woropallo

Now that I have pretty well decided to get the 2016 SH AWD RLX, I have to wait 90 days before it arrive from the factory Im deciding as to whether I should buy or lease. I would like input from some of the folks on this forum with the benefit of leasing versus buying. I do not have a business so I can't right a lease off and I have always brought my car. Payment amount is not an issue for me, I usually just by my cars out right. But in the last few years I have brought new cars every year, 2013, 2014, 2015 and now a 2016. The wife starting to question whether I am going through a mid life crisis. I just like new cars with the latest technology, that why I am starting to wonder whether I should lease versus buy my next one. My only concern with leasing is the worry about limited miles, penalties and how does it work when you turn the car in at the end of lease and it has dings, dents or small rock chips. I am looking at the extreme since I am one of those OCD guys that really take care of a car. Your input would be appreciated!

usdmJON

If you have established credit and plan on keeping the car then Id say buy it.

If you dont have established credit or you plan on upgrading cars every couple years then consider a lease as often acura has lease agreements where they wave damages and over mileage if you upgrade to a new Acura.

woropallo

Thanks for your input. Credit not an issue, I have outstanding scores and always get offered the lowest rates for preferred customers.

Nexx

lease it. let the finance company assume all the risks.

holografique

You're buying a new car every year??

That answers your question right there!

Lease for 12 months with 15k+ miles and call it a day. And if you're already OCD about caring for your car then you shouldn't have any problems maintaining it in good shape.

You also avoid having to fork out large sums of cash. I just dont believe in putting out large amounts of money for ANYTHING anymore, even when I can afford it outright. "Subscriptions" is the future of our economy.

pgeorg

What holografique said! I always buy because i put a lot of miles on my car (30,000+ a year). Leasing makes a lot of sense, especially if you like to change cars often.
I believe Acura offers a $1,500 threshold for dings, rock chips, etc at the end of the lease. I also believe it lets you roll over unused miles to your new lease.

krava

This is a debate on a lot of cars, there is a ton of info on the clublexus forum on the lease/buy option thing.

holografique

Looks like the shortest lease Acura offers is 24 month (unless you got pull?).

With the RLX currently seeing a 2-year cycle on anything significant being added to it, that still lines up well with wanting to stay current with the latest and greatest on a 24-month lease.

neuronbob

If you are buying a new car every year, you are probably better off leasing.

In my case I leased because a) I can write it off as a business expense--I use it almost exclusively for work or work-related travel-- and b) it's a good way to let the leasing company assume the risk for the abysmal depreciation for the RLX line.

jwong77

If think most of the posters have hit the nail in the head, depends on how long you own the car for. Then you can do the math by comparing the charges incurred during leasing vs how much the car will depreciate over the same timeframe. Which ever costs less would be the best decision, unless I'm missing something.

woropallo

Just to set the record right with regard to my buying cars habit so people don't think i'm a nut, here are the facts. I brought the 2013, 1st year redesign/production car. First month of purchase it was in the shop for half the month fixing problems, had more problems with over the next 6 months. I was going to invoke the lemon law and the corporation agreed to give me a new next year car, 2014. The 2014 had one of the same problems of the 2013, the headliner kept falling down around the moonroof, they tried to repair it but it happen again, so I traded in on my present car, the 2015 RLX. I wanted the 2014 RLX SH AWD but the dealer told me at the time he did not know when or if it was coming out so I went with the RLX 2015. After reading all the positive reviews about the 2014 RLX SH AWD I've decided I going to get what I originally wanted an RLX SH AWD, it just will be the 2016 model. I do not buy used cars only new and the top of the line and I like the technology. Since technology seems to be advancing every 2 to 3 years, it sound like the advice from the reviewers of this post is to lease, thanks.

George Knighton

That is also my problem when it comes to leasing.

oonowindoo

If i were to drive 30,000 miles a year, i would get a reliable beater to put those miles on because it does not matter if you lease or buy, 30,000 miles a year will kill the any resale value of the car.

