Register a SA Forums Account here!
JOINING THE SA FORUMS WILL REMOVE THIS BIG AD, THE ANNOYING UNDERLINED ADS, AND STUPID INTERSTITIAL ADS!!!

You can: log in, read the tech support FAQ, or request your lost password. This dumb message (and those ads) will appear on every screen until you register! Get rid of this crap by registering your own SA Forums Account and joining roughly 150,000 Goons, for the one-time price of $9.95! We charge money because it costs us money per month for bills, and since we don't believe in showing ads to our users, we try to make the money back through forum registrations.
 
  • Post
  • Reply
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.


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.

1) The comparison you need to make is between buying a car out right, driving it for x years, and then selling it, vs leasing the car for x years. You must accept this premise if you wish to make a valid comparison. If your objection is "well I really like this car and I'm going to keep it forever and ever", then it ceases to become a valid comparison because you can't lease a car forever and ever, or rather, since the value of the car eventually goes to 0, there is no difference, because....

2) A car is worth A at year 0, and B at year 0+x, regardless of the mode of ownership. Leasing a car for x years is exactly the same as purchasing a car for x years and then selling it, except that with a lease, THE BUYER HAS THE OPTION, NOT THE OBLIGATION TO RETURN THE CAR TO THE SELLER AT A PRE-AGREED UPON PRICE. If you understand what an option is, you understand that it is worth money, since it reduces your risk. A car may be quite popular at year 0, but what if <x years down the road, something suddenly happens that radically reduces the value of the car at year x? For example, suppose you have a GM car with the 3.8l V6 engine that has been found later to have a defective intake manifold gasket? If you own the car outright, you suffer the decreased resale value. But if you had leased, you are protected from this downside risk to some extent, because you have the option of returning the car to the seller at a pre-agreed upon price.

3) Because the lease is an option, and not an obligation, you still reap the rewards of any sort of move in resale value in your favour. It doesn't happen often, but suppose you lease a G8 GXP and then GM discontinues the model forever, making it somewhat collectible. If the resale value is suddenly higher, you can sell the car before the lease is up and benefit from it. I know this was the case with the VW R32, because VW imported so few of them that demand far outstripped supply. There is no downside for the lessee at all.

4) The way a lease is typically presented confuses the buyer with the Time Value of Money calculations, which are somewhat different for leasing than for buying. The key thing you want to understand is that the TMV calculation has nothing to do with the mode of ownership. You want to pay a lower interest rate, regardless of whether you own it or lease it, and you obviously want the highest residual value at the end, which can be negotiated just like the purchase price. You can actually think of them as being the same thing - keep the same purchase price and negotiate a higher residual, or keep the same residual and negotiate for a lower purchase price, it makes no difference. If it is helpful, just go back to the last point and think of the lease as simply you purchasing the car outright at the beginning, and selling it back at the end of the lease.

5) Back in the days of subprime loans, manufacturers could actually offer significant incentives in the form of artificially higher end-of-lease residuals, over and above their usual purchase incentives, called "subvented leasing", because the leases could be packaged up into collateralize debt obligations and sold off the companies books. The German companies in particular have been profligate in this regard, and are now suffering massive losses in their lease portfolios, because they "lost" the bet on leasing. Of course, they weren't going to "win" that bet in any case, on an individual basis, for the reasons I've already explained. The car makers "win" by having another avenue to move units off the lot, since leasing cars, even at disadvantageous terms, is better than keeping unsold units on the lot. Carmaking is a capital intensive business in that respect. The domestic Big 3 have been hit so badly, with their lease portfolios heavy in gas guzzling SUVs whose values plummeted during the surge in gas prices, that they stopped all leasing during the last worst melt down period. Their loss has been the lessee's gain. If you leased a German SUV during the height of the subprime boom, you have reaped a windfall at the expense of the German car makers. If you leased a GM or Chrysler SUV, enjoy your windfall courtesy of the American taxpayers who's money bailed out GMAC.

