Lease vs. Buying Outright
10-11-2003, 01:22 AM
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Lease vs. Buying Outright
With the recent posts on leases, I thought I pick some brains here...
Every car I've ever had, I've owned. Leasing never appealed to me, but that might be because I really don't understand the ins and outs of it. Anyway, I test drove a TSX (for the 3rd time) tonight, and afterwards when they guys were trying to get me to sign on the dotted line, they brought up leasing. I have to admit, it kinda went in one ear and out the other (I was trying to deflect the hard sell tactics), but they kept re-itterating how leasing is WAY better than buying outright, since it gives you more options and won't ending up costing anymore money than buying outright- only caveat is the mileage limit. But there's got to be more to it? If it's so great why doesn't everybody lease? I must be missing a lot here...
So anyway, can someone with some patience explain to me the ins and outs of leasing and the pros and cons against an outright (no financing) purchase? Assume you're talking to someone that if they leased would buy the car when the lease was over. Thanks.
Regards,
Ryanc44
Every car I've ever had, I've owned. Leasing never appealed to me, but that might be because I really don't understand the ins and outs of it. Anyway, I test drove a TSX (for the 3rd time) tonight, and afterwards when they guys were trying to get me to sign on the dotted line, they brought up leasing. I have to admit, it kinda went in one ear and out the other (I was trying to deflect the hard sell tactics), but they kept re-itterating how leasing is WAY better than buying outright, since it gives you more options and won't ending up costing anymore money than buying outright- only caveat is the mileage limit. But there's got to be more to it? If it's so great why doesn't everybody lease? I must be missing a lot here...
So anyway, can someone with some patience explain to me the ins and outs of leasing and the pros and cons against an outright (no financing) purchase? Assume you're talking to someone that if they leased would buy the car when the lease was over. Thanks.
Regards,
Ryanc44
10-11-2003, 01:40 AM
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Ah, the great privilege of being first on something like this. Wait a sec while I roll up my sleeves.....
LOTS of people lease, seems to me like almost everybody. IMHO most of the arguments in favor of it are bogus -- except that if you want to limit your current payments and you don't plan on keeping the car very long and you don't care about limiting your mileage and you don't care that you won't get any money when you get rid of the car, it may be worthwhile. But I think ALL those conditions have to be met, or else you're losing out. If you just want to limit your current payments but some of those other conditions aren't met, I think almost everybody is better off buying the car and financing most of the cost.
P.S. It's often said that an additional argument for leasing is that depending on your situation, you can deduct the cost as a business expense. As far as I know, that's fallacious, because you can deduct likewise if you buy the car, too. And either way you have to meet the same IRS tests for business deductability.
But, as they say, don't take my word, "Consult your accountant." (Translation: Please don't sue me.)
LOTS of people lease, seems to me like almost everybody. IMHO most of the arguments in favor of it are bogus -- except that if you want to limit your current payments and you don't plan on keeping the car very long and you don't care about limiting your mileage and you don't care that you won't get any money when you get rid of the car, it may be worthwhile. But I think ALL those conditions have to be met, or else you're losing out. If you just want to limit your current payments but some of those other conditions aren't met, I think almost everybody is better off buying the car and financing most of the cost.
P.S. It's often said that an additional argument for leasing is that depending on your situation, you can deduct the cost as a business expense. As far as I know, that's fallacious, because you can deduct likewise if you buy the car, too. And either way you have to meet the same IRS tests for business deductability.
But, as they say, don't take my word, "Consult your accountant." (Translation: Please don't sue me.)
10-11-2003, 11:43 AM
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Re: leasing vs. buying
Just ask yourself this question. Why does every car salesman push leasing so hard? Is it because it is a good deal for you? I think you know who's best interest the car salesman has at heart.
10-11-2003, 02:50 PM
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Hmmm - not really, guys. The real reason that people lease cars, especially cars that approach $30k and up is that it is almost always a *losing* proposition today to purchase. The big problem is depreciation. But leasing the vehicle, you are only paying for the part of the car that you use. The bank sucks up the rest and has to deal with the car at lease end.
The other reason is that automotive repairs are becoming extremely expensive, again, especially for $30k cars and up. In lieu of that, instead of pressing their luck, many people opt to lease their vehicle through the warranty period and then get rid of it before having to put money into brakes, tires, major service work or expensive repairs once the vehicle is out of warranty. So in essense, you have no real 'operating costs' outside of gas and insurnace.
Another reason is that some people just flat out want a new car more often. And finally, leasing allows you to afford a more expensive vehicle than you otherwise could afford.
As far as I can see, the only reason *not* to lease is if you average more than 15-18,000 miles per year; if you generally like to keep cars for a long time; if you don't really care about having new cars all that often.
However, again, as I see it - the cost of ownership is so relatively high these days that unless it is the mileage quotient that rules you out - why *wouldn't* you lease?
As to the dealers pushing leases because they are greatly in their favor - this is only the case for those customers who walk in and negotiate based upon monthly payments. The number one sin of lease negotiations. Always negotiate the selling price of the car *first* and then request them to factor the lease based upon the already agreed upon figure.
Otherwise, you're almost guaranteed to get ripped.
