Buy or Lease

[swak]

As soon as I got a "real" job, i've gotten into a bad habit of flipping cars more regularly than, financially i would like, but enjoy the opportunities that come with the salary.

I'm no beyond baller...
But have gone from a 2015 GTI of 8 months, to a 2016 Focus ST of 11 months... Now in the market for somehting else, AWD is a must now, coming from 2 FWD cars...

Despite what the dealer says, what would you do if you only intend on keeping your car for a year or 2 MAX?

Finance or Lease?

At face value, i hate the idea of leasing, as I don't get anything out of it... Mind you, financing a car, I don't have full title on them either.

What would you guys do?

[ExtraSlow]

Buy a three year old car, keep two years.

[Twin_Cam_Turbo]

Lease if you can get it cheap enough.

I’m thinking about getting out of my 2017 WRX lease and I think it will be somewhat painless with the price I paid.

[Aleks]

As soon as I got a "real" job, i've gotten into a bad habit of flipping cars more regularly than, financially i would like, but enjoy the opportunities that come with the salary.

I'm no beyond baller...
But have gone from a 2015 GTI of 8 months, to a 2016 Focus ST of 11 months... Now in the market for somehting else, AWD is a must now, coming from 2 FWD cars...

Despite what the dealer says, what would you do if you only intend on keeping your car for a year or 2 MAX?

Finance or Lease?

At face value, i hate the idea of leasing, as I don't get anything out of it... Mind you, financing a car, I don't have full title on them either.

What would you guys do?

If you know you want a new car and only keeping it 2 years max, I would lease it, unless there is some huge discrepancy in rates or factory incentives between the two.

I've leased many cars and have never given one back to dealer. Always transfer the leases, or sell them before lease is up. Last lease I had for 4 months and I transferred that one, one before I had for 30 months and sold it for over $7,000 on top of buyout. So you can get things out of leases if you know what you're doing up front.

[ExtraSlow]

Average beyonder is 7% smarter with their decisions than the average population. Average population is 8% to stupid to do these things responsibly.

And I'm for sure stupider than the average beyonder.

[mzdspd]

Golf R/FoRS/STI all seem to be pretty good cars to buy and resell with minimal lose. The R is 45ish new and most that are 2 years old are still selling for high 30s.

Now, the FoRS is the exception, they jacked the price up 10k so now even the used ones have gone up in used pricing (40-42k for a used one and brand new the 2017 were 48k). This one below seems to be a pretty good deal.

https://www.kijiji.ca/v-cars-trucks/calgary/2017-ford-focus-rs-hatchback-0-interest-awd/1328844728?enableSearchNavigationFlag=true

[Xtrema]

Buy a three year old car, keep two years.

This.

Short leases on new cars are expensive. Cheapest leases are 3+ years and hopefully they will move you to another car with no penalty with a year or 6 month left on lease.


flipping cars more regularly than, financially i would like

The more you need to stick with ExtraSlow's way. All leasing does is keep payment low and allow to re purpose your cash on other investments. You are still dealing with depreciation of a new car. And if you are keep a new car 2 year max, that's the highest depreciation years of any new vehicle.

[Mitsu3000gt]

I'll never buy a car again unless I have to (if I bought used). Lease all the way.

Pros:

- Don't have to care about it at all, pretty much treat it like an appliance and do whatever you want. Drive it however you want, park it wherever you want, never wash/wax it if you don't want to, drive it hard in the cold to warm it up, etc. Lets your kids beat up the inside and not worry about it, don't worry about winter mats, paint protection films, or anything like that. Generally you can treat it like a rental (within reason).
- Always have warranty
- Accidents, hail damage, etc. won't affect your ability to give it back to the dealer when it's resale value gets completely destroyed with a huge damage claim against it.
- Options to change to a new car mid-lease without penalty and keep same payment
- If you buy it out and sell it on the used market after 4 years or whatever, cost of ownership will be similar to if you had financed it and sold it after the same time period. At this point you can choose to keep it or just get into another lease.

Cons:
- Doesn't work for ultra high mileage drivers
- Can't lease used cars or year-old new cars because the dealer doesn't make enough money
- Overpriced vehicles with horrible resale value like Cadillac, Lincoln, etc. mean huge payments unless the manufacturer subsidizes it
- Always have a car payment, unless you buy it out (which most people do anyway unless they keep their cars more than 5-7 years)
- ???

For me, there is a fair chance I am keeping my car (at least to re-sell) when my lease is up, so I have babied it, but if I had a family with kids, a lease would be even more of a no-brainer.

