is not going to zero but to the residual, this interest amount will necessarily be greater than if you had financed the entire purchase price over the same period, since you are paying far less in principle. If it helps, you can compare buying a car outright with cash versus paying the entire lease amount up from in cash in the form of a massive downpayment. Leases even allow you to "pay down principle" in the form of security deposits that reduce interest cost for the lease duration and are returned to you at the end of the lease.
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Nov 20, 2009 22:53
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sanchez posted:How does buying a car, paying it off over 3 years, driving it for 2 more and then selling it compare to buying a car, leasing it for 3 years, buying it, driving it for 2 and then selling it. It should, but with the lease you have the option of returning it at the end of year 3. Once again, there isn't really any need to bring financing into it, since the discussion isn't about paying more or less interest, it's about leasing the car versus buying the car. You can pay more or less interest either buying or leasing.
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Nov 20, 2009 23:26
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Lyesh posted:The biggest problem I see is that you're treating used cars as a commodity. They aren't. If you end up returning your car, you are not going to find a used one in the same condition. If nothing else, you don't have as solid of an idea of maintenance and pre-existing problems on the used car you replace it with. Even if you were able to do that through some miracle, you'd still have to pay all the costs of getting the car reregistered. That will put you behind, though the significance depends on where you live. See point 1. The car is worth what it's worth at the end of the term. It may be worth more to you than it is to someone else, but that is true regardless of whether you buy or lease. This has no bearing on the original buy/lease decision. As a side point, a car at the end of a 3 year lease is going to have had at least the maintainance needed to keep the warranty in place. Modern cars are generally much more durable than they were 15 or 20 years ago, franchise dealers are confident enough to sell off lease CPO units with significant CPO warranties. Again, this is unrelated to the buy vs lease argument.
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Nov 21, 2009 00:37
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SuperCaptainJ posted:If you're thinking in economic terms, hybrids just aren't worth it compared to vanilla gas-sipping sedans. Here's a handy chart on Corolla vs Prius, for instance: The vast majority of these comparisons seem to be done by ignorant Free Republic posters who seem to have some kind of axe to grind against unpatriotic left coast liberal radicals who want to use less fuel and not drive huge trucks. This one is pretty easy - the Prius is an EPA MIDSIZE car, similar in internal volume to a Toyota Camry or BMW 5 series. So the correct comparison would to a Camry, the MSRPs for automatic transmission equipped models(you can get a manual Camry for slightly cheaper)with similar equipment would be $21,395 vs $23,550, or a difference of only $2,155. Looking again on Toyota's site, the actual EPA highway mileage is 32 for the Camry and 48 for the Prius, and the actual "breakeven" period @ 15k miles/year would only be 4.6 years. This is the worst possible case for the Prius, since the Hybrid's great advantage is in city driving. If you compared COMBINED EPA figures (26 vs 50), it drops to 2.5 years. That doesn't even account for the various ways with a hybrid that you can save even more fuel on, such as controlling your braking behavior to make maximum use of regenerative braking. The Prius is a great car, that's why it sells so well. It's really not that mysterious.
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May 31, 2010 00:06
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SuperCaptainJ posted:Ok, well I'm a liberal left-coast radical and I think it's a fine comparison to make Why does Toyota make the Corolla, which by your terms clearly competes with it's own hybrid Camry? That's not how car making works. There are some people who aren't going to buy a Prius but will buy a Camry. If they think they can sell more units by using a particular model lineup, they do it. quote:but instead I'll just talk numbers: A Chevy Colorado crew cab pickup truck has similar passenger volume to the Corolla, so plainly they are comparable vehicles? The Camry and the Prius are classified in the same category, and the Corolla is not. quote:The Prius is a great car. But in terms of saving money on smaller sedans, the Corolla is better. No, buying a smaller, shittier car will be cheaper. We could have known that without your big chart. However, your statement: quote:If you're thinking in economic terms, hybrids just aren't worth it compared to vanilla gas-sipping sedans. Here's a handy chart on Corolla vs Prius, for instance: ...is simply not true if you are actually comparing cars with similar sizes and capacities.
