The lease game...I would like to understand...
07-20-2011, 02:30 PM
#1
The lease game...I would like to understand...
I always buy my cars outright so I'm not very familiar with all the aspects of leasing.
I know of course the basic "financial mechanics" of leasing a car...you pay only the sum of the expected and agreed depreciation (plus interest) and at the end of the leasing period you decide if to return the car and getting another one or to pay the residual value and own the car outright....correct??
Well, I read somewhere and heard that the German brands outleases everybody else about 3 to one and I witnessed personally how people are able to lease some of these cars that on paper are significantly more expensive that comparably equipped Japanese offering for the same monthly sum or just a tiny bit more than a lease, for example, for a comparable Acura or Infiniti.
So maybe the lease on these cars are lower because lower expected depreciation but, surprise, Acura is one of the best residual value brand among premium manufacturers.....Audi, for example, I heard is one of the worst...
My question is, how the German brands really make their money then?? Do they somewhat "postpone" their full profit on the car with the second hand buyer for vehicle coming off lease?? Or are these manufacturers listing price purposedly inflated with the company not really expecting that kind of profit??
Can someone tell me more about this??
Acura is one of most profitable premium brand, almost on par with Porsche.....Infiniti and Lexus are immediately behind....
When I got my TL, the lease offering for a well equipped 335i was actually lower than a comparable lease on the TL....
S4, A4, 5 Series you name it....I often hear of lease monthly payments that are not in line with their theoretical price difference....
This, in my opinion, explains a lot of these brands apparent success, I don't think the vast majority of people driving these cars really pay the full supposed price gap for similar features/value....is my theory wrong??
I know of course the basic "financial mechanics" of leasing a car...you pay only the sum of the expected and agreed depreciation (plus interest) and at the end of the leasing period you decide if to return the car and getting another one or to pay the residual value and own the car outright....correct??
Well, I read somewhere and heard that the German brands outleases everybody else about 3 to one and I witnessed personally how people are able to lease some of these cars that on paper are significantly more expensive that comparably equipped Japanese offering for the same monthly sum or just a tiny bit more than a lease, for example, for a comparable Acura or Infiniti.
So maybe the lease on these cars are lower because lower expected depreciation but, surprise, Acura is one of the best residual value brand among premium manufacturers.....Audi, for example, I heard is one of the worst...
My question is, how the German brands really make their money then?? Do they somewhat "postpone" their full profit on the car with the second hand buyer for vehicle coming off lease?? Or are these manufacturers listing price purposedly inflated with the company not really expecting that kind of profit??
Can someone tell me more about this??
Acura is one of most profitable premium brand, almost on par with Porsche.....Infiniti and Lexus are immediately behind....
When I got my TL, the lease offering for a well equipped 335i was actually lower than a comparable lease on the TL....
S4, A4, 5 Series you name it....I often hear of lease monthly payments that are not in line with their theoretical price difference....
This, in my opinion, explains a lot of these brands apparent success, I don't think the vast majority of people driving these cars really pay the full supposed price gap for similar features/value....is my theory wrong??
07-20-2011, 02:35 PM
#2
Suzuka Master
It's easier to make payments on only part of the car's value than the whole thing making more expensive cars fit into a lot more budgets than outright owning would.
I am not sure how the mfg's make a profit other than I think they make the sale to the leasing company that leases to the car to you.
I am not sure how the mfg's make a profit other than I think they make the sale to the leasing company that leases to the car to you.
07-20-2011, 02:40 PM
#3
[quote=Stew4HD;13105239]It's easier to make payments on only part of the car's value than the whole thing making more expensive cars fit into a lot more budgets than outright owning would.
[quote]
I know that...the same is true with any manufacturer...leasing is less expensive per month than buying....my question is how certain German models that on paper are significantly more expensive end up having the same lease monthy payment that a cheaper Japanese premium car....I see this over and over and I would like to know where is the trick...
Yes but the company is often just a division of the company...so that is just an accounting profit not a real profit.
[quote]
I know that...the same is true with any manufacturer...leasing is less expensive per month than buying....my question is how certain German models that on paper are significantly more expensive end up having the same lease monthy payment that a cheaper Japanese premium car....I see this over and over and I would like to know where is the trick...
I am not sure how the mfg's make a profit other than I think they make the sale to the leasing company that leases to the car to you.
Yes but the company is often just a division of the company...so that is just an accounting profit not a real profit.
07-20-2011, 10:39 PM
#5
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Honestly, I don't see how leasing a car is a good thing for the driver. You still have a monthly payment, you still pay taxes on the car. But...you have to turn it in at the end of the lease, or refinance. The benefit is the lower monthly payment.
It's like renting an apartment as opposed to buying a house.
It's like renting an apartment as opposed to buying a house.
07-21-2011, 12:35 AM
#6
Moderator
Honestly, I don't see how leasing a car is a good thing for the driver. You still have a monthly payment, you still pay taxes on the car. But...you have to turn it in at the end of the lease, or refinance. The benefit is the lower monthly payment.
It's like renting an apartment as opposed to buying a house.
It's like renting an apartment as opposed to buying a house.
some people use it to write off tax.. its a good way to write off tax and still get a car.. because when tax time comes, you dont have to pay money back to the govt instead you can just use that money to lease a car.
