gigabyte137

I had a 2004 Acura TSX with navi and spoiler black on black with a dealer payoff of 19,100 and 57,000 miles on it that had a 15k/yr milage and 48 months and I still had 1 year 1 month left on it and I bought a 2006 Acura TSX with navi and spoiler black on black for 429 / month inc taxes with 2000 out of pocket for 48 mon lease 15k / yr? Did I get out of the old TSX and get into the new one for a good price?

CGTSX2004

iTrader: (1)

Why do people always ask these questions after they get the car? At that point, isn't it a little too late since you're stuck with the car already.

Anyway...to your question, considering the taxes, mileage, the fact that you went with the navi, I would say you made out pretty well. I'm assuming you managed to talk the dealer into giving you full payoff for your 2004?

gigabyte137

If you mean full payoff meaning I dont owe anything on 2004 then yes, they took the car and said they gave me 18,500 for it....

bradykp

i just don't know if i understant the logic here. so you're paying $429/mo and can drive 15k/yr for 4 years?

now, i put the same amount down, i'm paying $470/mo, and i own my vehicle. how is buying the car not worth it in this scenario? am i missing something?

429*48 = $20,592 and then you're done? i dunno. i just dont get the logic of some leases.

STL

It's never a good idea to trade a car that's only two years old, and leasing is bad idea unless you like having "never-ending" car payments.

bradykp

well, a lot of people have never ending payments. i understand if you dont like having a car for more than 2 years, or 3 years, but a 4 year lease is garbage. money out the window.

CGTSX2004

iTrader: (1)

Not true. My 2004 was a 4 year lease and I had not intention of keeping it for the entire 4 years. You simply have to project far enough ahead to where the payoff amount on the lease and the current resale/trade-in value of the car are about the same and trade the car in at that point.

My 2004 was traded after 2.5 years for full pay-off value. I made lower monthly payments in the meantime with a four year lease than I would have with a 3 year lease and I was able to move into a 2006 model with no money down and only my tax as a drive-off (stupid MD being a tax up-front state).

Don't immediately jump on a lease as being bad. People who know how to sit down and do the math correctly can get away with a lot on a lease if they know how to make things work.

STL

Fixed (see above).

bradykp

hahahaha, true, true.


i think leases are just garbage in almost every case. if you crunch the numbers, it's rarely worth it, and you have to restrict your driving amounts to the mileage restrictions. i've crunched the numbers, rarely makes sense to do it. again, i've been paying a marginal amount more and i own it, and i could probably sell it for the same the dealer buys you out for at a minimum, since either way, that's the present value of the same car.

CGTSX2004

iTrader: (1)

This is based on your habits though. Just because you have this opinion doesn't mean it's going to be true for everyone. People who drive a ton of miles and keep their cars forever shouldn't lease. But people who don't drive much, like the chance to drive a new car every few years, and have already accepted that they will have a regular car payment should lease because it allows them to have lower monthly payments.

And in my case, why would I want to own a depreciating asset.

STL

No the real question is, why would you want a never-ending car payment?

And you don't have to drive a ton of miles or keep a car forever to make ownership with it.

dalieu

jpt

You've mentioned this "get out of a lease early" trick before. Is it in fact true that AHFC will pay off your lease at any time if you trade it for another Honda lease? And do they still charge you for overmileage and/or damage at that point, or do they just forgive the lease completely? I drive way more than 15k a year (so far i'm at 3 months and almost 8k miles) so if they don't forgive the mileage this would never work for me but otherwise it sounds like a nice trick.

jpt

The real question, the only question that matters when considering any financing, limited-term purchasing (i.e. purchasing followed by eventual resale as in a car), or lease deal is "What will I have at the end of this?"

CGTSX2004

iTrader: (1)

Why own something that, as it ages, requires greater and greater maintenance, continues to depreciate, and isn't easily upgradable, if you don't have some sort of sentimental attachment to it?

And I don't mind the never-ending car payment because I know that I will be in a new car every 2 to 3 years.

