black label

My flame suit is chilled an on and I'm ready to post in StonedCLs defense.

1) 80% of the people who finance a car for 5 years never make the last payment. (national average for car financing is 5.5 yrs). If you never made the last payment before trading the car in, guess what, you rented it.

2) Putting large sums of money down as a down payment doesn't resolve the depreciation, it hides it from you so you don't feel bad about it.

3) Financial experts will tell you to purchase appreciating assets with cash and finance depreciating assets. That way you make your money work for you instead of taking hard earned cash and watching it disappear as you drive off the lot and take the depreciation hit.

4)If you take out a 5 year loan on a car and pay it off only to trade it in and get another car, you money would be better spent leasing. It only makes sense to buy if you will pay it off and own it payment free for at least 2 years.

5) The Azine demographic may not be the best sample pool. We have a lot of people here who like to modify their cars and that's not the best idea on a lease. We are not the majority. For a huge portion of the population leasing makes more sense than buying. I've heard a lot of people say they don't want to have a payment and I fully understand that, but the population at large trades cars in that aren't fully paid off yet (they think they were buying it but they rented it).

6) If you are going to drive a $30000 car for 3 years before you get bored with it which sounds like a better plan.
a- paying $600 a month and hoping the car is worth more than you owe in 3 years when you want a new car.
b- paying $450 a month and returning it in 3 years to get a new car with no worries about inequity.

Leasing isn't for everyone (I don't lease I have a 107K CLS 6MT that's been paid for long ago) but if you want a new car more often it may make more sense for you. Taking out a loan on a car, paying it off and immediately replacing it is foolish. Rolling inequity from your first car into your next car loan is foolish.

BTW if you don't have the title in your possession, you are renting the car regardless of whether you are leasing it or you think you are buying it.

dom

I just leased for the first time for a few simple reason's.

- I have that car ADHD that SS mentioned earlier.
- I don't completely trust VW reliability just yet.
- Lease rate was great.

We'll see how it goes. Have to try everything at least once.

LuvMyTSX

I come from a family who buys new cars and keeps them till they die, 10+ years.

When it came time to buy my own car, I bought a used 1 year old TSX. I put $9000 down and financed for 5 years at 3.9%. Payments were only $297/mo but I ended up paying it off in only about 2.5 years. I've been payment free for a long time now (3 years or so) and it's nice.

Leasing sounds nice, but you are never without a payment, and you own nothing. In cases where reliability is questionable, leasing makes sense, but only if you have the money to keep "renting" cars.

When you buy, and the car starts giving you problems, it is usually wise to sell/trade in instead of dumping more and more money into the car. That's why I just can't identify with the people who keep replacing trannies in their CLs/TLs. It's one thing if it's replaced free under warranty, but to keep paying for faulty transmissions? I would refuse and sell the car ASAP. No sense in pouring money down the drain.

chill_dog

My first car was bought used, paid for in two years, and kept for four years (got tired of it). My next car was bought new, paid for in three years, and kept for six years (got tired of it after three, but bought a house so had to hang onto it for a while). My current car was bought new, paid for in five years (this past June), and since I want to move, I'll be hanging onto it for another four or five years (not tired of it either, so I have no urge to get rid of it ). I'm over the new car thing, so my next car, and any other cars I buy in the future, will be used. And I really like not having a car payment. Wow, I really am getting old (ie. growing up) .

Pitman

Buying New = Never
Leasing = Not now, but I'm sure when I get older, and my $$$ grows I'll be leasing.
Buying Used One Yeard Old = Perfect

My 08 G OTD was around the $39K mark, I bought the car a year later for $26K. I win.

nj2pa2nc

always have and always will buy new-reason-drive alot and either have no car payment or pay off the loan way before time-
never lease
To OP-why no infiniti for you. The dealer in Pa did a dealer trade with Ramsey Acura to get me my tsx.

nokiaman

Great post by BL at the top of the page.

Just like it's been mentionned already, there are very different ways to go when it comes to cars. Some have cars ADHD() while some can keep cars for 10+years. I admire those who can keep them for so long because it is really the smarter way to go.

