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I am of the camp of 'if you can't pay cash you can't afford it'.
Well, I admit, there would be one circumstance in which I would take on a car loan.
If I get sick and medical bills drain all but $500 of my life savings, then I recover, and then I get a job offer in which I would earn $100k per year but must work at an office surrounded by uninhabitable swamp for 10 miles in every direction, there is NO bus, and I cannot sleep in my office.
In that circumstance I would borrow to buy a car...
No different than putting hundreds of dollars into the bank each month to buy a new car 5+ years later.
Mr CASH ONLY pays $30,000 for his new Fusion with CASH. Drives it for 8 years, 100k miles. Gets $7,000 for it on trade in. Buys another $30,000 new car, takes $23,000 in cash out of the bank to pay for it. He's out $30,000+$23,000=$53,000 in cash at the 8 year mark. Guy leasing the car for $400/months is out $38,400 at the 8 year mark ($400x96).
I choose not to have my money invested in my car, where it can't make money for me.
In your example, was anything paid up front at the start of the leases? Was any money owed at the end of the leases? I'm trying to come up with hard data for future discussions.
I assume that little to no maintenance or repair costs were paid during the leases, correct? Or would those costs be the same as for a car being purchased? I think you've referred to trading in the leased cars about the time they needed tires.
Quote:
Originally Posted by ncole1
I am of the camp of 'if you can't pay cash you can't afford it'.
Well, I admit, there would be one circumstance in which I would take on a car loan.
If I get sick and medical bills drain all but $500 of my life savings, then I recover, and then I get a job offer in which I would earn $100k per year but must work at an office surrounded by uninhabitable swamp for 10 miles in every direction, there is NO bus, and I cannot sleep in my office.
In that circumstance I would borrow to buy a car...
In your example, was anything paid up front at the start of the leases? Was any money owed at the end of the leases? I'm trying to come up with hard data for future discussions.
I assume that little to no maintenance or repair costs were paid during the leases, correct? Or would those costs be the same as for a car being purchased? I think you've referred to trading in the leased cars about the time they needed tires.
No different than putting hundreds of dollars into the bank each month to buy a new car 5+ years later.
Mr CASH ONLY pays $30,000 for his new Fusion with CASH. Drives it for 8 years, 100k miles. Gets $7,000 for it on trade in. Buys another $30,000 new car, takes $23,000 in cash out of the bank to pay for it. He's out $30,000+$23,000=$53,000 in cash at the 8 year mark. Guy leasing the car for $400/months is out $38,400 at the 8 year mark ($400x96).
I choose not to have my money invested in my car, where it can't make money for me.
But at the 16 year mark Mr CASH ONLY is still only out $53,000 while 'Guy leasing the car' is out $76,800 and does not own a car.
In your example, was anything paid up front at the start of the leases? Was any money owed at the end of the leases? I'm trying to come up with hard data for future discussions.
I assume that little to no maintenance or repair costs were paid during the leases, correct? Or would those costs be the same as for a car being purchased? I think you've referred to trading in the leased cars about the time they needed tires.
Do you have a mortgage?
No, never put money down on a lease.
Right, oil changes and tire rotations. (my dealer includes first 2 years). I rotate tires myself and replace cabin/air filters at half way point of lease.
Yes, have a mortgage. That's real equity I'm building. A lease just pays for the depreciation of the car, plus interest, acquisition/dispostion fees. I also only pay sales tax on my payment. I pay 6.3% of $330/month, so $20/mo * 36 = $720. If I bought car, sales tax would be 6.3% of $25,000 or $1,575.
Right, oil changes and tire rotations. (my dealer includes first 2 years). I rotate tires myself and replace cabin/air filters at half way point of lease.
Yes, have a mortgage. That's real equity I'm building. A lease just pays for the depreciation of the car, plus interest, acquisition/dispostion fees. I also only pay sales tax on my payment. I pay 6.3% of $330/month, so $20/mo * 36 = $720. If I bought car, sales tax would be 6.3% of $25,000 or $1,575.
I was asking if that poster had a mortgage, not you; the reference being that he said making payments means a person cannot afford something.
Originally Posted by Originally Posted by PokerMunkee
No different than putting hundreds of dollars into the bank each month to buy a new car 5+ years later.
Mr CASH ONLY pays $30,000 for his new Fusion with CASH. Drives it for 8 years, 100k miles. Gets $7,000 for it on trade in. Buys another $30,000 new car, takes $23,000 in cash out of the bank to pay for it. He's out $30,000+$23,000=$53,000 in cash at the 8 year mark. Guy leasing the car for $400/months is out $38,400 at the 8 year mark ($400x96).
I choose not to have my money invested in my car, where it can't make money for me.
Quote:
Originally Posted by ncole1
But at the 16 year mark Mr CASH ONLY is still only out $53,000 while 'Guy leasing the car' is out $76,800 and does not own a car.
You're missing the cost difference between owning two cars for 8 years each (out of warranty repairs) when compared to almost no cost maintenance for the 16 years for the lease.
Nowadays dealers take care of regular maintenance costs during the lease period plus you have a "bumper to bumper" warranty at all time.
There are other advantages to lease:
- in 16 years one gets to change at least new 6 cars (latest models) instead of owning only 2 cars (I would get sick of them)
- never have to worry about repairs and car failure, where to come up with repair money for a new transmission, time chain failure, etc
You're missing the cost difference between owning two cars for 8 years each (out of warranty repairs) when compared to almost no cost maintenance for the 16 years for the lease.
Nowadays dealers take care of regular maintenance costs during the lease period plus you have a "bumper to bumper" warranty at all time.
There are other advantages to lease:
- in 16 years one gets to change at least new 6 cars (latest models) instead of owning only 2 cars (I would get sick of them)
- never have to worry about repairs and car failure, where to come up with repair money for a new transmission, time chain failure, etc
Many dealers offer the same maintenance and warranty on new-bought cars just as leases.
Whether buying a car new or leasing, its pretty much a wash. The buyer might get a little bit back from selling it after 8 years ($30k to $7k on a Fusion is a little extreme, it would probably go for $10k-$12k at 100k miles). But either way, they're both money down the drain, no matter how you crunch the numbers.
Many dealers offer the same maintenance and warranty on new-bought cars just as leases.
Not for 8 years, while you have at least 2 years (others offer 3 year for entire duration) with leases.
So while a lease is pretty much covered (no headache), owning more than 2 years means you have to spend.
Once you keep the car more than 3 years and car goes out of warranty then you'll see the expenses going up.
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