New Car: Ever make sense to lease?

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DC3509
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Re: New Car: Ever make sense to lease?

Post by DC3509 » Tue Mar 13, 2018 4:04 pm

Boglegrappler wrote:
Tue Mar 13, 2018 2:47 pm
I've never leased a car yet, but have mildly considered it based on the idea that in three years or so I might want something different or have different circumstances.

It occurs to me that there could be an unfilled niche in the market for people like me. I'd be willing to do a deal where I paid up front (as though I were purchasing the car), but only for the three years. That way I would avoid the charge of renting someone else's capital instead of using my own, and the rest of the terms about mileage and condition could be roughly the same.

I doubt there are enough of me to make a decent market for that as opposed to staying with the current structure.
The interest rate on most leases is very low, and lower than auto loans (usually). If you wanted to keep the money in your bank account and earn interest on it and just dole it out every month, you can effectively reduce the interest rate even more. This is one of the reasons why you should not put any money down on a lease.

mountain-lion
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Re: New Car: Ever make sense to lease?

Post by mountain-lion » Tue Mar 13, 2018 4:11 pm

mouses wrote:
Tue Mar 13, 2018 3:48 pm
Do I understand correctly that if you lease a car, you're responsible for the cost for all the maintenance and repairs and insurance just as if you owned it, plus the lease cost, and at the end of the lease you have zero equity?
You are responsible for insurance, maintenance and repairs (except that repairs are usually covered under warranty). A lease pays for the depreciation on the vehicle.

In a perfectly priced lease, if the car depreciates $10,000 during the lease term, then you only pay $10,000 (this ignores interest rate issues). Of course you don't have equity in the car. To get equity, you have to pay more than the car is depreciating.

So strictly speaking, you have no equity. But, what actually happens is that you transfer the depreciation risk from yourself to the dealer. For example:

Say you lease a car for $20,000 for three years with a "residual value" of 50%, or $10,000. This means that means that at the end of the term, you have the option of paying $10,000 and owning the car. The key is that residual value is determined at the start of the lease.

So, at the end of the lease, if the car's market value is greater than the residual value--say $11,000 in this example, you can buy the car and make a $1,000 profit. If the car's market value is only $9,000, you give the car back, and the dealer takes that $1,000 loss.

Just to be clear leasing is typically more expensive than buying and driving a long time, simply because a car depreciates more when it is new than when it is old.

Spirit Rider
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Re: New Car: Ever make sense to lease?

Post by Spirit Rider » Tue Mar 13, 2018 4:48 pm

DC3509 wrote:
Tue Mar 13, 2018 4:04 pm
The interest rate on most leases is very low, and lower than auto loans (usually).
I would dispute the notion that lease interest rates are "usually" lower and say they are "rarely" lower.

What may be "lower" is the common deception that lease agents deploy. Leases use a "money factor". A lease money factor is always the lease interest rate / 2400. The deception is as follows; the lease interest rate is 6% / 2400 = .0025 and they will describe the money factor as 2.5. That is how you convert from a decimal value to a percent, so you will assume that this is the interest rate. It is not!

Nate79
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Re: New Car: Ever make sense to lease?

Post by Nate79 » Tue Mar 13, 2018 4:51 pm

DC3509 wrote:
Tue Mar 13, 2018 4:04 pm
Boglegrappler wrote:
Tue Mar 13, 2018 2:47 pm
I've never leased a car yet, but have mildly considered it based on the idea that in three years or so I might want something different or have different circumstances.

It occurs to me that there could be an unfilled niche in the market for people like me. I'd be willing to do a deal where I paid up front (as though I were purchasing the car), but only for the three years. That way I would avoid the charge of renting someone else's capital instead of using my own, and the rest of the terms about mileage and condition could be roughly the same.

I doubt there are enough of me to make a decent market for that as opposed to staying with the current structure.
The interest rate on most leases is very low, and lower than auto loans (usually). If you wanted to keep the money in your bank account and earn interest on it and just dole it out every month, you can effectively reduce the interest rate even more. This is one of the reasons why you should not put any money down on a lease.
According to data I have seen lease APR are about 2x the APR of buying on average (Q1 2018 data, financing thru the car manufacturers). Data here:
https://wallethub.com/edu/auto-financing-report/10131/

DC3509
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Re: New Car: Ever make sense to lease?

Post by DC3509 » Tue Mar 13, 2018 5:47 pm

Spirit Rider wrote:
Tue Mar 13, 2018 4:48 pm
DC3509 wrote:
Tue Mar 13, 2018 4:04 pm
The interest rate on most leases is very low, and lower than auto loans (usually).
I would dispute the notion that lease interest rates are "usually" lower and say they are "rarely" lower.

What may be "lower" is the common deception that lease agents deploy. Leases use a "money factor". A lease money factor is always the lease interest rate / 2400. The deception is as follows; the lease interest rate is 6% / 2400 = .0025 and they will describe the money factor as 2.5. That is how you convert from a decimal value to a percent, so you will assume that this is the interest rate. It is not!
Anybody who is serious about leasing knows that you multiple the money factor by 2400 to get an equivalent interest rate.

It varies by make and model --- the brand sets the money factor, not the dealer. But with a recent lease -- the money factor converted into an interest rate was less than 1.25%, which was lower than most car loan rates.

CurlyDave
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Re: New Car: Ever make sense to lease?

Post by CurlyDave » Wed Mar 14, 2018 12:19 am

There are some rare times when a lease will make sense.