07-21-2011, 01:12 AM
#7
Acura's leases are not the most agressive but they are not usually terrible though. From what I have seen the residuals are competitive (even though they could be among the most agressive like Infinti's since they retain value as well if not better) but the interest rate (money factor) is often a bit higher.
Others are usually disproportionately cheaper in relation to their stickers but it's not often that a car which costs $10k more has the same payment as one that is $10k less under the same money down and term arrangements. That would probably be an extreme case only or best case scenario for one car and worst case for another and would be largely affected by differences in discounts, incentives and sales prices. Less than that though, and sticker price might not mean too much when it comes to leasing in general.
Usually for every $10k more or less, it's about $150 more a month more or less, lease vs lease. Without consideration to sales prices, if you get a good month when it comes to the variable lease rates (MF and residual) and you put about $3k down payment on top of out of pocket expenses for taxes and fees, you could be looking at about the same payment as a $10k cheaper vehicle on a poor or regular month of lease rates with zero money down instead. $3k down is almost $100 a month in savings whe it comes to leasing.
I think what it really comes down to as well, is people are willing to put a good amount of money down when it comes to leasing comparable and well equipped German models so the payment is not that far off. Being that their number of lease sales are signifcantly higher, it's not uncommon for them to get a lot of 42 and 48 month leases as well, which is usually a bit cheaper than the 36 and some even go as far as restricting their mileage allotment to 10k per year instead of 12k or 12k instead of 15k to make the payment even lower in comparison.
I know people like this personally who would not do the same for an Acura, it would be zero down, 36 months and 36k miles and then they complain why it is not significantly cheaper. More justifying on their part but it's probably true that most do not play with an Acura lease that much, it's likely the standard 36 months, 36k miles and zero additional down payment.
In most cases, I have found that it is about the same or less to finance an Acura for 60 months compared to a competitive and similarly equipped German car's 36 month lease with similar out of pocket expenses. The same amount of money down at that point lowers the lease payment almost twice as much as it does the finance, so it's no wonder why the lease is popular with these brands.
Also a $10k price difference before any interest is about a $170 per month difference when it comes to a 60 month finance, in a 36 month lease that same $10k amount is about a $100 difference monthly, which is a difference that is much more defeatable when it comes to leasing than it is when financing. With a little finagling you can easily bring that $100 down to a very marginal number when leasing, not nearly the case when financing. Similarly a $20k difference is about $330 a month more in a 60 month finance before interest is applied, where in a 36 month lease it's only about $220.
So in many cases people will say why not go with a German car if leasing because it's not a substantial amount more on a monthly basis even if the car is and you can always play with the numbers and terms to better accomodate. They also have multiple security deposit prgrams that allow you to buy down the interest rate which save something like another $30-$50 a month but naturally that is risky even though it is a financially sound investment when it comes to cars.
What people don't often tell you is that Acura's tend to come back worth more than their projected lease residuals so you could have equity at the end of the lease to work with if you so choose to, which effectively makes the lease cheaper long term even if the payments were similar, usually the worst cases are it's a wash but even then you can always negotiate a favorable payoff since they usually get auctioned off for much less than the negotiated and residual amount anyway. Most German brand vehicles come back worth less and they stand to make less money per lease but that's why their approach is about volume, Acura tends to focus on higher profit per unit.
Basically German brands subsidize their residuals in this sense which helps makes it proportionately cheaper in relation to the sticker for leasing but on the other side of that, you are pretty much stuck with a lousy option to buy a car that is not worth that price or even worth a lower negotiated buyout, so in most cases, people simply go and lease a new one, which is the point anyway. That's why Acura leases are usually not crazy agressive, the residuals tend to be more conservative so they make sure they don't lose money on the car later and stand to profit a bit more from leases (and also) in general per unit but you can still save or recoupe on the back end later on instead.
I think the reliabilty factor probably ties into this stuff as well but in short, based on what I have seen and other evidence pointed out here, it seems Acura profits more by proportion from the front end of a lease than the back end, where German brands seem to profit less on the front but more profit potential on the back end. At the end of the day it's hard to tell for sure because there are so many variables involved when trying to determine this stuff.
Others are usually disproportionately cheaper in relation to their stickers but it's not often that a car which costs $10k more has the same payment as one that is $10k less under the same money down and term arrangements. That would probably be an extreme case only or best case scenario for one car and worst case for another and would be largely affected by differences in discounts, incentives and sales prices. Less than that though, and sticker price might not mean too much when it comes to leasing in general.
Usually for every $10k more or less, it's about $150 more a month more or less, lease vs lease. Without consideration to sales prices, if you get a good month when it comes to the variable lease rates (MF and residual) and you put about $3k down payment on top of out of pocket expenses for taxes and fees, you could be looking at about the same payment as a $10k cheaper vehicle on a poor or regular month of lease rates with zero money down instead. $3k down is almost $100 a month in savings whe it comes to leasing.
I think what it really comes down to as well, is people are willing to put a good amount of money down when it comes to leasing comparable and well equipped German models so the payment is not that far off. Being that their number of lease sales are signifcantly higher, it's not uncommon for them to get a lot of 42 and 48 month leases as well, which is usually a bit cheaper than the 36 and some even go as far as restricting their mileage allotment to 10k per year instead of 12k or 12k instead of 15k to make the payment even lower in comparison.