How much do you think a 3 years old RLX is worth with 100,000?

It does not make sense financially either way. do it with a cheaper car, not a $60k car that you buy with your own $$.


Now for the average people who drive between 10k to 15k miles per year.

- how long are you planning to keep the car? look at the past history. The "i think i will keep THIS one for a long time" usually do not work as the new car itch is strong.

- How much do you value your time? I personally do not like to deal with all the maintenance and repair stuff that is associated with older cars.

- Are you the type of person that must have the newest/best technology? Iphone 6 plus, Samsung Note 4, S6 edge?

- You have options with leasing. One of them is if you really hate the car, the worst it can happen is you return the car after 3 years. Now, if you bought a car that you really hate, be prepared to lose a shit load of $$ to get out of it. Another one that most of people do not know is, you can sell the car at ANY TIME during your leasing terms to ANY ONE (Private or Carmax or whatever you choose). Just like you would sell a financed car that is not paid off yet. How much you owe vs. how much the car is worth. Another one is, You still can purchase the car at ANY TIME, not only at the lease end. It is up to you to punch in some #s to see how much you would pay total if financed vs. Lease 3 years, then buy. (If you really love this car, you have the option to sell it at any time or buy it at any time, a few months into the lease or 1 year or 2)

- When financed or bought, you are actually more "stuck" with the car than leased cars because usually the first 3 years has the highest depreication % with any new car. So when you want to sell it, most likely you will be losing $$ in the first 5 years.

- The old, "you don't own anything after 3 years" argument is not valid because #1, home owners have similar claims. But they do not realize that no one owns shit until it is paid off. See what happens if you miss some mortgage payment or car payments.

#2. Even 5 years later after the car is paid off and you actually own it now. Are you going to keep driving it for another 3 or 5 years until the wheels fall off? or are you going to buy a new car at that time? If you are going to buy a new car after 5 years, then it makes no difference from leasing because you will always have car payments just like leasing but at a much higher rate. Yes, you will have some equity but remember you paid full price for the car + interest, vs leasing (around 40% of the car in 3 years). The equity you are getting back hopefully can actually cover the difference.

Bottom line, it only make sense to buy a BRAND NEW car that you know for sure that you will be driving for A LOOOONG time without any major repairs.

Otherwise, lease. or buy a beater to put the 30,000 miles a year, not on a $60k brand new car unless you just don't care.

Buy things that will appreciate and lease things that will depreciate and put cash into something that is actually worth putting into.

Now if you want to buy s2000, then that is a good investment

krava

I have to agree with the above poster. Get some kind of beater car to put extra miles on and only have liablity on it. I have put 150K miles on several cars. I promised myself I wouldn't do it with this car. I will rent a car to go to dallas and put 600 miles back and forth on it each couple of weeks. If you buy the car semi new and 1/2 of MSRP then you can run the heck out of it and not lose a lot of money. Or if you have a lot of money and don't care about it run it all you want. I am currently renting out my "beater" but I want to get it back when I can.

oonowindoo

Before anyone brings up the "You should only buy things that you can pay cash with or you can't afford it"


What is this? 1950? Good thing those people who believe ^ are not CEO or CFO, or the company will not last more than 2 years.

Depreciation is calculated by %, not fixed dollar amount. The more expensive the car is, the more $$ it will lose.

krava

The link is:


ALL About Leasing and Buying - Club Lexus Forums

RLX-Sport Hybrid

I am a Schedule C so rather than leasing a car, I finance at a very low rate (2% or less), or pay cash for the cars. Then I write off the miles which at the current IRS rate equates to about $11,000 per year, plus all parking, tolls, any business travel, office supplies, and various misc items that are acceptable to itemize. The overall deductions for me are typically $50,000-55,000 + maxing out contributions to a SEP IRA of $53,000 per year. All of my deductions are 100% legit and have withstood an audit with flying colors so these are real. The reason I am telling you this is if I leased the car I might be worse off from a deduction perspective so it is not an attractive option for me.