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May 31, 2010 01:02
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Faceless Clock posted:
No circumstances except for the law of the United States and the SAE. EPA posted:
Toyota does make a "large car", it's called the Toyota Avalon. Hope this helps. Throatwarbler fucked around with this message at 15:48 on May 31, 2010 |
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May 31, 2010 15:46
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Faceless Clock posted:Did you just say it is the law of the United States to call the Camry and Prius the same class of car? You don't quite understand a law, do you... Why don't you go ahead and explain it? I'm sure somehow that must completely negate my entire point, otherwise why are you posting? quote:In any case, I could not care less about EPA classification. People don't cross-shop the Prius and Camry as equivalently sized cars. Period. Is that just your opinion, or do you have some kind of survey on what "people" do and don't cross shop you'd like to refer to. quote:So yes, while the prius has enough total interior volume to be classified as midsize, the way that volume is laid out will have a huge impact on how roomy the car actually is. If the prius had a trunk instead of a hatch with similiar cargo room as a camry then it would be a compact car. And if my aunt had a penis she would be my uncle? The point of all this is that comparing the price and fuel efficiency of cars is only relevant if you are comparing like sized cars, and "size" in this case means how much stuff you can carry in the car. The Prius can carry as much as a Camry, and get's better fuel economy. So does the Corolla, but the Corolla can't carry as much. Yes, cars come in all shapes and sizes, some are bigger in some places than others. Since we are talking about cars used for carrying stuff, what difference does it make whether one car has bigger fins on the back or whatever that makes the total lengths longer? That's why the EPA uses interior volume and not total length like you guys are apparently so enthralled with.
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May 31, 2010 17:08
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Don Lapre posted:Cargo volume certainly is important. But what im talking about is when you are sitting in the car is it going to feel Camry sized or is it going to feel Golf sized. It is going to feel similar to a Golf, or Mazda 3, or Kia Forte. People don't buy a larger car usually because of the trunk space, they buy a larger car because its going to feel roomier on the inside. Regardless of what they buy it for, wouldn't you agree that a car that can carry more cargo (or passengers) will typically require more fuel per mile? That was my original point with respect to comparing the Prius to a Corolla, and that's why I brought up the extreme example of a pickup truck too. Yes, I agree that if you don't *need* a midsize car, or a pickup truck, then a Corolla is probably cheaper, I'm just saying you can't really compare the two.
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May 31, 2010 17:21
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sanchez posted:This entirely correct, but you're never going to convince throatwarbler. Most people buy hybrids for the wank factor, justifying purchasing one using logic is tough, regardless of what the EPA says. I don't know what I need to be convinced of, since I don't generally disagree with you WRT the passenger space. Using your example, would you still want to compare the Echo with the expanding camper on top to a normal Echo? Is the camper on top worth nothing because you can't feel it sitting in the driver's seat? Again, this is why I brought up the example of a pickup truck. A 2 door truck isn't going to have even as much passenger space as a Corolla, so by your logic that would make it smaller than a Corolla and thus should get better fuel economy?
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May 31, 2010 18:14
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necrobobsledder posted:Yeah, cubic volume doesn't necessarily mean "perceived volume" nor "usable volume" either. You could build a tall-rear end Homer Simpson car and the volume might be high, but it'd be cramped as hell. I would like to try some of this logic. What year is your Corolla? Older than 1980? Because I don't know of any generation of Corolla that gets 48mpg highway. And the bolded part is just  .
