LaCostaRacer

I'm not trying to bag too much on leasing- there is a purpose for it. I can certainly understand why a car sales guy likes leasing because it almost always gets the customer in a car that is more expensive and carries a higher profit and/or commission. It also almost always gets a sales guy a repeat customer in a predictable time period. I can also understand how people like the OP could get a call before lease end if business is slow too.

What you have to ask is which alternative saves you the most money:

A. Buy the car, but keep it for 6-8 years- with 3-4 years of 'out of warranty' exposure (a safe bet with an Acura). You can mod the car and drive as many miles as you need to. You may pay for this mileage but that is not until you decide to sell the car. There are no artificial time limits in this option.

or

B. Lease 3-4 cars in the 6-8 year period and never be out of warranty- and possibly get nitpicked on modifications, damage or mileage each time you go through this cycle.

Surely option B is nice since you get a new car every couple years, but what is that really costing you? As you all know, the biggest hit on the car's value is the first year so you're enduring this hit 3 to 4x as much with option B in the same time period. Surely that hit would pay a lot toward an unexpected repair bill now wouldn't it?

In option A you get 3-5 years of cash savings (providing you continue those car payments but make them to your own bank account instead as a form of savings). You acquire cash that can be invested and also are comfortable with a specific budgeted payment amount since you never see that payment in your normal checking account. If you get dinged with a repair, you will have savings to absorb most issues easily since you would be saving 4-5K a year typically. You will also have a substantial down payment with the savings and value of your 8 year car. You might still have a car loan but it could be only 50% of the value of the next car if you don't go too extreme next time.

Over your life time, I guarantee you are better with option A. The idea that the savings of monthly payments from lease .vs. purchase promotes more productive investments generally doesn't happen in real life- much like people maxing their 401Ks.

MrOtocinclus

^ The key to this post is the assumption that "better" means having more money in your pocket.

Suppose that I decided to keep my '11 until lease end. Counting the '09 that I leased for 3 years, I would have been leasing for 6 years. I would have paid about ~$30k to lease the 2 cars over that period of time.

I would have paid about the same amount as if I had bought the '09 in the beginning, maybe a little less. But let's assume it's the same amount. For that same amount, I would have been driving and enjoying 2 new cars, vs. just 1 if I had bought.

I value new cars and would never buy a used car if I had a choice. I'm way happier doing so. I love the new car smell. I love not having dings on the windshield. I love not having rattles. Etc. Etc.

Extrapolate that for my lifetime, would I be worse off financially? Of course, there's no denying the math. But would I be better off overall? Mmm, no I wouldn't, if I was I allowed to judge what was better for myself.

Again, I would say that both leasing and financing have their benefits. I would not say that one is better than another. It all depends on your situation.

Edit: To dispel any misconceptions, I max out my retirement savings every year, and I save on average 20% of my income. So no, not all lessees are the same.

MissAlyyTL

Hey, I'm not knocking leasing. My brother leased his last couple of cars then bought em out. He can do it tho. No other major expenses, good job, why not spend the $ to drive around in something new? I think the major point here is living within your means. Like some1 else said, if u can't afford to buy an Acura u need to go out & buy a Kia lol. And I'm not even being that exaggerated. If you can afford something, great! If you can't afford it then either a)downgrade or b)get the motivation to get a better paying job so you can live the lifestyle you strive for --not beg their daddy LOL.

ed_423

lol holy sht 19 years old with a 911, damn! time to call mom and dad....

lol theres this kid in my apartment complex with a tbrand new targa4.....that thing is a beast

LaCostaRacer

With the example, I would argue that the buy-it-from-the-get-go solution would allow you to be about 15k 'better'. Here's how I figure this:

Buy: 4 year car loan for a 30K car. Lets say you were making $550-ish payment because you have a 25K loan amount with a 4% interest rate.

After year 6: you should have about $13,200 in your bank account ready for you next car and you have your 2005 TSX that you own free and clear is also worth about 15K retail (I checked autotrader.com and subtracted 2K from top prices).

Buy & Hold: you have $28,200 + investment interest or proceeds for saving your money for 2 years. Perhaps it's really just 25K because you suffered a 3K major repair after the car is out of warranty. Again with an Acura- probably not likely but lets say it happened.

Lease: You saved yourself 4 years of reduced payments- perhaps 10K if the difference in lease .vs. loan payment is $200. You saved yourself the chance of a major repair but you still paid for normal service since that is equal for both scenarios.


With the buy & hold approach you forfeit having one new car, but you have a large cash position for the next car and have lots of money for mods if that's your thing.

Is that second new car really worth: 15K? Perhaps it is for some people, but I would rather have the financial freedom of not having lots of consumer debt as well. You also have the option to use that money to travel and expand your horizons. No matter how you slice, money gives you freedom that you don't otherwise have. Freedom does not equate to happiness in all cases but it's a great start to happiness.

