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      01-15-2013, 04:18 PM   #67
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Originally Posted by mrunner View Post
I'm leasing for the first time and it's freaking me out I don't even want to think about it.

I don't think payments are neccessarily a bad thing. They permit you to keep your money longer. Whether it is just for holding on to it longer, investing it, getting something else etc... When you pay an expensive car right off, a lot of money is gone, you don't have easy access to it anymore.

So payments allows you to slowly pay for it and still be able to use the money for something else. Big problem occurs when you start to stretch out that money, if you even really had it in the first place, and it wasn't just money that was going to be coming in the future as paychecks.

What is freaking me out with my first time lease is that at the end of the term, I will have nothing to show for it, but I paid lots of money already, for a car that would otherwise still be a great car after 4 years. And if I want another car, I would need to pay more money. When that lease is over, once again I pay again. A car is not an investment. It depreciates and needs maintenance. But when I buy it, if I pay it right off, I don't need to worry about payments. Anything can happen finacially and I still own the car. No bank can come and take my car back, a car for which I may have already put a lot of money towards in downpayment and monthly payments. I can choose to keep it, sell, drive it, unregister it and store it the garage until I can afford to get it back on the road. With a lease or payments you can't do that. If you don't pay it off right away, at leas with finance payments,at the end of the financing, you have something. That something depreciated in value. But now you own a car. You don't need to make payments anymore. and it still has a value, or serves a valuable functions of you being able to drive it around. It now in fact serves the valuable function of allowing you to save those monthly payments for how ever long until you get another car. Now you are actually making and saving money. a lease doesn't save money, it wastes money. A 400$ lease payment saves you 200$ over a 600$ purchase payment, but you keep paying 400$ into your next lease, so you will end up paying more. It also then gives the stealership some nice, used cars to sell as higher cost certified used cars. Dam stealerships...!!!

It's for these reasons that leasing expensive cars just don't make sense for me. You pay so much, for the use of it, but you lose it at the end, and have to give it back, only to start over again. But leasing small inexpensive cars like a civic or corrolla, that makes more sense. They for sure do not have the same handling or prestige, but from the perspective of having simple transportation it makes more sense.
What you just described isn't a debate between buying and leasing. What you're reasoning is whether you can justify buying a new car frequently. That's a great question to ask yourself. The answer is different for everyone.

Leasing only makes sense if you're want a new car every few years. If you're comfortable buying a used car, of if you're comfortable driving a car for 6 (or more) years, then leasing obviously makes no sense.
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      01-15-2013, 05:12 PM   #68
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Originally Posted by bradleyland View Post
What you just described isn't a debate between buying and leasing. What you're reasoning is whether you can justify buying a new car frequently. That's a great question to ask yourself. The answer is different for everyone.

Leasing only makes sense if you're want a new car every few years. If you're comfortable buying a used car, of if you're comfortable driving a car for 6 (or more) years, then leasing obviously makes no sense.
My initial debate wasn't a debate between buying and leasing, but between accepting to lease a lower cost, less optioned car vs prefering to buy a more expensive better equiped car. I was wondering if any one else thought the same way. maybe not.

When you say "justify"...for me it's just a "brain" thing, I can't come to accept (justify) to pay for something that I will not own. It's different to lease for work. I can lease or rent business equipment, but then pricing includes all those costs. For personal, I personally pay for it....over and over. It's not even a question of being able to afford to pay for it, it's also the why get rid of something perfectly good for another similar something, why give away my money rather than keep it.

I think way, way back in post 1, I was just saying that if I want to get all the bells and whistles, I want to buy it, and own it, and keep it, rather than pay for it and give it back to start paying again. maybe people just don't think this way or want to keep their stuff for long any more.
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      01-15-2013, 08:35 PM   #69
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Quote:
Originally Posted by mrunner View Post
I'm leasing for the first time and it's freaking me out I don't even want to think about it.

