Lease New Car?

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kwarden13
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Lease New Car?

Post by kwarden13 » Wed Jun 28, 2017 6:45 am

Decided to start a new thread of leasing....

So I have never leased prior and am now considering a lease. I have a 2015 Subaru Outback Limited w/ 29k miles and it cost $36k. I owe $26k and my payment to pay off in 3 years would be about $750. My math is as follows.

1) Lease a car for $300 a month w/ all modern safety and tech. Pay $10,800 over 3 years. Insurance goes up $15 a month.
2) Continue paying $750 a month knowing I will not keep the car more than 4 years. So maybe 1 year without a payment.
3) If I did keep it, it would take me about 7.5 years to break even. Meaning I could lease for the next 7 years and only break even on my car.
4) Some will say but your car is worth something. True let's say I pay the $26k off in 3 years and go to trade it in. Probably be worth $15k if lucky. So $26k - $15k = $11k. Basically break even leasing.

I am sure there are more scenarios, however, the about is what I am thinking. And cars are not appreciating assets so why put more money into it. Leasing can free up cash flow. I am not getting a super frugal car or a super high end car for $300 a month w/ $0 down, however, there are some good deals.

Thoughts?

BogleMelon
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Re: Lease New Car?

Post by BogleMelon » Wed Jun 28, 2017 7:19 am

kwarden13 wrote: And cars are not appreciating assets so why put more money into it.
By driving a car (any car) off a dealership's parking lot, you will spend money in something that will depreciate anyways (leasing or buying).
kwarden13 wrote: I will not keep the car more than 4 years
That is why your math shows that leasing could be better, but the question is, why wouldn't you keep a car more than 4 years? Cars can live for more than 10 years, your breakeven could be at year #6 or so, if you decided to keep the car, after that you are saving big money.
Also you presumed a trade-in value when reselling the car. Trade-ins in my opinion are the cheapest way to sell your car.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

Jack FFR1846
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Re: Lease New Car?

Post by Jack FFR1846 » Wed Jun 28, 2017 7:34 am

But what about the fees. Figure the dealer's bogus "doc fee"....aka...dealer profit is going to be in the $400 area. You still pay this with a lease. There are "lease origination fees" that add maybe $400 more. With some cars, you pay a turn-in fee of somewhere around $250. Either way, you are paying the bogus "doc fee" so I'll pull off that $400. But you're left with $650 in fees for absolutely nothing of value to you.

If you want to see what the cost is, get both lease and loan figures. Lots of sites will do this for you including a lot of manufacturer and dealer sites. Do the math. It is almost never cheaper to lease unless there is some tax benefit. Yes, you will save on sales taxes with leases but if you buy and trade, you get back some of that as the next car's taxable value is reduced by the value of your trade, so that ends up being about a wash.
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kwarden13
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Re: Lease New Car?

Post by kwarden13 » Wed Jun 28, 2017 7:48 am

I just did the math on my Subaru. When I bought it I could have leased for $300. Making it cheaper unless I kept it for over 6 years. Now I owe $26k and probably upside down 1-2k. So if I turn in now, leasing would be cheaper, at the 3 year mark.

b42
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Re: Lease New Car?

Post by b42 » Wed Jun 28, 2017 8:01 am

A great resource is leasehackr.com. There is a calculator there where you can estimate roughly how "good" a lease is compared to buying. If you get the right rebates and lease at the right time, it can be cheaper to lease rather than to own, but you have to do your homework. You may want to post how you came up with the alternate $300 lease as well, because for a $36k car that seems a bit low. Does that include tax?

My 13-year old car needed another expensive repair ($1k+, plus new brakes at inspection time), so I decided to lease my next car. I got a 2017 Honda Civic, I put $0 down and the monthly payment is $270 with taxes (If you include the initial fees at the beginning, the average is about $287 all inclusive per month). So I'm essentially paying a bit over $10k to drive the car for 3 years for 36,000 miles. However I know I'll be way under the mileage cap. I qualified for the 1.9% lease rate, and I do have the option of buying out the car for around $14k in 3 years. My car payment is about $100 less than if I would have bought the car outright, and now I have some options in 3 years.

One of those options may be to lease another car with a different dealer offering a competitive lease rebate, which if I get a similar priced vehicle would actually lower my monthly payments.

kwarden13
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Re: Lease New Car?

Post by kwarden13 » Sat Jul 01, 2017 8:59 pm

So I finally traded in my 2015 Subaru Outback and guess what?

I leased a 2017 Subaru Outback Limited w/ Eyesight and Nav for $360 a month for 12k miles/ 36 months and $360 due at signing. Some will say this is stupid, but now I can just turn the car back in three years from now and enjoy a lower payment! I was about $1k underwater on my current loan.