I know people like this personally who would not do the same for an Acura, it would be zero down, 36 months and 36k miles and then they complain why it is not significantly cheaper. More justifying on their part but it's probably true that most do not play with an Acura lease that much, it's likely the standard 36 months, 36k miles and zero additional down payment.
In most cases, I have found that it is about the same or less to finance an Acura for 60 months compared to a competitive and similarly equipped German car's 36 month lease with similar out of pocket expenses. The same amount of money down at that point lowers the lease payment almost twice as much as it does the finance, so it's no wonder why the lease is popular with these brands.
Also a $10k price difference before any interest is about a $170 per month difference when it comes to a 60 month finance, in a 36 month lease that same $10k amount is about a $100 difference monthly, which is a difference that is much more defeatable when it comes to leasing than it is when financing. With a little finagling you can easily bring that $100 down to a very marginal number when leasing, not nearly the case when financing. Similarly a $20k difference is about $330 a month more in a 60 month finance before interest is applied, where in a 36 month lease it's only about $220.
So in many cases people will say why not go with a German car if leasing because it's not a substantial amount more on a monthly basis even if the car is and you can always play with the numbers and terms to better accomodate. They also have multiple security deposit prgrams that allow you to buy down the interest rate which save something like another $30-$50 a month but naturally that is risky even though it is a financially sound investment when it comes to cars.
What people don't often tell you is that Acura's tend to come back worth more than their projected lease residuals so you could have equity at the end of the lease to work with if you so choose to, which effectively makes the lease cheaper long term even if the payments were similar, usually the worst cases are it's a wash but even then you can always negotiate a favorable payoff since they usually get auctioned off for much less than the negotiated and residual amount anyway. Most German brand vehicles come back worth less and they stand to make less money per lease but that's why their approach is about volume, Acura tends to focus on higher profit per unit.
Basically German brands subsidize their residuals in this sense which helps makes it proportionately cheaper in relation to the sticker for leasing but on the other side of that, you are pretty much stuck with a lousy option to buy a car that is not worth that price or even worth a lower negotiated buyout, so in most cases, people simply go and lease a new one, which is the point anyway. That's why Acura leases are usually not crazy agressive, the residuals tend to be more conservative so they make sure they don't lose money on the car later and stand to profit a bit more from leases (and also) in general per unit but you can still save or recoupe on the back end later on instead.
I think the reliabilty factor probably ties into this stuff as well but in short, based on what I have seen and other evidence pointed out here, it seems Acura profits more by proportion from the front end of a lease than the back end, where German brands seem to profit less on the front but more profit potential on the back end. At the end of the day it's hard to tell for sure because there are so many variables involved when trying to determine this stuff.
Last edited by winstrolvtec; 07-21-2011 at 01:27 AM.
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07-21-2011, 08:03 AM
#8
lol this whole lease is a tax write off thing is so mis-understood (myself included). i recently became a small business owner and you have to fit a very stringent criteria to be able to write off your car payment (IRS has gotten very strict with this in recent years). and even if you meet these criteria all that happens is your payments are deducted from your taxable income. for example, say you earned $200K. your lease payments for the year were $6K. so now instead of being taxed on $200K your taxed on $194K; so you'll save a few hundred dollars on taxes. many people (including myself) think that you can pay $6K less in taxes, which is not the case
07-21-2011, 02:58 PM
#9
The Sicilian
Honestly, I don't see how leasing a car is a good thing for the driver. You still have a monthly payment, you still pay taxes on the car. But...you have to turn it in at the end of the lease, or refinance. The benefit is the lower monthly payment.
It's like renting an apartment as opposed to buying a house.
It's like renting an apartment as opposed to buying a house.
I leased a car once in my life and will not do it ever again. Not just to keep it clean and polished just for the next guy to get a great car at a great price when i'm done with it.
07-21-2011, 03:15 PM
#11
Suzuka Master
I totally agree with you. At the end of the day, you've paid to drive this car and in the end it's not yours. You can't go crazy with mods and you still have to keep it in good condition and watch your mileage or you get screwed in the end.
I leased a car once in my life and will not do it ever again. Not just to keep it clean and polished just for the next guy to get a great car at a great price when i'm done with it.
I leased a car once in my life and will not do it ever again. Not just to keep it clean and polished just for the next guy to get a great car at a great price when i'm done with it.
07-21-2011, 03:22 PM
#12
Racer
I totally agree with you. At the end of the day, you've paid to drive this car and in the end it's not yours. You can't go crazy with mods and you still have to keep it in good condition and watch your mileage or you get screwed in the end.
I leased a car once in my life and will not do it ever again. Not just to keep it clean and polished just for the next guy to get a great car at a great price when i'm done with it.
I leased a car once in my life and will not do it ever again. Not just to keep it clean and polished just for the next guy to get a great car at a great price when i'm done with it.
07-21-2011, 07:32 PM
#13
The risk lies with the finance company.
07-21-2011, 08:26 PM
#14
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You guys all have good points, but at the end of the day, it's hard for me to make a monthly payment and not having anything to show for it....