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May 31, 2010 20:41
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quote:I have an '05 - I was considering the '05 Prius at the time, which would make it the 2nd generation or so. That got about 34 mpg highway and my Corolla gets 37-38 mpg (measured by myself doing around 3k RPM at 75 mph on cruise control from full to empty). No, according to the EPA, the 2005 Prius got 45mpg on the highway and the 2005 Corolla (5 speed, 1.8l engine) got 37. The reason the EPA figures are better than your anecdotal figures for comparison purposes is that the EPA runs a carefully controlled test cycle on a "rolling road" dynamometer where all the potential variables, are kept constant. This is why carmakers also use the EPA mileage figure in their promotional material, as opposed to "random internet driver anecdotally got 38mpg as he measured himself". Does it replicate perfectly your own driving cycle? No, but unless you have conducted the same kind of testing where all the variables are controlled for, anecdotes are just anecdotes. That's all I'm saying. I'm not telling you to buy a Prius, just making a factual correction.
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May 31, 2010 23:02
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moana posted:I mentioned to my boss that I was looking to buy a car in the near future, and he told me that I should check out a nearby Manheim car auction - apparently it's dealer only, but you can pay someone a couple hundred dollars to bid for you, and that's how he got his last car. This is the site for the auction. I've never heard of anything like this, and googling seems not to turn up too much info besides the fact that they're dealer-only wholesale auctions. Has anyone ever dealt with something like this before? There's at least a few AI regulars that work for them, or something similar, so they could probably tell you more, but yeah, essentially when dealers get stuff back off lease or trade ins, it goes to the auctions. Used car lots then buy at wholesale and sell to you retail. I think if I were in the market for a newer-ish used car, that's the direction I would go, although I've never done it personally. I guess the upside is that you pay wholesale plus a few hundred bucks, the downside would be that you better know what you want, how much to pay, and have all your financing sorted out in advance, just like a dealer would - there's a reason they're dealer only.
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Jun 3, 2010 05:19
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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... http://forums.somethingawful.com/showthread.php?threadid=3213538&userid=0&perpage=40&pagenumber=5#post368677717
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Jun 12, 2010 06:04
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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. 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 14:52 on Jun 12, 2010 |
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Jun 12, 2010 14:48
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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.
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Jun 12, 2010 15:22
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Leperflesh posted:
So you're saying that new cars cost more than used cars? Amazing. So by that principle since hamburger is cheaper than steak, no one should ever eat steak, and no one should ever buy new clothes either as there are perfectly serviceable garments available at Goodwill for a fraction of the price? The comparison is between buying a new car and leasing a new car because that's the apples to apples comparison. Comparing leasing a new car to buying an old car is apples to oranges. quote:
Leasing is the better option even if you keep the car forever. Throatwarbler fucked around with this message at 21:56 on Jun 12, 2010 |
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Jun 12, 2010 21:42
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^^^ Sorry.moana posted:Isn't this a losing proposition to begin with? I mean, car dealers ostensibly are calculating expected depreciation, then increasing that a bit in order to not lose money. Like insurance - you are always going to have negative expectation SIMPLY BECAUSE they need to be making money off of you. To decrease that variance, you're paying a premium. Isn't it the same with a lease? Again, this is making unfounded assumptions about the carmaker's cost structure. They are not selling you pork bellies, there are many costs associated with the cost of a car that are far beyond yours or mine ability to comprehend, how do YOU know that there is always a "premium"? If carmakers were perfectly rational, then they would never lose money on any cars they sell, because otherwise, they would just keep losing money until they go bankrupt and are taken over by the government, and that obviously can't happen, right? Don't worry about what this or that costs the car maker. They sell you what they are willing to sell, you buy what you are willing to buy. That's all there is to it. quote:- paying the premium to reduce risk is a financially wise option (something that I disagree with for many types of insurance for the same reason as stated above) 1) As I explained, there isn't necessarily a premium. 2) You are not clear on exactly what you are comparing here. Take a step back and think about this. Your scenario is basically saying that at the end of the lease term, the cost of a 3 year old car identical to your leased model may be lower than the buyout cost, in which case you would want to return your lease and buy the use one, right? The bit you are missing is that your lease payments are composed of a financing charge (which we will ignore here) and a monthly payment for the depreciation. If your identical car has a higher buyout value at the end, it must necessarily mean that you paid less in depreciation. So comparing your situation to that other sucker, he bought the identical car outright and now needs to unload it for less than your buyout value, meaning that he has paid *more* in depreciation than you have. You've already WON. Now you are correct that you can gain even further by returning your car and buying his used model, and you are correct that there is more risk, but consider that at the end of the lease, his car will basically have just reached the end of the warranty period, during which he would have every incentive to keep the car properly serviced. Throatwarbler fucked around with this message at 22:00 on Jun 12, 2010 |
