Mike_TX

Sorry, Mikey - I think maybe you've missed my point. I wasn't implying leasing is right for everyone - it's not (and I think I've even said that somewhere back in the thread). But neither is paying cash right for everyone, and financing isn't even a good idea for some! You're right - there are different circumstances that affect different people's buying decisions, and I wasn't trying to say one size fits all.

My reference to cars as disposables was intended to make the point that I don't get married to them. Just in the past 12 months or so, I've dumped an 18-month-old Infiniti M45, a 3-month-old Lexus IS350 and an 11-month-old TL. Sounds pretty disposable, huh? I love cars, but I'm realistic enough to know they wear out (or I get tired of them) and new ones come along. I haven't kept a car a full 3 years in decades ... I just don't believe in having them that long. As a result I haven't had to buy tires or belts or batteries in so long I can't even remember, and I've always driven pretty new iron.

Not putting more money into cars than necessary was a cash flow reference. Maybe I should have said "not tying up more money than necessary".

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Mike_TX

Hmmmm. I don't think you're right about that.

If you total your car, the insurance company is going to pay the leasing company the market value of the car. That amount will be applied against the payoff and you pay the difference. If you have GAP insurance, that will kick in and pay the difference. Mileage charges wouldn't apply, since the lease is being paid off.

I've traded leased cars with "excess" mileage (which is a similar termination of lease), and all I had to do was pay the payoff amount. Mileage was never an issue.

The mileage in the lease is expressed as the total mileage for the term of the lease (45,000 in your example), so there wouldn't be any excess mileage charges if you wreck it out prematurely.

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VOdoc

Fascinating discussion. I've leased 5 or 6 cars over the years so I'm very attuned to the concept of tying up other peoples' money instead of my own. Each of those cars, though, was chosen on the basis of which manufacturer had the most attractive subvented lease terms, not on the car for which I had the greatest lust. (Hint: BMW NEVER has the most attractive lease terms.) There are certain tax advantages to leasing which include, in California, a much lower sales tax hit. I have never put a nickel into a cap cost reduction for fear that some bozo would hit me and total the vehicle on my way home from the dealer. Nowadays I drive too many miles to lease, though the idea of leasing two cars and alternating them is sort of a fun one!!

Acura demands a whole new level of commitment. You pretty much gotta buy it! (But at least try to get the low APR and invest your capital elsewhere...)

noobie

Most people will have to pay tax on that return, so the gap at 6% is smaller. It really does depend on personal circumstances. I always buy less car than I can "afford" so a low monthly payment is not that big a deal. Leasing for me is not good as I put so little miles on car and I like total flexibility as to when I get rid of it whether it be 1 year or 10. It also make getting the next car so stress free; no deadline as to when to buy (lease) so I get usually get a good deal on what I want.

I will say though, those attractive lease deals on European vehicles does have me thinking twice.

noobie

I'm looking at both too. The GX will get refreshed for 08, but is still a full frame truck with worse gas mileage and higher rollover risk. I think the MDX is a safer vehicle. The GX, well equipped, is quite a bit more money as well.

SpicyMikey

Well, I must say this. Talking to the MB dealer this week made me wonder where all these great European lease deals are. Looked at a GL450. No MF incentives and the residual on these puppy's is a bit below average - 45% on a 36month 15k lease.

Granted it had a LOT of tech in it (and I love tech), but, it was also $75k equiped how I wanted it with a less then "glowing" repair record Still just seems to lack value. I guess I just don't love myself enough to spend $75k on a car worth $60 I just can't find an SUV that blows me away like the RL. The MDX needs to be upscaled to be a slam dunk; Better interior trim, Keyless start, Adaptive Cruise. also, don't make running boards, roof rack and side molding an "accessory". Thats rediculous. Follow Lexus' lead on that one.

black label

Most ad leases have a silly down payment. My sister store is a BMW store, the are one dealership away from me (seperated by a Lamborghini dealer). Their lease programs are simply better than Acura's from a leasing stand point. Their MF are much better and they use a high residual (partially because they focus on the 24 month range).

