Lease or Buy a new car?
- Thread starter Dryburn
- Start date
Every time a 'car buying' thread comes up, I find myself further convinced that the next time I buy a car, to look for a high mileage one that costs less, that I can get thoroughly inspected, and pay straight up for it and get whatever fixings done so it's cheaper in the long run.
I can find fun out of having a newish/useful car.
I can't find fun out of monthly payments.
I can find fun out of having a newish/useful car.
I can't find fun out of monthly payments.
that's not really true at all, but I can see how people get fleased leasing if they're not careful.
Because the auto industry wants to move higher priced cars and there simply aren't enough American's who can afford them. They don't make nearly as much on the lower priced models. Leasing allows them to get them out in the marketplace and continue to build more!
Burn and churn baby!
Has anyone ever thought to themselves “Dave Ramsey is a ******* jack ass on the radio” and his overarching money scheme doesn’t even scratch the surface of who I am or what I want to be? Besides me?
I wish people wouldn't mention Ramsey in this discussion because it immediately seems then be dismissed by many.
Leasing is a bad personal financial decision and you won't find any respectable financial types endorsing them for the average American .
So as an example:
2018 Honda Civic LX
3 year Lease
$2,000 at signing
$189*36=$6,804
Tax $340
Total Cost over 3 years $9,144 $3,048/yr
3 year purchase
Assume you can get it for $17,500
36 month loan at 3%
$509x36=$18,324
Trade in value $13,500
Tax=$200 (assuming you trade it in on another vehicle)
Total cost over 3 years $5,024 $1,674/yr
4 year purchase
Assume you can get it for $17,500
36 month loan at 3%
$387x48=$18,576
Trade in value $11,500
Tax=$300 (assuming you trade it in on another vehicle)
Total cost over 4 years $7,376 $1,844/yr
I'm sure there are a few costs that I've missed on both sides but you get the idea.
2018 Honda Civic LX
3 year Lease
$2,000 at signing
$189*36=$6,804
Tax $340
Total Cost over 3 years $9,144 $3,048/yr
3 year purchase
Assume you can get it for $17,500
36 month loan at 3%
$509x36=$18,324
Trade in value $13,500
Tax=$200 (assuming you trade it in on another vehicle)
Total cost over 3 years $5,024 $1,674/yr
4 year purchase
Assume you can get it for $17,500
36 month loan at 3%
$387x48=$18,576
Trade in value $11,500
Tax=$300 (assuming you trade it in on another vehicle)
Total cost over 4 years $7,376 $1,844/yr
I'm sure there are a few costs that I've missed on both sides but you get the idea.
No. It's pretty much common sense.
Certainly has issues you can nitpick but then you are getting into picky little details.
again, not really true.
money factors got to almost zero recently, residuals were inflated, and incentives increased, which changed the math for "respectable finance types."
(unless you are of the fortunate few where money doesn’t matter) Capcityguy’s ranking of worse car buying habits:
- Leasing
- Financing for more than 36 months
- Financing - period
- Buying a new vehicle vs used This maybe should be higher, but since I cheat here, so I’m bumping it down on the list. ( List creator’s prerogative.)
- Buying more car than you really need. Note: far less likely to occur, if you save for car and pay cash. This is where the 0% financing traps so many!!
So you are saying that when you buy a car it goes down 70% in value in 4 years? Sounds like I shouldn’t buy a car either.
Again, you should mention that all of these are dependent on what you need a car for and how much disposable money you have.
No one should ever look at a car as an investment
Generally like the rules but I think I'd rearrange them.
1. Buying too much car should be numero uno. Just the simple fact that cars depreciate means that any expensive car relative to your income is going to keep you poor. You can't build wealth by destroying 20% of your income with your ride.
2. Leasing, your not building any wealth because your renting an expensive toy and it makes it easier to make mistake #1 by looking at monthly payments.
3. Length of Ownership - The longer you own a car the lower your costs / year. Lower depreciation, lower sales taxes/tags, etc. This is a big factor
4. New vehicle vs used. I think this was a bigger difference in the past but more people have been looking at used cars. Plus the whole cash for clunkers and other reasons that inflated used car values.
5. Financing / Interest Rates. At these historic (and I mean 5,000 year lows) low rates financing doesn't really make a huge dent. I bought a new vehicle that I finally paid off but even after 6 year loan / 2.9% rate the total interest was like $2,200. The upfront fees like a $1500 registration fee made a bigger difference than paying $370 / year in interest.
Last edited:
Correct. So if you buy it, it goes down that much. And if you lease it, it goes down that much. Your purchase price could be the same on a lease as well as a purchase.
For instance, I leased a VW 2.5 years ago knowing I would need a bigger vehicle when my kids got older. Didn’t want to buy, then sell, then buy again. I get a cheap payment for 3 years and now I have the option to buy that car or hand it back to them and go find something else. I was going to lose value/money no matter what. We are now thinking about buying the lease out, trading my wife’s car in and buying another.
It can work out for certain situations and if you get the right deal.
That may be true if you compare buying a new car, then selling it and buying another new car in only 2-3 years vs. a lease. If you compare buying a car that is a few years old, then selling it and buying another nearly new or new car vs. either of the other options you are probably going to come out ahead just due to the reduced amount of depreciation.
That said, I know having new cars is important to some people and that's fine. It may not be the "optimal" financial decision but as long as you are aware of the costs and willing to accept that then I don't have an issue with it.