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Jun 12, 2010 21:55
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shredswithpiks posted:Isn't the idea that leasing is the better decision assuming that the actual depreciation of the car is more than expected, and that your use of the vehicle with conform to all the bureaucracy of the lease terms, No, if the actual depreciation of the car is less than expected, you can sell the car for that amount and pay out your lease, and come out ahead(well, not lose as much). quote:and that there's not much opportunity cost of losing $monthlyLeaseAmount from your cashflow, and neglecting the risk of signing yourself up for a $180/month contract? If you pay for your car outright and lose your job at least there's no guy ready to come kick you in the balls because you couldn't give him his money this month. I don't understand what you are saying here. Yeah, the guy coming to kick you in the balls is doing so because you got the car but didn't pay for (all of)it. Yes if you pay for all of it up front, he won't kick you. On the other hand if you don't give him all your money up front, you have more of it left in your pocket. Do you like having money in your pocket? Throatwarbler fucked around with this message at 22:23 on Jun 12, 2010 |
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Jun 12, 2010 22:15
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moana posted:Thanks for explaining this thoroughly. I've never considered leasing a car before, so these are a lot of new ideas that I'm still trying to absorb. Do you think there is there any situation where it would be better to buy a new car than to lease? In strict financial terms, not really. I guess the thing to keep in mind is that you are negotiating on price on a lease just like you are on a purchase, so it's a fair point that one could certainly get sucked into a very expensive lease deal, but I would maintain that if you fall into a bad lease deal, it is likely that you wouldn't have done any better with a purchase deal. Could the seller offer you a better purchase deal than a lease deal? Sure, but there isn't really any intrinsic reason for him to do so. I was listening to the Autoline Detroit podcast where they interview an ex new car dealer, and he was advising all new car dealers to do as many leases as possible, because a leased customer in 3 years is at least another POTENTIAL repeat customer, where as with the way the economy is going, a purchase customer in 3 years is almost certain to be underwater on his loan to the extent that he would be very reluctant to take on more debt. quote:
On the subject of used cars, on the one hand, modern cars are generally quite well built, and since we are talking about 2 or 3 year old cars, they would at least still be in the warranty period, and thus the previous owner would have every incentive to keep up with maintainance. One could look at maintainance records, of course, and also hire a mechanic to properly inspect the car to ensure everything is kosher. On the other hand, of course there's not a 100% guarantee that the PO didn't do anything stupid, and certain kinds of cars, i.e. sports cars popular with young men, tend to be driven harder and dumber than others. I guess I would put it as a general principle that you can either spend time, or spend money. If you have more time than money, you can take time to read up on problems specific to certain car models, post threads in AI to better understand things, read more on cars and generally educate yourself about what to look for. I think if you have a good idea of what to look for, the common problems associated with a car model, and a good handle on what market prices are, you will do fine with used cars. I appreciate that it's not necessarily for everyone, though. quote:Faceless Clock's reply to Leperflesh seemed to indicate that buying a new car, then running it into the ground would be less expensive than leasing it forever (until it's paid off). I would submit this is not the case, because a lease with the intention of buyout at the end of the lease does not cost more, in NPV terms, than a purchase, and even if you intend to buy the car out at the end, you should still lease, because there is no downside. This is confusing for most people because the payment structure of a lease is different from that of a financing agreement, which makes the comparisons a little difficult. A financing deal is where you take out a loan, buy the car, and pay off the loan in 3 years, which is fairly easy to understand. A lease is where you take out a loan, buy the car, and then every month pay an amount equal to the depreciation, plus the interest accumulated on the loan balance, which is being reduced every month by the amount you are paying in depreciation. Without going into exact calculations, it is a given that in absolute terms, you are paying more in interest in a lease than in the financing deal, because in the financing deal, you pay off the entire loan amount in the term, while in the lease you are only paying off the depreciation. So in a lease, you pay more interest because you are paying less up front. This is why I say that if you net everything out, including the opportunity cost of the difference between the principle payments on the financing loan and the lease loan, you will come out to the same figure.