So for $12,960, I get to drive a brand new car under warranty for 3 years. I could do this twice before it would make sense to buy and even then I would probably need a new car anyway. I really do not see a reason to finance a car unless you drive one for 10+ years and know how to do maintenance.

visualguy
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Re: Lease New Car?

Post by visualguy » Sun Jul 02, 2017 1:13 am

kwarden13 wrote:I really do not see a reason to finance a car unless you drive one for 10+ years and know how to do maintenance.
Yes, that is true with cars that have good lease deals. Leasing often is the better way to go. However, if you do keep your cars for 8+ years, and you get lucky with reliability, there is a significant financial advantage to buying.

Note that some of this depends on how much you drive. For example, I drive only 6K miles/year. It's hard to justify leasing with so little mileage because I can keep my car for many years without too much concern about repairs.

Another factor right now is the move to electric cars. It's hard to decide to "commit" to an internal combustion car for 8+ years right now when some good electric alternatives seem to be just around the corner.

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tennisplyr
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Re: Lease New Car?

Post by tennisplyr » Sun Jul 02, 2017 6:28 am

Never liked leasing, always wanted to own. However, since 1995, I've been leasing and love it.

-new car every 3 years, state of the art
-fun changing models
-no repairs, little maintenance
-frees up cash
-not owning a depreciating asset
-I feel safer
-etc

It's kind of like renting v owning a house. Who cares if it cost me a little extra!
Those who move forward with a happy spirit will find that things always work out.

fundseeker
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Re: Lease New Car?

Post by fundseeker » Sun Jul 02, 2017 6:40 am

tennisplyr wrote:Never liked leasing, always wanted to own. However, since 1995, I've been leasing and love it.

-new car every 3 years, state of the art
-fun changing models
-no repairs, little maintenance
-frees up cash
-not owning a depreciating asset
-I feel safer
-etc

It's kind of like renting v owning a house. Who cares if it cost me a little extra!
It may free up cash, but I'm pretty sure your net worth is decreasing with this very expensive habit.

And to the OP, have you considered putting a stop to the car/lease payment madness and going without any type of payment?

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bottlecap
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Re: Lease New Car?

Post by bottlecap » Sun Jul 02, 2017 7:27 am

Yes, you have found the secret. Auto dealers hates leases because they lose money and the customers save money.

Your vehicle with 36,000 miles on it (typical lease numbers) is worth a lot more than $15,000. You're paying 60% more per mile than if you drove for 5 years and sold, even factoring in one big repair. But it is a convenient way to get a new car every three years.

Just don't kid yourself that it costs about the same by fudging the numbers.

JT

Jags4186
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Re: Lease New Car?

Post by Jags4186 » Sun Jul 02, 2017 7:29 am

fundseeker wrote: It may free up cash, but I'm pretty sure your net worth is decreasing with this very expensive habit.

And to the OP, have you considered putting a stop to the car/lease payment madness and going without any type of payment?
+1

I don't drive $36,000 cars and may that's why buying a car never seems like a "big deal" to me, but the last 3 times I've bought and sold a car has usually been around the the 5-6 year mark when the cars have just about 100k miles on them. Each time I traded in my car it was worth about $8k-$10k and then I threw in an extra $10k and bought a brand new car in the $18-$20k range. My newest car is a 2016 Honda Civic LX and I love it. I might keep it past 100k if I don't have any major issues.

Iruntons
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Re: Lease New Car?

Post by Iruntons » Sun Jul 02, 2017 9:24 am

bottlecap wrote:Yes, you have found the secret. Auto dealers hates leases because they lose money and the customers save money.

Your vehicle with 36,000 miles on it (typical lease numbers) is worth a lot more than $15,000. You're paying 60% more per mile than if you drove for 5 years and sold, even factoring in one big repair. But it is a convenient way to get a new car every three years.

Just don't kid yourself that it costs about the same by fudging the numbers.

JT
Auto dealers love leases. (I am one). My profit on a lease is no different than on a retail deal. What we hate is cash purchases. Well, we don't hate them, they are usually not as profitable. We can usually make a profit on the finance portion of the deal. Also, if you are fair with the buyer, you tie them into your dealership. I have many clients that trade every 3 years. I'm not saying it's cheaper than holding on to a car for 6 plus years. But, there is a huge segment of the population that enjoys the 3 year cycle. The safety, comfort, convenience, and fun of driving a new car is important to many financially stable consumers.

tomservo14
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Re: Lease New Car?

Post by tomservo14 » Sun Jul 02, 2017 1:57 pm

I just bought a car last week, but I think for my next vehicle, I'm going to lease. You'll get a lot of people on here telling you that leasing is way more expensive then buying and holding, and they're right. For me, the benefit of leasing is driving vehicles with the latest safety technology. I'm willing to pay more if it keeps my family safe, and I think these tech improvements are only going to accelerate over the next few years. Just my $.02.

