New car buy or lease??

[IheartGUNS]

My wife is thinking about getting a new car(looking this weekend). I think leasing is better, but the wife says buy. What do you all think?

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[solv3nt]

I've always viewed fleasing, leasing a car a bad idea. As a fiscally conservative individual, I view renting a car a poor financial decision. If you have a reason to lease, such as for a company that you will write off, and having a new car is a mandate, then leasing may be the proper decision.

 

[jbett98]

Personally, I buy used vehicles, and only from the original owner.
Why take such a depreciation in value when you drive a new car off the lot.

 

[solv3nt]

My last three cars have all been from family

 

[Certaindeaf]

You should listen to your wife (kinda, a little bit).. and Clark Howard..

Clark Howard: Save More, Spend Less and Avoid Rip-offs | www.clarkhoward.com

I drive a rig I bought thirty years ago.

 

[gallogiro]

We have our "decent" family car.. it's used but it's nice enough take out the wife and she not be embarrassed, haha. But I have my car which is a commuter. Been doing this for a while, just buy a beater and run it to the ground. Last one lasted 7 years, paid $700 for it. New one is a '97 mercury cougar, actually gets ok mpg for a v8 if I can manage to keep a light foot. Everything works, just ugly because the paint is faded. I paid $500 for that one. We'll see how long it lasts.

And I agree with Solvent, only time I considered leasing was when I was a contracted employee and was required to drive around to different job-sites. I planned to try and write off the expense on my taxes. I don't remember what happened but I decided not to go that route.

 

[Ironbar]

Dave Ramsay doesn't call it a "Flease" for nothing. Unless you own a business and can write off the cost of the lease as part of the business, then it is NEVER the right choice. My last two vehicles were purchased as late-model used. They have been paid off for years and are still running. I would never even consider buying a car brand new off the lot, ever.

 

[solv3nt]

Dave Ramsay doesn't call it a "Flease" for nothing. Unless you own a business and can write off the cost of the lease as part of the business, then it is NEVER the right choice. My last two vehicles were purchased as late-model used. They have been paid off for years and are still running. I would never even consider buying a car brand new off the lot, ever.

I usually don't consider buying new, but if you check the used car prices, you'll see that in a down economy, people hold on to their older vehicles longer, and that they don't depreciate as much.

 

[IheartGUNS]

Thanks for all of your inputs. Keep'um coming. Just curious, why are you guys against buying new? I'm scared of buying used because you just don't know what you're getting...Especially if the car she wants cost 20-30+g's.

A couple months ago I followed a friend shopping for a used car(private sellers) and almost all cars were salvage titled cars. Most of them I suspect backyard mechanics...

 

[solv3nt]

Thanks for all of your inputs. Keep'um coming. Just curious, why are you guys against buying new? I'm scared of buying used because you just don't know what you're getting...Especially if the car she wants cost 20-30+g's.

A couple months ago I followed a friend shopping for a used car(private sellers) and almost all cars were salvage titled cars. Most of them I suspect backyard mechanics...

If you go used, check KBB/Edmonds and do a sniff test. Always get a title check on the vehicle. I'm not completely against new, had I not purchased my truck from my parents, I would have gone new, used prices are just too high to take the lemon risk.

 

[edogg]

Most mechanic shops will do pre-purchase used car inspections. Probably worth it if you are unsure of buying a used car.

Or you could buy a certified pre-owned with a warranty. My certified 2009 Tacoma was almost new with only 19k miles and saved me a few thousand bucks.

 

[solv3nt]

My certified 2009 Tacoma was almost new with only 19k miles and saved me a few thousand bucks.

That's my point with the used price, if it only saved you a few thousand, i.e. ~$3k, for a used vehicle then I would personally go new.

EDIT*
To clarify, purchase, not lease.

 

[huthuthike]

Leasing is offered because it makes money for financial organizations. According to the internet, a $16000 loan at 4% for 5 years equals a payment of $295 and at the end you own the car 100%. A lease may get you a $200 monthly payment for 3 years ($7200) but your ownership at the end is 0%. You may have the option to purchase the car at it's fair market value or the lease may stipulate a value for the car. If the residual value is $10,000, you can get a loan to buy the car ($10,000/3yrs/3%) = $291/month.

After 3 years the lease has cost $7200, the purchase has cost $10,620. After 5 years the lease has cost $14,184, the purchase has cost $17,700. At 6 years, the lease has cost $17,700 and the purchase has cost $17,700.

