2023 Real Estate Observations (excise tax, donations, trading)

[matrix5k]

Originally Posted by massnative71

Right, but my question is how would that compare to if they bought it new from the get go (total cost over that time) vs. leasing and then buying it out at the end (again, total accumulated cost). It's hard to get an answer on that. I've always bought new because I'm old school like that and don't want any surprises at the end (when it's paid for it's paid for), but I still wonder.

In general it is more expensive to lease. The money factor (basically interest) is often a ridiculous amount like 9-10% interest. Some negatives off the top of my head are limited miles (usually limited to 10k or 12k per year), penalties for going over miles, excess repair/damage fees if you get any dents or scratches, early termination fees if you change your mind, and if you have a trade in it does not reduce the sales tax like it would for a purchase (trade in 10k on a 30k car, you only pay sales tax on 20k). Here in MA you also have to pay excise tax on a lease. Leasing companies also make the terms complicated so it's hard to calculate everything up front, so they can easily add hidden fees that you may not notice.

If you do a lease and buy it out, you become the second owner on the title which buyers do not like to see when you sell it later on. You will also have to register it again so that's another trip to the RMV. You'll have to pay for plates again. You'll be charged excise tax again since it's a new registration, and good luck getting the leasing company to do an abatement for you when you paid excise tax the first time.

There are exceptions of course. Sometimes certain models will have significant discounts if you lease. These are usually models that have poor sales.

[redplum33]

Originally Posted by ca1337

This thread is for people who wish they could afford a home at today's prices but can't. It's a venting thread for the most part. A few are trying to bring it back on topic but it's mostly disgruntled people who got left behind. The delusional coping is out of control.

Originally Posted by ca1337

Well you got left behind from Wellesley and are clearly disgruntled about it lol.

Dude, you rent in Arlington?

[newenglandgal123]

Originally Posted by redplum33

Dude, you rent in Arlington?

Ah...so that poster doesn't even own in MA. Perhaps, they're the disgruntled one who got left behind??

[newenglandgal123]

Originally Posted by matrix5k

My auto loan is 3.49% and online savings accounts pay 4-5% now. There are 5.5% CDs. Why would anyone pay cash in that situation? No ouch here. No trade in cause I got more selling via private party.

I'd rather have no debt besides mortgage so I buy my cars w/cash.

[massnative71]

Originally Posted by matrix5k

My auto loan is 3.49% and online savings accounts pay 4-5% now. There are 5.5% CDs. Why would anyone pay cash in that situation? No ouch here. No trade in cause I got more selling via private party.

I'm currently seeing around 3.75% for online savings accounts and over 4% for new auto loans. And those current savings rates are unlikely to stay that high forever. Many of us also don't enjoy having a monthly payment, or the additional mandatory insurance coverage.

[matrix5k]

Originally Posted by newenglandgal123

I'd rather have no debt besides mortgage so I buy my cars w/cash.

Ah, so you don't understand math.

[massnative71]

Originally Posted by matrix5k

Ah, so you don't understand math.

^See my post above. Few who know what they are doing will recommend financing a vehicle or any depreciating asset.

[simplexsimon]

Originally Posted by matrix5k

Ah, so you don't understand math.

Eh let's be honest, we're talking about a $350 difference per year on a $50k loan, its not nothing but not a game changer.

Assuming a 24% marginal tax bracket, after tax interest on a 5.5% CD is 4.18% compared to the 3.49% non-deductible auto loan interest.

[matrix5k]

Originally Posted by massnative71

I'm currently seeing around 3.75% for online savings accounts and over 4% for new auto loans. And those current savings rates are unlikely to stay that high forever. Many of us also don't enjoy having a monthly payment, or the additional mandatory insurance coverage.

Man you people like to argue just for the sake of arguing.

I got my car loan before rates went up. It's offered at 3.75% now.

5.5% 15 month CD
https://www.nasafcu.com/personal/che...d-certificates

4.8% 11 month no penalty CD
https://www.cit.com/cit-bank/no-penalty-cd-direct

If rates drop drastically after these CDs mature, I can always pay off my 3.49% car loan. But I think in 5 years I would get more than that by investing in SPY or VTI.

[massnative71]

Originally Posted by simplexsimon

Assuming a 24% marginal tax bracket, after tax interest on a 5.5% CD is 4.18% compared to the 3.49% non-deductible auto loan interest.

And you are probably not going to find 3.49% right now, as I said. Likely over 4.