About 15 years ago, maybe more, our son needed a car and more than anything in the world, he wanted a Mustang. I heard an ad on the radio for leases at $150/month, so DW and I went down to the dealer and had him line up all the eligible cars in the parking lot. Then we called our son and asked him to come to the dealer.

When he got there we told him that he could have any of the cars in the line-up. He picked one out, we did the paperwork and he drove it home. He was overjoyed for the new few months.

As I had suspected, the virtues of a Mustang wore thin soon. Plus he went off to college and the car developed a leak in the rear main seal. But he was only 19 and the dealer at his college was reluctant to do an expensive repair on a car he hadn't sold or profited on in any way. So they did this test, that test and some other tests, but sure enough it was the main seal. But then our son transferred schools and the whole charade with the leak started over again. Plus all the sporty attractiveness of the car had met the harsh reality of a very bad back seat, a trunk small enough for no luggage, and better style than handling.

The ultimate result is that we turned that car in at the end of 3 years and felt happy to have taught him about buying practical cars instead of flashy ones. $1800 per year for 3 years was less than the cost of one college course and the lessons were enormous. If we had bought the fool thing I think we would have taken more of a beating than $5400.

Bottom line: a lease can be an excellent way of trying out a car, think of it as a purchase with a guaranteed resale value.

bovineplane
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Re: New Car: Ever make sense to lease?

Post by bovineplane » Wed Mar 14, 2018 1:22 am

Agree with leasing rarely makes sense. Here is one case where it does that has not been mentioned.

Member of the military. Deploys regularly. Leases can be turned in prior to deployment without any of the fees for breaking a lease.

Why does this makes sense? Putting a car in storage still suffers depreciation and requires insurance. Leaving a car for a year can flat spot tires and still experience wear to other rubber/plastic items as most often indoor storage is not used.

Leasing allows a service member the opportunity to drive a decent/nice car during the year home prior to the next deployment and turn it in prior to leaving. I watched multiple fellow Soldiers do this repeatedly between deployments. Alternatively saving money while deployed and paying the car payment while home. I would only recommend this if you are sure a deployment is coming as you are stuck with the lease if no deployment occurs.

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djpeteski
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Re: New Car: Ever make sense to lease?

Post by djpeteski » Wed Mar 14, 2018 7:31 am

My mom has sufficient income from her pension, and a nest egg where she is required to take RMDs. She is deathly afraid of touching her nest egg. The pension income allows for a lease. Part of her lease agreement is free regularly scheduled maintenance. I think she enjoys the trip to the dealership to talk with the other retirees doing the same thing.

Sure financially she would probably be a bit better off if she bought and held a car. However, I think she has earned the luxury of a lease and she enjoys some other aspects it of as well.

MDfan
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Re: New Car: Ever make sense to lease?

Post by MDfan » Wed Mar 14, 2018 8:16 am

I am leasing my current car. It certainly made sense to me because we needed a lower payment the first few years and then will be in a position to purchase the car at the end of the lease. I looked at all of the numbers both ways (and had others look at it too) and the amount I'll be paying in total is almost identical to what I would have paid had I purchased the car and financed it for 3 or 4 years. Maybe if you have enough $ to buy the car outright it makes more sense to buy. Otherwise, I really don't think there's that much difference any more if you plan on keeping the car like I plan to.

Dottie57
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Re: New Car: Ever make sense to lease?

Post by Dottie57 » Wed Mar 14, 2018 8:19 am

just frank wrote:
Tue Oct 31, 2017 7:57 am
warner25 wrote:
Tue Oct 31, 2017 6:20 am
I think it's fascinating that consensus here now is that a major technological revolution will wipe out the value of ICE cars within 5-10 years. We just bought a new ICE that I plan to keep for the next 10-20 years, so that's disconcerting, but I also welcome a shift to all self-driving cars as much as anyone. But 10 years ago seemed like peak oil and the end of gasoline as a reasonable source of energy for a car, and now gas prices are still 1/2 of what they were back then, so we'll see... I'm marking this thread to revisit in 2022.
I respect thoughtful skepticism in general.

The difference between the two predictions is that the PO story from 10 years ago was never endorsed by any scientists or engineers, nor did it appear in scientific journals, etc. Basically, all they had were a bunch of unfunded amateurs, a few websites, an annual jamboree, and a couple planning scenarios run by the military.

In contrast, the electrification of light transport has ~3 million vehicles on the road, tens of billions spent in R and D by nearly all the major carmakers, supportive policy statements by dozens of govts around the world (who are also putting billions in incentives to make it happen), etc. And the rationales, lower pollution of several types and ultimately lower cost, better cars, are pretty popular and hard to argue against.

Night and Day.
I too am not sure of the prediction. Not everyone has access to electrical plugins for cars. I live in a condo building where doing the electrical in underground building will be challenging. What happens if you need a charge up and you are on the road? I know people who commute 80 miles each way. Not sure EV will work wel.

I'm sticking to hybrids for near term. A lot has to change for EV to become mainstream with > 59% f vehicles in use.

emoore
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Re: New Car: Ever make sense to lease?