People have different priorities. I am a car guy who is forever looking for his next car. Ownership doesn't make a lot of sense for me because I always have that itch to scratch. Like I said before, it works well for some people and not others. But to totally discount it because it doesn't make sense to you is silly.

surferdude

I agree...I pay 500 a month witht he APR special over 3 years and the car is mine. Leasing sometimes works for more expensive cars. For example you can drive an MDX for 400-500 a month whereas purchasing it may be 700-800 a month, a little too high. Or for a porsche, etc. It allows you to drive more car than what you can really afford. But with such little difference and a great APR you can just buy it.

cibs

If any of you ppl are big into finance you should know that you don't finance a depreciating asset

If you work out the numbers, a lease isn't better or worse than financing, it's different. I leased because it acutally makes sense for me to lease the car, from a financial aspect. Never ending car payments are a small issue, because my dollar 5 yrs from now is worth less than my dollar today, i'd rather make smaller monthly payments than larger ones now... provided i can do somtehing with the money i have that will generate a larger return on my money than me putting it into a depreciating asset (which usually isn't that hard)

CGTSX2004

iTrader: (1)

No. The point is not to get them to pay off your lease, but to trade the car in for the pay-off amount listed on the monthly statement. When you do this, the car is "owned" outright and thus, no further payments are required on it. Also, when you do this, there is no fee for breaking the lease early.

Not in the same way that they would at the end of the lease. Instead, the mileage and damage would be rolled into the trade-in value of the vehicle and deducted accordingly.

Again, leases make sense for some, and not for others. I just don't like it when people spread misinformation by saying all leases are junk without a complete understanding of what benefits there are to a lease.

cibs

clearly you guys must be missing something, or he got a terrible deal, cuz the lease rate shouldnt' be that close to the finance rate... in a lease you should only by paying the depreciation of the asset over the term of the lease plus interest, hence the buy out value at the end (which is what the car is estimated to be worth at the end of the period..)

wndrlst

Which is why leasing does make sense when it's a car that retains value as well as the TSX. The depreciation is so slight the first couple of years.

On the other hand, I intend to own the car a while, so I paid cash.

STL

Have you ever owned a Honda longer then 2-3 years? In my experience, the maintenance on a 4+ year old car isn't much different than a 2-3 year old car. Yes it is more, but not by near as much as you try to make it sound.

You are aware a car depreciates MUCH faster during the first few years than it does later, right?

Brand new cars (especially after major changes) are typically harder to get upgrade parts for than cars 3+ years old.

I agree, but from a purely financial point of view leasing (and always having a car payment) is not a good idea.

STL

The fact you always have a car payment and the fact your "ownership" is during the time the car depreciates the fastest (during the first 2-3 years) more than outweighs your worth of future dollars arguement. Leasing makes sense if you feel you must own a new car every couple years, but buying and owning a car for 8-12 years makes more financial sense.

STL

I was able to get a 3.9% interest rate on my loan, therefore I elected to finance since I should be able to make a much better return than that.

jpt

Uh... depreciation is far, far, heavier in the first few years than over the remainder of the life of the car, even for the TSX. "Good" means that it retains a whopping 50% of its value after 5 years.

I think there must something wrong in the facts we've been given. OP is paying $429/month for 48 months for his lease plus the $600 he was apparently under water ($19100 payoff value of car less $18500 that dealer claims to have given him in tradein), on a 2006 navi. Edmunds estimates it will depreciate about $13,600 during that time based on 15kmi/yr, and gigabyte paid $2k down, so he's effectively financing $12,200 at an interest rate of 29% (absolutely terrible).

Bradykp claims to be paying a total of $2k down + $470 a month for a (I believe) non-nav that should cost about $26,800 + TTL. Even if he had a no-interest loan, the payments on a $24,800 financed amount would be $516.67 a month for 4 years. In fact based on the numbers brady quoted, the car would have had to cost no more than $24,600 including TTL (that with a no-interest loan, which is worth about $2600, today, in itself). This is an amazing deal for a new TSX and I don't quite believe it.

wndrlst

Which is, of course, a good point. They weren't running the promo when I purchased. I could have waited for another, but I had a buyer for my truck & they wanted it soon. (Of course, there was no impatience for the new car on my part. )

wndrlst

I realize that, but most people of my acquaintance who lease cars (and CGTSX, as he stated) turn them over more rapidly than that because they want a new model every year or two. If you've looked at prices for used TSX's, they're pretty ridiculous (& I know this is retail, not trade-in value). I'm just saying that if that's your style, then for some it does actually make sense to lease rather than to buy a new one every 18-24 months. Particularly if the car in question is one that retains value particularly well over the first couple of years.