6) To go back to point #1, what if you really, really want to keep a car for ever and ever? Well, in that case, leasing is no worse than buying - just keep the car at the end of the lease. If the buyout price is higher than the market value for the same car, return it and buy on the used market. If the buyout price is lower, then congrats, you've won. This is overall a stupid idea in any case. Cars 5 years from now are likely going to have more features, more power, be safer and more fuel efficient than they are now, and furthermore, the key question I always ask is if you are willing to drive a 5 year old car 5 years from now, why aren't you willing to drive a 5 year old car RIGHT NOW? It would definitely be cheaper than either leasing or buying a new car right now, and normal people generally want to have better things as they get older and progress in life, I don't know anyone who comes out and says "I really want to spend the money on a brand new car RIGHT NOW, but 5 years down the road? Meh. I've probably given up on life at that point so I'll just keep driving a 5 year old beater.". It's not really an argument for or against leasing, but it's certainly a strange way to go through life.

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.

Adbot
ADBOT LOVES YOU

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.


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.

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.


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 seems to me that you're suggesting that it'll come out nearly the same in terms of the total amount a person puts in in payments depending on interest?

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.

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.


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.

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.


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.

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.


SuperCaptainJ posted:

Ok, well I'm a liberal left-coast radical and I think it's a fine comparison to make

I could say something like "then why does Toyota make a hybrid Camry to compete with it's own sedan hybrid?",


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:

2010 Corolla EPA passenger volume (cu. ft.): 92.0
2010 Prius EPA passenger volume (cu. ft.): 93.7
2010 Camry EPA passenger volume (cu. ft.): 101.4

Cargo volume is larger for the Prius of course due to the hatchback, but obviously passenger volume is more comparable between the Corolla and Prius.


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.
At any rate, Moana is talking about Civics and Corollas vs hybrids so this conversation is irrelevant

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.

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.


Faceless Clock posted:



The Prius is not, under any circumstances, a vehicle comparable to a Toyota Camry.

No circumstances except for the law of the United States and the SAE.

EPA posted:


Title 40: Protection of Environment
PART 600—FUEL ECONOMY OF MOTOR VEHICLES
Subpart D—Fuel Economy Regulations for 1977 and Later Model Year Automobiles—Labeling

Browse Previous | Browse Next
§ 600.315-82 Classes of comparable automobiles.

(a) The Secretary will classify automobiles as passenger automobiles or light trucks (nonpassenger automobiles) in accordance with 49 CFR part 523.

(1) The Administrator will classify passenger automobiles by car line into one of the following classes based on interior volume index or seating capacity except for those passenger automobiles which the Administrator determines are most appropriately classed as special purpose vehicles as provided in paragraph (a)(3) of this section:

(i) Two seaters. A car line shall be classed as “Two Seater” if the majority of the vehicles in that car line have no more than two designated seating positions as such term is defined in the regulations of the National Highway Traffic Safety Administration, Department of Transportation (DOT), 49 CFR 571.3.

(ii) Minicompact cars. Interior volume index less than 85 cubic feet.

(iii) Subcompact cars. Interior volume index greater than or equal to 85 cubic feet but less than 100 cubic feet.

(iv) Compact cars. Interior volume index greater than or equal to 100 cubic feet but less than 110 cubic feet.

(v) Midsize cars. Interior volume index greater than or equal to 110 cubic feet but less than 120 cubic feet.

(vi) Large cars. Interior volume index greater than or equal to 120 cubic feet.

...

c) All interior and cargo dimensions are measured in inches to the nearest 0.1 inch. All dimensions and volumes shall be determined from the base vehicles of each body style in each car line, and do not include optional equipment. The dimensions H61, W3, W5, L34, H63, W4, W6, L51, H201, L205, L210, L211, H198, and volume V1 are to be determined in accordance with the procedures outlined in Motor Vehicle Dimensions SAE J1100a (Report of Human Factors Engineering Committee, Society of Automotive Engineers, approved September 1973 and last revised September 1975) except as noted herein:

Toyota does make a "large car", it's called the Toyota Avalon. Hope this helps.

