I am curious to see how many of you bought your TSX vs. leasing one? I find this particular interesting with the TSX because it is one of the newest and hottest cars out.

I lease all of my cars because I like having new cars every 3-4 years, I like not worrying about warranties and maintenance, and I like to always have the option of driving the newest cars out. Even though most of the vehicles I have owned have very high residuals, I still don't think that I would make out very well buying and selling after this amount of time.

So, what factors did you use to justify your purchase/lease?

 

Economically the thing that makes the most sense is to buy and keep for a long time.

But if you really want a new car every 3 or 4 years it makes sense to lease. Also if you have a business and can write off the payments it makes even more sense to lease.

 

People say this all the time, but I think it's not true -- at least in the U.S. From another thread, it seemed that maybe in Canada it is true.

In the U.S., I'm pretty sure that exactly the same things apply either way -- the same allowances, limits, requirements, etc.

 

Hmm...thats interesting. I'm no accountant, but wouldnt it be different when you are spending money and aquiring an asset? Unless you can write off the interest and/or depreciation only?

With a lease its easy, its completely an expense.

 

I bought mine. I am in business, and I travel way too much for rental to be worthwhile. But even if it were, I wouldn't want to go that way, because to me there's nothing like owning my own car.

 

I get the feeling it might indeed be different in Canada and the U.S. Also, since neither of us is an accountant, I guess we're not going to be able to find the "ultimate" answer by ourselves.

But, in terms of the U.S., here's what I do know:

(1) Even if you lease, it isn't "completely" a (deductible) expense, because there are annual limits -- which are exactly the same as if you buy.

(2) A footnote to #1 is that the limits apply only to the basic cost of the car. Additional costs -- including everything, you name it -- repairs, gasoline, washing, waxing -- everything except maybe mods -- is totally deductible, without limit, either way.

(3) A footnote to both #1 and #2 is that the figures have to be multiplied by the percentage business use of the car -- and this applies equally whether you lease or buy.

 

From a business expense standpoint, it's about the same when buying. The lease makes the accounting a bit simpler for you since you don't have to calculate the expense manually, but the calculation is essentially as you describe. Depreciation + interest expense. My wife is self-employed, the TSX is technically her car. Like sauceman, she puts on too many miles to make leasing worthwhile. Buying is the cheaper option in either a short- or long-term scenario.

I think if most people actually crunched the numbers, they'd find that buying is usually a slightly better deal than leasing, even when the car is a valid business expense. However, there's lots more to it, as we've discussed here before. Always having a new vehicle is something that has some value that is very difficult to assess. It may be a purely emotional thing ("gotta look cool wit me new wheels") or may have real business value (a breakdown means loss of revenue) or maybe something in between (a newer car could be safer in an accident - that has both emotional and financial implications).

tag --> larchmont.

 

I honestly don't see the point in leasing, besides that you have smaller montly payments and down payment. The lease for this car is about $349 avg?

$349*36 (months) = $12564 + $2000 or so (down payment)=
$14564!!!!!

Basically, you lose close to $15,000 on a car that is not yours and will possibly pay extra if you go over the mileage. If I were to sell or trade in the car in 5 years, it will be worth more than $10,000 (judging from resale values of other acuras and hondas).

For the tax write off, you need to be making a good amount of money to benefit from the tax write off. Like to be in the 40% bracket.

 

Well -- a lot of people are going to be saying, "Hey, Euclid, that's exactly what I want!"

But, as we showed on another thread, the monthly payments don't even have to be higher, provided you finance the buy with a long-term loan. The down payment probably does need to be higher, but not much.

 

I know a lot of people who fall into a sort of "leasing trap". E.g. - I graduate from college and need a car. I have just started working, so I don't have a lot for a down payment and/or I have student loan payments and rent that dictate that I can't tolerate large monthly car payments. So I lease a new car for, say, three years.