07-22-2011, 08:57 AM
#15
Instructor
So Steven. Do you have life insurance? Is it term or whole life? The same debate rages there as well. Personally, I think whole life is a rip off. Term allows you to pay less than whole life, and invest the difference. Whole life stinks as an investment. Same idea when buying vs leasing a car. I keep cars for such a relatively short time that it makes absolutely no sense to buy it. I'd rather spend less on the lease and do something else with the money I save every month over a loan payment (like buy gas).
07-22-2011, 09:02 AM
#16
Case I: Three consequent 36 mths & 15k miles/year lease contracts
Case II: Financing the same car (as case I) for 60 mths and keeping it for 9 years and then disposing of the 9 yr old car @ 135k miles. I factored in the average yearly maintenance on the purchased car and I assumed no major bearkdown (engine, tranny..) which is in favor of 2nd case.
We all agree that by keeping the car for 9 years (case II), the buyer has gotten what seems to be the best financial return on his investment. The question that surprised me is by how is the buyer in case II really ahead of the leasee in case I - considering the quality of the driven vehicles over the 9 year period and the comfort level when taking the family on road trips in both cases along with associated risk probabilities?
Not sure if there is interest in such exercise so wont bore you with the actual numbers.. But my findings are: Given the recent 1/ lease terms and 2/ overall vehicle reliability reports; I have realized that leasing might currently be a very attractive solution.
07-22-2011, 09:22 AM
#17
Suzuka Master
Wouldn't the fact that in plan 1, the car would have been paid off at roughly 60 months, giving you 4 years of bankable income? 600$ x 48mo = $28,800. You might have paid $40K for the car over the 5 years.
In the lease plan, you are paying the entire time. 400$ x 108mo = $43,200
@ $500 x 108mo = $54,000
It's still hard for me to justify the lease plan and be boxed in on what I can do with the car.
In the lease plan, you are paying the entire time. 400$ x 108mo = $43,200
@ $500 x 108mo = $54,000
It's still hard for me to justify the lease plan and be boxed in on what I can do with the car.
Last edited by Stew4HD; 07-22-2011 at 09:31 AM.
07-22-2011, 09:40 AM
#18
my biggest thing with a lease (as stew pointed out) is the limited number of miles. i love driving my car and taking road trips. the one time i leased i realized that i had to closely watch my miles and would even avoid taking it on road trips to keep the miles in check. this was with a 12k/yr allowance, i may be able to live with 15k/yr but why limit myself? the other factor is moding your car. look at mr. skytech. spent a ton of money on 3m wrap. wants to do a viper alarm.. all on a car that he doesnt even own! thats nuts! i like to do what i want on my car without worrying about giving it back.. having said that; leasing does work for those who must have a new car every 2-3 yrs.
07-22-2011, 09:46 AM
#20
Racer
At the end of the 9 years, you can also choose to keep the car. Any money that you saved by not paying a monthly payment the last 4 years could be added to the trade-in value, and get you that much closer to owning the next car earlier than 5 years.
Using the example above, you have $28,800 (plus interest) plus the value of a 9-year-old TL (we'll say 3k), giving you $31,800 to put DOWN on another new car. That could almost pay off a new TL, meaning you pay it off quicker, meaning you start saving for the next one earlier, meaning in just two cycles you have a paid off luxury car with a whole lot in the bank.
The above example gets much better if you don't buy brand new, but CPO (better warranty and less loss on depreciation).
I saw leasing work one time, but barely. My brother leased an '06 Mustang, then had sponsors donate 60k worth of parts plus labor. When he went to sell it, he made his lease payoff and then a little extra. If you can do that with an Acura, you are my hero. Don't be silly though because that doesn't happen for most people.
Using the example above, you have $28,800 (plus interest) plus the value of a 9-year-old TL (we'll say 3k), giving you $31,800 to put DOWN on another new car. That could almost pay off a new TL, meaning you pay it off quicker, meaning you start saving for the next one earlier, meaning in just two cycles you have a paid off luxury car with a whole lot in the bank.
The above example gets much better if you don't buy brand new, but CPO (better warranty and less loss on depreciation).
I saw leasing work one time, but barely. My brother leased an '06 Mustang, then had sponsors donate 60k worth of parts plus labor. When he went to sell it, he made his lease payoff and then a little extra. If you can do that with an Acura, you are my hero. Don't be silly though because that doesn't happen for most people.
Last edited by NWSTL; 07-22-2011 at 09:50 AM.
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Stew4HD (07-22-2011)
07-22-2011, 09:53 AM
#21
Suzuka Master
At the end of the 9 years, you can also choose to keep the car. Any money that you saved by not paying a monthly payment the last 4 years could be added to the trade-in value, and get you that much closer to owning the next car earlier than 5 years.
Using the example above, you have $28,800 (plus interest) plus the value of a 9-year-old TL (we'll say 3k), giving you $31,800 to put DOWN on another new car. That could almost pay off a new TL, meaning you pay it off quicker, meaning you start saving for the next one earlier, meaning in just two cycles you have a paid off luxury car with a whole lot in the bank.
The above example gets much better if you don't buy brand new, but CPO (better warranty and less loss on depreciation).
Using the example above, you have $28,800 (plus interest) plus the value of a 9-year-old TL (we'll say 3k), giving you $31,800 to put DOWN on another new car. That could almost pay off a new TL, meaning you pay it off quicker, meaning you start saving for the next one earlier, meaning in just two cycles you have a paid off luxury car with a whole lot in the bank.