Traveler
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Re: Lease New Car?

Post by Traveler » Sun Jul 02, 2017 2:30 pm

The math works for someone who wants a shiny new toy every few years and doesn't mind constantly having a car payment. But it doesn't for someone who prefers to buy a depreciating asset (that is simply a machine to reliably get one from point A to point B in relative comfort) and hold onto it for a longer time period. For me, I despise the car dealership experience so much that that alone is worth something in not having to experience it more than once every 10-12 years. If car dealerships weren't making more money on leases than actually selling cars, they wouldn't promote leasing to the extent that they do. If the dealership is making more money, it is more likely than not costing the lessee more.

H-Town
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Re: Lease New Car?

Post by H-Town » Sun Jul 02, 2017 4:37 pm

kwarden13 wrote:Decided to start a new thread of leasing....

So I have never leased prior and am now considering a lease. I have a 2015 Subaru Outback Limited w/ 29k miles and it cost $36k. I owe $26k and my payment to pay off in 3 years would be about $750. My math is as follows.

1) Lease a car for $300 a month w/ all modern safety and tech. Pay $10,800 over 3 years. Insurance goes up $15 a month.
2) Continue paying $750 a month knowing I will not keep the car more than 4 years. So maybe 1 year without a payment.
3) If I did keep it, it would take me about 7.5 years to break even. Meaning I could lease for the next 7 years and only break even on my car.
4) Some will say but your car is worth something. True let's say I pay the $26k off in 3 years and go to trade it in. Probably be worth $15k if lucky. So $26k - $15k = $11k. Basically break even leasing.

I am sure there are more scenarios, however, the about is what I am thinking. And cars are not appreciating assets so why put more money into it. Leasing can free up cash flow. I am not getting a super frugal car or a super high end car for $300 a month w/ $0 down, however, there are some good deals.

Thoughts?
In my opinion, modern safety and technology is a lame excuse of keeping buying/lease new car every other 3 years. If you pay attention to your surrounding, do not get distracted, look over your shoulder to check blind spot before changing lane, and use your common sense, you should be able to feel safe on the road. Be honest to yourself and admit that you want to get latest technologies and newest car. No shame in that. It's your money, you want something, you go get it.

I bought a used car 3 year ago and I haven't had a monthly car payment in 2 and a half year. With the additional cash flow from not making car payment coupled with living life below my means, I'm able to max out my retirement accounts and add to taxable savings. When I get to the point that a $xxx lease payment a month would not move a needle in my net worth, I will reward myself with a new lease of the car I want. Until then, it's an easy choice for me - stick with no monthly car payment.

2m2037
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Re: Lease New Car?

Post by 2m2037 » Sun Jul 02, 2017 4:48 pm

fundseeker wrote:
tennisplyr wrote:Never liked leasing, always wanted to own. However, since 1995, I've been leasing and love it.

-new car every 3 years, state of the art
-fun changing models
-no repairs, little maintenance
-frees up cash
-not owning a depreciating asset
-I feel safer
-etc

It's kind of like renting v owning a house. Who cares if it cost me a little extra!
It may free up cash, but I'm pretty sure your net worth is decreasing with this very expensive habit.

And to the OP, have you considered putting a stop to the car/lease payment madness and going without any type of payment?
Regardless whether you make monthly payments or you pay upfront and sell later, you still incur the depreciation expense. It's only whether you pay for it monthly, or you take the full hit when you sell the vehicle down the road.

2m2037
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Re: Lease New Car?

Post by 2m2037 » Sun Jul 02, 2017 4:55 pm

thangngo wrote:
kwarden13 wrote:Decided to start a new thread of leasing....

So I have never leased prior and am now considering a lease. I have a 2015 Subaru Outback Limited w/ 29k miles and it cost $36k. I owe $26k and my payment to pay off in 3 years would be about $750. My math is as follows.

1) Lease a car for $300 a month w/ all modern safety and tech. Pay $10,800 over 3 years. Insurance goes up $15 a month.
2) Continue paying $750 a month knowing I will not keep the car more than 4 years. So maybe 1 year without a payment.
3) If I did keep it, it would take me about 7.5 years to break even. Meaning I could lease for the next 7 years and only break even on my car.
4) Some will say but your car is worth something. True let's say I pay the $26k off in 3 years and go to trade it in. Probably be worth $15k if lucky. So $26k - $15k = $11k. Basically break even leasing.

I am sure there are more scenarios, however, the about is what I am thinking. And cars are not appreciating assets so why put more money into it. Leasing can free up cash flow. I am not getting a super frugal car or a super high end car for $300 a month w/ $0 down, however, there are some good deals.