The other reason is that automotive repairs are becoming extremely expensive, again, especially for $30k cars and up. In lieu of that, instead of pressing their luck, many people opt to lease their vehicle through the warranty period and then get rid of it before having to put money into brakes, tires, major service work or expensive repairs once the vehicle is out of warranty. So in essense, you have no real 'operating costs' outside of gas and insurnace.
Another reason is that some people just flat out want a new car more often. And finally, leasing allows you to afford a more expensive vehicle than you otherwise could afford.
As far as I can see, the only reason *not* to lease is if you average more than 15-18,000 miles per year; if you generally like to keep cars for a long time; if you don't really care about having new cars all that often.
However, again, as I see it - the cost of ownership is so relatively high these days that unless it is the mileage quotient that rules you out - why *wouldn't* you lease?
As to the dealers pushing leases because they are greatly in their favor - this is only the case for those customers who walk in and negotiate based upon monthly payments. The number one sin of lease negotiations. Always negotiate the selling price of the car *first* and then request them to factor the lease based upon the already agreed upon figure.
Otherwise, you're almost guaranteed to get ripped.
10-11-2003, 03:08 PM
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I did a breif analysis for the TSX. Bottom line is that it costs the same (aside from maybe property taxes) to own or lease at approximately 3 years. If you keep your vehicle longer, it's better to finance. If you want to keep it 1-2 years, lease it.
That is of course assuming that you can handle the mileage restrictions, etc.
That is of course assuming that you can handle the mileage restrictions, etc.
10-11-2003, 03:27 PM
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Originally posted by tgrundke
Hmmm - not really, guys. The real reason that people lease cars, especially cars that approach $30k and up is that it is almost always a *losing* proposition today to purchase. The big problem is depreciation. But leasing the vehicle, you are only paying for the part of the car that you use. The bank sucks up the rest and has to deal with the car at lease end.
Hmmm - not really, guys. The real reason that people lease cars, especially cars that approach $30k and up is that it is almost always a *losing* proposition today to purchase. The big problem is depreciation. But leasing the vehicle, you are only paying for the part of the car that you use. The bank sucks up the rest and has to deal with the car at lease end.
The other reason is that automotive repairs are becoming extremely expensive, again, especially for $30k cars and up. In lieu of that, instead of pressing their luck, many people opt to lease their vehicle through the warranty period and then get rid of it before having to put money into brakes, tires, major service work or expensive repairs once the vehicle is out of warranty. So in essense, you have no real 'operating costs' outside of gas and insurnace.
Another reason is that some people just flat out want a new car more often. And finally, leasing allows you to afford a more expensive vehicle than you otherwise could afford.
Another reason is that some people just flat out want a new car more often. And finally, leasing allows you to afford a more expensive vehicle than you otherwise could afford.
10-11-2003, 05:33 PM
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Originally posted by larchmont
I don't think so. The bank wouldn't be willing to suck up anything.
As far as I can see, speaking as someone who has always purchased outright, all of the same applies if you purchase the car and finance it with a long term. There's still no problem switching to another car whenever you want, and I believe you'd still come out ahead as long as you don't do it extremely soon (like within a year or two).
I don't think so. The bank wouldn't be willing to suck up anything.
As far as I can see, speaking as someone who has always purchased outright, all of the same applies if you purchase the car and finance it with a long term. There's still no problem switching to another car whenever you want, and I believe you'd still come out ahead as long as you don't do it extremely soon (like within a year or two).
What did I do? Bought the car for $10,500 and resold it myself for $14,200.
Again, the problem with purchasing is that you then have to cover all expenses after the warranty is up. That is why 3-4 year leases are so popular because you usually finish with the car within warranty and without having to pay for tires/brakes. Think about it with a car that has nice 17-18-19" wheels - those puppies are expensive to replace. Why not pass the buck off to someone else to deal with?
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10-11-2003, 05:39 PM
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2006 DGP Sold 10/24/2012
I've always either paid cash or financed, but this time I will be leasing. I've been researching the options and for me the lease is the better way to go for two significant reasons: 1) it ties up less capital, and 2) it saves me the hassle of selling the car at replacement time.
I hope the TSX retains its value as well as the residual forecasts of the leasing companies currently predict, but you can't beat the assurance of a guaranteed value even if they are overly optimistic and the car is worth considerably less. The glut of late- model used cars currently on the market makes it extremely difficult to get top dollar at selling time for a private party transaction. Add in time and money spent for advertising and dealing with potential buyers, and the relative simplicity of the lease return appears even more attractive.
Of course, for someone planning on keeping the car for a long time like Ryanc44, financing would be a better way to go.
I hope the TSX retains its value as well as the residual forecasts of the leasing companies currently predict, but you can't beat the assurance of a guaranteed value even if they are overly optimistic and the car is worth considerably less. The glut of late- model used cars currently on the market makes it extremely difficult to get top dollar at selling time for a private party transaction. Add in time and money spent for advertising and dealing with potential buyers, and the relative simplicity of the lease return appears even more attractive.
Of course, for someone planning on keeping the car for a long time like Ryanc44, financing would be a better way to go.
10-11-2003, 06:45 PM
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The capital issue has always been a big thing for me. On my Volkswagen which I will be selling soon, I'm lucky in that I will have paid the car off a year early, saved some bucks on interest, and will also recoup the amount of money I put down on the car ($10,000).