The above example gets much better if you don't buy brand new, but CPO (better warranty and less loss on depreciation).
07-22-2011, 10:04 AM
#22
Instructor
That's just what "smart money" says to do.. never buy new, pay off the car ASAP, drive until wheels fall off, save the cash as you go for replacement.. but smart money means that you don't love the car so much and see it only as transport.. I don' t know many guys like that..
07-22-2011, 10:12 AM
#23
Let’s look at the best case scenario that supports the purchase instead of lease of a base 2011 MDX - $0 down pymnt:
Buy:
60 mth financing @ 1.9% APR (Acura promotion for top tier customers):
9 year total cost: ($717 * 60 mths) + ($1200 avg yrl maintenance * 9 yrs) - $4000 private party sale @ 9yrs/135K miles (edmunds)
= Total cost of $49,820 which is equivalent to $462 avg monthly cost over 9 yrs
36 mth lease contract:
$560/mth for 35 mths (1 mth free as Acura promotion):
$560 * 35mths = cost over 3 yr period of $19600.
Monthly cost: $19600/36 mths: $544
Lease cost over 9 yrs: $58800
This calculation is far from being scientific - doesn't include inflation over the 9 yr period (this actually supports buying), assumes not major breakdowns after warranty, excludes tax benefits, assumes same lease numbers, etc.
I agree with you. There is financial gain when buying. My question is would one buy and keep for 9 yrs for a potential financial gain of ~$1K/yr or less than $100/mth? And if so, what is the cost associated with the impact to one's lifestyle given such decision? Very subjective..
Last edited by HighRevving; 07-22-2011 at 10:14 AM.
07-22-2011, 11:00 AM
#24
Yo Omaralt - I wrapped the front of the car because i am in a lease. I am affraid of the wear and tear thing that is not spesific on a lease. - The government should make a law sta states that it should be specific. Like when you rent a car. Enterprise has a scratch measure-er. If the car gets scratched more than that then you have to pay for it.
The alarm i have from my previous car. I would just pay to get it installed. If its worth it. If not then Black Market time.
Now I am paying 269.00 a month for my lease with 15K miles a year. Not bad. If i buy it then all the stuff i have done to it stays with me. If i go with a newer one like say a 2013 TL then i'll just buy it.
Since i am saving $$ because of my low lease it gives me a chance to put down a large amount for the new TL.
I see this as a win.
The alarm i have from my previous car. I would just pay to get it installed. If its worth it. If not then Black Market time.
Now I am paying 269.00 a month for my lease with 15K miles a year. Not bad. If i buy it then all the stuff i have done to it stays with me. If i go with a newer one like say a 2013 TL then i'll just buy it.
Since i am saving $$ because of my low lease it gives me a chance to put down a large amount for the new TL.
I see this as a win.
07-22-2011, 11:22 AM
#25
Moderator
you guys do know that when you lease, whatever payments you have made goes towards the car value..
at the end, you can buy the car and refinance..
and top of that, at the end you can negotiate the price of the car as if you were to buy a used car.. drop it down about 1-2k or so.. and put a down payment.
my car will be at about 20k at the end of my lease, which i plan to buy..
im with you buddy
at the end, you can buy the car and refinance..
and top of that, at the end you can negotiate the price of the car as if you were to buy a used car.. drop it down about 1-2k or so.. and put a down payment.
my car will be at about 20k at the end of my lease, which i plan to buy..
im with you buddy
Last edited by potmilkz; 07-22-2011 at 11:25 AM.
07-22-2011, 11:43 AM
#26
07-22-2011, 01:07 PM
#27
David_Dude
My personal Opinions
While I agree with the majority of what was said, I just wanna put in my 
. Leasing really isn't a bad thing. And I always read about the whole "always will have a car payment" deal. In reality if people really were smart and frugal or EXTRA tight with money, no one would have debt and no one would buy new. I may be 22, but when the time is right I WILL buy me a brand new car. IDC what others have told me about you lose 20%+ on depreciation within the first year and you'll be upside down, blah blah. If I put down a good amount then that wouldn't be a problem. For me leasing wouldn't be good because of the fact that I LOVE to drive and i do like changing things on a car.
Yes I could buy extra miles up front. It just depends on personal reasons and finances. I know plenty of people that will rent an apartment. You don't own it of course but your living there.
The way I see is: Just because you leased a car doesn't mean it's a bad financial mistake. Same thing for people who rent instead of buy. A lot of people don't wanna be tied down to a 30 yr mortgage. It's easier to break a lease or move when its up. People always say well you won't have nothing to show for it at the end. So what? I can complete a lease and then buy the car AND bam! It's totalled. I may get some money out of it, not expecting a whole lot, so I gotta start all over again (like i do now). My mazda was totalled an now I'm over here in Acura land. I've never leased before, mind you, but IF I were to I'd lease something like a Range Rover or a 911 to see if I really like it. You're paying for the depreciation value ANYWAY, so the way I see it you're NEVER upside down.