Throatwarbler fucked around with this message at 14:48 on May 31, 2010

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.


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.

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.


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.

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.


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.

The Prius has a lot of interior space because of the hatch and because the toaster profile gives a ton of headroom, which must be nice for tall people. An Echo with a 6 foot expanding camper top mounted on the roof would be EPA midsize or larger, it's still not a large car.

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?

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.


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'm perfectly happy with my Corolla partly because I've wound up driving at least 70% of its miles blasting along at 75+ MPH (I've driven cross-country lots of times and do a lot of long-range car trips). A Prius gets worse gas mileage on the highway than the Corolla, so it's worked out better for me than the what, 28 mpg I get city? Oh no, I could have gotten 60 mpg for that 30% (about 18k) that I drove, I'm an environmental monster that should be fined... Never mind the fact that I saved gas over the Prius during the other 70%...
Completely true - why else would there be Lexus and Mercedes hybrid cars? Whoever can afford a Lexus or Mercedes likely doesn't give a rip about trying to save $50 / mo in gas but it becomes a political statement that they're willing to pay an extra $5k+ for. This is precisely the problem with "green" marketing and such - it is a much higher initial capital outlay to actually "go green" and it's purely a long-term benefit, oftentimes for others, not necessarily yourself. It makes it even tougher to justify this kind of spending practice and charity toward one's society when we're in the middle of a full-blown depression in the US.


Go ahead and buy whatever you like - it's a free country as far as your dollars are concerned - but if you're not about to use logic to quantify something very much about dollars like gas mileage and TCO, your mind is already made up and there's nothing that'll convince you otherwise.

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 :psyduck:.

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.


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.

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.


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.

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

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

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.

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.


Leperflesh posted:


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.



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:


-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.


Leasing is the better option even if you keep the car forever.

Throatwarbler fucked around with this message at 20:56 on Jun 12, 2010

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.


^^^ 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)
- that returning your leased car after a few years and buying a used one on the market is equivalent to keeping a car that you bought new. In the latter case, there is much less risk in terms of knowing what has been done to the car.

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 21:00 on Jun 12, 2010

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.


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 21:23 on Jun 12, 2010

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.


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:


I mean, you say in your previous post that "If you are willing to drive a 5 year old car 5 years from now, why aren't you willing to drive a 5 year old car RIGHT NOW?" In my case, I was thinking that it would be nice to buy a new car and keep it forever because I don't mind driving a used car. The main concern I have with driving a used car is not knowing its entire history. I'd love to be able to get a car and maintain it properly without having to worry about any hidden issues and just drive it into the ground (or give it to one of my future kids). At least for me, this is the main point of contention between buying a new car and buying one that's a few years old, not being willing to drive an old car or not.


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.

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.


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.

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:

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.

Or I can lease the same car on special for $199 for 36 months.

Purchasing the car cost me $16K and I will get to drive it for at least 12 years.

Leasing will cost me $7200 and then I either have to buy out the lease or find a new car. If the buyout is less than $8800 than hooray I just made money because a dealer wrote a lease with absolutely no upside for him. If the buyout is more than $8800 then you just paid more than you could have bought it outright for. Lets say that you decide to lease again because you didn't have a magical buyout price, and that you won't get one either for your next 3 cycles.

12 years = 4 leases = $28800. You paid a premium of $12800 to get a new car every 3 years for 12 years. Not to mention my 12 year old car is still worth $2-3K if I took care of it. Drop all of this to a 6 year time scale and you still paid $14400 to swap cars every 3 years where-as I own a 6 year old car that is still worth $4-5K and I only paid $1600 more than you.

So yeah if I buy/sell often I'll probably break even with a lease in 5-7 years depending on my depreciation. After that buying crushes leasing when you are talking cheap cars.


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?

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'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.