That was a rather foolish move, in hindsight. I poured $10,000 into a depreciating asset when that $10,000 could have been placed in an interest bearing account or better yet, used as a downpayment on a condo or house.
Here is one of the *great* advantages of leasing for me - I put, perhaps $1,000 toward the new car lease and free up a boatload of capital instead of locking it up in an automobile. Again, for those who want to keep cars for a long time, it may be worth buying. However, as I said before, you can sometimes negotiate the buyout of your lease for significantly less than the bank originally estimated. The best way to go about this is when a bank decides to stop leasing cars when you are in the middle of a lease. At lease end, chances are that the bank just wants to get the auto off of its books so they'll dump it for significantly less than the market residual. Boo-yah!
That was a rather foolish move, in hindsight. I poured $10,000 into a depreciating asset when that $10,000 could have been placed in an interest bearing account or better yet, used as a downpayment on a condo or house.
Here is one of the *great* advantages of leasing for me - I put, perhaps $1,000 toward the new car lease and free up a boatload of capital instead of locking it up in an automobile. Again, for those who want to keep cars for a long time, it may be worth buying. However, as I said before, you can sometimes negotiate the buyout of your lease for significantly less than the bank originally estimated. The best way to go about this is when a bank decides to stop leasing cars when you are in the middle of a lease. At lease end, chances are that the bank just wants to get the auto off of its books so they'll dump it for significantly less than the market residual. Boo-yah!
Originally posted by SJHCL
I've always either paid cash or financed, but this time I will be leasing. I've been researching the options and for me the lease is the better way to go for two significant reasons: 1) it ties up less capital, and 2) it saves me the hassle of selling the car at replacement time.
I hope the TSX retains its value as well as the residual forecasts of the leasing companies currently predict, but you can't beat the assurance of a guaranteed value even if they are overly optimistic and the car is worth considerably less. The glut of late- model used cars currently on the market makes it extremely difficult to get top dollar at selling time for a private party transaction. Add in time and money spent for advertising and dealing with potential buyers, and the relative simplicity of the lease return appears even more attractive.
Of course, for someone planning on keeping the car for a long time like Ryanc44, financing would be a better way to go.
I've always either paid cash or financed, but this time I will be leasing. I've been researching the options and for me the lease is the better way to go for two significant reasons: 1) it ties up less capital, and 2) it saves me the hassle of selling the car at replacement time.
I hope the TSX retains its value as well as the residual forecasts of the leasing companies currently predict, but you can't beat the assurance of a guaranteed value even if they are overly optimistic and the car is worth considerably less. The glut of late- model used cars currently on the market makes it extremely difficult to get top dollar at selling time for a private party transaction. Add in time and money spent for advertising and dealing with potential buyers, and the relative simplicity of the lease return appears even more attractive.
Of course, for someone planning on keeping the car for a long time like Ryanc44, financing would be a better way to go.
10-11-2003, 07:33 PM
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First off, I've never heard of banks leasing cars before. Usually its an independent leasing company. Could just be a USA/Canada thing. I don't think Canadian banks do leases.
My take on leasing is that can make sense in some cases, but it's usually a money-loser compared to purchasing. (But money isn't everything to everyone, and that's why leasing can still be good for some people). Basically, you're introducing a third party into the purchase transaction and they wouldn't be there unless they were making money. So, what does the leasing company do to earn this money? Essentially, they buy your car, tying up some of their own capital in a depreciating asset (gasp!), then expense the depreciation and charge you a fee for doing so. So they make money doing something you could just as easily do yourself. Leasing simplifies your accounting a bit, but it seems a high price to pay.
The tying up of capital argument doesn't make any sense to me. If you're worried about that, don't do it. Just make sure you've got "gap coverage" (sometimes called "depreciation waiver") on your insurance policy and make a small (or zero) down payment.
Also the notion of not owning a car out of warranty because of the expense of repairs and maintenance doesn't really wash either. In my experience, the annual cost of keeping an out of warranty car going has never exceeded the equivalent of about two monthly payments on a new vehicle.
However, I do understand that some people don't like to have to to any repairs, and prefer to always have a new car. And that's fine for them if that's how they want to spend their money. It just costs more in the long run to do that. So it really boils down to another type of lifestyle decision.
Honestly though, I think a lot of people end up in leases simply because they haven't done the math and a 'helpful' salesperson is able to dazzle them with how much car they can get for their target monthly payment.
My take on leasing is that can make sense in some cases, but it's usually a money-loser compared to purchasing. (But money isn't everything to everyone, and that's why leasing can still be good for some people). Basically, you're introducing a third party into the purchase transaction and they wouldn't be there unless they were making money. So, what does the leasing company do to earn this money? Essentially, they buy your car, tying up some of their own capital in a depreciating asset (gasp!), then expense the depreciation and charge you a fee for doing so. So they make money doing something you could just as easily do yourself. Leasing simplifies your accounting a bit, but it seems a high price to pay.
The tying up of capital argument doesn't make any sense to me. If you're worried about that, don't do it. Just make sure you've got "gap coverage" (sometimes called "depreciation waiver") on your insurance policy and make a small (or zero) down payment.