People want prestigiousness so they'll go an lease something they cant afford (not talkin about anyone here) just saying. I seen plenty of base model A4s, 3-series, C-classes ridin around with vinyl seats and HALOGEN bulbs. <---wth those are entry level luxury cars, where's the real leather and HIDs. Oh wait it costs HELLA lot to option these cars up. By then you in the price range to just go ahead an buy an MDX even if you dont need an SUV.
I'll take acura ANYDAY of the week over the german brands, don't get me wrong they are VERY nice cars and ride great, but you get sooooooooo much stuff for your money with Acura plus at the end of the day it has a GREAT resale value PLUS its actually cheaper to lease (the last time i compared WITH the same options). Don't forget stellar reliability. I can easily see ALL of you guys keeping your cars well past a 100K miles without ANY major problems. That can't alwys be said for our european counterparts. Besides maintenance alone is a killer i.e. the Range Rover or any other euro luxury car.
Now as for the Acura TL, if you can get a good deal on the price (lower cap costs) and a great money factor (excellent credit), plus take advantage of deals thats offered by the manufacturer, and you dont drive no more than 15K a yr (averager mileage/yr), at the end of the lease you'll definitely be on top. You could actually sell the car for a profit. Especially in the inflated car market right now. Personally i'd advised to putting ANY money down to get a cheaper payment, because if the car is totalled thats it. You get nothing. I'd just pay for the tax, title and other fees (out of pocket expenses) that are usually rolled into a the loan anyway.
At the end of the day, it definitely depends on the person. There really isn't know such thing as SMART money imo. Unless your making 15 grand turn into 50 grand or something like that then ya... go figure smart money. For us average joes, renting vs buying, leasing vs buying, saving vs spending, it's the same song. Do we REALLY need a new car, rims, system, mods? No. You get one life and you SHOULD live a good one, but financially sound (contradiction here). I'd love to own a super fancy car, but for what? Others to see how well it SEEMS im doing...?
Ya it's nice to OWN something, but it really doesn't mean jack if you LOSE it.
To the OP, if leasing works for you go for it. I'd recommend you stick with Acura, it'll definitely be easier on your wallet ALL THE WAY around, and worth more in the end. If your going to keep it then just buy it? But the real question here is how long do people REALLY keep their cars (a lot say till the wheels fall off) before they realize its just cheaper to buy another one (used) than to keep dumping money in repairs. Sometimes there's nothing like buying your own NEW car. Dont even get me started on money wasted on junk food. lol You guys see where i'm going with this.
MONEY IS RELATIVE TO OUR WANTS AND NEEDS <--- damn i just should've typed that than this long book i wrote. We can easily meet our needs (we dont need much) But we're going to always want. A nice home, nice car, fancy this fancy that.
. Leasing really isn't a bad thing. And I always read about the whole "always will have a car payment" deal. In reality if people really were smart and frugal or EXTRA tight with money, no one would have debt and no one would buy new. I may be 22, but when the time is right I WILL buy me a brand new car. IDC what others have told me about you lose 20%+ on depreciation within the first year and you'll be upside down, blah blah. If I put down a good amount then that wouldn't be a problem. For me leasing wouldn't be good because of the fact that I LOVE to drive and i do like changing things on a car. Yes I could buy extra miles up front. It just depends on personal reasons and finances. I know plenty of people that will rent an apartment. You don't own it of course but your living there.The way I see is: Just because you leased a car doesn't mean it's a bad financial mistake. Same thing for people who rent instead of buy. A lot of people don't wanna be tied down to a 30 yr mortgage. It's easier to break a lease or move when its up. People always say well you won't have nothing to show for it at the end. So what? I can complete a lease and then buy the car AND bam! It's totalled. I may get some money out of it, not expecting a whole lot, so I gotta start all over again (like i do now). My mazda was totalled an now I'm over here in Acura land.
I've never leased before, mind you, but IF I were to I'd lease something like a Range Rover or a 911 to see if I really like it. You're paying for the depreciation value ANYWAY, so the way I see it you're NEVER upside down.People want prestigiousness so they'll go an lease something they cant afford (not talkin about anyone here) just saying. I seen plenty of base model A4s, 3-series, C-classes ridin around with vinyl seats and HALOGEN bulbs. <---wth those are entry level luxury cars, where's the real leather and HIDs. Oh wait it costs HELLA lot to option these cars up. By then you in the price range to just go ahead an buy an MDX even if you dont need an SUV.
I'll take acura ANYDAY of the week over the german brands, don't get me wrong they are VERY nice cars and ride great, but you get sooooooooo much stuff for your money with Acura plus at the end of the day it has a GREAT resale value PLUS its actually cheaper to lease (the last time i compared WITH the same options). Don't forget stellar reliability. I can easily see ALL of you guys keeping your cars well past a 100K miles without ANY major problems. That can't alwys be said for our european counterparts. Besides maintenance alone is a killer i.e. the Range Rover or any other euro luxury car.
Now as for the Acura TL, if you can get a good deal on the price (lower cap costs) and a great money factor (excellent credit), plus take advantage of deals thats offered by the manufacturer, and you dont drive no more than 15K a yr (averager mileage/yr), at the end of the lease you'll definitely be on top. You could actually sell the car for a profit. Especially in the inflated car market right now. Personally i'd advised to putting ANY money down to get a cheaper payment, because if the car is totalled thats it. You get nothing. I'd just pay for the tax, title and other fees (out of pocket expenses) that are usually rolled into a the loan anyway.