Now, three years rolls around, and those debt and rent payments haven't gone away - if anything they've increased. I have a little money saved up, but nothing approaching a "large" downpayment. And -here's the catch - I have gotten used to driving a new car, so the thought of buying a used car doesn't even cross my mind. So I end up leasing another new car...

In this scenario, leasing is terrible for me, because I always have a car payment, and I can never save enough to buy a new car. But I have seen it happen over and over to my friends.

BTW - in answer to the original question - bought mine outright

 

re "large down payment" -- Last I heard, you could usually buy a car with only 10% down. And if you take a long-term loan, the monthly payments can be similar to lease payments.

 

LOL, why don't you just come out and say that you think leasing is for poor people who don't make any money and cannot manage thier finances?
FYI - My wife and I do very well and I am sure there are others here that can afford a heck of a lot more than most of the cars discussed here on this forum, even if we choose not to.

 

Bought. But I plan to keep her for ~10 years, so....

 

Bought. Plan to keep for some years, plus I drive too many miles a year to justify a lease. With all the Acura's we've owned I've never had a problem and all rolled well over 100,000 miles before trading. Maintain them and the value lasts.

Just my view.

 

Actually, it wouldn't make sense to down pay 10%, since that would decrease payments by about 10~20 dollars a month. Unless your going with a large down payment, say >25~30%, then your just locking up your money for a small difference in terms of monthly payments. And in terms of down payments, you don't even have to make a down payment, if your credit allows it. When I bought an eclipse, I put nothing down.

And yes, you could go with a long payment, but there is the downside of having those payments extend well beyond the car's possible life. Plus, a 72 month payment plan just seems like a long commitment, seeing you can never really foresee one's financial future beyond 3 to 4 years.

Personally, I prefer to extend to 72 months if I know that it would make a significant difference in payment (a 40k car for instance). For a 20k car, I go with 36 to 48. If I had to purchase the TSX, I would go with a 60 months, I did the calculations on acura.com, and it seemed reasonable for me at that timelength.

Junkster, who would like to lease a car for once, just for experience.

 

I wish I could do this, but think back and what car would you be excited to buy from 5-7 years ago? I just think I am always going to want a relatively new body style. Although some of these futuristic , designs (like the Infiniti FX45) are starting to scare me...

 

1. last generation of the CRX
2. 4-door M3 (E39)
3. ITR
4. previous generation Accord
5. previous generation Civic Si

Same here.

 

It's E36.

Hmm...this is more than 5-7 years ago >>> early 70s Mazda RX3.

 

Hey, y'all -- you don't have to keep the car a long time in order for buying to be the better choice, nor to go for a long-term loan on a purchase. The thing about a long-term loan is, it keeps the monthly payments to a minimum -- which I imagine was one of the main reasons to consider leasing, and therefore one of the main points we're "arguing" here, which is why I talked about a long-term loan. If you want to get a new car after only 3 years, no problem -- sell your car, pay off the long-term loan, buy your new car -- and in most cases you're ahead of where you'd be if you had leased to begin with.

The issue of how long of a loan you opt for is a completely separate question. I just talked about a long-term loan because most people who lease are looking to minimize monthly payments, and buying with a long-term loan addresses their concern.

I think one reason this issue of lease-vs.-purchase gets so easily confused is that the various questions within it get blurred together, so we can lose sight of what considerations are involved in each question.

 

Buff-Daddy - shame on you for accusing me of snobbery. My then-fiancee leased her first car out of college, and it was the right choice for her at the time.

My point was is that there are really two types of people who lease cars: 1) people who choose to lease because they want a new car every couple years and don't mind having a car payment all the time, and 2) people who lease because it is the only way they can afford a new vehicle more often than every 8-10 years. Leasing makes perfect sense for the first person, but not, IMO, for the second. The second type should be buying used and not having a car payment for a few years in between purchases.

 

Couple notes about the costs of Leasing vs. Buying

1. Leasing will always give you a lower monthly payment than a loan of the same term will, so your initial costs are lower.