Also the notion of not owning a car out of warranty because of the expense of repairs and maintenance doesn't really wash either. In my experience, the annual cost of keeping an out of warranty car going has never exceeded the equivalent of about two monthly payments on a new vehicle.
However, I do understand that some people don't like to have to to any repairs, and prefer to always have a new car. And that's fine for them if that's how they want to spend their money. It just costs more in the long run to do that. So it really boils down to another type of lifestyle decision.
Honestly though, I think a lot of people end up in leases simply because they haven't done the math and a 'helpful' salesperson is able to dazzle them with how much car they can get for their target monthly payment.
10-11-2003, 07:57 PM
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...if I'm not mistaken, in Canada, Honda has their own leasing division of Honda Finance, so they actually handle their own leasing, and one of the reasons they like leasing, is it allows them to actually "sell" the car twice...first time they get their money out of the lessee, second time to the guy who buys it as a lease end unit. The financial guru types I know always advise purchasing and keeping the car for a long time, unless you can afford to always pay "rent" on a car, which is what you're doing when you lease. One of the main reasons I buy Honda products is they last a long time without having to spend a bundle on maintenance and repairs, the TSX will keep me a very happy camper for quite a while, I will definitely get my money's worth out of buying it...
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10-11-2003, 08:53 PM
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Originally posted by majormojo
......My take on leasing is that can make sense in some cases, but it's usually a money-loser compared to purchasing....... Basically, you're introducing a third party into the purchase transaction and they wouldn't be there unless they were making money...... they make money doing something you could just as easily do yourself. Leasing simplifies your accounting a bit, but it seems a high price to pay.
The tying up of capital argument doesn't make any sense to me. If you're worried about that......make a small (or zero) down payment.....
I think a lot of people end up in leases simply because they haven't done the math and a 'helpful' salesperson is able to dazzle them with how much car they can get for their target monthly payment.
......My take on leasing is that can make sense in some cases, but it's usually a money-loser compared to purchasing....... Basically, you're introducing a third party into the purchase transaction and they wouldn't be there unless they were making money...... they make money doing something you could just as easily do yourself. Leasing simplifies your accounting a bit, but it seems a high price to pay.
The tying up of capital argument doesn't make any sense to me. If you're worried about that......make a small (or zero) down payment.....
I think a lot of people end up in leases simply because they haven't done the math and a 'helpful' salesperson is able to dazzle them with how much car they can get for their target monthly payment.
10-11-2003, 09:40 PM
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2006 DGP Sold 10/24/2012
Originally posted by majormojo
Basically, you're introducing a third party into the purchase transaction and they wouldn't be there unless they were making money.
Basically, you're introducing a third party into the purchase transaction and they wouldn't be there unless they were making money.
The tying up of capital argument doesn't make any sense to me. If you're worried about that, don't do it. Just make sure you've got "gap coverage" (sometimes called "depreciation waiver") on your insurance policy and make a small (or zero) down payment.
Also the notion of not owning a car out of warranty because of the expense of repairs and maintenance doesn't really wash either. In my experience, the annual cost of keeping an out of warranty car going has never exceeded the equivalent of about two monthly payments on a new vehicle.
However, I do understand that some people don't like to have to to any repairs, and prefer to always have a new car. And that's fine for them if that's how they want to spend their money. It just costs more in the long run to do that. So it really boils down to another type of lifestyle decision.
Honestly though, I think a lot of people end up in leases simply because they haven't done the math and a 'helpful' salesperson is able to dazzle them with how much car they can get for their target monthly payment.
10-11-2003, 09:52 PM
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I think a lot of stuff has been covered already, but here is the way I think about it for me.
I am actually in a situation (work at home) where I drive 10K miles per year. So it seems like I should lease right (initially I did, but I am now buying)?
Well ... the answer for me was no ... and it is purely based on a 6-7 year ownership plan of this car. So I own the car for 5 years and pay it off in 5 years and the car now has 50K miles. So you guys are telling me that 2 years of that car (50-70K miles) is going to cost me more than a new 2 year lease? Nope. In fact, at 10K miles per year .... 10 years is VERY real and the 2nd half of that will probably come at less that $500 per year.
Also for the 3 year car owners ... consider a lease that is cheaper for 3 years than a purchase by $100/month. I challenge you to save that $100/month to equal $3600 and make more money than someone selling a 3 year old TSX off a 5 year loan with 2 years left that has only 30K miles on it. If this was a Ford/GM product, I would not take this bet But then again, you wouldn't like the leases on those kind of cars either 
I am actually in a situation (work at home) where I drive 10K miles per year. So it seems like I should lease right (initially I did, but I am now buying)?
Well ... the answer for me was no ... and it is purely based on a 6-7 year ownership plan of this car. So I own the car for 5 years and pay it off in 5 years and the car now has 50K miles. So you guys are telling me that 2 years of that car (50-70K miles) is going to cost me more than a new 2 year lease? Nope. In fact, at 10K miles per year .... 10 years is VERY real and the 2nd half of that will probably come at less that $500 per year.