Post by emoore » Wed Mar 14, 2018 8:42 am

Dottie57 wrote:
Wed Mar 14, 2018 8:19 am
just frank wrote:
Tue Oct 31, 2017 7:57 am
warner25 wrote:
Tue Oct 31, 2017 6:20 am
I think it's fascinating that consensus here now is that a major technological revolution will wipe out the value of ICE cars within 5-10 years. We just bought a new ICE that I plan to keep for the next 10-20 years, so that's disconcerting, but I also welcome a shift to all self-driving cars as much as anyone. But 10 years ago seemed like peak oil and the end of gasoline as a reasonable source of energy for a car, and now gas prices are still 1/2 of what they were back then, so we'll see... I'm marking this thread to revisit in 2022.
I respect thoughtful skepticism in general.

The difference between the two predictions is that the PO story from 10 years ago was never endorsed by any scientists or engineers, nor did it appear in scientific journals, etc. Basically, all they had were a bunch of unfunded amateurs, a few websites, an annual jamboree, and a couple planning scenarios run by the military.

In contrast, the electrification of light transport has ~3 million vehicles on the road, tens of billions spent in R and D by nearly all the major carmakers, supportive policy statements by dozens of govts around the world (who are also putting billions in incentives to make it happen), etc. And the rationales, lower pollution of several types and ultimately lower cost, better cars, are pretty popular and hard to argue against.

Night and Day.
I too am not sure of the prediction. Not everyone has access to electrical plugins for cars. I live in a condo building where doing the electrical in underground building will be challenging. What happens if you need a charge up and you are on the road? I know people who commute 80 miles each way. Not sure EV will work wel.

I'm sticking to hybrids for near term. A lot has to change for EV to become mainstream with > 59% f vehicles in use.
Electric cars are changing rapidly. You can buy a few EV right now with greater than 200 mile range. I think there will be dozens of EVs with greater than 200 mile range in 5 years. Also with the 150KW to 350KW chargers it will only take 20 minutes or so to get you back to 80% range. That's why in 5 years when I'm ready for a new car I will be buying or even leasing an EV. If the technology is still changing rapidly I will probably lease.

Dottie57
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Re: New Car: Ever make sense to lease?

Post by Dottie57 » Wed Mar 14, 2018 12:04 pm

emoore wrote:
Wed Mar 14, 2018 8:42 am
Dottie57 wrote:
Wed Mar 14, 2018 8:19 am
just frank wrote:
Tue Oct 31, 2017 7:57 am
warner25 wrote:
Tue Oct 31, 2017 6:20 am
I think it's fascinating that consensus here now is that a major technological revolution will wipe out the value of ICE cars within 5-10 years. We just bought a new ICE that I plan to keep for the next 10-20 years, so that's disconcerting, but I also welcome a shift to all self-driving cars as much as anyone. But 10 years ago seemed like peak oil and the end of gasoline as a reasonable source of energy for a car, and now gas prices are still 1/2 of what they were back then, so we'll see... I'm marking this thread to revisit in 2022.
I respect thoughtful skepticism in general.

The difference between the two predictions is that the PO story from 10 years ago was never endorsed by any scientists or engineers, nor did it appear in scientific journals, etc. Basically, all they had were a bunch of unfunded amateurs, a few websites, an annual jamboree, and a couple planning scenarios run by the military.

In contrast, the electrification of light transport has ~3 million vehicles on the road, tens of billions spent in R and D by nearly all the major carmakers, supportive policy statements by dozens of govts around the world (who are also putting billions in incentives to make it happen), etc. And the rationales, lower pollution of several types and ultimately lower cost, better cars, are pretty popular and hard to argue against.

Night and Day.
I too am not sure of the prediction. Not everyone has access to electrical plugins for cars. I live in a condo building where doing the electrical in underground building will be challenging. What happens if you need a charge up and you are on the road? I know people who commute 80 miles each way. Not sure EV will work wel.

I'm sticking to hybrids for near term. A lot has to change for EV to become mainstream with > 59% f vehicles in use.
Electric cars are changing rapidly. You can buy a few EV right now with greater than 200 mile range. I think there will be dozens of EVs with greater than 200 mile range in 5 years. Also with the 150KW to 350KW chargers it will only take 20 minutes or so to get you back to 80% range. That's why in 5 years when I'm ready for a new car I will be buying or even leasing an EV. If the technology is still changing rapidly I will probably lease.
There will still be problems in infrastructure for apartments, condos and even homes.

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FrugalInvestor
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Re: New Car: Ever make sense to lease?

Post by FrugalInvestor » Wed Mar 14, 2018 12:16 pm

Top99% wrote:
Tue Oct 31, 2017 7:17 am
People have already covered the lease Vs buy angle so I will address the AWD Vs FWD angle. Unless you need to scale steep snow covered hills on a regular basis FWD + winter tires will be fine. If you Google "winter tires Vs AWD" you will find numerous articles on how winter tires make a huge difference. I realize I live where there is no winter weather now but I did learn to drive in Canada and got by just fine on RWD + winter tires.
I would maintain that the benefit of AWD depends on your skill and experience as a driver and it can go both ways. AWD can help someone substantially who isn't good at driving in the snow but it can also result in overconfidence which can create dangerous situations.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

vested1
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Re: New Car: Ever make sense to lease?

Post by vested1 » Wed Mar 14, 2018 12:41 pm

I'm keeping the possibility of leasing a car, rather than buying one, in my back pocket for one reason only. My wife and I have been retired for over 2 years.

I have structured a plan for our delay of SS to my age 70 which encompasses 4 more years. My wife's 2007 Rav4 has 118,000 miles on it, and my 2000 GMC Sierra has 106,000 miles. Both are running great, but if something major happened, either mechanically or due to an accident, it would probably be better to get a new car than to pour money into a depreciated asset.