I have leased only one car which is was my previous 335i and it was leased under my business. For everything else I've owned, I've pretty much used the same way as juniorbean. Buy a 1-3 years old car that depreciation had already hit with cash upfront and try to keep it for a few years.

juniorbean

iTrader: (5)

^ Agreed... great post by BL... but it doesn't change my mind and I still stand by my original post on Page 1

I'd also like to see some links to some of the data being thrown around in this topic. StonedCL is throwing out stats like 75% (his words: 3 out of 4) of new luxury cars are leased. Black Label throwing out 80% of financers do not make their final payment b/c they trade in early.

I'd like to see some backup for these numbers... b/c anyone can start spitting out BS stats to support their argument... let's see some hard data and references...

CL-S progression 01

iTrader: (2)

I concer with the above statement also. I want spreadsheets, graphs, and w/e else u GOT haha

Rock2534

I see nothing wrong with buying new provided you get a good deal(as in not sticker), can afford it, and plan to keep it a while. Although I have recently become a huge fan of buying corp demo vehicles. We recently got an 09 Tribeca loaded with 7k mi on it for almost 12k off the sticker price.

YeuEmMaiMai

I never said it resolved the depreciation, it resolved the intrest you are paying on said car loan which in turn lowers your depreciation since you are depreciating from the price paid where as others are depreciating from price paid plus intrest.

what is better

paying 30K for a car in cash including TTL fees

taking a loan for $15K assuming you put 15K down plus paid TTL fees in cash

taking a loan for $20K assuming you put 10K down plus paid TTL fees in cash

taking a loan on a $25K assuming you put 5K down plus paid TTL fees in cash

neuronbob

Great post by black label and it is definitely the truth. No need for a flame suit, man, you simply laid out the truth even with what I wrote earlier in the thread.

bgsm1th

Between my wife and I, we've financed 4 cars -3 of which we paid off in full long before selling. The other car was totaled before we could finish making payments and the insurance check was for 3-4k more than our balance on the car note.

However, I have laid down the ground rule that we ONLY finance for three years and we MUST have 10% down. That is the only way we finance automobiles in our family and we've never been close to upside down. I also have a passion and patience for finding ridiculous deals on slightly used cars which also helps. I recently found and negotiated a deal for my dad's USED 2009 Lexus GS350 - fully loaded w/ sport pkg. Only had 1,400 miles on it and we got it for $41,900. $10k under sticker for what is basically a new car. Turns out the previous "owner" couldn't make it passed the first lease payment.

juniorbean

iTrader: (5)

^ haha. His loss and you got to save the ~$10k depreciation hit

If we still acted the way we did when we were younger, leasing might make some sense... however, we are much smarter with our money so I'd rather get a 1-3 year old pre-owned in great shape for a steal and just pay cash, then drive it for years verses making payments (whether it's leasing or financing) on a depreciating asset.

The last decade or so we've been more interested in assets which appreciate to allow us to build up our net worth. Now, we may look into leasing in the near future for and through the business... but that is a whole other conversation.

StonedCL

iTrader: (1)

My numbers are comming from my DLR ramsey infinity..
Last month we sold abot 100 new cars 70 something of which where leased.
Of course GM is not like that cuz they do not lease and do you know whay GM does not lease it is because the bank that took those leases lost money 99% of every lease so that means the customer made out EVERY TIME.
when there lease on the ENVOY was up after $350/month payments the car was worth 10K less then what the buyout was so when u r going to give back the car and book value is 10K less then your buyout--YOU WIN..if it not or your buyout is less then the car is currently worth , u just buy it out..
LEASEING a car is a WIN WIN situation... NOT EVERY CAR resuduals and money factors have a lot to do with it but on the base TSX lease is a no brainer..
When I worked at saturn i know 2 people that bought a AURA XR one leased with 2k down paymen was 300/month and oned bought 0%2K down $450/month the guy that leased is giving back his car buy out is like 17K and car is woth 10K and guy that bouth has 15K left to pay off wants a new maxima now but is upsidedown 6-7 K so IS STUCK... if he leased he would have save $150 a month for 36 months and not be in a hole for 6-7K..These are 2 people I know and 2 people that bought there cars at the same time one 0% at dealer invoice and one leased at dlr invoice... WHO IS THE ONE THAT IS IN THE HOLE NOW.. one rented a car for $300 and gave it back no harm down one person rented it for $450 a month and hase to give anouth 6K to give back his vehicle..REAL LIFE SITUATIONs..