Also for the 3 year car owners ... consider a lease that is cheaper for 3 years than a purchase by $100/month. I challenge you to save that $100/month to equal $3600 and make more money than someone selling a 3 year old TSX off a 5 year loan with 2 years left that has only 30K miles on it. If this was a Ford/GM product, I would not take this bet
But then again, you wouldn't like the leases on those kind of cars either
10-11-2003, 11:06 PM
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2006 DGP Sold 10/24/2012
Originally posted by provench
... and it is purely based on a 6-7 year ownership plan of this car.
... and it is purely based on a 6-7 year ownership plan of this car.
Also for the 3 year car owners ... consider a lease that is cheaper for 3 years than a purchase by $100/month.
Even with a 20% down payment the loan is still over $200 more per month than the lease. Since I know I'll be replacing the car again within 3-4 years and my mileage will be less than 15K per year, it makes sense for me to keep that down payment and put it to better use. If I was keeping the car for longer, I'd buy a low-mileage late-model lease return at 50% off list, but then I wouldn't get to drive a TSX...:'(
10-11-2003, 11:22 PM
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Originally posted by SJHCL
[B]I don't see leasing as a viable option for anyone keeping a car for more than 4 years max. When I compare the numbers from the Acura website for a 3 year lease compared to my credit union's loan rate of 3.95% the difference is $444 vs. $840 per month. Even with a 20% down payment the loan is still over $200 more per month than the lease. Since I know I'll be replacing the car again within 3-4 years and my mileage will be less than 15K per year, it makes sense for me to keep that down payment and put it to better use. If I was keeping the car for longer, I'd buy a low-mileage late-model lease return at 50% off list, but then I wouldn't get to drive a TSX...:'(
[B]I don't see leasing as a viable option for anyone keeping a car for more than 4 years max. When I compare the numbers from the Acura website for a 3 year lease compared to my credit union's loan rate of 3.95% the difference is $444 vs. $840 per month.
Even with a 20% down payment the loan is still over $200 more per month than the lease. Since I know I'll be replacing the car again within 3-4 years and my mileage will be less than 15K per year, it makes sense for me to keep that down payment and put it to better use. If I was keeping the car for longer, I'd buy a low-mileage late-model lease return at 50% off list, but then I wouldn't get to drive a TSX...:'(
As for your comparison ... clearly you can not compare a 3 year lease with a three year buy. With one you have zero to show for it and the other you have a car you can sell for $17K+ !
Now try the real comparison here ... 5 year loan, with NO money down, 4%, $27K purchase price = $497/month ... which is only $50 more ! And after 3 years you only owe $12K on a TSX with 36K miles (remember to keep it compared to the lease).
Hope this helps, cause I think you had some bad logic going there.
10-11-2003, 11:32 PM
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Originally posted by SJHCL
How does this differ from a lender? They also hold title to the car until it is paid off and make money off of the service they provide.
How does this differ from a lender? They also hold title to the car until it is paid off and make money off of the service they provide.
Why pay for something you won't use if you know you're putting in $5 to get back $3 in the end?
I need my car for business, if it breaks down in the middle of an appointment, I may lose more than the temporary use of the car.
Changing sides for a moment (sorry Larch, don't mean to jump ship on ya
), I'd say one of the best reasons FOR leasing as opposed to purchasing is to if you want/need to keep your overall debt servicing costs down, or don't want to carry the auto debt on your balance sheet. That still doesn't mean that leasing is "cheaper", it's probably not, but it can offer other advantages.tag --> Larchmont.
10-12-2003, 12:12 AM
#18
2006 DGP Sold 10/24/2012
Originally posted by provench
As for your comparison ... clearly you can not compare a 3 year lease with a three year buy. With one you have zero to show for it and the other you have a car you can sell for $17K+ !
As for your comparison ... clearly you can not compare a 3 year lease with a three year buy. With one you have zero to show for it and the other you have a car you can sell for $17K+ !
Now try the real comparison here ... 5 year loan, with NO money down, 4%, $27K purchase price = $497/month ... which is only $50 more ! And after 3 years you only owe $12K on a TSX with 36K miles (remember to keep it compared to the lease).
10-12-2003, 12:26 AM
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Originally posted by majormojo
.....tag --> Larchmont.
.....tag --> Larchmont.
Great, great stuff here. I gotta say, this is the very best discussion I've ever seen or heard anywhere on this subject. And, as is usually the case in discussions of this quality, as far as I can tell everybody is basically right, on both sides.
SJHCL: You make great points on the side of leasing, but.... as Provench already noted, it's not fair to the "buying" side of the argument to use the monthly payments on a 3-year loan when you compare to lease payments. Prov pointed out that if you use a 5-year loan as the comparison, then the difference is only $50 a month, not $400. But even that isn't as fair as it could be -- not that most people get longer-term loans, but you can, and if what we're looking at is which method best minimizes your current payments, you want to look at the longest possible loan term. I don't know exactly what that would be, but I think it's longer than 5 years. (The one time I financed a car purchase, my term was 6 years.) So, the difference might be even less than what Prov said. But really he made the point. I'm just quibbling.
Also, SJHCL, on that thing about the expense and hassle of owning an out-of-warranty car, I don't see that this has anything at all to do with this subject -- rather, it's the topic of whether it's worthwhile to keep a car for a long time. In fact this is one of the things that determines whether someone decides to lease or to purchase, but what we're talking about here is just leasing vs. purchasing. And what we purchasing advocates are saying is that purchasing/financing may be a better option even if you only keep the car about 3 years.