Thoughts?
In my opinion, modern safety and technology is a lame excuse of keeping buying/lease new car every other 3 years. If you pay attention to your surrounding, do not get distracted, look over your shoulder to check blind spot before changing lane, and use your common sense, you should be able to feel safe on the road. Be honest to yourself and admit that you want to get latest technologies and newest car. No shame in that. It's your money, you want something, you go get it.

I bought a used car 3 year ago and I haven't had a monthly car payment in 2 and a half year. With the additional cash flow from not making car payment coupled with living life below my means, I'm able to max out my retirement accounts and add to taxable savings. When I get to the point that a $xxx lease payment a month would not move a needle in my net worth, I will reward myself with a new lease of the car I want. Until then, it's an easy choice for me - stick with no monthly car payment.
When you lease, the bulk of your monthly dues are to pay for the cost of depreciation. Although you don't make monthly payments now, you're going to make a lumpsum payment in the form of accepting less money when you sell your car compared to when you first bought it. There are only 2 cost savings to the buy-with-cash method vs leasing - escaping the financing aspect of a lease and being able to invest those savings. However #1 is probably offset due to the large initial outlay.

2m2037
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Re: Lease New Car?

Post by 2m2037 » Sun Jul 02, 2017 5:26 pm

Using a very simple example - if I have $30,000 cash today, should I be buying a $30,000 car and selling after 3 years or leasing for 3 years?

Buy method
Pay $30,000 up front.
Drive for 3 years
Sell for $15,000.
Depreciation cost = $15,000

Lease method
Pay $0 up front.
Put $30,000 in Ally Savings account @ current 1.15% interest rate
Make monthly automatic payments of $437.50, (this is calculated as $15,000 depreciation costs plus a 5% financing charge/money factor). Monthly payments are automatically deducted from your Ally Savings account
Total payments made after 36 months = $15,750 (irrelevant)
Balance remaining in Ally Savings account after 36 months (compounded monthly, no tax) = $15,036
Net total outflow = $30,000 - $15,036 = $14,964

Of course there are many variables you could throw into the mix, but in this example I've used an average/slightly higher than average money factor equivalent of 5% and a very low investment yield of 1.15% per annum. If you used a 3% after-tax yield which is still relatively conservative, your net total outflow goes down to $13,637.

mortfree
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Re: Lease New Car?

Post by mortfree » Sun Jul 02, 2017 6:09 pm

kwarden13 wrote:So I finally traded in my 2015 Subaru Outback and guess what?

I leased a 2017 Subaru Outback Limited w/ Eyesight and Nav for $360 a month for 12k miles/ 36 months and $360 due at signing. Some will say this is stupid, but now I can just turn the car back in three years from now and enjoy a lower payment! I was about $1k underwater on my current loan.

So for $12,960, I get to drive a brand new car under warranty for 3 years. I could do this twice before it would make sense to buy and even then I would probably need a new car anyway. I really do not see a reason to finance a car unless you drive one for 10+ years and know how to do maintenance.
It's not stupid.

But it just shows that you could not afford to actually buy the 2015 or the 2017.

kwarden13
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Re: Lease New Car?

Post by kwarden13 » Sun Jul 02, 2017 7:26 pm

mortfree wrote:
kwarden13 wrote:So I finally traded in my 2015 Subaru Outback and guess what?

I leased a 2017 Subaru Outback Limited w/ Eyesight and Nav for $360 a month for 12k miles/ 36 months and $360 due at signing. Some will say this is stupid, but now I can just turn the car back in three years from now and enjoy a lower payment! I was about $1k underwater on my current loan.

So for $12,960, I get to drive a brand new car under warranty for 3 years. I could do this twice before it would make sense to buy and even then I would probably need a new car anyway. I really do not see a reason to finance a car unless you drive one for 10+ years and know how to do maintenance.
It's not stupid.

But it just shows that you could not afford to actually buy the 2015 or the 2017.
Actually I could afford it. I just did not want to tie up more money when I know I am not going to keep it. Pay $600-$650 a month to get rid of it in 3 years or pay $360 for three years and just turn it back in. I rather just give the car back. Yea, if I pay more I will have equity, but that equity still cost me something. Rather have a lower payment now and invest the difference.

Bastiat
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Re: Lease New Car?

Post by Bastiat » Sun Jul 02, 2017 8:23 pm

Traveler wrote:The math works for someone who wants a shiny new toy every few years and doesn't mind constantly having a car payment. But it doesn't for someone who prefers to buy a depreciating asset (that is simply a machine to reliably get one from point A to point B in relative comfort) and hold onto it for a longer time period. For me, I despise the car dealership experience so much that that alone is worth something in not having to experience it more than once every 10-12 years. If car dealerships weren't making more money on leases than actually selling cars, they wouldn't promote leasing to the extent that they do. If the dealership is making more money, it is more likely than not costing the lessee more.
The statement in bold is affirming the consequent. Dealerships promote leases because their job is to move cars. A lease enables a person to get a nicer car for the same payment, and it gives flexibility that buying does not. The majority of the public don't care any more about what a car is going to cost them than what their monthly payment ends up being.