The big difference between an Acura lease and a BMW is in the long term. You can typically buy your leased Acura at the end of the lease for a lot less than it's actually worth. To purchase your BMW lease at the end, you would typically spend a lot more than you would to buy a similar car as a CPO.

In the end most people who lease are payment buyers so they don't really care what they could buy the car for at the end, they only care that they can lease a BMW with a higher sticker price than the RL for less money.

Mike_TX

45%?!?!? Holy moly. That surprises me.

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Mike_TX

I agree. BMW typically inflates their residuals a bit to make their leasing programs more attractive. That's nothing but good for the person leasing, since it reduces the monthly outlay and helps you get into a nicer car.

OTOH, it's also good for BMW, since it helps "prop up" the resale value of their cars. Since they control most of the leases - and set the residuals - they exercise a lot of control over the market value of their cars as they come off lease. And as you say, only a very small percentage of BMW lessees buy their cars at the end of the lease. Used BMW buyers are a different breed from new buyers.

In fact, IMO that's where Ford, GM, Chrysler (and to some extent Acura) have helped sell themselves down the river. By setting low residuals on their leases, they're telegraphing their own lack of confidence in their products and in a sense helping to depress resale prices.

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SpicyMikey

yea Mike, definitely worse then your MDX or a Lexus GX (which is around 53%). The MB number is kind of in line with the RL, which everyone always says is terrible, but, which is really around average.

I try to use the 3 year/50% rule (for 15k mileage). If the car is above that then I'm doing great. Really, 45% isn't that bad. Now, go buy a Dodge Carravan and watch it's value drop to 35% after 3 years. Now, THAT'S bad!

CL6

I think the more tech, the lower the residual.

black label

GAP is included on ALL Acura leases. They don't check your mileage yearly, as long as you're under the total mileage, you don't pay a penalty.

black label

This may be the biggest misunderstanding in leasing. Unless you are over 35k per year or have absolutely no idea of how many miles you will drive over the next 3 years, leasing can still be a good thing.

A good friend of mine drives 30K per year. The last car he bought he financed for 5 years (and rolled the inequity from his previous car). In three years he has a 90k car that is worth $6000-$7000 less than what he owes. When he wants a new car (which he does every 3 years), he can payoff his inequity or roll it into the financing of another car.

If he leased the car as a 30K per year lease, he will pay more monthly than a 12 or 15K lease, but nearly as much as if he financed for 5 years. The best part is in 3 years, he doesn't care what his high mileage (90K) 3 year old car is worth, he's giving it back to the dealer (Subaru) and its now their problem.

If you drive 30K per year and are financing for 5 years, your car will have 150K on it when its paid off, how much longer are you going to keep it? How much trade value does your 5 year old 150000 mile car worth as a trade in? If you figure out your total cost to purchase the car over 5 years, then subtract the trade value at the end. It will cost you more to own that car for 5 years than it would have been to do 2 separate 3 year lease.

Nationally, only 19% of the people who take on a 5 year loan ever make the last payment (the rest trade the car in while there is still a payoff). That means that the other 81% never actually bought the car, the bank owned it and they rented (leased) it from them, you just paid too much each month.

Unless you're like me and will buy a car and keep it forever (1997 Prelude just hit 153K this morning), leasing can make a lot of sense, you just need someone to explain it.

Mike_TX

The residual on my MDX for an AHFC 36/15,000 lease was 55% (cap cost $44892/resid. $24732). I was a little (pleasantly) surprised it was that high, since it sure wasn't on my RL!

It's worth noting, though, that the residual on Sport models and/or Entertainment models is a couple points lower than just a Tech.

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Mike_TX

Now THERE'S an interesting point!

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SpicyMikey

Thanks, that's good to know. I was just throwing out national averages from a leasing table I have. The MDX is doing well ESPECIALLY with it being so late in the model year.