But, above all -- this is a great, very-high-level discussion.
10-12-2003, 01:35 AM
#20
2006 DGP Sold 10/24/2012
I've gotta agree larch, and I'm learning a lot here... really playing the Devil's advocate as I own (not lease) three vehicles and do tend to keep them for a long time, although in this instance I'm convinced that leasing is the best option for me. I sell real estate and will be using my TSX for business and in this market a nice new car is essential for continued success, and also a good excuse for me to have the car that brings us all together here. 
I'll be selling my '99 3.0 CL before the end of the year and replacing it with either a gray or blue TSX (still can't decide
). I financed the CL for 84 months BTW, and have heard that 8 year loans are also out there now, but I plan on leasing my TSX for 36 - 42 months. If I like it as much as I think I will replace it with another at lease end. I've no plans on selling either my pristine low-mileage '90 Miata or my practical '98 Ford Ranger, so I can justify getting a new car every few years as a business expense.
And the money not put into the car can go towards more-lucrative real estate investments. 
So as you can see, I tend to agree more than differ with all of your points of view, but if there are holes in my logic I welcome the chance to learn from you all.
I'll be selling my '99 3.0 CL before the end of the year and replacing it with either a gray or blue TSX (still can't decide
). I financed the CL for 84 months BTW, and have heard that 8 year loans are also out there now, but I plan on leasing my TSX for 36 - 42 months. If I like it as much as I think I will replace it with another at lease end. I've no plans on selling either my pristine low-mileage '90 Miata or my practical '98 Ford Ranger, so I can justify getting a new car every few years as a business expense. And the money not put into the car can go towards more-lucrative real estate investments. So as you can see, I tend to agree more than differ with all of your points of view, but if there are holes in my logic I welcome the chance to learn from you all.
10-12-2003, 02:11 PM
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I agree- I'm glad I brought up this topic as you guys have given me vast amounts of info. Thanks. But with so much info it's starts to get confusing again. I noticed that the latter parts of the thread seem to drift towards lease vs. finance, which is great to know and I'm sure will help others, but in my case I'm weighing lease vs. straight purchase (no financing).
So say I go to my local Acura dealer, a price of $29000 (tax/license/whatever else-out the door) is agreed upon- now I say, "hmm, maybe I want to lease instead of empty my bank account of $29000"...
With the above scenario, say I would want a 3-year lease, and I would definitely buy the car (because I love it so much) at lease end. So if the price was agreed upon, when the lease is broken down- I'm assuming after a down payment (if there is one), my montly payments for 3 years, and the final buyout at the end of the three years- that would all total the original $29K? If that's the case I'm confused at how the leasing company makes any money? I got the impression that the buyout could possibly even go down, which I guess could also mean it could go up too? Is that the catch?
Also, are you always given the "opportunity" to buy the car at lease end, or could the lease people say no, or again, expect some outrageous over-inflated market value of the car?(we are talking about a tsx here...) Also, are services (oil changes, etc.) "taken care of" with it being a lease car, or do you pay out of pocket for this?
Thanks again for all the great info guys...
Ryanc44
So say I go to my local Acura dealer, a price of $29000 (tax/license/whatever else-out the door) is agreed upon- now I say, "hmm, maybe I want to lease instead of empty my bank account of $29000"...
With the above scenario, say I would want a 3-year lease, and I would definitely buy the car (because I love it so much) at lease end. So if the price was agreed upon, when the lease is broken down- I'm assuming after a down payment (if there is one), my montly payments for 3 years, and the final buyout at the end of the three years- that would all total the original $29K? If that's the case I'm confused at how the leasing company makes any money? I got the impression that the buyout could possibly even go down, which I guess could also mean it could go up too? Is that the catch?
Also, are you always given the "opportunity" to buy the car at lease end, or could the lease people say no, or again, expect some outrageous over-inflated market value of the car?(we are talking about a tsx here...) Also, are services (oil changes, etc.) "taken care of" with it being a lease car, or do you pay out of pocket for this?
Thanks again for all the great info guys...
Ryanc44
10-12-2003, 02:51 PM
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Re: Lease vs. purchase
Well, being that I am an accountant, I guess it makes sense for me to make my first post in this thread...
In the instance of buying outright vs. leasing, buying outright will win easily unless you can earn at LEAST roughly 5% per year on the cash you have invested as a result of not putting it on the table when you bought your car. If that isn't the case (and it isn't for me, given the low interest rates and the economy), then you will definitely be better off buying. It's all about opportunity cost - if you don't spend the money on the car until later, will you benefit enough from another use of that money to make up the extra couple of grand you'll pay in lease charges?
Also, the relative value of a lease is far smaller with a reliable car such as a Honda/Acura or Toyota. Because you are guaranteed a market for your car whenever you want to sell it, buying is far more flexible - whether you keep the car 1 year or 10, you'lll be able to sell it for a good price in days due to the perception of quality in Acuras.
Cars that I would consider leasing would be German cars. They tend to depreciate quite rapidly and be more unpredictable cost-wise beyond a standard lease term. Also, their lease "rates" tend to be far more advantageous than the Japanese companies.