Leasing is not the terrible deal many here seem to think it is. If you don't want to keep the car long term or your circumstances will be different in 3 years leasing is a good option.

Thesaints
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Re: Lease New Car?

Post by Thesaints » Sun Jul 02, 2017 8:29 pm

Best to worst financially, IMO:

- Buy used car, keep it to the end

- Buy new car, keep it to the end

- Buy new car, keep it 3 years.

- Lease car for 3 years.

Last two are very close. Tie-breaker is that you can choose to self insure you own car, while cannot self insure leased car. Collision coverage on new cars is pretty expensive.

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Dendritic Tree
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Re: Lease New Car?

Post by Dendritic Tree » Mon Jul 03, 2017 2:17 pm

One small niche where leasing may make sense is in leasing electric cars (outside of Teslas). This market segment is improving so rapidly that owning one doesn't make much sense because you're guaranteed to be rapidly obsolete when new and improved battery technology comes out. A 5-year-old electric car is much more likely to be relatively obsolete compared to a 5-year-old ICE (internal combustion engine) vehicle. A concrete example is the early adopter who bought a 2011 or 2012 Nissan LEAF for ~ $35,000. The LEAF had a substantial upgrade to its battery chemistry from 2013 onward, and an upgrade to its range for 2016 onward, despite still being the same generation/body style and roughly same MSRP. However, Nissan has had an aggressive leasing program where a basic LEAF can be had for $199/mo throughout this time. Those who bought a LEAF probably regret it when they see used, low-mileage LEAFs for sale for well under $10,000 now.

For many people who drive an electric car though, the primary motivator is not economic but rather moral. Some people perceive climate change as the biggest risk to our species and think (rightfully or not) that sustainable transportation is a major solution to this problem. In just the same way that you may give to a charity you believe to truly make a difference, many people feel that sacrificing some of their money in the form of increased cost of driving electric vehicles is worth it to them.

For these people who must drive electric, leasing can often be a more rational financial decision than buying, as the asset in question depreciates even more rapidly than most ICE cars due to the steeper curve of innovation and improvement.

AlwaysBeClimbing
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Re: Lease New Car?

Post by AlwaysBeClimbing » Mon Jul 03, 2017 7:20 pm

Dendritic Tree wrote: ~
For many people who drive an electric car though, the primary motivator is not economic but rather moral. Some people perceive climate change as the biggest risk to our species and think (rightfully or not) that sustainable transportation is a major solution to this problem. In just the same way that you may give to a charity you believe to truly make a difference, many people feel that sacrificing some of their money in the form of increased cost of driving electric vehicles is worth it to them.

~.
With 60+ of US electrical production coming courtesy of coal(30%) and natural gas fired plants this moral argument is largely baseless.

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Dendritic Tree
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Re: Lease New Car?

Post by Dendritic Tree » Mon Jul 03, 2017 9:12 pm

It's true that most electrical power still comes from coal in the US, but most EVs that drive on coal-generated electrons still at least break even in terms of carbon footprint due to their markedly increased efficiency compared to ICE vehicles. And the electric grid is rather dramatically moving away from coal towards less carbon-intensive options including natural gas and carbon-free renewables, making the average EV less carbon-intensive with every passing year. Many EV owners aim for the holy grail of driving on their own rooftop-solar-generated electricity for minimal carbon footprint. But that option is generally available only to pretty affluent drivers, which doesn't do much to improve the overall societal carbon footprint.

AlwaysBeClimbing
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Re: Lease New Car?

Post by AlwaysBeClimbing » Mon Jul 03, 2017 11:33 pm

Dendritic Tree wrote:It's true that most electrical power still comes from coal in the US, but most EVs that drive on coal-generated electrons still at least break even in terms of carbon footprint due to their markedly increased efficiency compared to ICE vehicles. And the electric grid is rather dramatically moving away from coal towards less carbon-intensive options including natural gas and carbon-free renewables, making the average EV less carbon-intensive with every passing year. Many EV owners aim for the holy grail of driving on their own rooftop-solar-generated electricity for minimal carbon footprint. But that option is generally available only to pretty affluent drivers, which doesn't do much to improve the overall societal carbon footprint.

How dramatic that shift towards renewables is going to be now( given current administration), is highly uncertain. The reality is that any benefit from electric vehicles derives almost solely from the way it's consumed electrical power is generated.

https://www.scientificamerican.com/arti ... ily-clean/

denovo
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Re: Lease New Car?

Post by denovo » Mon Jul 03, 2017 11:57 pm

tennisplyr wrote:Never liked leasing, always wanted to own. However, since 1995, I've been leasing and love it.