black label

I'd like to provide you some back up but I can't seem to find any. I was given the 80% stat about 3 years ago (it was really 81%) in a meeting regarding financing and leasing numbers. I see it all the time though whether they have equity in their trade or not most people still have a payoff.

From what you said JB purchasing works better for you, your basically living payment free from day one. While I still finance my cars, I own them (title in hand) for a good amount of time before I move on to something new. I most likely will never lease a car, I know that it makes more sense for a large number of consumers.

The best scenario is the one you left out. Take the 30K and invest it in something that makes you money (making your hard earned cash work hard for you). Finance the car with the banks money.

Pay cash for assets that appreciate and finance assets that depreciate. Unless your buying a gullwing mercedes, it's most likely depreciating.

TzarChasm

Meh, I bought my TL new, and put nothing down except my trade in (4$k) and two years later I am not upside down anymore. In fact, I was on the dealers lot the other day and a car identical to mine, but a year older, was going for $21K while I only owe $17K.

So if I wanted to get rid of my car now, after only 2 years, I could probably get a leased vehicle with nothing down but my trade in, where as you are going to have to keep coming up with that $2k every time you get a new lease, because all the money you have put in to the lease was for rental of the car and you have no equity in it at all.

If you HAVE to have a new car every 3 years, than a lease makes some sense, otherwise, you are much better owning. Unless of course you have a business you are going to charge the lease to.

TzarChasm

This only makes sense if you are able to find a better interest rate than you are being charged for the financing. Generally it applies to houses because they get better interest rates than cars. If you take that $30k and put it into a CD with a 2.5% interest rate so you can pay 7% on your car loan, you are an idiot.

95gt

Now sounds like your scenario justifies it but a lot of times I see 1 year old prices as about 1k or so less than the new car (with all the discounts thrown in). Then you get to the point where you can probably haggle the used down a bit but would you really be saving that much money? On a 30k car I am willing to put in 2k extra for the new car with 0 miles vs. the used car?

Was looking at Honda minivans and the used prices were barely less then brand new ones

bgsm1th

If you've seen $30k+ cars that depreciate only $2k the first 12 mos. or more you're looking at cars that will sit on the lot for the next 12 mos. Just because that is what the dealer is asking does not mean that is what it's worth. I knocked $6k off the dealers asking price for the Lexus mentioned above.

My friend just returned his 2008 G37S lease with only 12k miles on it.
That lease totaled $18,000 over the 24 mos. period
It had a $46k sticker and it's now back on their used lot for $34k.

Nicky Pass

I've bought 3 new cars in my life....my 01 CL Type S, my 2003 Cobra and my 2010 TSX.

For me, when I decide I want a new car, I never buy the first year of a new body style and I research the crap out of what I want. I also always save up to have a decent down payment. I also keep my cars in immaculate condition, which helps when selling/trading in. The only new car I've had and paid off was my Cobra....other then that, I've never been upside down or even close to it. I have also been fortunate to actually not lose money on most of my cars. I bought my F150 FX4 for $18.8K when gas prices were high....16 months later, the Acura dealer gave my just under $18K for it....after tax savings, its almost a wash.