If we leased a new car, say another Rav4, the payment would be far less than a purchase. Our low yearly mileage would preclude any penalties for driving more than the prescribed 12k a year. We could still afford it either way, but adding $400 a month to expenses or withdrawing extra from the Tira for a down payment would alter our numbers somewhat. At age 70 we could dump the lease and buy a new car without breaking a sweat. If the cars last until then it's even better.

Having had one lease in the distant past I would not advocate getting one in any other circumstance.

2m2037
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Re: New Car: Ever make sense to lease?

Post by 2m2037 » Wed Mar 14, 2018 6:46 pm

Watty wrote:
Tue Mar 13, 2018 12:27 pm
S&L1940 wrote:
Wed Nov 01, 2017 12:12 pm
How about an area like south Florida with a ton of aging drivers?
Owning a car for 10+ years may be extremely optimistic - forget car longevity, what about driver longevity?
And then there is the driver's ability (meaning mental and physical capability), some of us probably should have been off the road years ago!
Thinking here is a situation where short term, low mileage leases, can make a lot of sense.

And let's hear it for self driving cars - owned or leased - that have automatic turn signals programed in...
Having a leased car is a problem if the owner dies or has to give up driving since that does not automatically end the lease.

With a owned car the car can just be sold if your needs change.
Note to self: don't lease if I plan to die or give up driving before the lease term is up :D

Just kidding

Helo80
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Re: New Car: Ever make sense to lease?

Post by Helo80 » Wed Mar 14, 2018 7:23 pm

emoore wrote:
Wed Mar 14, 2018 8:42 am
Electric cars are changing rapidly. You can buy a few EV right now with greater than 200 mile range. I think there will be dozens of EVs with greater than 200 mile range in 5 years. Also with the 150KW to 350KW chargers it will only take 20 minutes or so to get you back to 80% range. That's why in 5 years when I'm ready for a new car I will be buying or even leasing an EV. If the technology is still changing rapidly I will probably lease.

If I'm not mistaken, all lithium batteries, including Tesla's, do better with slow charging to prolong the life of the battery. Also, I believe I have read that some Tesla owners are reporting issues with their cars doing the rapid charge thing as few as 50 times.

https://electrek.co/2017/05/07/tesla-li ... r-charges/

From Tesla...
"“The peak charging rate possible in a li-ion cell will slightly decline after a very large number of high-rate charging sessions. This is due to physical and chemical changes inside of the cells. Our fast-charge control technology is designed to keep the battery safe and to preserve the maximum amount of cell capacity (range capability) in all conditions"

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bostondan
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Re: New Car: Ever make sense to lease?

Post by bostondan » Wed Mar 14, 2018 7:38 pm

2m2037 wrote:
Wed Mar 14, 2018 6:46 pm
Watty wrote:
Tue Mar 13, 2018 12:27 pm
S&L1940 wrote:
Wed Nov 01, 2017 12:12 pm
How about an area like south Florida with a ton of aging drivers?
Owning a car for 10+ years may be extremely optimistic - forget car longevity, what about driver longevity?
And then there is the driver's ability (meaning mental and physical capability), some of us probably should have been off the road years ago!
Thinking here is a situation where short term, low mileage leases, can make a lot of sense.

And let's hear it for self driving cars - owned or leased - that have automatic turn signals programed in...
Having a leased car is a problem if the owner dies or has to give up driving since that does not automatically end the lease.

With a owned car the car can just be sold if your needs change.
Note to self: don't lease if I plan to die or give up driving before the lease term is up :D

Just kidding
That might be true most of the time, but wasn't in our case. While I currently own my car, my father had previously had a leased BMW 5 series when he died somewhat unexpectedly. It still had a couple years left in the lease.

I called the dealer, where we had purchased and leased many cars and said something along the lines of, "Please deal with this car." They took the car back without any questions and I never heard about it again.

I assume this was some type of gesture on their part due to us being good customers, but I never really stopped to do the math to figure out what it meant for them financially.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

Helo80
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Re: New Car: Ever make sense to lease?

Post by Helo80 » Wed Mar 14, 2018 7:40 pm

Leasing threads in a finance forum are always fun. Some cars lease well, some do not. In some cases, leasing makes more sense than buying.

Unfortunately, people tend to project onto others why they feel like leasing is a terrible idea rather than looking at all of the facts and figures.

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bostondan
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Re: New Car: Ever make sense to lease?

Post by bostondan » Wed Mar 14, 2018 7:44 pm

One major perk I have found with purchasing my current car has been a change of attitude towards my car as it ages. My wife convinced me to purchase my car after many years of leasing.

Previously, I always did 3 year leases. After 2 years I would start to think of my car as feeling "old" and would be thinking of what car I would be getting next. Now, after 2 years of owning a car outright, I don't find myself having those thoughts. My car feels new still and I don't feel compelled to think about getting a new car. I can see myself easily keeping this car for many more years, whereas I never would have felt that way when I leased.

Obviously this is all psychological, but it has been a nice perk of owning my car. I no longer feel compelled to chase the next best thing as aggressively.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

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just frank
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Re: New Car: Ever make sense to lease?