-new car every 3 years, state of the art
-fun changing models
-no repairs, little maintenance
-frees up cash
-not owning a depreciating asset

-I feel safer
-etc

It's kind of like renting v owning a house. Who cares if it cost me a little extra!
People should certainly do what they enjoy/have fun as long as they can afford it. But its certainly baffling me that you say it "frees up cash" Leasing a new car means you have to make these payments as long as you drive and you certainly are paying more in the long-run. Yes, you're not also owning a depreciating asset, but cars don't appreciate evenly over its life. The first 3 years have the steepest depreciation and you are repeating the steepest part of the depreciation curve perpetually.
Last edited by denovo on Tue Jul 04, 2017 12:02 am, edited 1 time in total.
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denovo
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Re: Lease New Car?

Post by denovo » Mon Jul 03, 2017 11:59 pm

kwarden13 wrote: I really do not see a reason to finance a car unless you drive one for 10+ years and know how to do maintenance.
Certainly an odd argument re;maintenance. I presume you don't know to do plumbing or lay down a roof, but you'll still want to own a house, correct?
"Don't trust everything you read on the Internet"- Abraham Lincoln

inbox788
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Re: Lease New Car?

Post by inbox788 » Tue Jul 04, 2017 12:04 am

Dendritic Tree wrote:It's true that most electrical power still comes from coal in the US, but most EVs that drive on coal-generated electrons still at least break even in terms of carbon footprint due to their markedly increased efficiency compared to ICE vehicles. And the electric grid is rather dramatically moving away from coal towards less carbon-intensive options including natural gas and carbon-free renewables, making the average EV less carbon-intensive with every passing year. Many EV owners aim for the holy grail of driving on their own rooftop-solar-generated electricity for minimal carbon footprint. But that option is generally available only to pretty affluent drivers, which doesn't do much to improve the overall societal carbon footprint.
Looks like natural gas has overtaken coal, and with current cost advantage, likely to widen the gap.
Natural gas = 33.8%
Coal = 30.4%
Nuclear = 19.7%
Renewables (total) = 14.9%
Hydropower = 6.5%
Wind = 5.6%
Biomass = 1.5%
Solar = 0.9%
Geothermal = 0.4%
Petroleum = 0.6%
Other gases = 0.3%
Other nonrenewable sources = 0.3%
Pumped storage hydroelectricity = -0.2%4
https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
https://www.washingtonpost.com/graphics ... er-plants/

I'm surprised how high natural gas has gotten as well has how large the coal and nuclear share still are. I thought hydro was bigger and other renewable were closer to 10%. Is solar really that small a share? And has oil burning power plants really shrunken to so small a share?
4 Pumped storage hydroelectricity generation is negative because most pumped storage electricity generation facilities use more electricity than they produce on an annual basis.
Essentially a battery or storage. No indication of capacity. To circle back, car batteries can be considered storage devices and there are some novel ideas about using them in parking lots during the day to provide backup power for our home air conditioners on a hot day.

Anyway, with regard to leasing electric cars, the case for them are getting better and better with each improvement. I'm surprised the 200 mile Bolt isn't more popular (might be production limited). We shall see if the Tesla 3 lives up to the hype. Was in the news today and deliveries soon.

https://electrek.co/2017/07/03/gm-chevy ... v-sales-3/
http://insideevs.com/june-2017-plug-in- ... port-card/

boglewannabe
Posts: 46
Joined: Fri May 04, 2007 12:47 pm

Re: Lease New Car?

Post by boglewannabe » Thu Nov 02, 2017 4:04 pm

imperio wrote:
Sun Jul 02, 2017 5:26 pm
Using a very simple example - if I have $30,000 cash today, should I be buying a $30,000 car and selling after 3 years or leasing for 3 years?

Buy method
Pay $30,000 up front.
Drive for 3 years
Sell for $15,000.
Depreciation cost = $15,000

Lease method
Pay $0 up front.
Put $30,000 in Ally Savings account @ current 1.15% interest rate
Make monthly automatic payments of $437.50, (this is calculated as $15,000 depreciation costs plus a 5% financing charge/money factor). Monthly payments are automatically deducted from your Ally Savings account
Total payments made after 36 months = $15,750 (irrelevant)
Balance remaining in Ally Savings account after 36 months (compounded monthly, no tax) = $15,036
Net total outflow = $30,000 - $15,036 = $14,964

Of course there are many variables you could throw into the mix, but in this example I've used an average/slightly higher than average money factor equivalent of 5% and a very low investment yield of 1.15% per annum. If you used a 3% after-tax yield which is still relatively conservative, your net total outflow goes down to $13,637.
This is a great illustration, but it actually supports leasing, since the "Sell for $15,000" is rarely the case. Selling a car is a real pain, people rarely get the amount they want, and contrary to the post below, in 3 years it's the semi-autonomous electric cars that will be the ones everybody wants. Your 3 year old Internal Combustion Engine (ICE) dinosaur will be almost obsolete!