At the end of the day, it definitely depends on the person. There really isn't know such thing as SMART money imo. Unless your making 15 grand turn into 50 grand or something like that then ya... go figure smart money. For us average joes, renting vs buying, leasing vs buying, saving vs spending, it's the same song. Do we REALLY need a new car, rims, system, mods? No. You get one life and you SHOULD live a good one, but financially sound (contradiction here). I'd love to own a super fancy car, but for what? Others to see how well it SEEMS im doing...?
Ya it's nice to OWN something, but it really doesn't mean jack if you LOSE it.To the OP, if leasing works for you go for it. I'd recommend you stick with Acura, it'll definitely be easier on your wallet ALL THE WAY around, and worth more in the end. If your going to keep it then just buy it? But the real question here is how long do people REALLY keep their cars (a lot say till the wheels fall off) before they realize its just cheaper to buy another one (used) than to keep dumping money in repairs. Sometimes there's nothing like buying your own NEW car. Dont even get me started on money wasted on junk food. lol You guys see where i'm going with this.
MONEY IS RELATIVE TO OUR WANTS AND NEEDS <--- damn i just should've typed that than this long book i wrote. We can easily meet our needs (we dont need much) But we're going to always want. A nice home, nice car, fancy this fancy that.
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Acura_Dude (07-22-2011)
07-22-2011, 04:00 PM
#29
Racer
I can't see myself keeping a car more then 4 years anyways.
I might as well be leasing and have lower payments and always be in a fantastic new car.
My company pays for my lease, and I just get a taxable benefit on which I have to pay taxes. The rules in Canada may be a bit different. Of course I keep a mileage log book, and I can only write off a certain percentage.
Because it's a deduction its not a direct tax savings, but I'm in a high income tax bracket and so I certainly save 30% at least off my lease cost in taxes.
I might as well be leasing and have lower payments and always be in a fantastic new car.
My company pays for my lease, and I just get a taxable benefit on which I have to pay taxes. The rules in Canada may be a bit different. Of course I keep a mileage log book, and I can only write off a certain percentage.
Because it's a deduction its not a direct tax savings, but I'm in a high income tax bracket and so I certainly save 30% at least off my lease cost in taxes.
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Acura_Dude (07-22-2011)
07-22-2011, 04:52 PM
#31
Moderator
think of it this way.. its like buying a used car after your lease.. but your buying the car that you drove for 3 years..
to me, id rather be paying 400 a month than to down 10k and pay still 700 a month... for 4 years..
07-22-2011, 06:16 PM
#32
I like everyone's points here. We have one car leased and own the other. I like to be in new cars every 2-3 years, never have to worry about the mileage limit and like not carrying the risk of the depreciating asset = leasing is for me!
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Acura_Dude (07-22-2011)
07-22-2011, 07:46 PM
#33
I'll give my two cents.
I had a Range Rover before I decided to lease my TL.
At the time I was 10k upside down on my RR. Trading in the car being upside down is almost the same thing as leasing as I did have anything to show after paying car notes for 3 years.
I decided to lease because I was able to roll in the 7k in negative equity into my lease payment and my payment was $125 less than what I was paying for the Rover.
Now I have a new, reliable car that won't break down. (seems like the Rover was in the shop every 6 weeks)
At the end of the lease, I plan on buying the car outright.
I had a Range Rover before I decided to lease my TL.
At the time I was 10k upside down on my RR. Trading in the car being upside down is almost the same thing as leasing as I did have anything to show after paying car notes for 3 years.
I decided to lease because I was able to roll in the 7k in negative equity into my lease payment and my payment was $125 less than what I was paying for the Rover.
Now I have a new, reliable car that won't break down. (seems like the Rover was in the shop every 6 weeks)
At the end of the lease, I plan on buying the car outright.
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Acura_Dude (07-22-2011)
07-22-2011, 10:06 PM
#34
Racer
The problem with Range Rovers is that they are horrible, horrible creatures that take your money while you're looking and behind your back. If you had gotten a vehicle that kept it's resale better, you would have been in a decent spot when you traded. Nothing will save you from the depreciation monster though.
07-22-2011, 10:40 PM
#35
David_Dude
^ Awesome glad you were able to get out of your Range Rover. I'm also glad your going to buy your car after your lease.
I went back up and re-read my post. Oh man did I have some typos. Just cover what I said earlier is: NEVER put any money down on a lease. It's not worth it, you won't get it back. We can argue about car payments all night if we want. Whether you buy a brand new car with cash, finance it, or lease it; it doesn't matter. You're enjoying your car and you CANT put a price on the fun factor. Just think if you had a car you HATED. It's going to depreciate anyway, why not enjoy it. BTW who here have flat screen tv's in their house? <--- see where I'm going with this... AGAIN?!
It's really subjective when it comes to your "money's" worth. Hell im pretty sure the posters here who've leased are getting their money's worth out of their car. They are paying for it. Same with me if I finance a car, I WILL get my money's worth out of it. I could care less if some one put 36k miles on a car or 120K miles. At the end of the day its their money and if they feel like it was worth it, it was worth it. Just like that DiGorno pizza that came with the chocolate chip cookies I had tonight. Was it worth it. HELL YEAH IT WAS! I coulda had grapes or cereal, but hmm... I don't eat pizza alot or sweets. Live a little.
