Win or Lose (Lease / Rent vs Buy)

[flynnibus]

It's burning money (leasing) vs owning the car at the end

This notion is so broke, and so untrue. You aren't paying for the same thing.. so comparing you 'owning the the car at the end' is fiction.. unless you are comparing the same term period.

If you lease for 3, and borrow for 4 or 5... you don't own that car at 3yrs. You've paid more in principle, and you still have a loan obligation. If you say 'well I can sell the car'... that is the same exact thing the leasee is doing... except they have a net zero transaction (their residual vs their obligation).

The only money being burned is in fees... and depreciation. And the 'buy' guy loses the SAME DEPRECIATION the leasee is paying for. Both the buy person and the leasee are paying interest.. the big chunk is the fees and if depreciation were to swing signficantly off the schedule.

I also was specific in that you shouldn't consider a bottom of the line car, as it will lose more.

I quoted the car you brought into the discussion... you then claimed the depreciation wasn't typical... I then showed you what real typical depreciation is.. (far far worse). Every example used was real... you keep claiming your reality is something different.

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

You are blurring collectibles and consumer vehicles where it suits your view. It's not about lesser or greater being the volatility - its other factors like gas, affordability vs the consumer forecast, etc. Volativity doesn't speak to which depreciates faster or not.. it speaks to CHANGE in the EXPECTED depreciation. Because again, leasing is just about paying a pre-set deprecation schedule.

Your position really sounds like someone said 'Psst.. hey buddy, I have this great idea on how you can afford a great car!'

If you really were looking to maximize your Residual and less expenses.. you should be buying the 1-2 year old car with mostly cash, and selling it after 2 years... not buying the new car.

Or do what I do.. and keep cars for 8+ years and enjoy no car payments and minimizing money lost to transaction fees.

 

[LAKid53]

Actually, World Omni is the financing arm of Southeast Toyota, the only privately held Toyota distributor in the USA. Toyota Financial Services (TFS) US is the financing arm of Toyota in the USA (there is also a separate TFS entity in Mexico). BTW, the financing arm of a manufacturer is referred to as a Captive in the finance industry. This applies not only to automotive manufacturers, but also industries such as watercraft, construction equipment, small aircraft, farm equipment, etc.

Sorry... finance geek broke out. I need to get back to Disney soon!

Yes, I meant SE Toyota, not Toyota worldwide. Thanks for catching that. Met Jan Moran several times. Lovely lady.

 

[RustySpork]

Or do what I do.. and keep cars for 8+ years and enjoy no car payments and minimizing money lost to transaction fees.

Why do that when you can just trade them every couple of years instead?

 

[LAKid53]

This notion is so broke, and so untrue. You aren't paying for the same thing.. so comparing you 'owning the the car at the end' is fiction.. unless you are comparing the same term period.

If you lease for 3, and borrow for 4 or 5... you don't own that car at 3yrs. You've paid more in principle, and you still have a loan obligation. If you say 'well I can sell the car'... that is the same exact thing the leasee is doing... except they have a net zero transaction (their residual vs their obligation).

The only money being burned is in fees... and depreciation. And the 'buy' guy loses the SAME DEPRECIATION the leasee is paying for. Both the buy person and the leasee are paying interest.. the big chunk is the fees and if depreciation were to swing signficantly off the schedule.



I quoted the car you brought into the discussion... you then claimed the depreciation wasn't typical... I then showed you what real typical depreciation is.. (far far worse). Every example used was real... you keep claiming your reality is something different.



You are blurring collectibles and consumer vehicles where it suits your view. It's not about lesser or greater being the volatility - its other factors like gas, affordability vs the consumer forecast, etc. Volativity doesn't speak to which depreciates faster or not.. it speaks to CHANGE in the EXPECTED depreciation. Because again, leasing is just about paying a pre-set deprecation schedule.

Your position really sounds like someone said 'Psst.. hey buddy, I have this great idea on how you can afford a great car!'

If you really were looking to maximize your Residual and less expenses.. you should be buying the 1-2 year old car with mostly cash, and selling it after 2 years... not buying the new car.

Or do what I do.. and keep cars for 8+ years and enjoy no car payments and minimizing money lost to transaction fees.

It was difficult following his argument, since he kept moving the target.

 

[RustySpork]

It was difficult following his argument, since he kept moving the target.

Target? No, @21stamps moved the target A LOT, but that's alright you can blame me if it makes you feel good.

 

[LAKid53]

Why do that when you can just trade them every couple of years instead?

Because not everyone needs something shiny every couple of years.

 

[LAKid53]

Target? No, @21stamps moved the target A LOT, but that's alright you can blame me if it makes you feel good.

 

[RustySpork]

Because not everyone needs something shiny every couple of years.

 

[RustySpork]

 

[networkpro]

Or do what I do.. and keep cars for 8+ years and enjoy no car payments and minimizing money lost to transaction fees.

Or do what I do, pay for them in full up front. Zero carry costs, minimal transaction fees, title in hand within 30 days.

