Win or Lose (Lease / Rent vs Buy)

[RustySpork]

It's burning money... vs buying the end game car.

It was simply the example you suggested earlier.. a porsche cayanne. That's not 'worst case' - that's what the schedule suggests. And is actually pretty good since its a porsche. For comparison.. a Ford Fusion, is scheduled to drop 9400 off it's 32k price - almost 30%.

As I said before (and noted in that post)... when buying there is a variable on your residual. It's beholden to market forces and what you can actually get. The dealer isn't going to give you market value.. because they need to make money too. When buying you are assuming these risks.. when leasing you are pre-paying them and setting a schedule.

That is a ridiculous comparison because both sides are not doing the same thing. And if that's your belief.. you never would have made the thread...

In theory it's cheaper to buy... but you assume risks and volatility. For leasing, you pre-pay to avoid the volatility. That's pretty much it if you are talking about individuals (not business and ignore the milage/damage issues)

It's burning money (leasing) vs owning the car at the end. I also was specific in that you shouldn't consider a bottom of the line car, as it will lose more.

I made the thread so I could try to understand why a certain person thought burning her money was a smart idea (it's not).

You're right, in that you assume risks and volatility. The lesser the car the higher the risk generally.

 

[RustySpork]

I do want to add to this, So much is dependent on the vehicle in question, in both scenarios.

I think I've said that 19 times now, and every time you've avoided responding to that until now when you spin it around like it's suddenly your advice.

 

[21stamps]

I think I've said that 19 times now, and every time you've avoided responding to that until now when you spin it around like it's suddenly your advice.

It's burning money (leasing) vs owning the car at the end. I also was specific in that you shouldn't consider a bottom of the line car, as it will lose more.

I made the thread so I could try to understand why a certain person thought burning her money was a smart idea (it's not).

You're right, in that you assume risks and volatility. The lesser the car the higher the risk generally.

You're wrong. The lesser the car does not equal less equity. Expensive does not equal high residual.
Luxury brands and resale value are not what you are assuming they are. You're throwing out wild example of cars that most people don't drive. Except for the Cayenne, that's a relatively common car, but some of the others you mentioned are not. A price tag of a car has nothing to do with what it is worth in a few years. Go buy an A8 and then tell me how well it held it's value. You pay $110,000 and I promise you that you will lose a large chunk of that in a short time. You also will probably never meet someone who is leasing one..I'm sure someone does, but it would be very rare.
But an A4 or A7, they lease better than an A8. And Both are a much "lessor" car.
On non luxury brands you could have a Kia that's priced lower than a Honda, but the Honda has a better lease.
There's reasons for this, but you aren't grasping them.

This is a pointless thread because you are not listening, and are not understanding what anyone is saying.

 

[RustySpork]

You're wrong. The lesser the car does not equal less equity. Expensive does not equal high residual.
Luxury brands and resale value are not what you are assuming they are. You're throwing out wild example of cars that most people don't drive. Except for the Cayenne, that's a relatively common car, but some of the others you mentioned are not. A price tag of a car has nothing to do with what it is worth in a few years. Go buy an A8 and then tell me how well it held it's value. You pay $110,000 and I promise you that you will lose a large chunk of that in a short time. You also will probably never meet someone who is leasing one..I'm sure someone does, but it would be very rare.
But an A4 or A7, they lease better than an A8. And Both are a much "lessor" car.
There's reasons for that..but you are ignoring them.

This is a pointless thread because you are not listening, and are not understanding what anyone is saying.

You sure are a hoot.

That's ok, I've already been PM'ed a few times about you so I knew what to expect.

 

[21stamps]

You sure are a hoot.

That's ok, I've already been PM'ed a few times about you so I knew what to expect.

Nice.
I'm going to give you the benefit of the doubt and assume that you didn't mean anything that you said in this entire thread. Hoping that you didn't start one just to act clueless to provoke responses.
Hopefully.. good luck. You're on ignore now
Poor reason to start a thread, hopefully it just gets deleted as it deserves.

 

[LAKid53]

Okay first of all, you're not building equity in that time. Interest plus depreciation outpaces principle in the first few years of a car's life.

Separately, you're comparing apples and oranges if you change the time frame to 4-5 years. Most leases are 36 months. Yes, in years 4 and 5, financing begins to catch up with and possibly surpass leasing because the leaser will be into his or her second vehicle, likely with an additional down payment, while the purchaser's depreciation will have slowed down at that point.