Leasing is something that I wouldn't do unless I had nothing to put down. You could buy a cheaper used car and try your luck on having it be reliable...which I did alot have $5K daily drivers so my Cobra can be a weekender. In the end, the $5K cars ended up nickle and diming me to the point that I'd rather have something new and a warranty and KNOW what I'm paying per month. What gets me about leasing is you have to put money down....in most cases, if you put the $2-$3K down, you can finance the same car for around the same price. THEN...if you want to get out of it, you can without penalty. The only car I've kept longer then 3 years is my Cobra....other then that, I got rid of my cars after about 2 years. I finally decided to get something that is a nice daily driver, but something that I know will be good for atleast the next 5 years. This is why I bought my TSX....and the fact that I got it for $27.9K

The next step for me is trying to sell my condo and get into a house with wifey.
NO MORE CARS!

CL-S progression 01

iTrader: (2)

DUDE u got a sweet avatar and I love the comment above it HAHAHAHAAHHAA........

such a joker.

that's ur 03 SVT boost gauge? or someone elses?

Ken1997TL

Buy a reliable used car, preferably a luxury one that doesn't require much maintainence, it'll give you features and safety.

Here's why:

For example, since January 2003 I've owned a 1997 Acura TL.

Purchased for $12,000 and including a 2 year Acura warranty.

That was 83 months ago.

$12000 divided by 83 = $144.57

Outside of modifications, I've spent $2200 on fluids, belts, new windshield, tires, new CV boots and a starter.

So, $14200 divided by 83 = $171.08

My insurance through USAA for this vehicle per month is just under $40

I'm basically paying $221.08 per month for everything excluding gas for a vehicle that is far better than a leased and (basic) Accord.

My 2002 RL is an even better example.

iTimmy

The warranty on CPO's is a great point. While I have been guilty of living in the "I only drive new cars" camp and may or may not remain there, the warranty is a great incentive to buy used... not to mention the savings on the vehicle itself.

It depends on the deal itself, and what your priorities are. On my Si, I got a great trade in from my S2000 and they sold the car to me for about $1,000 more then I could have bought a used one for, for that difference I went new. On my Infiniti I was prison raped by the dealership and should not have bought it, but I agreed to it, so I guess you live and learn. When it comes time to replace the Si, I will more then likely be shopping for a used car, and I won't be leasing. What I do may or may not be the best choice for someone else.

iTimmy

Not to mention your car still has value! Subtract what you could sell the car for from that $14,200 and then divide by 83 and you have the real cost/month for that car - it should sweeten the deal up a bit!

StonedCL

iTrader: (1)

I just started a job at a new dealer and things have been going good here soo far but they are slowing down for the holidays.. I just bought a townhouse in the last year, and got engaged.. My townhouse was a short sale so it is still in the process of going through and thank goodness my fiancee has a great job (she is branch manager soon to reginal manager at a bank) so I want to keep costs down.. The mortgage/taxes.maintence is $1600 that we r gonna split (we put 33% down) and I NEED to keep my car payment down for now and will buy my dream car when this lease expires in 30months (2011 M56 or M37X) and like u guys said buy then I will be able to pick up a pre-pwned one.. so 380 a/month 4 15K miles and about 170 for insurance a month is $550..not too bad..The 4 clylinder TSX is not a car i can see myself owning but I can see it holding me over while I get settled the next 2 and a half years..So leasing IS the right thing for me RIGHT now..

StonedCL

iTrader: (1)

BTW the transmission would have paid 8 months of payment and the rear main seal is anouther 2 month, so in the last 6 months I put enough money into the car that i could have leased for 10 months w/o the aggrivation!

F23A4

Bottomline: different strokes for different folks.

dom

We can talk about what the smart thing to do is when it comes to buying cars and I definitley agree with what's being said in this thread. But buying a car can many times be an emotional decesion.

black label

The part you mentioned about reliability is a big thing as well. I wouldn't want to own any VW, Audi, Mercedes Benz, or BMW product outside of the warranty period. BMW is one of the best to lease, 4 yr 50K warranty, 4 year maintanance program, you lease it for 3 years no more than 15k per year, turn it in when the warranty and maintanance is about to end (and its value is about to drop substantially) and let it's actual real world value be BMW's problem.