MrOtocinclus

Good point, so much for my econ degree, didn't think about opportunity cost.

MissAlyyTL

Sounds like I gotta move there! LOL.

MissAlyyTL

you bring up lots of good points, assumed that the buyer/lessee is using their own financial portfolio so to speak lol. The point that I have made, along with others on here that is being missed on your posts is being financially responsible. If you cannot afford such high payments and maintenance costs, or whatever cost is incurred along the way, then time to give up the Acura and trade those keys in for a 1999 honda civic where the payments would be dirt cheap, if not able to be paid for outright so cheap. Hell, fans of leases can get a Hyundai for $99 a month, and be able to save the extra $300 a month to actually have some $ to their name.

MrOtocinclus

I definitely agree with you guys about being financially responsible. I'm not a big fan of people living beyond their means. I guess I just like playing devil's advocate too much.

ttk5

I've forgotten what this this thread was about

Oh yea. I test drove the STI today. Great car!

MissAlyyTL

Oh, if you want I can refresh your memory. It was ab u asking perfect strangers to trade parts with you because you can neither afford to return your leased car to stock or buy out your car without begging daddy to do so.

ttk5

Whaaa? Wheres the cost in returning my car to stock? Its just a day of work. And the only time I mentioned my dad was just in response to everyone who told me to buy out this TSX to tell them why I cant. I quote "If I wanted to buy out, my only choice would be to convince my dad to buy it out for me, which I dont really want to do...."

I specifically said I do not want to go that route so I dont know what your talking about. Why do you have try and be offensive in your tone?
But to get back on track..heres a quote from my first post

"Anyways, I just wanted to share whats going on because I am so anxious about what might happen!"

This was supposed to be a positive thread. dont know what happened lol. If people are concerned about my finances and wasted money..ill say right now that Im very ok financially and Im content with all the decisions ive made so far.

MissAlyyTL

How can you justify being ok in ur finances when you said yourself you can't even afford to buy out a lease? Makes no sense lol

ttk5

Alright. I respect ur opinion. I'm not gonna explain myself to you or anybody anymore. It seems your opinion will not change regardless of what I say anyway. So all good. :-)

ed_423

SO.....ttk, how was the sti?!

09TSXTech

Yes, ttk5, how was the STI ?

Don't worry about what other may think? I always value and respect your work and opinion precisely because you are respectful to others even if you don't agree with them. Your parents raised you well.

If you do decide to return the car, please let round up all the CU2 in Metro Vancouver area and let you try out your photographic skill. Just put my 19" Rage wheel back on but with new rubber-Hankook Evo V12 225/40/19.

ed_423

^ well said.

i will drive up there for this epic photoshoot as well

MissAlyyTL

Raised implies past tense...apparently attempting to raise is more like it considering the "financial stability " lol agree to disagree I guess. But I think its safe to say that the posts speak for themselves lol

ttk5

You know what, the STI was not actually what I had expected. I was worried it would be too mechanical and raw for daily driving but it was very pleasant to sit in and definitely daily drivable. The seats are not a full bucket, so you can certainly sit in them for long drives... and the cabin insulation was good as well; probably comparable to the TSX.

The different 'modes' i guess are sport and sport sharp and there is definitely a notable difference between the two; with the sharp mode being much more sensitive to the throttle. Amazing. You can also control the diff ratio to make it RWD of FWD bias.

One really cool thing was that there was a video input jack for RCA cables..so I am guessing you can watch videos on the NAV screen??

The torque didn't really throw my head back which was surprising. It was a very even distribution of power, it kind of felt super charged. But we were only in the lower gears so who knows what its like higher up.

I could go on for hours but ill stop here. Overall, it was a very positive experience and I got a good idea of what the STI is like. Seems like a good candidate for a long term car because not only is it practical for vancouver weather, it can fulfill my need for speed. I am going to try and do the trade..but nothings final.

ed_423

glad you liked it. i would trade for an STi if i could as well

a77

just ran some numbers comparing financing to leasing. with zero down a 4 year lease on a new base tsx in canada is $23,328 in total payments @486 a month. A 5 year finance (at the same rate) is $38,880, payments $648. If you are going to keep the financed car another 3 years (so 8 in total) you could get a 8 year warranty and that would bring total payments cost to about $42,000. With the lease you need a second lease after 4 year which qualifies for a 2% reduction in rate - so I have assumed another $21,000 in payments, so leasing for 8 years costs about $44,000. So your difference in payments is only about $2000. But you own the 8 year old car. Black book says an 8 year old TSX base is worth $4000 to $6000 (shees...) so say you sell it privately for $8000. Net "gain" $10,000. On the other hand you could sell your 2 leased Acuras each time for say $2000 more than black book, which claws you back $4000. So like for like leasing 2 cars has cost you about $6000 extra, or $750 a year. i have left out the interest ramifications of investing the amount saved in monthly payments for the first 5 years of leasing assuming they are counteracted by the investment potential after you have finished your finance payments. You have greater flexibility to change cars after year four with the lease if your needs/requirements change. Then there's the "niceness" of having a new car. The finance only makes sense if you are going to keep the car some years after you have finished payments, as in this model. i think....