I don't think payments are neccessarily a bad thing. They permit you to keep your money longer. Whether it is just for holding on to it longer, investing it, getting something else etc... When you pay an expensive car right off, a lot of money is gone, you don't have easy access to it anymore.

So payments allows you to slowly pay for it and still be able to use the money for something else. Big problem occurs when you start to stretch out that money, if you even really had it in the first place, and it wasn't just money that was going to be coming in the future as paychecks.

What is freaking me out with my first time lease is that at the end of the term, I will have nothing to show for it, but I paid lots of money already, for a car that would otherwise still be a great car after 4 years. And if I want another car, I would need to pay more money. When that lease is over, once again I pay again. A car is not an investment. It depreciates and needs maintenance. But when I buy it, if I pay it right off, I don't need to worry about payments. Anything can happen finacially and I still own the car. No bank can come and take my car back, a car for which I may have already put a lot of money towards in downpayment and monthly payments. I can choose to keep it, sell, drive it, unregister it and store it the garage until I can afford to get it back on the road. With a lease or payments you can't do that. If you don't pay it off right away, at leas with finance payments,at the end of the financing, you have something. That something depreciated in value. But now you own a car. You don't need to make payments anymore. and it still has a value, or serves a valuable functions of you being able to drive it around. It now in fact serves the valuable function of allowing you to save those monthly payments for how ever long until you get another car. Now you are actually making and saving money. a lease doesn't save money, it wastes money. A 400$ lease payment saves you 200$ over a 600$ purchase payment, but you keep paying 400$ into your next lease, so you will end up paying more. It also then gives the stealership some nice, used cars to sell as higher cost certified used cars. Dam stealerships...!!!

It's for these reasons that leasing expensive cars just don't make sense for me. You pay so much, for the use of it, but you lose it at the end, and have to give it back, only to start over again. But leasing small inexpensive cars like a civic or corrolla, that makes more sense. They for sure do not have the same handling or prestige, but from the perspective of having simple transportation it makes more sense.
Leasing is the most expensive form of financing. And you get nothing out of it.
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      01-15-2013, 09:55 PM   #70
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Originally Posted by jacobsed View Post
Leasing is the most expensive form of financing. And you get nothing out of it.
Agreed. That is the price you pay to drive a new car every 3 years. If you want that luxury and are willing to pay for it, then more power to you.

If you are content with buying a gently used Corolla to drive for 10+ years to save money on deprecation, then more power to you as well.
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      01-15-2013, 10:38 PM   #71
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Quote:
Originally Posted by mrunner View Post
My initial debate wasn't a debate between buying and leasing, but between accepting to lease a lower cost, less optioned car vs prefering to buy a more expensive better equiped car. I was wondering if any one else thought the same way. maybe not.

When you say "justify"...for me it's just a "brain" thing, I can't come to accept (justify) to pay for something that I will not own. It's different to lease for work. I can lease or rent business equipment, but then pricing includes all those costs. For personal, I personally pay for it....over and over. It's not even a question of being able to afford to pay for it, it's also the why get rid of something perfectly good for another similar something, why give away my money rather than keep it.

I think way, way back in post 1, I was just saying that if I want to get all the bells and whistles, I want to buy it, and own it, and keep it, rather than pay for it and give it back to start paying again. maybe people just don't think this way or want to keep their stuff for long any more.
You are Bly paying for the percentage of the car that you use.....including options. When you buy a car you pay for 100%. General Motors went broke partially because they over valued their residual on leased cars. My last BMW (about 10 yrs ago) was worth exactly what they predicted at lease end but my current ride is not worth anywhere near what BMW predicted its value to be. They lose, I win in this case.
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      02-23-2013, 09:19 AM   #72
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Lease= new car every 36 months. Buy= depreciates ...unless your going to have it long term and rack up miles.
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      02-23-2013, 10:03 AM   #73
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While I bought my car, I do not have a problem with leasing. All cars lose their value. The whole “you have nothing to show for your money” argument does not really resonate with me.