Even if the money rate was 0%, leasing would not work for me mathematically. I don't worry about miles and wear and tear I manage meticulously. So my advice is simple, If you want a lower monthly car payment and your credit is 800+, make a larger down payment over your trade. Typically I estimate what the 2nd year value of the car could be and target to prepay that depreciation in the form of a down payment. So for my car I guessed that the SH value at two years might be around $40,000 and I bought the car for $54,500 before taxes. I negotiated an $18,000 value for my trade which was fair considering it was nearly perfect in every way. I also put a small amount ($2,500) to keep my payment to $650 per month or less which was a target I arbitrarily wanted, and I ended up at $643 per month. The gas savings alone over my last car is around $100 per month or more so in real dollars it costs me $543 per month (net/net).

How does this logic sound? Is this helpful?

oonowindoo

#1. You put over $20,000 as the down payment into a depreciating asset, that you will lose all of it in the first year. I can think of so many other thing that I could do with $20,000.

#2. I highly highly doubt your RLX will have a trade in value of $40,000 after 2 years.

woropallo

Thanks, I am like you. If I can get free money anything under 2% I will finance the car or else I will buy it out right. I always get offered the best rates because of my high credit score. My last car was 0% financing my current car is 1.9%. I usually don't put any money down on a car especially if I am getting free money of 2% or less. Payment amounts are not an issue to me on free money and because of my financial situation. I look at it from the perspective of why tie my cash up. However, I am leaning toward leasing, I don't have the write off capabilities that some of the folks on this forum have but I like the idea of changing cars every 2 to 3 years and not getting hit with the big depreciation of the car. I am curious, when they do the calculation of a lease price do they take into account the financing of it and do you get the same rate as if you are buying the car?

RLX-Sport Hybrid

It was a target value and I am keeping it anyway. I don't care that it is a depreciating asset. I enjoy every minute of it. I was more interested in a lower monthly target payment. Regardless of the opportunity cost for investing the differential is something I am completely ok with. Unless we are talking about a rare exotic that might appreciate in value or maintain a relatively steady value, no car is a good financial value. But the enjoyment value for the SH for me is very high. I don't blink at its cost, don't care how much gas costs per gallon, and don't want to know what its current trade in value is. It could be worth zero and I am happy. It is a cost for enjoyment. Would the average high end person care whether a vacation cost $10,000 or $12,000? Nope, not even for a moment. I'm going to the Turks and Caicos for 10 days not long from now. It will be expensive, but the enjoyment will be fantastic and worth it. That is a guaranteed 100% depreciated value of those dollars and I will only enjoy it for the time while on vacation. The car will be enjoyed everyday for many years to come and still be worth something at the end. That enjoyment per dollar makes sense to me.

oonowindoo

From the sound of it, you are very new to leasing.

I can give you some general ideas but if you really want to do your homework, i would suggest you to visit some BMW or Merc forum to see how the #s work, since there are way more people leasing BMW/Merc than Acura.

- MSRP (same as financing)
- Cap gross (Negotiated selling price of the car)
- Cap reduction (discounts, trade in, incentives and other type of discounts)
- Money Factor (same as APR, has to do with your credit and the current promotion)
- Mileage per year
- lease terms (24, 36, 39, 48 months)
- residual value (non negotiable, a value pre-determined by bank. It changes based on the mileage per year and lease term you choose, you can see it as the estimated resale value and this is the amount you will have to pay if you decide to purchase the car at lease end)
- Some states have their own leasing laws. But in CA, you only pay tax on your monthly leasing payment, not on the selling price
- Documentation fee/title/and other fees (not a lot)

You always start the negotiation with the selling price of the car just like how you would when you buy a car.

Many people get into the trap of assuming if the dealer offers them an affordable monthly payment then it is a good deal. WRONG! you want all the #s above presented to you so you can check they did not jack up the money factor or other fees when you could get even a BETTER deal.

This is a basic lease calculator

Auto Lease Calculator at Edmunds.com

Also, depends on the program on the RLX, sometimes for the same amount you pay, you could get into an even more expensive car than RLX.