LaCostaRacer

^Your logic is a bit flawed. The obvious flaw is your calculation for the value of a 8 year old TSX- it is closer to 11k and that is without Nav even.

Also if your aim is to drive new cars, why would you even go for 4 year lease in the first place? Wouldn't you rather have a two year lease and live life large if a new car is your thing. Suppose your life style changes and you need a different car in the middle of that lease? Buy you simply sell the car- lease you will be paying penalties.

LaCostaRacer

Oops forgot to write how much off a77's calculations are in his example:

Buy: pay total of 38,800 in payments at end of year 5.
You actually skip the extended warranty because its often a ripoff for a quality car anyway. By year 8, you should have 23,328 if you saved those payments and paid yourself instead + the value of the car or 10K as a very conservative estimate.

Lease: you paid 23,328 for car #1 however you really don't know how much car #2 is actually going to cost since it could be a revised model year or a completely different car model or make even. It's a stretch thinking you're actually going to be paying less leasing that next car. Even using A's numbers you'll have 15,552 in payment savings + the optimistic 4K in perceived profit selling the car yourself or 19,552- that's the best you will ever do in fact and the likely is probably 17K.

Based on my math, the difference is (33,328 - 19,552) or actually $14,224. You do have a maintenance risk after the warranty but again that is not a big risk driving an Acura anyway.

So back to my original question a few days ago: Is that second car really worth 15K? If it is then go for it, if it isn't then don't. But definitely stop showing how much money you're saving leasing because that is not the case.

a77

My 8 year old price was based on what it says in the black book - an average of wholesale/trade in prices. Obviously you'd get more privately.

There are no penalties for selling early if you lease (in canada anyway). I sold my less than 3 year old Accord while on a four year lease and came out ahead. Fair point re trying to predict future lease costs - but in canada they have been coming down, just as MSRPs have been declining the last 5 years. Unlike in the US. As regards buying instead of leasing/financing - I guess, if you have the cash available.

And I am on a 2 year lease - it was the cheapest option. just a lease special in February.

iamitman

Same here man! 15% 401K 5% STOCK.

rockstar143

iTrader: (6)

ttk5...can't believe I missed this thread. So what's the verdict? You jump on that STi finally?!?! Great car...I'm not IN LOVE with the looks, but I do love hatches and turbo and subaru reliability.


About the whole other debate in this thread...wow. What a pissing contest. I have heard both sides of the argument...leasing is better for some, buying for others. At the end of the day we all end up paying a few hundred bucks a month and at one point or another we put mods on the car and take mods off the car. People that buy a car, mod it and keep it indefinitely are few and far between. And yes, this applies to people that do their own modding (the ability to reverse for free).

MoaarLow

I wouldnt necessarily put Subaru and Reliability in the same category. There are blown stock motors with less than 10,000 miles. Factory tune, Fuel system, and weak pistons are to blame. None the less its an amazing all around car if you get those issues worked out( Built Block, Cobb AP, and Custom Tune )

Awd, 4 Doors, trunk Space, Turbo, 6 speed and a ton of aftermarket support is just WIN!

On the lease or finance you nailed it. Its all personal preference, how long one plans on keeping a car, if they like a new car often, and what their financial situation is at the time.

tuan43

I feel sorry for ttk5 since everyone is being a b!tch lecturing him...i think he has all the information he needs to make a informed decision with the previous posts on finance vs lease etc

IMHO, i think you should just finance the car to cut your losses. then you can put on those shiney wheels you painted

visconti

i must say your car is one of the nicest here, if i were u.. i'd keep it

btw, if you really part out later.. I'm interested in front camber kit, which brand you got?

ttk5

Front camber kit is ingalls of SPC or something. I cant remember, I bought em brand new but second hand. And thanks for the support tuan43

So minor update. I've been doing some research and some more doors have been opening up. I may be able to get an EVO instead. So I will continue doing hwork but i presume i'll make my decision in around 3 weeks time. I've also become more open minded to getting another TSX

akamaru

just keep ur minds open when buying ur babe...just like getting a girl friend LOL.
before I bouight mine tsx, I've never considered of buying an Acura car.
an Evo will def be a good car for the Vancouver weather just like sti
good luck on your quest to find the right car

Mr. NC

Sti > evo > tsx lol

VortexBlueTSX

Whatever you do, im sure youll be happy there all amazing cars....just keep me posted