 

[LAKid53]

Or do what I do, pay for them in full up front. Zero carry costs, minimal transaction fees, title in hand within 30 days.

I believe that's what Flynnibus recommended...along with buying a 1-2 year old car that someone else took the depreciation on.

 

[flynnibus]

Why do that when you can just trade them every couple of years instead?

Because a trade isn't free - duh. You are so adamant that the leasee is 'burning money' and that's exactly what trade-in does.
You are giving the dealer part of your value (he isn't taking cars in at a loss...) - Consider that 'burning up your value'
You are paying sales tax... again
You are paying DMV registration/titling fees... again
You are paying the dealer fees... again
You are resetting your loan.. which means more interest.. again
You are spending hours in paperwork and processes.. that I value my time for

My current 6 year old car looks like new to most people and still has a warranty with only a $100 deductible.

 

[RustySpork]

This notion is so broke, and so untrue. You aren't paying for the same thing.. so comparing you 'owning the the car at the end' is fiction.. unless you are comparing the same term period.

So, just so I understand, you are saying that when you're done with your loan and have the title in hand that you don't own the car you've paid off. Got it.

If you lease for 3, and borrow for 4 or 5... you don't own that car at 3yrs. You've paid more in principle, and you still have a loan obligation. If you say 'well I can sell the car'... that is the same exact thing the leasee is doing... except they have a net zero transaction (their residual vs their obligation).

You don't own the car, right, I've said that before. You own value in that car though because you've paid the bank back for that amount. They have a net zero transaction, you don't. That's my whole point. Thanks for getting on board!

The only money being burned is in fees... and depreciation. And the 'buy' guy loses the SAME DEPRECIATION the leasee is paying for. Both the buy person and the leasee are paying interest.. the big chunk is the fees and if depreciation were to swing signficantly off the schedule.

So, what happens if you owe less than the car is worth and you wreck but you don't have GAP?

I quoted the car you brought into the discussion... you then claimed the depreciation wasn't typical... I then showed you what real typical depreciation is.. (far far worse). Every example used was real... you keep claiming your reality is something different.

No you didn't. You claimed 20% depreciation using bad math. The real percentage was 15%. Sorry, bad math doesn't mean you're right. Which post did you show real typical depreciation?

You are blurring collectibles and consumer vehicles where it suits your view. It's not about lesser or greater being the volatility - its other factors like gas, affordability vs the consumer forecast, etc. Volativity doesn't speak to which depreciates faster or not.. it speaks to CHANGE in the EXPECTED depreciation. Because again, leasing is just about paying a pre-set deprecation schedule.

Am I? What was the target purchase this whole time? I'll wait.

Your position really sounds like someone said 'Psst.. hey buddy, I have this great idea on how you can afford a great car!'

Yeah, that's what it is.

If you really were looking to maximize your Residual and less expenses.. you should be buying the 1-2 year old car with mostly cash, and selling it after 2 years... not buying the new car.

Why? If I have $20K in value in my trade why shouldn't I use it?

Or do what I do.. and keep cars for 8+ years and enjoy no car payments and minimizing money lost to transaction fees.

That sounds like a great plan. See you on the side of the road.

 

[networkpro]

I believe that's what Flynnibus recommended...along with buying a 1-2 year old car that someone else took the depreciation on.

 

[RustySpork]

Because a trade isn't free - duh. You are so adamant that the leasee is 'burning money' and that's exactly what trade-in does.
You are giving the dealer part of your value (he isn't taking cars in at a loss...) - Consider that 'burning up your value'
You are paying sales tax... again
You are paying DMV registration/titling fees... again
You are paying the dealer fees... again
You are resetting your loan.. which means more interest.. again
You are spending hours in paperwork and processes.. that I value my time for

My current 6 year old car looks like new to most people and still has a warranty with only a $100 deductible.

It's not? No kidding. I'm pretty sure I did this math a page or two ago. Actually, I'm sure when I said "take $1 from the pile and burn it" I was talking about exactly this.

Do you think you have no fees in a lease?

What if I put 40k miles on my car every year? How's that lease working out for you now?

 

[21stamps]

I really want to believe that this whole thing is a joke..
It can't really be serious..not at this point, right?

 

[LAKid53]

I really want to believe that this whole thing is a joke..
It can't really be serious..not at this point, right?

 

[LAKid53]

It's not? No kidding. I'm pretty sure I did this math a page or two ago. Actually, I'm sure when I said "take $1 from the pile and burn it" I was talking about exactly this.

Do you think you have no fees in a lease?

What if I put 40k miles on my car every year? How's that lease working out for you now?

And you're not moving the target?

 

[RustySpork]

And you're not moving the target?

Show me where I've moved it.

 

[21stamps]

We've gone from a Bugatti, to a Porsche, to positive equity in a 24 month time span..with ZERO down payment at a 4% apr?!?!?!, now people leasing who drive 40k miles per year.

I'm going to chose thinking that it's all just to get people to respond.lol