Scenario 1: You buy a car for 30K, drive it for three years, then 3 years later you get a 15K trade in value. You’ve lost 15K and paid tax on 30K.

Scenario 2: You lease the same car for 3 years (assume you pay the 50% of depreciation over 36 monthly installments of 416). At the end of the lease, you’ve lost, you have guessed it, 15K (but only paid tax on 15K!).

Now, imagine with both scenarios that you have 30K cash before you go to the dealer. Would you rather give up all your cash with the purchase (scenario 1) or keep 30K in a certified deposit (scenario 2), effectively drip-feeding your hard-earned to BMW via a lease?

As far as options go, it depends. If the option(s) increases both the sale price and the residual price equally (e.g. new car price and end of lease price), it's not likely to increase the monthly cost of the lease. Remember, with the lease, in theory, you're only paying depreciation and a bit of financing costs (30,500 – 15,500 is the same as 30,000 – 15,000)
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      02-23-2013, 10:17 AM   #74
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Quote:
Originally Posted by mrunner View Post
I'm leasing for the first time and it's freaking me out I don't even want to think about it.

I don't think payments are neccessarily a bad thing. They permit you to keep your money longer. Whether it is just for holding on to it longer, investing it, getting something else etc... When you pay an expensive car right off, a lot of money is gone, you don't have easy access to it anymore.

So payments allows you to slowly pay for it and still be able to use the money for something else. Big problem occurs when you start to stretch out that money, if you even really had it in the first place, and it wasn't just money that was going to be coming in the future as paychecks.

What is freaking me out with my first time lease is that at the end of the term, I will have nothing to show for it, but I paid lots of money already, for a car that would otherwise still be a great car after 4 years. And if I want another car, I would need to pay more money. When that lease is over, once again I pay again. A car is not an investment. It depreciates and needs maintenance. But when I buy it, if I pay it right off, I don't need to worry about payments. Anything can happen finacially and I still own the car. No bank can come and take my car back, a car for which I may have already put a lot of money towards in downpayment and monthly payments. I can choose to keep it, sell, drive it, unregister it and store it the garage until I can afford to get it back on the road. With a lease or payments you can't do that. If you don't pay it off right away, at leas with finance payments,at the end of the financing, you have something. That something depreciated in value. But now you own a car. You don't need to make payments anymore. and it still has a value, or serves a valuable functions of you being able to drive it around. It now in fact serves the valuable function of allowing you to save those monthly payments for how ever long until you get another car. Now you are actually making and saving money. a lease doesn't save money, it wastes money. A 400$ lease payment saves you 200$ over a 600$ purchase payment, but you keep paying 400$ into your next lease, so you will end up paying more. It also then gives the stealership some nice, used cars to sell as higher cost certified used cars. Dam stealerships...!!!

It's for these reasons that leasing expensive cars just don't make sense for me. You pay so much, for the use of it, but you lose it at the end, and have to give it back, only to start over again. But leasing small inexpensive cars like a civic or corrolla, that makes more sense. They for sure do not have the same handling or prestige, but from the perspective of having simple transportation it makes more sense.
Don't worry.

Why don't you just buy at the end of your lease? At lease-end, you can hand in the keys or pay the residual value. Now that you own the "old model", you could probably have the car "certified" and reduce the sale price (e.g. residual in your lease contract) by at least 15%.

I did exactly this after I leased my first car (2001 Integra GSR). I leased the last year the car was made, so I got a great "money factor" and sale price. When I bought at lease-end, it was considered an "old car" so the dealer let the car go for $12,000 (per my contract, residual after 36 months SHOULD have been 13,800!).
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      02-24-2013, 09:44 AM   #75
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I noticed that there are a few responses here about not having anything after the lease is done and whats better financially so I'll add my $.02.