While the math is right for the above breakdown, the variables are my best guesses about loan rates, terms and the residual value. It also assumes that fees are equal and there are no penalties.

I think the biggest thing to think about is your long-term plan. Do you want a car payment indefinitely? If you are ok with that, leasing may work for you. You get the best deal you can now and get into another great deal when you need to. In a given year, you may have a lower cost or ownership than the guy who bought the same car. After year 5 or 7 though, the numbers start skewing his way heavily. He has no car payment and the major repairs and maintenance are still lower than having a car payment. And the guy that bought used - maybe a lease return for $10,000? His 3 year cost was $10,500 and year 4 and 5 are really cheap.

BTW - I'm not an expert, I don't work in the auto business and have never leased anything.

 

[jluck]

Thanks for all of your inputs. Keep'um coming. Just curious, why are you guys against buying new? I'm scared of buying used because you just don't know what you're getting...Especially if the car she wants cost 20-30+g's.

A couple months ago I followed a friend shopping for a used car(private sellers) and almost all cars were salvage titled cars. Most of them I suspect backyard mechanics...

If you can afford a new car (zero financing) by all means go for it! Otherwise there is a huge gap between a brand new car and every used car having a salvaged title.
Zero interest deals with a majority down payment could be a decent route if someone just has to have something there bank account suggests they can not afford. This is no direct attack just my feelings in general.

 

[Botte Hork]

Leasing is offered because it makes money for financial organizations. According to the internet, a $16000 loan at 4% for 5 years equals a payment of $295 and at the end you own the car 100%. A lease may get you a $200 monthly payment for 3 years ($7200) but your ownership at the end is 0%. You may have the option to purchase the car at it's fair market value or the lease may stipulate a value for the car. If the residual value is $10,000, you can get a loan to buy the car ($10,000/3yrs/3%) = $291/month.

After 3 years the lease has cost $7200, the purchase has cost $10,620. After 5 years the lease has cost $14,184, the purchase has cost $17,700. At 6 years, the lease has cost $17,700 and the purchase has cost $17,700.

While the math is right for the above breakdown, the variables are my best guesses about loan rates, terms and the residual value. It also assumes that fees are equal and there are no penalties.

I think the biggest thing to think about is your long-term plan. Do you want a car payment indefinitely? If you are ok with that, leasing may work for you. You get the best deal you can now and get into another great deal when you need to. In a given year, you may have a lower cost or ownership than the guy who bought the same car. After year 5 or 7 though, the numbers start skewing his way heavily. He has no car payment and the major repairs and maintenance are still lower than having a car payment. And the guy that bought used - maybe a lease return for $10,000? His 3 year cost was $10,500 and year 4 and 5 are really cheap.

BTW - I'm not an expert, I don't work in the auto business and have never leased anything.

Agreed. I want to add that leasing might be a better option for people who would otherwise trade in and buy new every 3 years or so. For these people the monthly payment is the biggest factor.

 

[solv3nt]

If you can afford a new car (zero financing) by all means go for it! Otherwise there is a huge gap between a brand new car and every used car having a salvaged title.
Zero interest deals with a majority down payment could be a decent route if someone just has to have something there bank account suggests they can not afford. This is no direct attack just my feelings in general.

A $25,000 loan for 5 years has 60 equal payments of $460 at 4% APR. As long as their aren't extra fees, you are paying $2600 in interest. It is up to you to decide if this is too much in interest.

 

[IheartGUNS]

That's my point with the used price, if it only saved you a few thousand, i.e. ~$3k, for a used vehicle then I would personally go new.

Reason why I like this...I apply this with guns.

 

[edogg]

Closer to $5k actually. Tacomas hold their value like few other vehicles, though. Check the price difference between a new loaded Ford Flex and a used one. Its literally about half the price for a used one.

That's my point with the used price, if it only saved you a few thousand, i.e. ~$3k, for a used vehicle then I would personally go new.

 

[2506]

I've always viewed fleasing, leasing a car a bad idea. As a fiscally conservative individual, I view renting a car a poor financial decision. If you have a reason to lease, such as for a company that you will write off, and having a new car is a mandate, then leasing may be the proper decision.

Buying a car, on face value, is a poor financial decision. Money pits, every last one of them.

 

[jluck]

A $25,000 loan for 5 years has 60 equal payments of $460 at 4% APR. As long as their aren't extra fees, you are paying $2600 in interest. It is up to you to decide if this is too much in interest.

Uh....yep.