[Buster]

I'm not sure that's entirely accurate:

1. Lease returns are scrutinized to one degree or another when you return them. It can cost real dollars if something needs fixing.
2. Cost of ownership for leasing can be higher because you are financing (often at a higher rate), the most expensive part of the cycle. So your overall cost of capital is higher.
3. It also doesn't work for low mileage drivers (like me)
4. Leasing sometimes comes with additional fees/deposits

[Mitsu3000gt]

I'm not sure that's entirely accurate:

1. Lease returns are scrutinized to one degree or another when you return them. It can cost real dollars if something needs fixing.
2. Cost of ownership for leasing can be higher because you are financing (often at a higher rate), the most expensive part of the cycle. So your overall cost of capital is higher.
3. It also doesn't work for low mileage drivers (like me)
4. Leasing sometimes comes with additional fees/deposits

I dunno, at least from how it's all been explained to me with my lease:

1) Obviously nothing can be broken or have huge damage, but a vehicle can be pretty rough with plenty of careless use without anything actually breaking. There is no way for them to charge you for less obvious mechanical wear either (like abusive cold temperature driving, for example) Small dents, dings, rock chips, scuffed interior, ring/watch scratches, etc. are "wear & tear". If you had to pay for every rock chip on a Calgary car, nobody would lease haha. Tires and windshield are the only things I am responsible for when I return my lease, if either are in poor condition or cracked. Any major damage obviously would be dealt with, but that is probably an insurance claim. 2-4 years just isn't really long enough for anything to completely wear out even if treated harshly. You could probably get away with never washing or waxing it for the entire lease period if you so desired.

2) My lease is at 0.9%, and rates do seem to fluctuate a lot, but that is competitive with most financing rates of 0%-2.9% or whatever the average is these days. It's the same for financing though, you can pay 4.9% or something high like that too depending on the vehicle and the month. When I did all my cost of ownership calculations the difference was negligible. You are also essentially paying for insurance on the original condition of the vehicle in case it gets decimated by hail or a huge accident that isn't a write-off - the car is now worthless on the used market but you can get the shittiest insurance repair job and give the car back for your full residual. That being said, residuals are always lower than market, so in that case you would still lose any uplift you would have gotten from a buyout and subsequent private sale, but that loss would be nothing compared to if you owned the car and had to try and sell it after heavy damage.

3) Agreed - that is the first "con" I mentioned in my OP. It's no good for high KM drivers and overage charges can add up quickly even at $0.08/KM or whatever they are.

4) Could be - I've just never seen it and there were none on any lease agreements I looked at.

[Buster]

Well, cost of financing is not always just a rate thing...but I think if you looked at the overall cost of capital across the industry it would be higher for leasing than for financing. But the variability would be higher here. But in general, your interest cost/month on a lease is higher than on a finance deal. I'd have to pull out an am calculator to figure it out.

On the mileage thing, I was referring to a LOW mileage driver. If you are paying for 20kkm/year of depreciation but only put on 8kkm/year, then you are paying for miles that you aren't using. Perhaps the dealer gives you fair compensation for this when you roll it into your next lease. Maybe they don't.

Leasing being a good idea requires a few conditions to be met:

1. You are within the general mileage window of the lease
2. You don't plan on being in the car longer than 2-3 years or whatever the lease is. (You don't plan to keep the car 5-6 years.)
3. You don't plan on buying the car out at the end of the lease.

[max_boost]

It just depends. Everything depends! It's just marth.

What do you ballers do when you buy your 150k to 200k cars? You guys pay cash? Lease? Finance? lol

[Mitsu3000gt]

Well, cost of financing is not always just a rate thing...but I think if you looked at the overall cost of capital across the industry it would be higher for leasing than for financing. But the variability would be higher here. But in general, your interest cost/month on a lease is higher than on a finance deal. I'd have to pull out an am calculator to figure it out.

On the mileage thing, I was referring to a LOW mileage driver. If you are paying for 20kkm/year of depreciation but only put on 8kkm/year, then you are paying for miles that you aren't using. Perhaps the dealer gives you fair compensation for this when you roll it into your next lease. Maybe they don't.

Leasing being a good idea requires a few conditions to be met:

1. You are within the general mileage window of the lease
2. You don't plan on being in the car longer than 2-3 years or whatever the lease is. (You don't plan to keep the car 5-6 years.)
3. You don't plan on buying the car out at the end of the lease.

Ah, I see. Yeah some brands (like MB) offer 12,000 Km/yr leases, but a lot of them are 16,000 - 24,000 with a couple options in-between. Honda is 20,000 or 24,000, just those 2 options, but they are dirt cheap to lease anyway.

It's just a spreadsheet at the end of the day if you are trying to see what is cheaper, since there are so many variables (like interest and residual). You can also buy out your lease and sell at market value, clawing back several thousand, then still go lease something else.