2m2037
Posts: 203
Joined: Mon May 08, 2017 4:48 pm

Re: Lease New Car?

Post by 2m2037 » Thu Nov 02, 2017 4:22 pm

boglewannabe wrote:
Thu Nov 02, 2017 4:04 pm
imperio wrote:
Sun Jul 02, 2017 5:26 pm
Using a very simple example - if I have $30,000 cash today, should I be buying a $30,000 car and selling after 3 years or leasing for 3 years?

Buy method
Pay $30,000 up front.
Drive for 3 years
Sell for $15,000.
Depreciation cost = $15,000

Lease method
Pay $0 up front.
Put $30,000 in Ally Savings account @ current 1.15% interest rate
Make monthly automatic payments of $437.50, (this is calculated as $15,000 depreciation costs plus a 5% financing charge/money factor). Monthly payments are automatically deducted from your Ally Savings account
Total payments made after 36 months = $15,750 (irrelevant)
Balance remaining in Ally Savings account after 36 months (compounded monthly, no tax) = $15,036
Net total outflow = $30,000 - $15,036 = $14,964

Of course there are many variables you could throw into the mix, but in this example I've used an average/slightly higher than average money factor equivalent of 5% and a very low investment yield of 1.15% per annum. If you used a 3% after-tax yield which is still relatively conservative, your net total outflow goes down to $13,637.
This is a great illustration, but it actually supports leasing, since the "Sell for $15,000" is rarely the case. Selling a car is a real pain, people rarely get the amount they want, and contrary to the post below, in 3 years it's the semi-autonomous electric cars that will be the ones everybody wants. Your 3 year old Internal Combustion Engine (ICE) dinosaur will be almost obsolete!
The point I was trying to make, I believe. 8-)

H-Town
Posts: 1234
Joined: Sun Feb 26, 2017 2:08 pm

Re: Lease New Car?

Post by H-Town » Thu Nov 02, 2017 5:51 pm

kwarden13 wrote:
Wed Jun 28, 2017 6:45 am
Decided to start a new thread of leasing....

So I have never leased prior and am now considering a lease. I have a 2015 Subaru Outback Limited w/ 29k miles and it cost $36k. I owe $26k and my payment to pay off in 3 years would be about $750. My math is as follows.

1) Lease a car for $300 a month w/ all modern safety and tech. Pay $10,800 over 3 years. Insurance goes up $15 a month.
2) Continue paying $750 a month knowing I will not keep the car more than 4 years. So maybe 1 year without a payment.
3) If I did keep it, it would take me about 7.5 years to break even. Meaning I could lease for the next 7 years and only break even on my car.
4) Some will say but your car is worth something. True let's say I pay the $26k off in 3 years and go to trade it in. Probably be worth $15k if lucky. So $26k - $15k = $11k. Basically break even leasing.

I am sure there are more scenarios, however, the about is what I am thinking. And cars are not appreciating assets so why put more money into it. Leasing can free up cash flow. I am not getting a super frugal car or a super high end car for $300 a month w/ $0 down, however, there are some good deals.

Thoughts?
there are two things certain in life: death and taxes. Congratulations, you just added "car payment" to the list. :sharebeer

JDot
Posts: 361
Joined: Fri Apr 24, 2015 10:15 pm

Re: Lease New Car?

Post by JDot » Thu Nov 02, 2017 9:15 pm

leasing is okay depending on your circumstances. I just finished a lease. One expense many people may miss is that you will likely need to replace the tires at 30 to 40k miles and your lease will be up at 45k. So that's $600 to $1,000 most likely that you will not see much benefit from imo.

inbox788
Posts: 5411
Joined: Thu Mar 15, 2012 5:24 pm

Re: Lease New Car?

Post by inbox788 » Fri Nov 03, 2017 2:12 am

kwarden13 wrote:
Wed Jun 28, 2017 7:48 am
I just did the math on my Subaru. When I bought it I could have leased for $300. Making it cheaper unless I kept it for over 6 years. Now I owe $26k and probably upside down 1-2k. So if I turn in now, leasing would be cheaper, at the 3 year mark.
While the difference may not be that much, your math/accounting is probably wrong. There are some costs that apply to lease and purchase, like the cost of the car. Other costs apply only to lease, such as lease acquisition and disposal costs. Also, when you finance, the interest/money factor applies to a bigger balance. Incentives can be same or different, sometimes favoring purchase, other times lease. One big benefit of lease is the sales tax only applies to the payments, not the residual. If your work or you have a business where you can write off the payments, a lease may be beneficial. In most cases, the math favors the purchase.