2. If you buy and sell your car every 3-4 years, then the total cost of leasing vs buying is about the same. Yes, leasing may give you more more fees, but if you wisely invest the money you save from your monthlies, then the return on investment will more than outweigh the extra fees.

3. Of course, if you buy a car and keep it for a long time, this makes the most financial sense.

IMO, if you are going to be changing your car every 4 years or so anyway, you might as well lease. After all, your total cost is about the same as buying, and you don't have to deal with the hassle of selling your car at the end.

You definatley do NOT want to lease if:

1. You drive a lot of miles
2. You want to modify your car
3. There's a chance you want to back out of your lease. Backing out of a lease is very costly, and much harder than selling a car you own.

That's my take on the matter

 

Good points, except this one.

Because: What is the relevance of comparing the lease payment to a loan "of the same term"?

As I understand it, the main point for such a person to get a lease is that it minimizes the monthly payment. So, to address this concern, you should compare it to a loan term that gives the lowest possible monthly payment -- Right? The fact that there might be loan payments remaining when you sell the car is irrelevant, because you can pay that back out of what you get for selling the car -- and come out ahead.

By the time we're done with this thread, I think we'll have this issue answered once and for all!

 

cactuscool, I agree with your points except wrt investing the diff between a loan payment and a lease payment as you describe in your second point. Not that it isn't true, it's that virtually nobody will do that - they'll lease a more expensive car instead.

Good first post, BTW. Welcome.

 

Good. Then we can get back to working on "TSX vs Accord" and "Do I really need premium fuel?".

 

Yes you can get a 72 or a 96 month loan and that will give you a very low monthly payment, but such a term drastically reduces the long - term cost benefit of buying. These types of loans generally have much higher interest rates. That combined with the longer term of the loan means you end up spending a HUGE percentage of your payments just to pay interest on the loan.

I'm not quite certain why you are so sure that you will "come out ahead" when you buy your car then sell it later. Most people who sell back their car in reality use it as a trade-in. A dealer trade-in is most often the worst option, as they give you quite a bit less than what you could sell it for yourself, so you lose money right there. Another thing to consider is that when you buy a car, you pay all the sales tax up front, whereas on a lease, only your payments are taxed, so there is actually a large percentage of the vehicle that you don't pay tax for.

 

I seriously think that leasing costs more than buying... On the long run that is...

For people that can't afford a higher payment, a lease may be a solution but you will always end up having a car payment forever...

I have a 600$/month for 48 months on my TSX (CDN $$$). Even if the payment for a purchase and a lease were the same, I would still end up leasing the car...

I kick the sh!t out of my cars and I also like to change them often (every 2-3 years). Just the fact of not having to try selling the car is a great deal for me (you give it back). I just can't be bothered with selling the car. I also would not feel comfortable selling one of my cars to someone I know :P (did I mention it, I really kick the sh!t out of my cars).

Also, for leased cars, there is a value after the lease term is guarrantied. Try selling your car in 5 years after 6-7 accidents ... With a lease, you just give the car back as long as the car is in good condition (all repairs done).

One more thing, I used to buy and sell my cars every year (which was really costly). By leasing, it makes replacing a car a little harder before the end of the lease. So it moderates me (for instance, I will be stuck with my TSX for at least 40 months, not that it's a bad thing).

I guess that unless you can afford a monthly payment for life, one should buy instead of leasing.

One more thing... By leasing, I think twice before dishing out 6K on some aftermarket parts on the car (headers, CAI, Hondata, Mags, audio system...). I will still end up spending some $$$ for parts but I will not buy as much. Just this fact alone makes the car much cheaper than buying it (you should have seen what's I've done to my purchased Integra Type R )

Just my

Luc

 

CRX? That thing looked like a Roller-Skate!

I have to admit that the old Acoord is better looking than the new one. If they only screwed up the back OR the front, I would have been ok with it, but they screwed them both up.

It is kind of cheesy, but I liked the last production Toyota Supra TT too, but I would have had to buy one without the 3 foot spoiler...

 

Leasing is for poor people who don't make any money and cannot manage thier finances.