No, neither is true. You own both.

Yes, there's a BIG difference between a lien (the bank) and the title/deed ( the borrower, i.e.owner).

I think Rusty would be shocked if he ever ran an amortization schedule for any of his loans....

 

[RustySpork]

Yes, there's a BIG difference between a lien (the bank) and the title/deed ( the borrower, i.e.owner).

I think Rusty would be shocked if he ever ran an amortization schedule for any of his loans....

You'll find one for an auto loan in this thread actually, several pages back.

 

[wm49rs]

Nice.
I'm going to give you the benefit of the doubt and assume that you didn't mean anything that you said in this entire thread. Hoping that you didn't start one just to act clueless to provoke responses.
Hopefully.. good luck. You're on ignore now
Poor reason to start a thread, hopefully it just gets deleted as it deserves.

And yet here is stays....

 

[LAKid53]

The leaser still gains nothing.



Kind of. Unless you have the title/deed in your possession you don't own it.

I have the deed to my house. MY name is on it, not the lender's. I pay the property tax, not the lender. I pay the insurance, not the lender. The lender is on it as the lien holder.

Possession of the document doesn't equate to ownership..

Captain's arguments are all correct. You are forgetting the compounding of interest over the life of a loan. Which is why paying a loan early saves you money, provided there's no penalty for early payoff.

 

[RustySpork]

And yet here is stays....

I certainly hope so.

 

[RustySpork]

I have the deed to my house. MY name is on it, not the lender's. I pay the property tax, not the lender. I pay the insurance, not the lender. The lender is on it as the lien holder.

Possession of the document doesn't equate to ownership..

Captain's arguments are all correct. You are forgetting the compounding of interest over the life of a loan. Which is why paying a loan early saves you money, provided there's no penalty for early payoff.

Sure. I know what compounding interest is, you'll find an amortization schedule in the thread. Remember 48 month loans here, not 60, not 72. If we were talking about 60 and 72 month loans, leasing could be better.

 

[LAKid53]

Can you take that car to CarMax or any other dealership where you did not purchase it, and sell it for the equity?



They gave me what I asked for. I saw the invoice on the new vehicle before I signed. If I don't, they don't close the deal. They turned around and re-sold the car for $500 more than they gave me on trade within 7 days.

You still haven't shown me the numbers, or the two year depreciation on the Porsche Cayenne.

If course they resold it for more than the dealer gave you on trade in. Dealers typically give you 50-60% of the FMV for your trade in..... Now, if it's a vehicle that has a high demand for used, they might give you more. But they will also adjust the sale price of the car your purchasing.

 

[21stamps]

I have the deed to my house. MY name is on it, not the lender's. I pay the property tax, not the lender. I pay the insurance, not the lender. The lender is on it as the lien holder.

Possession of the document doesn't equate to ownership..

Captain's arguments are all correct. You are forgetting the compounding of interest over the life of a loan. Which is why paying a loan early saves you money, provided there's no penalty for early payoff.

You can't rationalize this. I tried for several pages. Interest rates between 48 and 60 months are typically the same these days. The OP said he puts $0 down when buys a car. Goal- trade in 2-3 years.. But takes the shorter loan so he can apply more money to the next car, and get a better (more expensive) one as a result.
It's basically a backwards way of setting a savings schedule to use on a future purchase. A savings plan that you're paying interest on.

 

[RustySpork]

If course they resold it for more than the dealer gave you on trade in. Dealers typically give you 50-60% of the FMV for your trade in..... Now, if it's a vehicle that has a high demand for used, they might give you more. But they will also adjust the sale price of the car your purchasing.

I'd love to sell you a car if you think this is the best you can do, and I don't even work in that industry.

You can't rationalize this. I tried for several pages. Interest rates between 48 and 60 months are typically the same these days. The OP said he puts $0 down when buys a car. Goal- trade in 2-3 years.. But takes the shorter loan so he can apply more money to the next car, and get a better (more expensive) one as a result.
It's basically a backwards way of setting a savings schedule to use on a future purchase. A savings plan that you're paying interest on.

You can't rationalize this because you're wrong. I didn't say that I put down $0, I said I roll the value of my car into the next car. That's not zero silly.