Residual values are a crapshoot, but often, the car is worth much more, and you lose the equity if you simply turn a car in. Same if you trade in a car instead of selling it yourself. You may not be under as much as you think, and you might have a little equity if you do a private sale (carmax near me is listing a couple of 2014 2.5i limited with 60-70k for $22k and 2015 50k for $25k/34k for $28k). It does look like you put a lot of miles (29k) for about 13 months ($10k/750) in payments. If you keep this up, you need to buy additional miles on a lease.
kwarden13 wrote:
Sat Jul 01, 2017 8:59 pm
I leased a 2017 Subaru Outback Limited w/ Eyesight and Nav for $360 a month for 12k miles/ 36 months and $360 due at signing. Some will say this is stupid, but now I can just turn the car back in three years from now and enjoy a lower payment! I was about $1k underwater on my current loan.

So for $12,960, I get to drive a brand new car under warranty for 3 years. I could do this twice before it would make sense to buy and even then I would probably need a new car anyway. I really do not see a reason to finance a car unless you drive one for 10+ years and know how to do maintenance.
Is this the $36k car? How much is your residual/percentage? Looks like you're benefiting from a high residual value and near straight line depreciation. Did you figure out where they buried the $1k on the current loan? Would the payment have been $30 less if you got a lease anew?
visualguy wrote:
Sun Jul 02, 2017 1:13 am
Another factor right now is the move to electric cars. It's hard to decide to "commit" to an internal combustion car for 8+ years right now when some good electric alternatives seem to be just around the corner.
It's still going to take some time to ramp up, and if you find a good electric vehicle, you can still sell you car. The used car market for electric is going to lag a bit. In 8+ years, you'll probably still be an early adopter if you bought a plug in EV. It might go mainstream around 2025-2035 based on these projections.
https://www.forbes.com/sites/oppenheime ... ac00036ec5

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JupiterJones
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Location: Nashville, TN

Re: Lease New Car?

Post by JupiterJones » Fri Nov 03, 2017 8:53 am

thangngo wrote:
Sun Jul 02, 2017 4:37 pm
In my opinion, modern safety and technology is a lame excuse of keeping buying/lease new car every other 3 years.
Same here. If you buy a brand-new car with all the modern safety features, it doesn't suddenly become a deathtrap in 3 years when new safety technology comes out.

Barring mechanical issues, any car is still as safe as it was when you bought it. If it was safe enough to drive your family around in then, it is now. The fact that cars now exist that may be marginally safer doesn't change that.
Stay on target...

stoptothink
Posts: 4374
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Re: Lease New Car?

Post by stoptothink » Fri Nov 03, 2017 9:44 am

JupiterJones wrote:
Fri Nov 03, 2017 8:53 am
thangngo wrote:
Sun Jul 02, 2017 4:37 pm
In my opinion, modern safety and technology is a lame excuse of keeping buying/lease new car every other 3 years.
Same here. If you buy a brand-new car with all the modern safety features, it doesn't suddenly become a deathtrap in 3 years when new safety technology comes out.

Barring mechanical issues, any car is still as safe as it was when you bought it. If it was safe enough to drive your family around in then, it is now. The fact that cars now exist that may be marginally safer doesn't change that.
+1. This is so commonly brought up on this board as a reason to buy new vehicles every few years and IMO it is simply a rationalization. The difference in safety between a well maintained car produced in the last decade and a brand new one is infinitesimally small.

a5ehren
Posts: 62
Joined: Fri May 26, 2017 7:48 am

Re: Lease New Car?

Post by a5ehren » Fri Nov 03, 2017 3:27 pm

I don't think the Buy vs. Sell argument is really about 3 year cycles.

If you're going to have a new car every 3 years no matter what, then you should probably lease unless you go way over on mileage.

The upside in buying is when you can hold the car for a decade+ and come out 50% ahead.

sco
Posts: 771
Joined: Thu Sep 24, 2015 2:28 pm

Re: Lease New Car?

Post by sco » Fri Nov 03, 2017 10:43 pm

duplicate
Last edited by sco on Fri Nov 03, 2017 10:44 pm, edited 1 time in total.

sco
Posts: 771
Joined: Thu Sep 24, 2015 2:28 pm

Re: Lease New Car?

Post by sco » Fri Nov 03, 2017 10:43 pm

stoptothink wrote:
Fri Nov 03, 2017 9:44 am

+1. This is so commonly brought up on this board as a reason to buy new vehicles every few years and IMO it is simply a rationalization. The difference in safety between a well maintained car produced in the last decade and a brand new one is infinitesimally small.
I agree completely.


There have been large safety improvements in the past 50 years, what with seatbelts, airbags, ABS, whatever they call their impact absorbing frames, etc...

In any particular 10 year period, the changes have been much less dramatic.

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