At the lease end (assume you don't sell it in between or buy it at lease end) and the car is in good shape then Acura will contact you a few months before the lease end to schedule a lease end inspection, at your home or work, local gas station, Burger King or where ever you choose. If everything checks out then you drop off the car at the dealer on your lease maturity date, sign a paper and walk away, 5 minutes process.
If you have some "excessive" wear and tear (bald tires, cracked bumpers) then you will have some time between the inspection date and maturity date to do your own repairs or Acura can just simply send you a bill. They will not expect you to return a brand new looking car, that is why there is the normal wear and tear and excessive wear and tear.

oonowindoo

Then you falling in to the category where i said "you just don't care". Then just do whatever that makes sense to you.

Since OP is here asking for the benefits of leasing vs. owning then he obviously cares about options.

This is not about whether you can afford it or not. It is about what can you do to the maximize your $$ while still drive the same car you wanted. But obviously not everyone cares about that.

Also if those 2 are really your priorities, then leasing makes even more sense.
You will get lower monthly payment than financing and always enjoy the best of what Acura can offer every 2 or 3 years while the car is always under warranty and trouble free.

oonowindoo

You know leasing has even higher credit requirement right?

You can get away with financing a car with higher down payment even with bad credit.

You can't do that with leasing because you dont want to put $10k down into the MSRP since you will not be getting that $10k back if the car is totaled.

Always put as little down payment as possible with leasing, ideally $0 down with only the first month payment + title as the Drive-off.

mattyloudness

Just a side note to this discussion, anything over 15,000 miles in an Acura lease costs you only 10 cents a mile upfront, meaning if you did an additional 45000 miles per year that would only cost you an additional $4500 over the lease, if you were to look at a 3 year old RLX, one with 45000 miles and the other with 90,000 miles, you think the higher mileage one would be more than $5000 less? I would say 100% yes. Also who thinks of buying a 3 year old model with 90,000 miles on it? So I look at it this way, if you are driving more than 15000 or 20,000 miles per year it's hard to beat 10 cents a mile especially if you can deduct it and Acura Financial carries all of the risk. My previous 2010 MDX had 3800 miles on it when it got hit with $11400 worth of hail, (when I got it fixed I was glad I leased it, if I owned it I would still have it), just my point of view.

woropallo

Good advise but how does it work if you are trading in a car that you purchased and are now going to lease a new car? I figure I will have 16k to 20k worth of equity, depending on the numbers I get for the car, after the payoff of my 2015 RLX.

holografique

For someone who constantly defends Acura anytime I complain about my RLX, Im shocked to hear you had soo many problems with your first two cars....

In also curious when you mention the 2013...are you referring to a 2014 RLX purchased in 2013? I wasnt aware there was a 2013 year RLX. Didnt they skip that year all together?

woropallo

The reason why I defend Acura is that the current car I have, the 2015 RLX, is great and no problems. The 2013 and 2014 were not Acura. I left Acura when I traded my RL, but returned to buy the RLX after my bad experience with another brand. Also, please don' take my responses to your post negatively. I understand your frustration with getting a car that doesn't meet your expectation or turns out to be a lemon. For me I just got rid of the headache like I did, eat the lost and move on. I am not suggesting you do that, it just the way I work and I can afford to eat the lost and not lose sleep over it.

oonowindoo

Trading a car into a dealer is rarely a wise choice because they almost never give you top dollars. Sometimes you might get a good amount because you are buying a car from them, but chances are they will get it back from the new car one way or the other.

Based on my personal experience, if you do not like to deal with the hassle selling privately, like me. I usually would sell it to carmax, or other local used car dealers. Keep your new car and the used car transaction separate. Things always get complicated when you do trade ins.

Also remember, how much down and how much drive off are not the same thing. A lot of the dealers will trick you on that.

neuronbob

Great discussion. In my lease, I traded in a beater worth only about $4k. That was enough to cover taxes, a small cap reduction, security deposit, and the first month's payment. I'd placed a very small deposit to save my place in line for the Sport Hybrid and I used that as a further cap reduction. I gave $0 cash at the time of my transaction.