Financially speaking only here, leases are better only if you plan to trade in your car within 5 years or so. The math is pretty straight forward on this (just add up the costs of both options and you'll see the difference - and it is usually pretty significant), I believe it is just a matter of how you plan to use/sell the car. The difficult question really is whether or not you really intend to trade the car in, not everyone knows what they are going to do in 3-5 yrs. The real value of buying comes in yrs 5-10 assuming the repair/maintenance costs are reasonable.

IMO there are two questions that you should ask yourself just before you plan to get a new car:
1) how long am I going to keep the car?
2) do I plan/really want to modify the car in a way that is difficult to return the car back to stock?

If the answer to 1 is probably less than 5 yrs and two is no then leasing is pretty much always better financially for you.

As was stated a few times before, when you lease you only pay what the leasing company believes the depreciation of the car will be. This can be a bit difficult to fully grasp because of all the money that someone is paying to "rent" a car so think of it as buying the car and at the same time agreeing to sell it back to the leasing company for a set price in say 3 yrs, while (in most cases) not paying any tax or having to deal with selling it.

One of the bonuses here is that you do not assume any risk when it comes to that sell back (residual value) price. If the car is actually worth more at the end sell it and pocket the difference, if it is worth less, hand them the keys and thank them for the discount.

If you end changing your mind and want to keep the car for whatever reason, you can always buy it at lease end. Not exactly the best financially, but not that bad (you eat the lease origination cost -$795ish- and the usually slightly higher lease interest rate).

Personally I don't lease or even buy new, ~2 yrs old (and usually CPO) is my preference. Apart from say some jewelry, there is pretty much nothing that decreases in value more than a new luxury car. However, some people like to have the latest new thingy or whatever and are willing to pay for it. It is a personal choice. IMO there is only one thing more expensive than leasing a new car and that is buying the same car and selling it in < 5 yrs.
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      02-24-2013, 02:07 PM   #76
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Just the facts

Here are the facts
1. For a business owner, the write off on a lease payment just comes quicker. You still get the full write-off when BUYING the car vs. Leasing - you just get the majority of it when you sell it. So for you business owners, don't use the "it is a lease so I can write off 100% of it" - because a) same thing with buying and b) you need to deduct your personal miles
2. MANY options on a BMW have zero residual at trade in. With my 550, I had $15K or so in options - but all except NAV/Sport/Auto became worthless at trade in as they are not factored in by the black book. With a lease, these options have residual. So that $2K leather dash option? You are only paying for 40% of it or so vs. 100% had you bought the car.
3. Leasing guarantees the value of your car in 3 years (provided you take reasonable care). With my M5 this SAVED MY BUTT as it would have been worth about $15K less at the end of the 3 years had I purchased it.
4. Smart money does not buy or lease a BMW. Smart money says "I need cheap reliable transportation" and picks up a used Camry or Accord and drives it until the end.

Therefore, in the end, if you are getting a BMW, then
1. Work out the monthly figure, lease vs. purchase.
2. Do NOT assume you will get the same residual that the leasing company is calculating for you. That $1K extra for the 19" wheels? Gone. So take the common configuration of the car you are looking at and use that as your starting point (e.g. You configured your 3-series to $60K and the residual is 60% for lease = $36K lease end value. However, the average 3-series on the dealer lot goes for $50K. Use that as your perceived trade value if you buy ($50K*60%=$30K).
3. Make sure you are cool with living with the car for the entire lease term* - whereas the hit when buying is just as bad, you never feel it as much as writing a check just to get out of the car.
4. *Never do multiple security deposits (MSDs). They make it even harder to get out of the lease.

There, those are the facts (Ok, the MSD thing is my personal belief). Now you can calculate and decide what makes the most sense for you. Personally, if you like a new car every 3 years, don't drive a ton of miles, and can get a nice deal on a lease, then go for it. If however you like to mod the car, drive a ton of miles, switch out cars like you do pants, then buy the thing. Neither way is right or wrong - but one way is right for you
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