I also used math to show how putting that money into savings didn't work nearly as well as you indicated that it would but you being you pretended that never happened. I've added lots of math to back up everything I've said. You know who hasn't? You.

I'm wrong though, it's cool.

 

[MinnieM123]

Unlike some of the posters here, I do not have any financial background.

Yet, after looking through the automotive sales section of the Sunday newspaper today, the dealers were all pushing leasing. (In the smaller print, they'd then list the sales price of the car, if you wanted to buy it instead.)

Hence, IMO, the dealers are probably making more money on leasing. I mean, otherwise, wouldn't they be pushing the sales prices in the larger print--if they wanted people to buy, versus lease?

 

[LAKid53]

A bank.

Not necessarily. World Omni is the financing arm of Toyota. GMAC was the financing arm of GM, until Ally purchased it.

You will do better, rate wise, if you finance through your bank, rather than the dealer.

 

[21stamps]

Kind of related (to the sports car talk). I had remembered an article that I read and just googled it..
It's pretty funny. Uber replacing Sports Cars.
This is the most wise decision of all


It's not uncommon for developers to includesports cars in package deals with luxury real estate. One condo tower in South Beach once gave away a Lamborghini Gallardo Spyder to every buyer. In fact, it was speeding in South Beach in a Lambo that finally ended Justin Bieber's international spree of mischief. Heck, just two years ago, the Greater Miami Convention & Visitors Bureau offered free rides to New Yorkers in cars like a bright-orange McLaren as a publicity stunt. That's how strong the connection is between Miami and fine European supercars.

Yet we've recently realized just how stupid owning a luxury sports car in Miami is, and it was megadirector Michael Bay, of all people, who made us see the light.

Michael Bay loves his fancy sports cars. Just about every movie he's ever directed has prominently featured them. The only exceptions are Armageddon and Pearl Harbor, but only because those films were set in space and 1941, respectively. His biggest franchise, Transformers, features sports cars as characters. That's how much the man loves a good car.

Bay lives in Miami in a North Bay Road mansion (the place is set up with equipment so he can oversee all the postproduction of his films right from Miami Beach), but in a recent profile in Rolling Stone, he revealed he's selling all of his sports cars because, well, it just doesn't make sense to own one here:

Do you hear that, guys? Michael Bay — Michael ****g Bay — a man whose cinematic oeuvre is synonymous with explosive car chases and who casually revealed in the same interview his net worth is about half a billion, is selling his sports cars in favor of the more sensible option of Uber!

And you know what? He's right! It is stupid to drive a sports car in Miami.

Cars like Lamborghinis and Ferraris are meant for race tracks and the high-speed autobahns of Europe.

They aren't meant to stop every two blocks at an intersection in South Beach while trying not to drive through sea-level-rise-inducedpuddles in between. They aren't meant to sit in gridlock on the Palmetto Expressway. They aren't meant to get caught up in a downtown traffic jam while waiting for that dan drawbridge over the Miami River.

Miami's horrible traffic and hopelessly overworked roads have rendered driving a sports car here useless.

It's like buying a $3,000 MacBook Pro just to check email. It's like wearing Givenchy Couture to the grocery store. It's like putting caviar in your PB&J. It just ain't right.

Respect the machine! Don't doom it to a life of puttering in bumper-to-bumper traffic.

So there are very few places here to drive a supercar like it's meant to be driven, and even when you do own it, you can easily be mistaken for a chump tourist. What's the point?

We'd love to think that all sports car owners would follow Bay's lead and switch them out for an Uber ride (or even public transit, but we're nerds), but if you've still got to flaunt your wealth by your choice of wheels, at leastbe smarter about it. A handsome luxury sedan like a Maybach or Bentley is a much more sensible option when it comes to sitting in Miami's horrible traffic.

 

[RustySpork]

Silly words that make no sense to try to change the topic.

Fixed that for you. Go home @21stamps, you're drunk.

 

[flynnibus]

Captain's arguments are all correct. You are forgetting the compounding of interest over the life of a loan. Which is why paying a loan early saves you money, provided there's no penalty for early payoff.

The reason selling a car near-new is viable at all is because the loan rates on a short term auto loan are so cheap. Less than 2.5%. On a 40k loan 48m loan, year 1 is only $953 in interest.. and only ~2k for the entire life of the loan. In short... it's cheap... unlike much longer terms.

 

[21stamps]

@dmw you know your stuff!Love it!