Post by just frank » Wed Mar 14, 2018 9:08 pm

Dottie57 wrote:
Wed Mar 14, 2018 8:19 am
just frank wrote:
Tue Oct 31, 2017 7:57 am
warner25 wrote:
Tue Oct 31, 2017 6:20 am
I think it's fascinating that consensus here now is that a major technological revolution will wipe out the value of ICE cars within 5-10 years. We just bought a new ICE that I plan to keep for the next 10-20 years, so that's disconcerting, but I also welcome a shift to all self-driving cars as much as anyone. But 10 years ago seemed like peak oil and the end of gasoline as a reasonable source of energy for a car, and now gas prices are still 1/2 of what they were back then, so we'll see... I'm marking this thread to revisit in 2022.
I respect thoughtful skepticism in general.

The difference between the two predictions is that the PO story from 10 years ago was never endorsed by any scientists or engineers, nor did it appear in scientific journals, etc. Basically, all they had were a bunch of unfunded amateurs, a few websites, an annual jamboree, and a couple planning scenarios run by the military.

In contrast, the electrification of light transport has ~3 million vehicles on the road, tens of billions spent in R and D by nearly all the major carmakers, supportive policy statements by dozens of govts around the world (who are also putting billions in incentives to make it happen), etc. And the rationales, lower pollution of several types and ultimately lower cost, better cars, are pretty popular and hard to argue against.

Night and Day.
I too am not sure of the prediction. Not everyone has access to electrical plugins for cars. I live in a condo building where doing the electrical in underground building will be challenging. What happens if you need a charge up and you are on the road? I know people who commute 80 miles each way. Not sure EV will work wel.

I'm sticking to hybrids for near term. A lot has to change for EV to become mainstream with > 59% f vehicles in use.
As for fast charging....Tesla has a nationwide network today at ~120 kW (about 300 mph charging speed), for non-Tesla there are tons of 50 kW (about 200 mph charging speed) CCS chargers on both coasts, and another 2000 or so 150 kW (400 mph speed) CCS chargers are supposed to be built out within the next 18 months or so, coast to coast (courtesy of the diesel-gate settlement).

Not a lot of people commute 160 miles/day. But my EV could do that no problem, without charging at work. It cost $30k out the door, the same price as the median new car sold in the US, and is a lot more fun to drive than a hybrid.

As for condos and apartments....they will get plugs. Time was they didn't have indoor plumbing. Then they did. Time was they didn't have AC, then they did. Plugs in parking spots/garages are easier and cheaper than both of those other retrofits, some conduit on a wall or a trench, and some boxes screwed on walls or posts. When most of the tenant want/expect them, they shall be.

LarryAllen
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Re: New Car: Ever make sense to lease?

Post by LarryAllen » Wed Mar 14, 2018 9:12 pm

Sometimes leasehacker has incredible leases. Here's the latest. Brand new GMC Terrain for $167/month. Hard to go wrong spending that little for a new car.

https://leasehackr.com/blog/2018/3/9/gm ... nth-0-down

jminv
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Re: New Car: Ever make sense to lease?

Post by jminv » Wed Mar 14, 2018 9:52 pm

Of course it can make sense to lease a car, just as it can make sense to rent a house. For the leases, it depends on your needs in a car, your wants, and the deals on hand. I've had leases before and have had lots of fun finding ridiculously good deals (leasehakr is a good site to start).

I've also done short-term leases (up to 6 months) internationally for work. Brand new off the factory cars at decent price that includes insurance and flexibility for the company. European car companies tend to offer these directly to consumers. Short term leases are also available in the US from the major rental companies but aren't as good deals as in Europe. So yes, leases can make sense in some cases.

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Re: New Car: Ever make sense to lease?

Post by RetiredCSProf » Wed Mar 14, 2018 10:25 pm

1) I wasn't planning to purchase a car yet: I leased a car in July - 1st time I have ever done this. My previous car was a 20-year old Lexus, which my son (new driver) totaled when he hit a cylinder in the parking garage at community college. Car was drivable but not worth fixing.

2) We needed to make a quick decision: Our insurance company paid for a rental car for two weeks while we went car shopping. I had no idea what I wanted, other than all the new safety features that the Lexus was missing (back-up camera, lane departure warning, blind-spot warning, parking assist).

3) We plan to keep the car for three years: I share the car with my son, so we needed to make some compromises (he's at least a foot taller than me). I expect that he will finish college in a few years -- and we will no longer be sharing.

4) Technology is changing: We ended up choosing a plug-in hybrid. The electric battery gives us 12 miles per charge (6 miles with a/c) in urban driving. I expect this technology will change in 3 years. In the meantime, it works for us, since we generally take short trips. I fill up the tank about every two months.

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Re: New Car: Ever make sense to lease?

Post by MnD » Wed Mar 14, 2018 10:39 pm

The "car" I drove/drive has been a 1977 Datsun pickup (paid cash) , a 1989 Mazda pickup (50% down 36 month loan) and currently a 2005 Toyota pickup (paid cash). All reliable and all got/gets me where I need to go - plus cargo! People seem to blow a lot of money on vehicles and over-complicate things. The lease crowd always seems to try to be justifying having more car than they can really afford.

Dottie57
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Re: New Car: Ever make sense to lease?