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Jun 12, 2010 23:19
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Just to drive the point home, maybe you're wondering if leasing is such a good deal for us, who is paying for it? http://www.businessweek.com/magazine/content/08_31/b4094064675897.htm?chan=top+news_top+news+index_news+%2B+analysis http://www.thetruthaboutcars.com/gm-on-the-hook-for-up-for-1b-in-gmac-lease-losses/ If you leased a BMW or other German luxury SUV, you've done well, because you're costing them hundreds of millions in losses. If you leased a GM or Chrysler SUV, you've also done well, because all their losses have been absorbed by the government and taxpayer, through the GM nationalization and TARP assistance to GMAC. IF you BUY a car, then you're just a bag holder.
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Jun 12, 2010 23:39
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Arzakon posted:But what if I don't care about depreciation and understand that the maintenance on an extra 1000 miles will be minimal compared to $.10-15/mi direct cost of going over on my lease. We have already covered this multiple times. If you feel your total cost (the paid up depreciation + extra mileage) exceeds the actual depreciation, you can sell your car for your actual value. quote:Let's say I buy a base Mazda3 for $16K (Edmund's invoice price) at 0% and pay $267 for 5 years. I have no idea what you are trying to get at here. Are you trying to say that old cars are worth less than new cars? I knew that already. quote:And can we drop the ludicrous notion that car manufacturers went bankrupt because their independent dealers were not good at math when writing leases rather than because US auto manufacturers had nothing to offer a changing market with increasing gas prices and their own growing labor and benefits costs? Leases are not written by independent dealers, they are done mostly through the captive financing arms of the manufacturers who then package them into CDOs to be sold to other investors. I never said that was the ONLY reason they went bankrupt, I was addressing the point about how car makers could not possibly write a deal that did not benefit them. What exactly is your point here? quote:I already conceded the point that if you lease an expensive SUV or European car than you have come out way ahead. I am focusing on "Hey I am making a little money now and I think I want to buy/lease a reasonably priced automobile" and not "Hey I'm either rich or retarded and want to know how to lose only $40K instead of $60K on my baller vehicle". Okay? So because you make a little money, $20k isn't real money?
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Jun 13, 2010 03:52
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Arzakon posted:I'm saying that buying a car and driving it for 12 years costs you less than taking out 4 leases over a 12 year period. You said otherwise. I showed that not to be the case on base model vehicles to the tune of $12,000+cars value, minus the minimal levels of maintenance a car under 150K miles will need. You must be confusing me with someone else, because I said none of these things and as such have no response. Maybe you should go back and read it again. I find this style of argumentation tiresome and unproductive.