The best way to compare lease vs finance vs straight-up purchase is to calculate the total that you'll pay for a car (including finance charges). To do this for a lease, you can add up all the payments and the downpayment, less the deposit refund, and that's what you paid for the 3-4 years of the car. For finance, you multiply add up all the payments for the 3-4 year period and deduct the estimated resale value of the car. The reason that buying will win out almost every time with Japanese cars (esp. honda's and toyotas) is the consistently high resale value.
There's a mouthfull! Hope it helps a bit! End result - normally a lease will cost you roughly an extra $2K-$3K on a car of the TSX's value. And that is regardless of the period you keep the car - just taking payments you make less anything you get back.
Cheers,
Ken.
In the instance of buying outright vs. leasing, buying outright will win easily unless you can earn at LEAST roughly 5% per year on the cash you have invested as a result of not putting it on the table when you bought your car. If that isn't the case (and it isn't for me, given the low interest rates and the economy), then you will definitely be better off buying. It's all about opportunity cost - if you don't spend the money on the car until later, will you benefit enough from another use of that money to make up the extra couple of grand you'll pay in lease charges?
Also, the relative value of a lease is far smaller with a reliable car such as a Honda/Acura or Toyota. Because you are guaranteed a market for your car whenever you want to sell it, buying is far more flexible - whether you keep the car 1 year or 10, you'lll be able to sell it for a good price in days due to the perception of quality in Acuras.
Cars that I would consider leasing would be German cars. They tend to depreciate quite rapidly and be more unpredictable cost-wise beyond a standard lease term. Also, their lease "rates" tend to be far more advantageous than the Japanese companies.
The best way to compare lease vs finance vs straight-up purchase is to calculate the total that you'll pay for a car (including finance charges). To do this for a lease, you can add up all the payments and the downpayment, less the deposit refund, and that's what you paid for the 3-4 years of the car. For finance, you multiply add up all the payments for the 3-4 year period and deduct the estimated resale value of the car. The reason that buying will win out almost every time with Japanese cars (esp. honda's and toyotas) is the consistently high resale value.
There's a mouthfull! Hope it helps a bit! End result - normally a lease will cost you roughly an extra $2K-$3K on a car of the TSX's value. And that is regardless of the period you keep the car - just taking payments you make less anything you get back.
Cheers,
Ken.
10-12-2003, 03:26 PM
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Re: Re: Lease vs. purchase
Originally posted by debaser
Well, being that I am an accountant, I guess it makes sense for me to make my first post in this thread.......
Well, being that I am an accountant, I guess it makes sense for me to make my first post in this thread.......
Ryanc, I don't understand why you are considering only either buying outright or leasing, and not the additional choice of buying and financing. My very confident answer to you would be: If you're in a position to even consider buying outright, there's almost no doubt that you shouldn't even be thinking of leasing; your second option should be buying and financing. I can't think of a single reason that in your position, leasing would be preferable to buying and financing.
10-13-2003, 12:06 AM
#24
2006 DGP Sold 10/24/2012
Originally posted by ryanc44
With the above scenario, say I would want a 3-year lease, and I would definitely buy the car (because I love it so much) at lease end. So if the price was agreed upon, when the lease is broken down- I'm assuming after a down payment (if there is one), my montly payments for 3 years, and the final buyout at the end of the three years- that would all total the original $29K? If that's the case I'm confused at how the leasing company makes any money?
With the above scenario, say I would want a 3-year lease, and I would definitely buy the car (because I love it so much) at lease end. So if the price was agreed upon, when the lease is broken down- I'm assuming after a down payment (if there is one), my montly payments for 3 years, and the final buyout at the end of the three years- that would all total the original $29K? If that's the case I'm confused at how the leasing company makes any money?
Also, are you always given the "opportunity" to buy the car at lease end, or could the lease people say no, or again, expect some outrageous over-inflated market value of the car?(we are talking about a tsx here...) Also, are services (oil changes, etc.) "taken care of" with it being a lease car, or do you pay out of pocket for this?
And sorry for hijacking your thread, ryanc44. I guess I got a little carried away...
LOL, all of those months spent as a lurker got me a little jammed up and the dam just gave way...
10-13-2003, 12:22 AM
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Originally posted by SJHCL
......And sorry for hijacking your thread, ryanc44. I guess I got a little carried away...
LOL, all of those months spent as a lurker got me a little jammed up and the dam just gave way...
......And sorry for hijacking your thread, ryanc44. I guess I got a little carried away...
LOL, all of those months spent as a lurker got me a little jammed up and the dam just gave way...
Speaking of hijacking a thread, , maybe you didn't see my little aside on another thread you were on.....
What starts with the capital of Puerto Rico and ends with acid?
10-13-2003, 01:14 AM
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Re: Re: Re: Lease vs. purchase
Originally posted by larchmont
Darn right -- great post.
Ryanc, I don't understand why you are considering only either buying outright or leasing, and not the additional choice of buying and financing. My very confident answer to you would be: If you're in a position to even consider buying outright, there's almost no doubt that you shouldn't even be thinking of leasing; your second option should be buying and financing. I can't think of a single reason that in your position, leasing would be preferable to buying and financing.