Post by Dottie57 » Thu Mar 15, 2018 1:38 pm

just frank wrote:
Wed Mar 14, 2018 9:08 pm
Dottie57 wrote:
Wed Mar 14, 2018 8:19 am
just frank wrote:
Tue Oct 31, 2017 7:57 am
warner25 wrote:
Tue Oct 31, 2017 6:20 am
I think it's fascinating that consensus here now is that a major technological revolution will wipe out the value of ICE cars within 5-10 years. We just bought a new ICE that I plan to keep for the next 10-20 years, so that's disconcerting, but I also welcome a shift to all self-driving cars as much as anyone. But 10 years ago seemed like peak oil and the end of gasoline as a reasonable source of energy for a car, and now gas prices are still 1/2 of what they were back then, so we'll see... I'm marking this thread to revisit in 2022.
I respect thoughtful skepticism in general.

The difference between the two predictions is that the PO story from 10 years ago was never endorsed by any scientists or engineers, nor did it appear in scientific journals, etc. Basically, all they had were a bunch of unfunded amateurs, a few websites, an annual jamboree, and a couple planning scenarios run by the military.

In contrast, the electrification of light transport has ~3 million vehicles on the road, tens of billions spent in R and D by nearly all the major carmakers, supportive policy statements by dozens of govts around the world (who are also putting billions in incentives to make it happen), etc. And the rationales, lower pollution of several types and ultimately lower cost, better cars, are pretty popular and hard to argue against.

Night and Day.
I too am not sure of the prediction. Not everyone has access to electrical plugins for cars. I live in a condo building where doing the electrical in underground building will be challenging. What happens if you need a charge up and you are on the road? I know people who commute 80 miles each way. Not sure EV will work wel.

I'm sticking to hybrids for near term. A lot has to change for EV to become mainstream with > 59% f vehicles in use.
As for fast charging....Tesla has a nationwide network today at ~120 kW (about 300 mph charging speed), for non-Tesla there are tons of 50 kW (about 200 mph charging speed) CCS chargers on both coasts, and another 2000 or so 150 kW (400 mph speed) CCS chargers are supposed to be built out within the next 18 months or so, coast to coast (courtesy of the diesel-gate settlement).

Not a lot of people commute 160 miles/day. But my EV could do that no problem, without charging at work. It cost $30k out the door, the same price as the median new car sold in the US, and is a lot more fun to drive than a hybrid.

As for condos and apartments....they will get plugs. Time was they didn't have indoor plumbing. Then they did. Time was they didn't have AC, then they did. Plugs in parking spots/garages are easier and cheaper than both of those other retrofits, some conduit on a wall or a trench, and some boxes screwed on walls or posts. When most of the tenant want/expect them, they shall be.
I am sceptical of the timing you propose.

inbox788
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Re: New Car: Ever make sense to lease?

Post by inbox788 » Thu Mar 15, 2018 2:50 pm

bloom2708 wrote:
Tue Oct 31, 2017 11:58 am
Check out Leasehackr
[link formatted by admin LadyGeek]

I see some crazy good leases on a Bolt in CA. There are other "deal" leases if you don't drive much and are not brand/car dependent. Meaning, you just look for a great deal and don't care much if it is a Chevy, Toyota, Mitsubishi or Yugo.
FYI,
Step Up To An Acura RDX: $318/Month, $0 Down Lease
MARCH 10, 2018

We wouldn't be surprised if the upmarket RDX is cheaper to lease than its mainstream corporate cousin, Honda CR-V.
https://leasehackr.com/blog/2018/3/10/s ... down-lease

jeroly
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Re: New Car: Ever make sense to lease?

Post by jeroly » Fri Mar 16, 2018 3:06 pm

There are two factors which in general make leasing a less desirable financial vehicle (pardon the pun).

1. The actual terms of leases are often obfuscated by bundling the lease with the purchase while stating the cost in terms of a monthly payment. This helps to hide the residual value calculation, charges for excess miles, and interest rate. In those rare cases when it's a good deal on its own, it may be only be offered as part of a deal involving a higher sale price for the car (e.g. list price instead of a negotiated price used for the lease calculations).

2. When leasing a car one is required to obtain full insurance coverage with low deductibles, which is more expensive on average than self-insuring on comprehensive and/or collision and/or having a high deductible when possible.

Of course sometimes you run into a situation where some auto company is in fact giving something away (in the lease terms) in order to move the cars - in such a case one might find a good lease deal.

There are also tax purposes related to business expense deductibility that could make a lease desirable.

From a not-strictly-financial perspective, there are other times when a lease might be worthwhile...

- you need a new car, know you'll be done with it in 2-3 years, and won't have the time/ability to sell it then (e.g you're working a 2-year contract in Cleveland).
- You have cashflow problems and really "need" a car, and the lower monthly payment associated with a lease is the only way you can fit it in your budget (like other financial services directed at lower incomes such as payday loans, it's more expensive but sometimes necessary).

MDfan
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Re: New Car: Ever make sense to lease?

Post by MDfan » Wed Apr 25, 2018 11:36 am

We are currently leasing 2 cars and my insurance company (Liberty Mutual) never told me anything about having to take low deductibles. In fact, our collision deductibles on both cars are $1k.

KSActuary
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Re: New Car: Ever make sense to lease?

Post by KSActuary » Wed Apr 25, 2018 9:51 pm

Most important aspect of a lease is the money factor and residual value.

A lease makes sense if you want/need a car which you do not want to own long term.

Here's my example, 2016 Hellcat that sat on the lot for 18 months due to over production. FCA (Fiat) runs a lease deal that ups residual to $46k. I negotiate car to $58k. I am essentially paying $12k over 36 months and I get to hand over the keys at the end.