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Jun 13, 2010 05:09
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Arzakon posted:You even bolded it. Unless you are saying paying thousands extra to lease a car for three years then buy it out would somehow be a better financial decision. Can you show me a lease agreement where the lease payments + buyout would be anywhere close to just buying the car with 0% financing? 1) Read the following quote and ensure you understand it exactly. Throatwarbler posted:This is confusing for most people because the payment structure of a lease is different from that of a financing agreement, which makes the comparisons a little difficult. A financing deal is where you take out a loan, buy the car, and pay off the loan in 3 years, which is fairly easy to understand. A lease is where you take out a loan, buy the car, and then every month pay an amount equal to the depreciation, plus the interest accumulated on the loan balance, which is being reduced every month by the amount you are paying in depreciation. Without going into exact calculations, it is a given that in absolute terms, you are paying more in interest in a lease than in the financing deal, because in the financing deal, you pay off the entire loan amount in the term, while in the lease you are only paying off the depreciation. So in a lease, you pay more interest because you are paying less up front. This is why I say that if you net everything out, including the opportunity cost of the difference between the principle payments on the financing loan and the lease loan, you will come out to the same figure. 2) Go to Madza's site and look at the current offers. You have 0% APR financing with downpayment and approved credit. When I press the calculate button the default is a downpayment of $2000. This is reasonable so we will use it in our assumption. The MSRP , also shown on the lease calculation, is $17,855. Using Excel's NPV function, a discount rate of 4.25%, monthly payments of $264.24 for 60 months, the NPV of your total outlay works out to $16,261. You have the $199 lease deal, for the same car MSRP $17,855. Note here that the actual amount financed turns out to be $16,400(see small print), because that's the lease offer ($1,550 off MSRP). This is equivalent to the 0% APR financing deal, since you are not getting 0% leasing, they give it back to you somewhere else. These 2 deals are equivalent. You can of course do better or worse in person, in either case. Using the same Excel NPV function, same discount rate, total payments of $8159(see small print) with 0 due at lease signing(which confusingly makes it actually 41 payments of $199, not 42, but that's what it says there), the NPV of your total outlay works out to $16,260.84. I picked the discount rate of 4.25% because that seems to be the break even point for these 2 particular deals. The implied interest rate on the lease works out to about 4.6%, which is consistent. With a higher discount rate, leasing is cheaper, with a lower discount rate, buying is cheaper. Note that if your discount rate is lower than the lease rate, you can always pay more initially to offset the rate differential. quote:
I am saying that you can't predict the future. If you knew exactly what will happen in 3 years, you'll be rich. What if the car is a lemon? What if the car turns out to have a serious manufacturing flaw that renders it worthless, like happened with the automatic transmissions of the 2000-2002 Honda Accord? Or if the car company comes out with a substantially improved model 2 or 3 years on, as happened with the current Ford Mustang? It happens more often than you think. Leperflesh posted:If I indulge my hunch, I kind of think one or two folks have a pro-leasing axe to grind here. Which is fine, everyone has their pet peeves, and maybe this is just a perceived opportunity to improve the tarnished image of certain financial arrangements or something but come on, please let's try to give people who come to BFC for financial advice something other than a series of lengthy tirades about the injustices wrought by the ignorant anti-lease masses. No one posted anything about it until you made the following factually incorrect statement: quote:
Throatwarbler fucked around with this message at 15:16 on Jun 13, 2010 |
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Jun 13, 2010 15:07
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Leperflesh posted:
Those problems with the Honda continued beyond the warranty. The owners had to launch a class action against Honda to get anything, and even then not everyone did - many models that had similar problems were not covered. How about the leaking LIM gaskets on the GM 3.1/3.4l V6? The owners eventually won the law suit just in time for GM to be nationalized and all their obligations written off. quote:That's really the point, isn't it? You seem to place a very high value on having the option of easily getting rid of the car after the lease term is up. I think I, and perhaps a lot of other BFC types, put a low value on that (because financially it is almost always an expensive thing to do, compared to keeping your bought-new car for a lot longer). NO. The option to rid yourself of the car CAN be worth a lot, but as I have shown above, even if you don't exercise it, you still don't end up spending any more money in NPV terms than you do with a purchase. There really is no reason to buy a car versus leasing it. None. quote:But if I think I'm likely to only want to own a car for three years, I'll be a much richer man 12 years from now if I make a habit of buying 2 year old cars, owning them for another three, and then selling them, than if I engage in a series of three-year leases. I don't even know how to respond to this anymore without snark. Yes, 2 year old cars are cheaper than brand new cars, I get it. If you don't want a brand new car, don't buy one. Move on.