Darn right -- great post.
Ryanc, I don't understand why you are considering only either buying outright or leasing, and not the additional choice of buying and financing. My very confident answer to you would be: If you're in a position to even consider buying outright, there's almost no doubt that you shouldn't even be thinking of leasing; your second option should be buying and financing. I can't think of a single reason that in your position, leasing would be preferable to buying and financing.
I never considered financing because (as our resident accountant mentioned), I don't have my money set up to where I'll get a higher return vs. the interest rate I'd have to pay on financing the car.
The whole lease thing came about just because I was initially made to believe that it wouldn't cost me anymore than an outright purchase, and there were some added benefits. But now I've been enlightened by all the great info you guys have stated here.
Thanks again everybody,
Ryanc44
10-13-2003, 12:55 PM
#27
2006 DGP Sold 10/24/2012
Originally posted by larchmont
Speaking of hijacking a thread, , maybe you didn't see my little aside on another thread you were on.....
What starts with the capital of Puerto Rico and ends with acid?
Speaking of hijacking a thread, , maybe you didn't see my little aside on another thread you were on.....
What starts with the capital of Puerto Rico and ends with acid?
10-13-2003, 04:24 PM
#28
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Originally posted by SJHCL
Yes, I saw it and have been trying to figure it out ever since...
Yes, I saw it and have been trying to figure it out ever since...
10-13-2003, 10:38 PM
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Originally posted by jimblock
It may help if you remember some chemistry (common acids), I don't want to give away the answer...
It may help if you remember some chemistry (common acids), I don't want to give away the answer...
Whaddya say we try to help him out a bit:
The capital of Puerto Rico is San Juan.
OK, that's it for now. Let's see where you can go with it.
BTW, back to the topic: On a thread like this, most of the time you'd get almost everybody saying that leasing is the better deal. This thread just happens to have sorted out in a more even way, maybe even tilting against leasing.
10-14-2003, 12:23 AM
#31
2006 DGP Sold 10/24/2012
Gee thanks larch, that part I had within 30 seconds...
It's the chemical part that has stumped me for well over a week... :o
And about the majority response to leasing; from your observation it seems most folks just buy into the sales hype about focusing on the down + monthly without running the numbers and looking at the complete package. I wonder what percentage of new car lease holders would be better off financing? And do you think that there are many folks who buy that would be better served with a lease?
It's the chemical part that has stumped me for well over a week... :o
And about the majority response to leasing; from your observation it seems most folks just buy into the sales hype about focusing on the down + monthly without running the numbers and looking at the complete package. I wonder what percentage of new car lease holders would be better off financing? And do you think that there are many folks who buy that would be better served with a lease?
10-14-2003, 12:47 AM
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Originally posted by SJHCL
Gee thanks larch, that part I had within 30 seconds...
It's the chemical part that has stumped me for well over a week... :o
And about the majority response to leasing; from your observation it seems most folks just buy into the sales hype about focusing on the down + monthly without running the numbers and looking at the complete package. I wonder what percentage of new car lease holders would be better off financing? And do you think that there are many folks who buy that would be better served with a lease?
Gee thanks larch, that part I had within 30 seconds...
It's the chemical part that has stumped me for well over a week... :o
And about the majority response to leasing; from your observation it seems most folks just buy into the sales hype about focusing on the down + monthly without running the numbers and looking at the complete package. I wonder what percentage of new car lease holders would be better off financing? And do you think that there are many folks who buy that would be better served with a lease?
About the quiz: Before the next hint, a little preamble.
Ever heard this joke? Actually it's not a joke, it's a silly rhyme:
Willie was a little chemist,
Willie is no more.
What he thought was H2O
Was H2SO4.
....which is sulfuric acid.
So..... Do you know the chemical symbol for hydrochloric acid?
10-14-2003, 01:00 AM
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Hey, Lung, he was supposed to figure that out himself!
But, what the hey, we've put him through enough agony already.
Now, do you think you could maybe put back the other avatar?
But, back to SJ:
So..... What starts with the capital of Puerto Rico and ends with acid?
But, what the hey, we've put him through enough agony already.
Now, do you think you could maybe put back the other avatar?
But, back to SJ:
So..... What starts with the capital of Puerto Rico and ends with acid?
10-14-2003, 10:58 AM
#38
2006 DGP Sold 10/24/2012
LOL, I didn't even look at the letters..."I was hooked on phonics"
Initially I was sure it had something to do with "To Kill a Mockingbird" as that's where you first posted it.... never even crossed my mind to look at my Username...
10-14-2003, 11:09 AM
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Originally posted by SJHCL
LOL, I didn't even look at the letters..."I was hooked on phonics"....never even crossed my mind to look at my Username...
LOL, I didn't even look at the letters..."I was hooked on phonics"
....never even crossed my mind to look at my Username...
Which would then seem to have nothing to do with SJ, HCL!
So you're forgiven.
10-14-2003, 12:22 PM
#40
2006 DGP Sold 10/24/2012
Originally posted by larchmont
-- probably SJH, CL, right?
-- probably SJH, CL, right?
... my initials & car, which is also the California personalized tag on my CL.Now what do I do about my Username when I sell my CL and lease my new TSX?