Trackruner228

iTrader: (1)

To say leasing is the only problem with the RL is pushing it. Granted I am sure its a problem but it cant be the only one. I mean the GS, and M45 arent on it. Granted it probably would sell better if the lease deals were better, I dont think it would improve greatly. Although very intersting fact about BMW.

noobie

The GL has pretty good demand, so special deals and incentives are light on that vehicle. It's also the first model year, so it's "new" with all the gremlins too.

Interesting comment about tech in that car. I never associate MB with "good" user friendly tech. They still have optional Bluetooth modules in many cars and their nav is the pits. Give me Garmin Nuvi anyday. Attractive base price, but add leather seats, HID lights, Nav, rear entertainment, keyless go and boy does it get pricey. I think the diesel is good option for torque and mileage is that vehicle. The new GL550 debuts this year with a base price people are guessing in the mid 70s. Yikes.

Regarding the MDX, I've never used teh roof rack on the first gen, except for a Christmas tree and I prefer the look wihout the rack. I won't buy side molding again. I bought on the last MDX and all of the digs are in places without the molding. Keyless start and CMBS would be nice though

noobie

My first new car was a 1986 Prelude! 1.6L engine with a carb and no power steering or power windows. Air conditioning as with all Hondas at the time was a dealer installed option. It was a cool little car with those pop up headlights and sunroof and a slick 5 speed manual gear box. Back seat room was non existant though.

noobie

That happens when you have a young baby at home. Just wait a few years... when the activities and school start to pile the miles on.

SpicyMikey

Exactly, the base price (and the looks) got my attention, until I realized that price didn't include anything. EVERYTHING on this SUV is optional. Including leather seats! I guess for $55k you just get vinyl with MB

Regarding nav. You're right, it's terrible. My brother, who sells Acura's, says that's the first thing he demonstrates when he finds out the person currently owns a MB. They are usually stunned at how well it works (especially the voice commands).

CL6

Better leases on that car would help. I don't think Acura has ever really been serious about capturing and retaining lease customers. And the M35 is the competition for the RL, not the M45 (different price point). Also, as somebody else remarked, the GS is brand new and has a hybrid model available so I'm sure this helps a lot. I know Acura thinks the trunk money is helpful but, in the long run, it says this car doesn't sell and damages the brand going forward. Better to 'save' the customer that money in terms of a strong residual or very low money factor because 99% of customers are not going to think those are signs of a damaged model/brand.

black label

Lots of upgrades since then, except it still has a smaller back seat than a Civic. For all intents and purposes, its a 2 seater.

SpicyMikey

True. factory incentives save you money on the front end but that almost always flows right to the residual value at trade in time. In reality, those incentives don't save you much if your rolling the car in 3 or 4 years. All it does is make things tricky for you. You almost HAVE to wait to get these on and again off again incentives otherwise you get hurt.

neuronbob

Hmmmmm....interesting point that I will remember the next time I'm in the market for a car. Negotiating a high-mileage 3-year lease would not be a bad idea. The current RL would still be a bad lease deal in that situation, no?

SpicyMikey

Bob, remember not to think in absolutes. The only absolute certainty is that, all things being equal, a lease is always more expensive then a purchase. That's a fact. Logically speaking, it HAS to be. You got a middle man. Instead of you buying the car, the leasing company is buying the car and renting it back to you. They're taking all the risk, they need to be compensated. They need to charge you the finance charge (you avoided paying) plus a profit margin for themselves.

Having said that, often factors can play in that make leasing smart. First, if you own your own business the tax laws (which where changed back in the 90's) took away your ability to write off interest on a purchase. This is a big plus for leasing (if you can take advantage of it) and it's one of the main reasons you've seen a real surge in leasing over the last 10-15 years. Plus, a closed end lease gives you a guaranteed residual value after 3 or 4 years. With a purchase that is an unknown. Sure you can use predicted averages to anticipate the value of your car when you sell it. But what if you get in an accident that puts your title into "salvage". Your 50% predicted residual after 3 years drops in half. A big plus for leasing. The leasing company is taking that risk and loses, not you.