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Jun 13, 2010 19:00
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Leperflesh posted:asses cost  Yes, you should run your finances like a business. Why not? I personally run my life like Goldman Sachs and literally beat up and rob widowed pensioners and children on my way home from work.
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Jun 13, 2010 20:09
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I meant more in the vein of "don't spend money on dumb poo poo, spend it on making more money". What would you use to assess the cost? Do you assume that your own personal cost of capital is 0%? If so, I suppose you should just buy everything with cash, or maybe start your own car dealership.
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Jun 13, 2010 20:23
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Lyesh posted:You're assuming that the dealer's depreciation follows market depreciation. A 2007 Honda Civic DX runs around $10,300 from a dealer (according to edmunds). A 2010 Civic DX runs $17,200 MSRP. That means that depreciation on a Civic DX across 3 years is around $6900 at most (since your price for a new one is going to be below MSRP). They list the lease at $347.44 for 36 months, which is $12,400 total. 3 years interest on the loan (assuming 5% across 60 months) is around $1,900. $1,900 plus $6900 is NOT greater than $12,400. Guess what the extra's for. 1) Source your numbers. A few clicks over to honda's website gets me a lease offer of $159/month (albeit it looks like there's a downpayment) for 36 months. 2) I think that even if you found the right numbers, you've still missed the wider point. The buyback doesn't have to follow actual depreciation, because if the buyback was significantly less than the depreciation, you could just buy it out and sell the car. EDIT: You didn't lease a Civic DX for $347/month, did you? 
Throatwarbler fucked around with this message at 20:55 on Jun 13, 2010 |
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Jun 13, 2010 20:46
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Lyesh posted:No, because you have to find the value of the use of that $17000. The financier could have loaned out their money and gotten $1900 instead of what they're getting from the lease. I want you to take a step back and consider what has been posted so far. The Mazda3 that we just talked about MSRPed at about $17k, the same as this Civic you are talking about. The lease is $199/month/36month 0 down. Honda itself has a lease offer on a Civic DX for $159/month/36month/$1700 or so down. Now you are telling us with a straight face that it costs $347/month to lease a Honda Civic DX. I guess I agree that buying a Civic for $35k is a bad deal, which is what you seem to be suggesting.
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Jun 13, 2010 21:30
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Lyesh posted:Sure, in the same way that it costs MSRP to buy one. We also have to consider how likely it is for somebody to get the promo lease (I mean, do you need an 800 credit score or something) and whether or not that lease is a borderline bait-and-switch tactic. Yes, because if your credit score is below 800, it actually costs you $35k to buy a base model Honda Civic with a MSRP of $15k. :gun:
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Jun 13, 2010 21:37
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Just so we are clear, here is the lease for the Civic DX on Honda's website. I agree you should not lease a Civic DX for $347/month, because you can lease a base model BMW 328i or Audi A4 for about that much money. I have no idea how the $347 is arrived at(granted I followed the link and there it is) and I'm not particularly interested in finding out.
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Jun 13, 2010 21:48
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Lyesh posted:As it turns out, I'm dumb and didn't read all the fine print on the special lease offer. Here's the relevant bit: If you have bad credit, you will also not be able to get the best interest rate on a loan, either, and you can haggle on the price in a lease too. Leases are based on price too. I'm just completely bewildered by the $347/month. How bad does your credit have to be for them to literally charge you(you in general, not you forum poster Lyesh) more than twice the list price, and for you to take it?
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Jun 13, 2010 22:02
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v, assuming that you can't get that car much below $16,400 if you're taking out a loan.