I rarely see lease examples that work where the factory does not support the deal through $ support or ups residual. Leasing a POPULAR car is a huge mistake as many dealers will lease at 125% of MSRP. Never lease a popular or high demand vehicle. Better to own.

ubermax
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Re: New Car: Ever make sense to lease?

Post by ubermax » Thu Apr 26, 2018 2:11 pm

KSActuary wrote:
Wed Apr 25, 2018 9:51 pm
Most important aspect of a lease is the money factor and residual value.
the money factor impacts the finance charge and the residual ,selling price , and term determine the depreciation charge ; currently money factors are very small and the depreciation charge takes the lion's share of the monthly lease payment .

A lease makes sense if you want/need a car which you do not want to own long term.

Here's my example, 2016 Hellcat that sat on the lot for 18 months due to over production. FCA (Fiat) runs a lease deal that ups residual to $46k. I negotiate car to $58k. I am essentially paying $12k over 36 months and I get to hand over the keys at the end.

I rarely see lease examples that work where the factory does not support the deal through $ support or ups residual. Leasing a POPULAR car is a huge mistake as many dealers will lease at 125% of MSRP. Never lease a popular or high demand vehicle. Better to own.
I've never seen a negotiated selling price of a vehicle, which is the starting point of lease negotiations , greater than MSRP

KSActuary
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Re: New Car: Ever make sense to lease?

Post by KSActuary » Fri Apr 27, 2018 10:00 pm

In the way back machine when the then new BMW 3 series came over from Germany, dealers regularly started over msrp on the lease price. Probably not as prevalent now as people are better educated but leasing is a really bad way to own a depreciating asset

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weltschmerz
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Re: New Car: Ever make sense to lease?

Post by weltschmerz » Fri Apr 27, 2018 10:32 pm

I leased a car 2.5 years ago (VW e-Golf), it was a good decision for me for two reasons: 1) It only has a range of 85 miles which is pretty low these days. 2) I moved into a condo without a garage to charge it. I am reliant on public chargers now, although my condo complex is installing chargers soon, it will not be as convenient as when I had my own garage. I like that I can just hand the keys back to VW at the end of this year if I want.

ubermax
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Re: New Car: Ever make sense to lease?

Post by ubermax » Sun Apr 29, 2018 12:44 pm

I also think leasing can make sense for retired people who want to view lease payments as being similar to just another utility bill in their monthly budget - it's hard to make a financial argument either way , lease or buy , because an accurate residual value is hard to determine prospectively - I think the financial arm of the manufacturer probably has access to a large used car data base and utilize something akin to an option pricing model .

AlwaysaQ
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Re: New Car: Ever make sense to lease?

Post by AlwaysaQ » Sun Apr 29, 2018 7:25 pm

I bought my last car almost 15 years ago. If I get a new vehicle to get the new safety features I will probably lease since I will be 77 this year.

MikeZ
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Re: New Car: Ever make sense to lease?

Post by MikeZ » Mon Apr 30, 2018 12:04 pm

So I have to say that I used to hate the idea of leasing, but then I really started to warm to the idea. The main thing that got my attention was when I did the math on my first car out of college. A 2004 Mazda 3 hatchback. I bought it in 2007 with about 58k miles for $12,500. I figured that was a solid frugal move.

I sold it 9 years later with 137,000 miles for $3,200 when it became clear more work was going to be needed on the car--and over the 9 years figure that I spent about $3,700 on repairs and maintenance.

That all works out to $120/month for owning the car.

Yes. I tried to do everything right from a frugality standpoint and the math still is not THAT FAR off from a good lease deal. The thing I learned from this was simple--I'm not a car person and a few major repairs on an older car skew the math hard in terms of monthly ownership costs when you amortize it out.

Then I started to read up on LeaseHackr and realized maybe leasing was actually a much better idea than I had been thinking it was. Here is why:

In leasing you are basically financing the depreciation of a car, the thing though is what is the depreciation? It's the difference between the sale price of the car and the calculated residual value. This is the key! What is residual value? It's calculated as a percentage of the MSRP of the car :idea: . Main point is *IF* you can get a great deal on a car and lease it, the lease will basically magnify the deal you are getting. This is the whole leasehackr idea: Find a car that dealers are willing to come down on the price for (like a off-promotion car) at the same time there are ton of manufacture and finance incentives and stack them to get the sale price to as close to the residual as possible.

Also, you don't have to finance the depreciation, you can do a single-pay on the lease.

Sounds great right? Yes, in theory. That said, I tried one of the leasehackr deals: The Buick Encore for about $130/mo, zero down. I read the GM finance documents posted on their forum, checked dealerships around the state and contacted a bunch. Every single one of the them basically told me to go to H@!! when I made an offer based on the leasehackr calculator. No one was even close.

Gave up, and bought a used 2014.5 Camry hybrid with 52,000 miles for $14,000.

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Toons
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Re: New Car: Ever make sense to lease?

Post by Toons » Mon Apr 30, 2018 12:12 pm

"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

DemySD
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Re: New Car: Ever make sense to lease?

Post by DemySD » Mon Apr 30, 2018 12:17 pm

Yes, it can make a lot of sense.

Read up on lease math at leasehackr, crowdsource deals and then go into negotiation with all the data on your side.

Leasing EVs in particular can be tremendously valuable as they are heavily incentivized at the federal, state, and even local levels and the cost of energy is much less than ICE vehicles.

