Teach me about leasing

[03ozwhip]

Due to always switching cars, I feel like leasing might be my best option for the next vehicle. What do I need to look for?

I see that people are talking about residuals, but honestly have no clue what that means when it pertains to vehicle leasing.

I think it just makes more sense for me, since I get rid of vehicles usually before 2 years and drive maybe 12k a year.

Opinions and advice would be appreciated.

[killramos]

Residual is what the car is projected to be worth at the end of the lease.

The lease is a payment plan stringing the purchase price of the vehicle down to the residual value, including interest.

Typically there are rules governing the state of the vehicle when you return it, damage Killometers etc, otherwise you pay penalties.

Leases only really make sense if you are buying new vehicles and getting rid of them after a few years. Buying used and selling a couple years later is likely much cheaper than leasing. Leases aren’t cheap, but at least they are very heads up about exactly what the car is going to cost you over life and no guessing what it will be worth. Payment is the payment. Interest on a lease is generally higher than finance interest rate, which generally reflect the risk the lease company takes in that they overestimated residual and as such they end up with a car worth less than they thought.

Anything specific you are interested in?

[you&me]

Due to always switching cars, I feel like leasing might be my best option for the next vehicle. What do I need to look for?

I see that people are talking about residuals, but honestly have no clue what that means when it pertains to vehicle leasing.

I think it just makes more sense for me, since I get rid of vehicles usually before 2 years and drive maybe 12k a year.

Opinions and advice would be appreciated.

In your situation, with "always switching cars", the residual is important because it will determine your equity position at the end of each lease and the ease with which you can get into the next one.

People talk about residuals because they are hugely important to any lease, because they will a) determine the payments relative to the price of the vehicle and b) factor into whether or not you should lease a particular car.

When you lease, you're technically financing the depreciation of the car over a given period, say 24 or 36 months. The residual is the value at the end of the term, so your lease payments are roughly based on the difference between the MSRP and Residual, divided by the lease term (plus the interest rate to carry the asset over the term).

Most new vehicle leases are "closed-end", meaning the leasing company is guaranteeing the value at the end of the term. This is obviously beneficial from the consumer / lessee perspective, as the risk of that value being higher than the market value falls onto the lessor (car financing company). Especially since 2008, lessors tend to be a little more conservative in the residual values (you don't want to be wrong by even a $1,000 on a lease portfolio of 10s of thousand of vehicles!). That said, this risk aversion can work in favour of the consumer if they make the right choice - for example, if you do your research and know that a particular vehicle has an exceptionally high resale value after 3 years (say, like a F150 Raptor or Mercedes G-class), then even though the lessor has based the lease on a typical residual (usually ~50% over 36 months), there's an opportunity to have a massive amount of equity in the vehicle at the end of the term, effectively lowering your total cost over the term of the lease.

On the other hand, there are plenty of vehicles that will be "upside-down" at the end of the term and the lessor can simply turn them back in to the dealership and let the finance co. worry about the negative equity (it's factored in anyways as a "cost of doing business").

If you can do some market research and find vehicles with strong resale values after 24-36 months, it will make your lease turning much easier & less expensive.

Fun anecdote - I have a friend that has basically "rolled" his downpayment from a lease starting in 2011 to his current ride. By picking the right vehicles, he's managed to stay in an equity position through probably a dozen cars and ended each lease with at least the original equity and often more that he considers an offset to his payments (again, effectively lowering his TCO). This works particularly well if you have good connections at dealerships that get you very early deliveries of new model import (mostly) SUVs that are in high demand and depreciate very little in the first 6-12 months of a new model being released... It all started with a 2011 Porsche Cayenne Turbo, then a series of Range Rovers, GLs, and currently sits in an X7...