Denial is not just a river in Egypt.

 

Hey, Crazytree -- off-topic, but.....

I can't believe you never got on here:

http://www.acura-tsx.com/forums/show...&threadid=4250

You must have slept through it.

 

Upon much thoughtful reflection, I still think our toker friend here looks kinda like he's mining for booger nuggets.

 

Great thread. I always buy, partially because I normally put too many miles/year on my cars. But I can see the appeal of leasing - gets you in a fancier car.

 

I tend to buy in CASH. I know that sounds wacky, but I start saving for my next car as soon as I purchase a new one. By the time I get tired of the TSX, I should already have enough cash in the bank to buy the 2011 TSX or whatever.

 

If you can earn more of a return by investing the cash than the imputed rate of interest on the lease, than you should lease, invest the money wisely and then buy the car at the end of the lease.

I've never been able to confidently do that. So I'm another anti-Keynesian who pays cash and then drives a car until it's "fully depreciated" and the wheels fall off. Sorry.

 

Leasing is yet another way for people to live above their means. If the only way you can afford the monthly payments on that TSX is to lease it, you're in over your head.

How's that?

Another downside to leasing: if you're like me, and get bored with your car every year, leasing is not the way to go, since it will cost boucoup bucks to get out of it early.

 

Before I was in the business, I purchased my cars. Once I understood leasing concepts I have been leasing. I don't think I'll ever purchase a car again. Granted, most customers don't know enough about the subject to make the BEST decision EVERY time, but I feel good enough to feel I make the best decision for us.

The advantage of leasing for us are two fold. First, we put more miles on our S2000s than just about anyone else I know in Hawaii. Because of this, if we had purchased, we would get comparitivley little at trade in time. Naturally we allow for these miles when we start our lease.

Look at our 2000 S2000. The residual at the end of the 5 years is going to be around $22,000. When I saw that residual, I knew that the leasing company had missed terribly on this and there was no way it would be worth that. Thus far, I am being proven correct. Our car with the current mileage is barely worth 18-19,000 wholesale NOW, and the lease matures in one year! The car will probably be worth 15-16,000 next Nov. When we turn this car in, the leasing company loses that money not us! They will have paid 22K for a car worth 15K, and I walk away.

 

I think what the "buy" people are missing is that you dont come out ahead. Yes at the end of the lease you walk away and have nothing and you complain that a buyer is ahead because they can trade the car in and recoupe some of the money. But what you miss is that leasing people only put down 1-2k and are paying about hundred -200 dollars less per payment. If you add up that the money they save is about the same as what you would get back on a trade...and chances are you wont be in an equitable position till the 3-4 year anyway. A lease is just deferring the payments. Thats all. Simple as that. Its a creative way of financing a vehicle.

 

I'm putting equity into my car with every payment.

 

Not necessarily so, at all. In fact, there isn't any figure that you could state that would be accurate, because loan payments vary greatly, depending on how long-term the loan is. You can usually have the loan payment be comparable to the lease payment if you want to, by taking a long enough term loan.

And that's how it is with this debate. Most arguments that are made in favor of leasing seem to be not quite correct. The monthly payments don't really have to be higher, it probably isn't true that leasing is better from a tax-deduction standpoint, etc., etc. This doesn't mean leasing isn't a good decision, but it does mean that maybe a lot of the decisions are made on misconceptions.

But on this thread there have been some absolutely clear things in favor of leasing. There's no doubt that leasing is simpler than having to deal with selling your car when you get your next car. And, like Luc said (lgregoir), if you really kick the shit out of your car, you better lease. (I think he said he kicks the shit out of his car. I'm not sure I got it right, did he say he kicks the shit out of his car? Yeah, I'm almost sure of it.)

 

Yeah I think I did say it

Have a great week end...

 

Equity? I hope you are kidding! This isn't real estate, cars depreciate. Although people like to try and compare these 2 things, this isn't the same arguement as renting an appartment vs. buying a house.