People can debate presevation of "working capital" and all that stuff, but to me it's a minor issue (emphasis on the word ME). To some people tieing up a little extra money is critical, especially if they need it to run or start a business, etc. I happen to not be in that boat. I can float the money if I know my Total Coast of Ownership -- in the end -- will net a savings.

But bottom line, there's just no right way to buy a car. You can't even anticipate it. When I go to buy a car I look at the deals at the time. Since I own my own company leasing is a real option. Sometimes I let my company lease it , sometimes I buy it. If I buy, sometimes I go short (3 or 4 years), sometimes I go long (5 or 6). It just depends on the interest rates and my circumstances. You gotta go with what makes sense at the time.

With my 07 RL there were no lease offers, plus, the interest rates are a bit high these days, so, I went with a short 4 year loan. Even with the "low" residual I calculated that if I make 36 $1100 payments and then sell the car after 3 years, I can pay off the $13000 balance with a predicted wholesale residual of $25500. That $12500 equity will offset the extra up front payments caused by the purchase and leave me about $4000 ahead versus the lease deal from Acura (assuming I don't get in a serious accident). For me, taking on the extra risk was worth $4000 (especially since purchase does offer some nice freedoms leasing doesn't). Again, emphasis on ME. Don't want to start a religious war over leasing/buying again, because, it's also true that if Acura had offered some 2.9% MF or an inflated 55% residual on the RL, then the dynamics of the deal would have been reversed.

The only mistake you can make is to walk into buy a car already deciding whether you want to lease or buy. You gotta let the numbers take you where they may.

CL6

Good points, all. However... with a purchase you have depreciation to worry about. Let's say you don't drive your car into the ground... that will become a factor when you get into something new. Also, it is human nature to not keep the car for many years. Something new comes out, better technology, safety, etc. Many good reasons to sell a car early.

One could argue that it makes more sense to lease an expensive car because it would have better (and more) safety technologies on it than a cheaper car would have with the same purchase payment as the lease.

Would you rather be in a wreck in an RL or a TSX?

I think most people lease for the wrong reasons and end up paying too much because they don't understand leasing, but I think it can be a really good thing for many people. But if you keep burying yourself deeper and deeper until only a pile of cash will get you out of it... then that's a bad thing.

SpicyMikey

Totally agree my friend. I am not against leasing in the slightest. You mention some other things that are intangibles. Only the individual can can factor in "value" of those. The calculations for me on my new RL came up cheaper even if I decide to roll out in 3 years on my 4 year loan. That's just the way it worked out for me. My high beacon score allowed me to get a good (6%) finance rate. The lease deal (if I remember correctly ) was in the high 6% range. It just worked out better to buy this time. I admit it doesn't always work out that way.

Chas2

I had a 1985 Prelude! It was a 1.8L engine, dual carbs. Very fun car especially with 15 inch wheels and 50 series tires. Those were the days. My brother in law is still driving it...I cannot believe it! Good thing I got those sheepskin covers to protect the upholstery!

Very little back seat room, but it did have three seat belts so I guess that makes it a 2+3?

Mike_TX

Mikey!!! You got on me earlier when you thought I was stating"absolutes". Now you say (in the same breath) not to think in absolutes, then you state an absolute!

And it's an absolute I simply don't agree with. You cannot say a lease is "always more expensive than a purchase". That's complete BS, unless you mean an outright cash purchase - which almost nobody does these days ... they finance. And it's almost impossible to compare an outright purchase with any kind of financing or leasing , because it depends entirely on what you would have done with that money otherwise.

But I'll put up a few simplistic numbers:

Let's assume a 6.6% interest rate across the board (since that's what I just got on my MDX lease (.00275 MF x 2400 = 6.6%), a $40,000 cost and a residual/trade-in value of 50%, or $20,000, after 3 years. Let's also assume a conservative investment return of 8%/year (far less than the stock market average yield).