I also find that most people don't keep their cars longer than 5-6 years anyway, so they are always going to have a car payment regardless of whether they buy or lease, the only difference is that their financed payment will be much higher because they are on the hook for the full cost of the vehicle, not the purchase price less residual.

I think the protection you have against enormous depreciation (hail, accidents, etc.) is often under appreciated as well. It's kind of an insurance policy, so if something happens that instantly makes your car almost worthless on the used market, you are protected against thousands of dollars worth of loss.

[rage2]

1. Lease returns are scrutinized to one degree or another when you return them. It can cost real dollars if something needs fixing.
You can also protect yourself with a lease protection package. $30/month gets you $4k worth of incidentals. Windshields, bald tires, scraped wheels, dents, etc.

[Buster]

You can also protect yourself with a lease protection package. $30/month gets you $4k worth of incidentals. Windshields, bald tires, scraped wheels, dents, etc.

That's $360/year or about the equivalent of a 1% interest rate on a $35,000 car. I have no idea if that's a good value or not, but you could consider it additional cost-of-borrowing. It's not an argument against leasing per se, but as Mitsu mentioned, you need to include it in your spreadsheet work.

[ercchry]

Depends completely on the terms, and the model in question

I would lean more towards slightly used though. Depends on your own financials though. I’f you can swing it... picking the right model... HELOC, set payments are minimum+anticipated depreciation for length you want to own it for... cheap hit to monthly cash flow and minimal cost of ownership, also opens you up to much more expensive cars if you want... #themaxboostway

[rage2]

That's $360/year or about the equivalent of a 1% interest rate on a $35,000 car. I have no idea if that's a good value or not, but you could consider it additional cost-of-borrowing. It's not an argument against leasing per se, but as Mitsu mentioned, you need to include it in your spreadsheet work.
It's a good value if you don't get shit fixed. 3 months left on my lease here, and I'm living with a cracked windshield. Last summer was the last year for my summer tires too and went the last month with no tread left. Those things would need to be replaced anyways if I was to sell the car. :rofl:

[Mitsu3000gt]

You can also protect yourself with a lease protection package. $30/month gets you $4k worth of incidentals. Windshields, bald tires, scraped wheels, dents, etc.

On a 4-year lease that is $1,500 which seems high, depending on the original price of the car I guess. You could probably buy some crappy Chinese tires and a third party windshield for a lot less than that, but then again I don't know if the leasee is responsible for OEM specification or not. I don't think they are because there is nothing stopping me from swapping out my tires right now, and they wouldn't make me change them when I returned the lease if they were in good condition.

Minor scrapes, rock chips & small door dings I don't think you would get charged for. Curb rash on wheels I actually have no idea, I would have assumed a small amount would be considered wear & tear, but if you destroyed the whole rim it's reasonable they would want that taken care of.

[Buster]

I assume that the people who calculate the residuals have a component in there which accounts for anticipated wear and tear (in aggregate) over the model range. It's not like you are getting the tires for free, the cost is simply re-allocated.

[max_boost]

Depends completely on the terms, and the model in question

I would lean more towards slightly used though. Depends on your own financials though. I’f you can swing it... picking the right model... HELOC, set payments are minimum+anticipated depreciation for length you want to own it for... cheap hit to monthly cash flow and minimal cost of ownership, also opens you up to much more expensive cars if you want... #themaxboostway Problem with the budgetballers is that they don't have the he to go with the loc lol


It's a good value if you don't get shit fixed. 3 months left on my lease here, and I'm living with a cracked windshield. Last summer was the last year for my summer tires too and went the last month with no tread left. Those things would need to be replaced anyways if I was to sell the car. :rofl:

Yes rajdeep. The Asian/Indian is strong in you.

[Xtrema]

On a 4-year lease that is $1,500 which seems high, depending on the original price of the car I guess. You could probably buy some crappy Chinese tires and a third party windshield for a lot less than that, but then again I don't know if the leasee is responsible for OEM specification or not. I don't think they are because there is nothing stopping me from swapping out my tires right now, and they wouldn't make me change them when I returned the lease if they were in good condition.

Minor scrapes, rock chips & small door dings I don't think you would get charged for. Curb rash on wheels I actually have no idea, I would have assumed a small amount would be considered wear & tear, but if you destroyed the whole rim it's reasonable they would want that taken care of.

It's not high you consider an AMG wheel is $700-$2000 each, factory windshield is $1000 and factory tire could run you up to $600.


It just depends. Everything depends! It's just marth.

What do you ballers do when you buy your 150k to 200k cars? You guys pay cash? Lease? Finance? lol

Didn't ZR lease that Enzo from himself for write off purposes or something?