My point is you are trying to say that auto manufacturers leasing SUVs then having gas go to $4/gallon, destroying their residual value caused them to go bankrupt. At the very least you were implying that it was more than a minimal factor. One of your links gave a $1b loss for GM and mentioned SUVs/trucks as the cause. Their bailout was $49.5b. A drop in the bucket and by no means does it mean leasing a small automobile is a good idea.

No, I'm saying its completely irrelevant to the person originally being given advise asking if they should buy or lease a base model Impreza. Unless they are getting an WRX STi for $180/mo then they should jump on that.

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.

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:

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:



You are saying I should pay extra to hedge my bet that the car will be worth more at the end of the lease than I am paying to then buy out the car. You are missing the point that the cars value at 36 months is irrelevant in the purchase scenario because I plan on driving the car into the ground then junking it.

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:


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.


Throatwarbler fucked around with this message at 14:16 on Jun 13, 2010

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.


Leperflesh posted:


Then you'd be covered by the lemon laws and you could be rid of your lemon.


Then you'd be covered by your warranty, and you could get the issue fixed.




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.

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.


Leperflesh posted:

asses cost

:c00lbutt:

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.

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.


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.

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.


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.

Hint: it's the risk premium for the dealer. Which yes, they do gently caress up. But not every single time.

Edit: then again this does depend on the buyout price. Anyone actually have data on that?

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? :ohdear:

Throatwarbler fucked around with this message at 19:55 on Jun 13, 2010

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.


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.

source: go here, click the DX automatic, and click the "Monthly Payments" button.

If you use the special offer you're assuming that you'll qualify, you also have to figure out how the capital cost reduction figures in (not that much, probably about $2000 after three years at a 5% discount rate), and you probably face restrictions in terms of what model you can get. Additionally, the buyback is a vital number.

I actually agree that leases can be great if you like new car smell a lot; my issue is with the assertion that the depreciation a dealer charges is going to always be less than the market depreciation.

edit: gently caress no, I've had my (used) car for about four years and am planning on keeping it for at least four more.

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.

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.


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:

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.


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.

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.


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:


Adding the $5724 in payments to the $1240 cap cost reduction gives us $6964, which is around the $7k in depreciation that the market would give us.

So, yeah, special lease offers can be better than buying outright v :) v, assuming that you can't get that car much below $16,400 if you're taking out a loan.

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? :psyduck:

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.


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.

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.


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.

Sorry, I made a mistake, the max term i could get 3.9% for would be a 6 year term, not 7. Although regardless I would not plan on actually taking that long to pay it off.

The special edition offer requires me to take delivery by the 30th ( if the car is even available that long, only 200 in canada) so I do not have the time to sell my vehicle privately and include that in the downpayment. Would it still be better to sell it privately and use the proceeds to put extra on afterwards vs a half decent trade in offer from the dealership?

How do I go about negotiating a good price, I feel like I am going to be at a disadvantage in that they know I will want the car, there are limited ones available and because its a special edition I don't know if i can figure out what the wholesale price is for the vehicle. I'm still willing to walk if I feel like I am getting screwed so there is that at least.

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.

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.


How did people have kids before SUVs? :monocle:

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.


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.

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.


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.

My question is, is there anything about a Focus I need to be aware of? After speaking with some mechanic friends they seem to think everything is fine, but I thought I'd check here as well to see if anyone knows of any small things I should know before plunging in.


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.

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.


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.

To start things off, I'm really interested in a Subaru. For some reason I just love these cars. The look, the locations that they're popular, I hear they are super reliable from friends that own them. I want BFCs opinion on these guys. Also, right now Subaru has special offers going on: http://www.subaru.com/special-offers/index.html. If anyone has any experience with Subarus I would love to hear about it.

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.

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.


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.

I'm interested in test driving out the manual Legacy and Impreza . Quick numbers tells me that it comes out to $250 per month. Which is more than manageable throughout the next year of work and then the year to year and a half of college.


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.

Adbot
ADBOT LOVES YOU

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.


If you are looking for a "bang for the buck" used car, there is no reason to even consider either the Camry or Accord.

  • 1
  • 2
  • 3
  • 4
  • 5
  • Post
  • Reply