Lease:

$720.56/month. No trade-in at end of lease.


Finance:

$47,920. (interest + principle) divided by 36 = $1,331.11/month

At the end, you have a trade-in worth $20,000, but you have lost opportunity costs of $1,758.38 (diff between finance payment and lease payment @ 8%), as compared to the lease, so you really have a net equity of only $18,241.62.

Divide that by equity 36, and you have $506.71. In other words, it has cost you that much per month to achieve that equity. So credit that against your finance payment and you still have $825 a month net ownership cost ... compared to only $720 for the lease.


Outright Purchase:

Lost opportunity cost - $9,600. ($40,000. x 8%), or $266.66/mo.

Equity at end - $20,000. - $9,600. = $10400. net equity.

Now, divide that net equity by 36 and you have $289. to "credit" against the lost opportunity costs, which leaves you just $22. a month ... barely ahead of the game. And God knows what you could have dome with that cash that might have yielded more than 8% of good to you!


Conclusion:

Based on this admittedly simplistic example, leasing is the clear winner in terms of financing methods, and buying cash is pretty much a break-even proposition.

Of course, all these examples are based on 3 years of ownership. For those rare individuals who keeps cars for 5 or 6 years, it's a different game. But most people don't do that.

Therefore, it's nothing personal, but your own "absolute" just doesn't hold water, so your own advice to avoid absolutes is worth following.

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CL6

Time for some Absolut!

Mike_TX

I'll drink to that!

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SpicyMikey

Hey, that sounds like a good idea CL. But I prefer Scotch Lin'em up

Mike, first, I said "all things being equal" it would be cheaper. That's just a fact dude. I'm not speculating here. That's different then saying a lease is ALWAYS more expensive on any particular day for any particular car. I think that's what I was getting at when I said that.

Regardless, lets clear up the numbers together for everyone's benifit. I could be wrong, but it seems your values are a bit off. When I use my "lease kit" analyzer I get different numbers for your scenerio. Here's the numbers I think you used;

$40k MSRP car.
- Cap Cost is $40k (this buyer bent over for the dealer)
- MF of .00275 or 6.6%
- Depreciation of 50% resulting in $20k residual

OK, let's run the numbers using LeaseGuide.com. You can run them there too and check my figures.

LEASE: $740 + $45 tax = $785 x 36 = $28,260
FINAN: $1301 X 36 = $46,836 - $20,000 trade in equity = $26,836

It seems that -- all things being EQUAL -- the finance scenerio was about $1500 cheaper. Of course it is! That's the leasing companies profit. They gotta make money too, right?

Now, we haven't even factored in Lease Aquisition fees and/or Disposition fees yet. No doubt you have those to add on to the pile. Another $1k? Probably. We're up to about $2500

Now, regarding lost opportunity with your cash; 8% is a way high number to use for conservative investments geared towards parking working capital. I have money for retirement in high yield vehicles too. But my business working capital is invested in low yield bonds, etc. You're getting 3% on average in these areas. PLUS, we all know the bond and stock market isn't like a bank account. You don't ALWAYS make 8, 10, 15%. Some years you even LOOSE money. Bottom line; your assumption of 8% per year is unrealistic for modeling. You might argue about this, but we can't use this figure. It's not realistic for shorterm working capital.

Let's say you have an average annual return on your shorterm cash of 3% over 3 years. The finance scenerio left you with $18k of dead money over 3 years. We can use a simple loan program to borrow $18k for 3 years at 3% to get the interest figure. Using BankRate.com it seems you loose about $844 over 3 years. Now our lease is still around $1600 more expensive.

One last variable; Tax interest write off. The lease would allow me to deduct more interest then I could have written off with asset deprecation. But, that's a hard one to quantify here. It depends on your revenue versus expenses (profit), other deductions for the year, etc. I can tell you this. It wouldn't absorb the difference even in a optimistic scenerio.