[realazy]

You could probably buy some crappy Chinese tires and a third party windshield for a lot less than that, but then again I don't know if the leasee is responsible for OEM specification or not. I don't think they are because there is nothing stopping me from swapping out my tires right now, and they wouldn't make me change them when I returned the lease if they were in good condition.


Pretty sure they specify a certain level of tires, you can't go and buy the cheapest ones to replace them.

[ercchry]

I’f you buy the lease protection package, you don’t buy 3m... cost is offset with that alone



Didn't ZR lease that Enzo from himself for write off purposes or something?

Technically his wife did :rofl:

But that’s a completely different type of lease

[Buster]

I’f you buy the lease protection package, you don’t buy 3m... cost is offset with that alone

The cost of these wear and tear items is factored into your residual. Alternatively, you could say that owning a vehicle, and putting some care into it has two advantages: you are driving a car that doesn't have beat up paint etc, and you are going to see somewhat better equity (insofar as the residual implies equity).

[ercchry]

^^only if you want to keep it or sell privately... which then you should of financed.. whole point of lease is to not give a fuck and have the lowest monthly cost and zero hassle

[rage2]

The cost of these wear and tear items is factored into your residual. Alternatively, you could say that owning a vehicle, and putting some care into it has two advantages: you are driving a car that doesn't have beat up paint etc, and you are going to see somewhat better equity (insofar as the residual implies equity).
There's wear limits for a lot of things. The key is to be right on the edge when returning. Also, the one less maintenance by stretching it out a little so that maintenance is due AFTER your lease return is another way to lower your TCO.

[Buster]

^^only if you want to keep it or sell privately... which then you should of financed.. whole point of lease is to not give a fuck and have the lowest monthly cost and zero hassle

Absolutely...my only point is that that convenience doesn't come for free.

- - - Updated - - -


There's wear limits for a lot of things. The key is to be right on the edge when returning. Also, the one less maintenance by stretching it out a little so that maintenance is due AFTER your lease return is another way to lower your TCO.

Well, it always pays to be smarter than your fellow man. The dumb lessees are subsidizing the smart ones, lol.

If leasing is supposed to be about convenience, peace of mind, and relaxing about your car, then managing your mileage, service intervals etc seems opposite to that....but I'm lazy.

[88CRX]

The lease documents you sign specifically state the 'damage' that is acceptable. Acura's is as follows:

https://i.imgur.com/LaTzEj8.jpg

https://i.imgur.com/iYsuhW1.jpg

https://i.imgur.com/Pflains.jpg

https://i.imgur.com/hiJFUX4.jpg

There are specifics for everything (maximum length of wheel curb marks, minimum tread depth, # of allowable rock chips, etc).

I only leased my car because Acura had lower interest rates (0% vs 1.9%) and higher factory discounts ($2500 vs $1500) on lease vs finance. I was planning on buying the car out at the end of the 4 year lease but not so sure now (massive hail damage claim + another damage claim now). Considering just returning it and not having to deal with a 4 year old car with 2 significant insurance repair bills on the record.

[Mitsu3000gt]

^^ Going by that list, you could pretty much return a piece of junk, covered in a few door dings per panel, dozens of rock chips covering the entire car, and even burn marks on the interior less than 1.5CM in diameter haha.

My list was similar, if not identical (Honda). I couldn't even do that much allowable damage to the car in 4 years if I tired, and drove on deerfoot every single day. Not to mention all the hidden damage and excess wear and tear people can do the engine, transmission, clutch, drivetrain, etc. It also highlights why I would never buy a lease-back vehicle.

[Bladeh]

I returned a Ford Focus lease a few years ago, I keep my cars in good shape, when I returned it on a Saturday my sales guy wasn't around and would do the lease inspection the following Monday, I checked to make sure the windshield was in the limits with the manager as it had 2 small chips less the 1.5cm, 3 they would ding me...... Sales guy did the return lease on the Monday morning, left me a voice mail message as I was in a meeting, then a 2nd voice mail saying he had completed the lease return. A few weeks later I get a bill from Ford for $680, of course I was on the phone right away as they had ding me for a 3rd windshield chip :Bastards!: The lady I was on the phone with was a bitch so I wanted to talk to the manager.... she said I'm the manager! I got it down to $400 in the end. Turned me off lease, ended up getting a F-150 from another Ford dealer with cash down and 0% financing, I'll keep it until it dies and use it for a winter vehicle and get something fun for the summer/warmer months.

My wife's Rav4 lease is up here in April she will be returning the SUV, For sure needs new windshield because Toyota have the worst glass, and probably new tires as its 75k on original tires and a good clean, I'm not sure what she has planned but I don't think she will be leasing another one.