If I didn't drive a lot and didn't want a new car I'd just buy a used one and be done with it. But for others who want a new car every 3-4 yrs and dont drive over the mileage limits, I say lease them bitches and enjoy them. When it's all said done it's all relative. Do I really need a new android phone or the new iPhone5 thats supose to be here soon. NO! Is that a bad financial choice? IDK you be the judge of that. I dont need internet or a smartphone. I can go to walmart easy and buy a $15 prepaid phone with no camera on it just to make calls. But from what I've read here WE'RE all very good with our finances and know how to get our MONEY'S worth. At least you guys are better with money than some of my family and friends. You can always budget for a new car, house, emergency fund (you never know), trips, etc.
EDIT: I also would like to add that I would LOVE LOVE LOVE to have a range rover. That would be a vehicle to lease. I may get me one if or when the reliability goes up. LOL but that could take some time. At least it'll be under warranty. And i haven't looked into it yet, but im sure lemon laws apply for leases too.
I went back up and re-read my post. Oh man did I have some typos. Just cover what I said earlier is: NEVER put any money down on a lease. It's not worth it, you won't get it back. We can argue about car payments all night if we want. Whether you buy a brand new car with cash, finance it, or lease it; it doesn't matter. You're enjoying your car and you CANT put a price on the fun factor. Just think if you had a car you HATED. It's going to depreciate anyway, why not enjoy it. BTW who here have flat screen tv's in their house? <--- see where I'm going with this... AGAIN?!
It's really subjective when it comes to your "money's" worth. Hell im pretty sure the posters here who've leased are getting their money's worth out of their car. They are paying for it. Same with me if I finance a car, I WILL get my money's worth out of it. I could care less if some one put 36k miles on a car or 120K miles. At the end of the day its their money and if they feel like it was worth it, it was worth it. Just like that DiGorno pizza that came with the chocolate chip cookies I had tonight. Was it worth it. HELL YEAH IT WAS! I coulda had grapes or cereal, but hmm... I don't eat pizza alot or sweets. Live a little.
If I didn't drive a lot and didn't want a new car I'd just buy a used one and be done with it. But for others who want a new car every 3-4 yrs and dont drive over the mileage limits, I say lease them bitches and enjoy them. When it's all said done it's all relative. Do I really need a new android phone or the new iPhone5 thats supose to be here soon. NO! Is that a bad financial choice? IDK you be the judge of that. I dont need internet or a smartphone. I can go to walmart easy and buy a $15 prepaid phone with no camera on it just to make calls. But from what I've read here WE'RE all very good with our finances and know how to get our MONEY'S worth. At least you guys are better with money than some of my family and friends. You can always budget for a new car, house, emergency fund (you never know), trips, etc.
EDIT: I also would like to add that I would LOVE LOVE LOVE to have a range rover. That would be a vehicle to lease. I may get me one if or when the reliability goes up. LOL but that could take some time. At least it'll be under warranty.
And i haven't looked into it yet, but im sure lemon laws apply for leases too.
Last edited by Acura_Dude; 07-22-2011 at 10:43 PM.
07-23-2011, 12:08 AM
#37
2G TLX-S
But for the highly reliable Honda/Acura vehicles, there isn't so much need to worry about paying for repair bills.
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Acura_Dude (07-23-2011)
07-23-2011, 05:23 AM
#38
Suzuka Master
Cars are not investments nor a good use of money in the logical sense but we car enthusiasts are not logical when it comes to our cars.
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Acura_Dude (07-23-2011)
07-23-2011, 07:45 AM
#39
I feel strongly both ways
Great thread. Interesting and informative reading. In the past I've leased and bought. On the whole what this thread teaches me is that, done right, the financial differences between leasing and buying are essentially negligible. To me, the simplicity of knowing that the car is your, that you don't have to worry about every ding and scratch or going over your allotted mileage is hard to quantify or put a dollar figure on. However, that piece of mind is definitely worth something. So to me, unless a compelling argument could be made that resulted in substantial savings, I think I'll stick with cash purchases.
Like I said, great thread.
The mods should consider making this one a sticky.
Like I said, great thread.
The mods should consider making this one a sticky.
07-23-2011, 08:41 AM
#40
Drifting
I have never leased a car and never will because you are pretty likely to lose money on the deal much like you would trying to play the tables in Vegas. The manufacturers push leasing because they have a captive audience that will be in the car market every 2-3 years.
Regarding the original question about how the Germans can make money on lease with unusually low payments. I think you might need to compare the terms in more detail possibly. The mileage limits and charges are bound to be different as one example- perhaps the Germans might have 10k-12k miles per year allowance and a higher per mile change if over this limit. Another way the dealers make money is of coarse on service when that BMW goes off warranty- that's when you get into some absurd charges for things and they make a lot of money.
Regarding the original question about how the Germans can make money on lease with unusually low payments. I think you might need to compare the terms in more detail possibly. The mileage limits and charges are bound to be different as one example- perhaps the Germans might have 10k-12k miles per year allowance and a higher per mile change if over this limit. Another way the dealers make money is of coarse on service when that BMW goes off warranty- that's when you get into some absurd charges for things and they make a lot of money.