Bottom line; if everything worked out like you say, that 40k car would have been more then $1000 more expensive with the lease. But things are rarely equal. If there were some lease incentives available or the residual was artifically high, that $1000-$1500 difference could have easily gone the other way.

In my particular "real world" case it was even worse. First, I got a better finance deal with the purchase from my bank. I only paid 6% rather then 6.6%. Second, Acura doesn't residualize accessories. I put almost $3k in accessories on my RL. I would have lost almost $1500 in equity on the lease. I'm telling you dude, the lease would have cost me thousands more. I'm not making this stuff up. That's not to say you can't have different circumstances which made the move smart for you. HENCE, my statement from yesterday. DO NOT SAY LEASING IS ALWAYS BETTER. It just depends on the MF, residual, lease fees, and your personal circumstances. They both work.

Mike_TX

Well, Mikey, I didn't expect you to agree, but I don't agree with your numbers, either, so let's keep the spectators from being misled -

Lease payment calculated thusly:

$40,000 cap cost - $20,000 residual = $20,000.
$20,000 divided 36 = $555.56 (referred to as the "rent" or depreciation)

$40,000 + $20,000 = $60,000 x .00275 MF = $165. (interest)

$555.56 + $165.00 = $720.56/month for 36 months

I have no clue what your "tax" entry is about, since we don't have that in lease calcs in Texas. But with your inflated lease payment plus the tax item, you are about $2,340 HIGH on the lease cost. That makes your example 'way off.

It should be:

LEASE - $25,940 ... NOT $28,260

Therefore, my point is made on that count.

If you choose to ignore the lost opportunity cost of money forked over prematurely for finance payments, you're missing a key point, since it's real money LOST. Up in smoke.


As for investment income, you are in need of some serious help, my friend. Three percent??? Hell, I have some money in CD's (for goodness sake) at 5.5% and that compounds! (Explains why you don't even consider lost opportunity costs!)

But any accountant or financial planner will tell you that on average, the market has returned 10% per year. Your mileage may vary, depending on investment skill, but any good diversified portfolio will equal or beat that. Mine have.

Mikey, you can bend numbers to make them say what you want, but what it boils down to is that you don't like leasing very well. But don't try to obfuscate the facts to make your point ... that's not kosher.

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VOdoc

Guys, your analyses make for interesting reading. They certainly demonstrate the point that money is fungible and that reasonable people can differ.

Three to five percent in excess of inflation is a very decent return on investment. Three percent nominal return sucks--that's less than inflation. So let's be clear whether these are real or nominal numbers.

Leave us not forget that the purchased vehicle will likely be traded in at a discount of at least $1000 to the wholesale value...that's just the way car dealers work. (That's THEIR profit margin.) And a leased vehicle that's returned early is considered an early termination that allows the finance company to throw the predetermined residual value out the window and rape the consumer as they see fit.

There's no perfect answer here.

CL6

That's my ticket to jump in here. Trust me... the trade-in for an RL is far more than 1k below wholesale... it's more like 3 or 4k back. As if people will pay retail for a used RL. They will say:

"I got my Kelly Blue Book here and it tells me the wholesale value is $X but I know you guys don't pay that much so I'll pay $X below that. And I read some guy in Timbuk3 named Johnny paid 3k back for his car!"

This, to them, becomes the 'starting point.' The dealer takes their ACV (Acutal Cash Value) and adds Recon and Certification, plus a Pack and you're talking 2k minimum! So that RL you paid 3k back you're in 1k back and Mr. Customer has just offered you that...

I think we can all agree new cars are generally a bad investment to begin with. So you save $X if you lease of $X if you pay cash... you're still losing money either way. We'd all save cash if we drove 98 Honda Civics.