You put down as little cash as possible on a lease because:

A) if the car is totaled, you never get that down payment money back.

B) you are often trying to maximize cash flow and tying up your money in a huge down payment is counterproductive to that strategy. You can invest the money you were using for that down payment.

I am not planning to keep the Sport Hybrid long term, so a lease made more sense to me--I'm expecting great things from Acura by 2017, when my lease is up.

woropallo

I really appreciate all your information you are providing! One more thing can you explain what you mean by "How much Drive Off"?

mattyloudness

That's not a problem, you can simply get a check back to you for the equity and start the lease with zero down. To you have a comparison on trade-in, Carmax would be a good base and then compare to what the Acura dealer will offer. Regardless of what the books say because human still appraise cars many times one location may value it more than another.

George Knighton

If somebody drives that much, he is probably going to have to take phone calls and make decisions while he is in his car.

So you'll want a car conducive to having serious discussions while you're still underway, and you'll want a car that is comfortable for you and for any passengers you might have to take.

You'll want a car good enough to be both entertaining when necessary, seriously quick and fast when necessary, quiet enough to have a serious conversation and not distracting so that you can analyze information while you're driving, perhaps with a decent music system for those times nothing is going on, and comfortable and long legged enough that you arrive at your destinations refresh and mentally awake, fully capable of executing justice in an efficient, logical and irresistible fashion.

Maybe if you're 20-something, it makes sense for you to be on an hour's drive to your destination in a "beater," but as you get older it makes more sense to spend some of your income on being more comfortable, if for no other reason than for the sakes of the people who rely on you to make intelligent decisions.

George Knighton

That's my excuse for wasting money, and I'm sticking to it.

:-)

George Knighton

I did *not* know that, and that changes the formula enough that I'll think about it next time.

But I'm a little rough on cars. While I admit that it changes my idea of what leases entail, you never know what I'm going to do with a car...and although I'm getting on in years, it could very well still mean taking to the track in my own car to show a student exactly what I meant about a particular turn.

So...I still don't know about how an analysis would work out in a couple of years, but I admit I had no idea it was only 0.10/mile and I'm surprised nobody's suggested it to me.

You're not going to necessarily hesitate if the car says Honda on it and it checks out. Odysseys and Ridgelines, Accords and TL's are very popular high mileage cars.

They are quite cheap and very good buys and you know nothing's going to go wrong in any major way for quite a while yet.

When discussions like this pop up, my mind keeps going back to my Honda history, and mileage has never been a problem.

I think I've mentioned before that a couple of kids grabbed my 1994 Accord LX 5-speed when I'd done with it, stripped it out, bolted in a cage (the rules were different back then) and promptly went out and started winning H4 Class Honda-Challenge races.

Mind you, this car had something like 250,000 miles on it when they started this process, and the head had never even been off of it.

Modeler

On a related topic: does anyone have lease parameters for the 2016 RLX? At least the residual value. Thanks.

mattyloudness

2016 RLX Lease residuals

36 months
12k per year Tech 52%
12k per year Advance 50%
12k per year Sport Hyb Tech 52%
12k per year Sport Hyb Advance 50%

mattyloudness

I would have to agree, but when I was younger I did buy a car for $300 once. (and I wouldn't do that again)

Modeler

Thanks for posting these! Well, that answers the question about whether it makes sense to lease RLX. With residuals this low, leasing is generally a bad idea (unless you own a business and can take tax deductions for leasing). In comparison, residual on my current Lexus GS450h was 62% when I leased two years ago.

woropallo

So is the residual value what they estimate the car will be worth after 3 yrs?

Modeler

Yes. Cars like BMW and Lexus routinely have residuals in the upper 50s or lower 60s. The higher the residual, the lower is your monthly payment. My opinion is that it doesn't make sense to lease unless the residual is at least 58%. Again, unless you can deduct lease payments on the tax return.