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Residency Evil posted:Quick question for you, just to complete my understanding of this. If you're interested in leasing a car, you would want to negotiate for both the lowest buy price as well as the lowest buyout price, correct? So you could lose ground on one to make some up on the other? Yes, you should negotiate the lowest buy price. As for the buyout price, there are a number of things to consider. If you have a higher buyout price, you are paying less in depreciation (depreciation is the difference between buyout and purchase price divided by the number of months) but more in interest, since you are paying off less principle on the loan. If on the other hand, you go for a lower buyout price, your monthly payments are more, but you'll pay slightly less in interest, plus at the end, if the market value of the car is higher than the buyout, you could sell the car and recover some of your payments (it's not really a "gain", since you're just getting back extra depreciation that you paid for but didn't happen. I guess the concept would be similar to having "equity" in your house). You could do a spreadsheet to model how exactly each variable affects your bottom line, but I think it's probably easier to just take the buyout price as given and negotiate on the purchase price. Now I'm of the opinion that car dealers are pretty free wheelin' with what they can and can't do, but the general policy in most new car deals is that they move on the purchase price and the buyout is fixed, so it's probably an uphill battle if you want to change the buyout, for questionable gain.
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Jun 14, 2010 18:26
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asmallrabbit posted:I should have noted that these are Canadian prices. I have looked at BMW as well and I just did not like them as much. Here's a thread detailing the deals on Audis in Canada. There was a "suppliers discount" a while ago but I don't know if it's still on. The plain fact of it is that Audi is largely a Chinese car maker and the majority of their sales are in China, they really don't give a poo poo about North America and especially not Canada. The last gen RS4 had a MSRP of over $100,000, compared to about $63k for a C63 AMG or $69k for a BMW M3. They're that good. You'll be paying top dollar. but if your lifelong dream is a $50k 4 cylinder FWD compact car, who am I to argue with you.
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Sep 17, 2010 00:06
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How did people have kids before SUVs? 
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Mar 11, 2011 23:51
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You can check on gates or dayco's site but I'm pretty sure the B6 Passat's 2.0T is the newer timing chain type.
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Apr 12, 2011 03:33
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CelestialScribe posted:So I'm looking at a 2003 Ford Focus. It has 40,000 miles on it, full service history, no major repairs, etc. $9,000 and I'm financing $7,000 of that - easily knocked off within a year, if that. I have more cash to put down but don't want to take it out of my emergency fund. It's a good choice generally but the price seems high. Maybe try for closer to $7k? If it has the CVH engine then you need to watch out for the timing belt change interval. You should post a question in the AI stupid questions thread since there are a lot of guys there who know a lot about Ford Focus.
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May 2, 2011 04:02
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Earth posted:I hate car shopping. I hated it when I was buying my first car January of 2005, and now that I'm in the process again six and a half years later I hate it again. The necessary evils that we have to go through. A little background. I'm a fully employed engineer, and next fall I plan on going back to college to do a graduate degree. The college is very expensive, and while I hope to attain funding, there is no guarantee. So I've got to be financially savvy with my choice. Your link doesn't work for me, but which model are you looking at? The Impreza is going to a new body style next year so there would be discounts on the current body style.
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May 13, 2011 03:57
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Earth posted:That's strange, I tried the link and it doesn't work for me either. Google "Subaru Special Offers" and it's the first link with the same URL as I posted. Are you absolutely set on the manual? The CVT Legacy gets significantly better fuel economy due to its CVT and more efficient part time AWD. I've driven it and its perfectly adequate, and this was with the smaller 2.0l 170hp engine (not sold in the US). It should also be cheaper too.
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May 14, 2011 19:57
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| # ¿ Apr 25, 2024 17:37 |
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If you are looking for a "bang for the buck" used car, there is no reason to even consider either the Camry or Accord.
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May 20, 2011 18:21
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