SpicyMikey

I never sell my cars to the dealer. I take them to CarMAX . CarMAX gives me fair market for them (almost KBB value to the penny). In Florida you NEVER return your car to the dealer because we have CarMAX all around. Maybe you don't have that option where you are.

Regarding this back and forth between the two Mikes We're going to have to agree to disagree. The numbers came right from a Lease calculator using your numbers. The tax number came from their program. That's the monthly sales tax on the "lease" charge. This is paid monthly while with a purchase it's paid up front. The $1300 finance charge included the sales tax while I separated it out on the lease. I separated it because it seemed that was what you were forgetting to include on your calcs. You only showed the lease charge before tax. Could it be different in Texas then Florida? Who knows.

Either way, with an "all things being equal" scenerio, these amounts seem to be small numbers. Even with the 3% or 8% thing. I think we can agree on that. That's kind of my point. It's no slam dunk either way without an incentive to push you to one side or the other. Let's split the difference for the sake of this scenerio and use 5.5%. That's about $1500 of interest versus $850.

You're right about one thing Mike, I am biased against leasing because I don't want one more restricting contract floating over my head then necessary (mileage limits, excessive wear, etc.). So, for me, I need a real savings for me to lease a car vs. buy. With the 2.9% financing on the MDX (and no lease incentive) I would have definitely purchased. However, trust me, if I can get a good lease deal and save 4 or 5k on a 3 year term, I will definitely lease. I have done it many times in the past.

Too bad we're so far away. I think you and I need a sit down to have a few drinks

dwboston

Talk about selectively employing statistics. The average return on the market (as measured by the S&P 500) has been around 10% (at least for the last 25 years or so) but what is the standard deviation of those returns? 14.6%. Which means that 2/3 of the time the return of the market fell between -5% and 24%. 95% of the time it fell between -20% and 29%. There were 4 years in that period where the market fell 10% or more and one year (2002) where it fell 23%.

Over the long-term it's pretty unlikely that a diversified portfolio will beat the market return, mostly due to fees and taxes, but also due to investment choices in actively managed portfolios. Even the best active managers have down years (which tend to wipe out the outperformance in good years over long periods of time, especially when fees and taxes come into play). A blanket statement that any good diversified portfolio will equal or beat 10% a year is just laughable. It reinforces the idea that most people overestimate their investing acumen and the actual returns they achieve on their investments. If it were true we would all be investing in this guaranteed 10% option and doubling our money every 7.2 years. I guess 99.9% of professional money managers must lack investing skill since just about every one of them would kill for a 10% return every year. If your portfolio is returning 10% every year then you should be selling your secrets via book or infomercial.

SpicyMikey

Thanks DW. I was starting to think I'm an idiot with my money management At least I'm not alone to think expecting a GUARANTEED 8% every year is high.

Besides, it's kind of a moot point for 99.9% of the people in this world. No one is going to setup some savings account and religiiously acrue their monthly front end savings from the lease payments. Who we kidding? They're going to spend that money on something else. Most people live on the edge. If you're leasing (or financing) then you probably fall into that category already. Truly wealthy people pay cash for their cars. It's a drop in the bucket to them and IT IS the cheapest way to drive a car.

CL6 can probably confirm that. CL? Did you ever get a truly rich person walk in and ask about comparing lease deals to financing? They probably just write you a check.

Mike_TX

Well, DW, you'll note I watered down the market return to 8% in my example (being conservative, as I noted). But water it down more to 6% and you'll still do double the 3% Mikey mentioned.

You guys might want to check into Ted Aranson's "Lazy Man's Portfolio", which returned 13.7% last year, all with non-actively-managed funds. And he's consistently beaten all the traditional indices for years. You might want to rearrange your 401k!

But anyway, I think we've beaten this horse pretty much to death for now. I've yet to see a discussion of leasing vs. buying end differently, although hope springs eternal. We're back to the good advice to consider your own financial situation and your needs and make the buying choice that works best for you. Just look at all the options.

I hope this discussion has been helpful to the group.

(Now, where were we? )

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