There is a (subjective) sweet spot for cost of ownership per year for a vehicle and with the right deal you can absolutely hit it on a lease. People how even leased vehicles for effectively $0. That's rare, of course, but $100-150 a month range is extremely common with some research.

But yes, be prepared to be yelled at and jeered by dealers when you push for a great lease deal, but really how is that any different than any dealership negotiation?

Leesbro63
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Re: New Car: Ever make sense to lease?

Post by Leesbro63 » Mon Apr 30, 2018 12:52 pm

ubermax wrote:
Thu Apr 26, 2018 2:11 pm
KSActuary wrote:
Wed Apr 25, 2018 9:51 pm
Most important aspect of a lease is the money factor and residual value.
the money factor impacts the finance charge and the residual ,selling price , and term determine the depreciation charge ; currently money factors are very small and the depreciation charge takes the lion's share of the monthly lease payment .

A lease makes sense if you want/need a car which you do not want to own long term.

Here's my example, 2016 Hellcat that sat on the lot for 18 months due to over production. FCA (Fiat) runs a lease deal that ups residual to $46k. I negotiate car to $58k. I am essentially paying $12k over 36 months and I get to hand over the keys at the end.

I rarely see lease examples that work where the factory does not support the deal through $ support or ups residual. Leasing a POPULAR car is a huge mistake as many dealers will lease at 125% of MSRP. Never lease a popular or high demand vehicle. Better to own.
I've never seen a negotiated selling price of a vehicle, which is the starting point of lease negotiations , greater than MSRP
I’ve seen the opposite. Honda/Toyota/Hyundai undercutting each other to lease out high residual Civic/Accord Corolla/Camry Elantra/Sonata. The popularity of the car makes high residuals possible (great resale value), thus low lease payments.

ubermax
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Re: New Car: Ever make sense to lease?

Post by ubermax » Mon Apr 30, 2018 3:14 pm

Leesbro63 wrote:
Mon Apr 30, 2018 12:52 pm
ubermax wrote:
Thu Apr 26, 2018 2:11 pm
KSActuary wrote:
Wed Apr 25, 2018 9:51 pm
Most important aspect of a lease is the money factor and residual value.
the money factor impacts the finance charge and the residual ,selling price , and term determine the depreciation charge ; currently money factors are very small and the depreciation charge takes the lion's share of the monthly lease payment .

A lease makes sense if you want/need a car which you do not want to own long term.

Here's my example, 2016 Hellcat that sat on the lot for 18 months due to over production. FCA (Fiat) runs a lease deal that ups residual to $46k. I negotiate car to $58k. I am essentially paying $12k over 36 months and I get to hand over the keys at the end.

I rarely see lease examples that work where the factory does not support the deal through $ support or ups residual. Leasing a POPULAR car is a huge mistake as many dealers will lease at 125% of MSRP. Never lease a popular or high demand vehicle. Better to own.
I've never seen a negotiated selling price of a vehicle, which is the starting point of lease negotiations , greater than MSRP
I’ve seen the opposite. Honda/Toyota/Hyundai undercutting each other to lease out high residual Civic/Accord Corolla/Camry Elantra/Sonata. The popularity of the car makes high residuals possible (great resale value), thus low lease payments.
Leesbro63 , what you described is exactly the example given by KSActuary , not the opposite .

Leesbro63
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Re: New Car: Ever make sense to lease?

Post by Leesbro63 » Mon Apr 30, 2018 4:38 pm

Maybe I got confused as to who said what. But someone said: "Leasing a POPULAR car is a huge mistake as many dealers will lease at 125% of MSRP. Never lease a popular or high demand vehicle. Better to own."

I am saying the opposite of this. That the fact that a vehicle is popular, generally means it will have a high resale value/high residual/very competitive (low) lease payments. And THOSE ARE the vehicles to lease. Corolla/Camry, Civic/Accord, Elantra/Sonata. Popular and cheap (realtively) to lease. BECAUSE they are popular (allowing high residual).

oslocal
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Re: New Car: Ever make sense to lease?

Post by oslocal » Tue May 29, 2018 4:24 pm

Here's my history of owning cars from a financial standpoint and a few different classes of car.

2005-2008, Owned a 1996 Ford Explorer, paid $5,500, sold for $2,000, + ~$1,500 in repairs, total cost of owning = ~$5,000 or ~$1,667 per year for a cheap and very old crappy car
2008-current, 2008 Ford Escape Hybrid 4x4, paid ~$35000 + tax (7%) = $37,000. Current value at high end ~ $7,000. New breaks, tires and repairs $1,500. Total cost of owning (so far) ~31,500 or ~$3,150 per year for a reasonably nice car held for 10 years with almost no repairs.
2013-2014, older Pontiac Solstice, paid $8,000 incl. tax, sold for $3,000, ~$5,000 per year for an old crappy car
2014-2018 (3.5y), 2012 Jaguar XF, paid $32,000 + tax ($35,000), according to carvana I can get 18k. Cost of repair 1 month after warranty went out ~$5,000. Total cost of ownership $22,000 or $6,300 /yr for a really nice car but 2 years old

New car lease on MSRP $53,000 BMW. Total cost of lease for 2 years incl. tax = $457 x 23 = ~$10,500 (zero down, 1st payment capitalized, so only 23 payments) - total cost of ownership = $5,250 + dents and dings / year for a brand new almost as nice as the jag used to be but with warranty and I keep my money (also have GAP insurance so "no value at risk" if totaled in e.g. 6 months)

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