YeuEmMaiMai

no way on financing a loss man..... paying cash for a car is by far better than financing one....and this isn't about taking your money and making it work for you becuase you cannot use the bank's money without paying intrest

unless you live right next to work or can take public transportation, live in an area where you can ride a bike or scooter or motorcycle year around, a car is a must and paying cash for it is the BEST solution as you do not eat intrest + depreciation......that's just plain common sense

TinkySD

Great post above and this point is important as well. I will never give a blank answer on if leasing or buying is better because every car/manufacturer/financing arrangement etc is different. You have to run the numbers to see what the total cost of ownership is. I bought my acura and leased my audi and have no idea what I will do next but it will likely be buying something CPO.

An important part of leasing is that a lot of companies(BMW for example) falsely prop up their car by guaranteering residuals on a lease that are higher than market value. That means the leasing company is eating a cost that would be payed for by the buyer if they were to purchase that car new. Additionally leasing a car, and then buying it out(if you were so inclinded) let's you negotiate discounts twice. You can negotiate the original purchase price used for calculating your montly payments based on the residual. Then when it's time to turn the car in, and if you were interested in buying, you can negotiate a price based on the fair market value of the car instead of your "buyout cost" as stated in your lease. For cars where manufacturers inflate residual values to get cars on the road this can save a person money vs. buying up front if they pay for the car in cash or finance for less than 2 years.

TinkySD

What if you can earn a higher interest rate investing the cash than the financing through the dealership costs you? IE You can get safe 4% on investment while APR for your lease is 2.9%.(Toyota still has 0% financing going on) In that case, if you take the long view, you are costing yourself potential earnings by paying cash.

calgary2800

If youre rich you can afford to screw up your cash with cars but for the rest of us paycheck to paycheck we cant afford to flip cars, owning for 10 + years is the way to go. Boring it is but it is the best route. I am in the check to check group.

StonedCL

iTrader: (1)

Yes but every case is different, in my car I did the numbers and MY 2001 CL type-s cost me about $50,000 in the 9 and a half years I owned it, and I did most the work myself or at a deep discounted rate (I work at a DLR) If I payed for the work it would prob costed around $60,000. So on a TSX lease it cost about $5000 per year to drive a new leased car with 15K miles a year.
In my case it would have came out cheaper to lease and I would have been on my 4th NEW leased car and NOT driving a 10 year old CL thats leaking oil and would have spent the same amount of money!

njzprettyboy

I'd rather buy a car approx 2 years old..

YeuEmMaiMai

what about the balloon payment and the monthly tax payments? milage restrictions, and the fact that you have to pay for any damage to the car like rock chips paint scratches, etc....leasing is for people that don't drive much.

ever wonder why our society is on the brink of financial collapse? yeah that's right because people are lacking in the common sense. paying cash is always better than financing no ifs ands or buts about it.

StonedCL

iTrader: (1)

And I would rather be the first to fart in my leather seats!

CL-S progression 01

iTrader: (2)

HAHAHAH that's a good one,

but i'd still rather pay several thousands less for a little bit of a smell

TinkySD

No argument from me that leasing only makes sense in some very specific situations, low mileage driver etc.

THere are no baloon payments in modern leasing as residuals are guaranteed up front by the car company. When you turn it in, if the fair market value is a lot less they eat the cost. It's a straight division of the depreciation of the car over the duration of the loan plus tax + apr. Many car companies are losing money on leasing, which is why some companies have cut it out completely. If some car companies are losing money leasing that means there is an opportunity there for the consumer to save money. Again it's all about what make sense in a perons very specific circumstances, what their need for cash, what kind of car, what type of residuals/financing is available.

People who claim financing is always the best option tend not to think about depceciation as throwing away money. Let's say someone buys a car and pays it off immediately. Let's also say after one year their car is worth 25k and decreases in value approximately 5k every year for the first few years. This person may not have a payment they are making to someone, but they are losing 5k in real money every year. 5K that could have been earning interest or some other kind of return. There is a duration of ownership which is a break even point and a point wehre owning a car saves you money which is right around 5 years.

I'm sure if the country sunk all their cash into depreciating assets instead of investing in things that make you money it would be much better off!