STL

I missed the Acura deal too (since it came out about a month later). I got this rate with Captial One Finance through Costco, but the term isn't 60 months like Acura offered.

jpt

But getting (whether you buy or lease) a new car every 2-3 years is more expensive than keeping cars longer no matter how you pay for it, so this argument does not hold water in terms of "leasing/financing is better". Some lease deals are better than some finance deals, and some finance deals are better than some lease deals; that's the long and short of it.

This is a common thing to say but is nonetheless completely wrong. When I buy a new car every two years for 8 years, and you buy one car and drive it that whole time, there are two differences between us at the end of 8 years:

1. You have some number of extra dollars in your bank account.
2. I have been driving newish cars for 8 years where you have been driving the same aging car for that period.

Which one of us is better off depends entirely on our preferences, and it is entirely possible that each of us will think he is the one that's better off and neither of us will be wrong. It is therefore a fallacy to say that one policy or the other makes "more financial sense" -- you can only say that if one way will leave you strictly better off for sure (for instance, putting your savings in an ING Direct savings account with a 4.25% APY makes more financial sense than putting them in a Wachovia savings account with a 0.35% APY, but you can not necessarily say that a money market with a 6% APY makes even more sense than that, because the person making the decision may or may not want to assume the risk inherent in the latter investment in exchange for higher yields).

jpt

When I got the deal (end of March) it was 2.9% for 2 years, 3.9% for 3 years, 4.9% for 4 years, or 5.9% for 5 years, so you didn't miss out much it seems.

CGTSX2004

iTrader: (1)

You missed the fact that the payment each month includes the tax and that he said $2000 out of pocket, which is drive-off, not downpayment. The drive-off includes all title and licensing fees along with the first payment and sometimes a security deposit.

His total payments over the 48 month period totals about $19500.

Also, I think that Bradykp has a longer payment period than 48 months. It seems he forgot to account for that detail...

CGTSX2004

iTrader: (1)

Again, not everyone wants to own a car for 8-12 years.

On a apples to apples comparison, buying a car every 2-3 years is throwing money away compared to leasing one every 2-3 years.

As for making financial sense, it's all a matter of perspective. Sure you may save money by not making car payments, but you're also missing out on the joy of driving a new car every 2-3 years, which to some is just as, or more important, than not having to make a car payment.

STL

jpt,
I think you're being a bit nitpicky, but in the very strictest terms you could be considered correct. What I'm really trying to say is that if someone is really worried about saving money, then they shouldn't lease (because it's better to buy and own for 8-12 years).

STL

True, but that doesn't really make leasing a great financial choice (overall) unless you ignore the fact leasing (instead of buying) is throwing money away year-in and year-out. Yes, to many it may be worth it to have a new car, but strictly speaking buying a new car so often isn't a good financial choice (unless maybe you can write off the car's depreciation). I'll put it this way: leasing lessens the cost of buying a new car every 2-3 years, but it doesn't make it cheaper that cost enough to make it (even close to being) less than buying and owning for longer periods.

STL

I wonder how many leasers here have actually owned a recent (meaning 90s) Honda vehicle for 8-10 years?

CGTSX2004

iTrader: (1)

Fair enough, but do me a favor and don't write-off leasing until you understand someone's needs. The next time when someone asks about leasing, don't automatically jump in with the "leases are garbage" comments because until you understand where their coming from.

wndrlst

I don't think it's typically a maintenance issue, but rather style and the newest technology/gadgets that inspires the more rapid turnover.

It's like owning a sailboat. Is it a good financial decision? Hell no, but it's a lot of fun.

For some people leasing a new car every couple of years belongs more under the "entertainment" budget than "transportation."

STL

Hey, I was just giving my . And BTW, it's a case of their wants not needs.

STL

True, I guess I just took a different route so to speak. Owning my Civic and my wife's Prelude longer allowed us to buy an S2000. We have since replaced those other cars, but we still have the S2000 to enjoy.

gigabyte137

JPT, Where are you getting your numbers for on my lease? You are calculating something wrong bigtime, they said they only made 200 dollars on me in the deal and it was the best deal the finance person saw the whole month... Cgtsx What do you think about the deal... Buyout at end of 48 months would be 14,786...

CGTSX2004

iTrader: (1)

Don't listen to the finance guy, he's just buttering you up. The deal is good, but I have seen better. Your money factor come around to the equivalent of 5% APR or so. You're not planning to buy it out at the end, are you?