[rage2]

It’s all about the total cost of ownership to determine if leasing is right for you. With lease you’re paying for a fixed depreciation of the vehicle for a set amount of time and mileage. I wrote a comparo years ago that compares lease vs purchase vs finance.

https://forums.beyond.ca/threads/339018-Opinions-on-Leasing?p=3747596#post3747596

The residual is what the manufacturer is banking on the worth of the vehicle at the end of the lease. The higher the residual, the less depreciation you’re financing. The interest is on the depreciation that you’re financing (msrp - residual).

There are a lot of tricks to maximize a lease. I take advantage of the early termination clause, basically I can get out of a lease 6 months before it’s over if I move into another lease without penalty (why I’m “locked” into Mercedes). The sweet spot for residual rates are 36 month leases, while 24 is pretty poor. By moving 6 months early, I’m effectively getting a 36 month residual rate at 30 month terms.

End of the day you need to get quotes on the different lease terms, calculate your TCO for the duration, and compare if you bought and sold the car how much you’re in for and see if it’s close or favorable.

[shakalaka]

Also leasing makes sense if payments can be written off under a corporation or something. Porsches and RR's generally end up putting you in positive at the end of lease. Particularly if you have the more desirable models.

In your situation if you're going to be changing cars every 2 years, it's likely better to only lease for 2 years or else you will be stuck with the same brand for a long time OR take a big hit in the end. This was sort of the reason why I went through 6 BMW's in 4 years before ultimately just saying fuck it and getting out of BMW this time around.

Also it typically ends up being more expensive to lease (payments wise) over financing if going for a brand new car. With financing a year or two old used model you can get a better car for similar payment as leasing a brand new (lesser model) vehicle. Big dealers don't typically lease used vehicles at all.

[killramos]

Also it typically ends up being more expensive to lease (payments wise) over financing if going for a brand new car.

Not sure I agree with you on this. Apples to apples, unless the interest rate is completely whack with a near 0 residual, finance payments will almost certainly be higher than lease payments. You are amortizing a way larger amount of money when you finance than when you lease. But with financing at least you own something at the end of your term.

[Misterman]

Good information so far, but there's a few comments here that are either incorrect or unclear.

"Leases are expensive"- That's a misnomer to say the least. You can compare a dealerships lease vs finance rates. In my experience lease rates are the same or better than full finance. And you're paying the same price for the car regardless, so I am not seeing how a lease is "expensive" in comparison to a finance? Monthly payment wise it is definitely cheaper as you're financing only part of a car. And if you decide you want to buy out the vehicle at the end of lease, you can simply finance the residual for continued lower payments. One place they can become expensive, is if you have KM overages at the end. 20cents a KM adds up if you're way over.



"residual is important because it determines the ease with which you can get into a new one at the end" - Not so much. If you leased. period. It will be super easy to get into a new one at the end of term. You know exactly what the terms are, you make your payment for 36 months or whatever term you choose, you go in and hand them the keys and then pick a new one. It's that simple. You don't have to haggle the trade in value, or deal with tire kickers off kijiji. Oh you crashed the car and it has 10 grand worth of depreciated value? Big whoop, dealer guaranteed you the residual value, so drop it off and it's their problem, then pick a new one.

As mentioned, if you pick something with great residual value, you can sell private for more than dealership residual value and pay out the lease, pocket the difference. Lexus vehicles are well known for this, doesn't have to be something crazy like a G wagon. This is actually what I did with my first Lexus lease. I was way over on KM, was looking at a 5000$ penalty to give it back. I listed it on kijiji and sold it for what the residual value was and just paid out the residual. Saved myself the 5000$ penalty. They would've waived the penalty if I signed a new lease with them, but I wanted something different. However this is still a timing issue, and may not always work. Our used market is very soft right now as our economy is in the shitter. Sometimes it can take months to sell a used vehicle, which is months you don't necessarily have when it comes to the end of the lease. If you don't find a private buyer by the end of your term, you have to either turn it in or buy it out yourself while you wait to find a buyer.



There is a few hidden benefits of a lease that nobody really talks about. Because you have a fixed residual value, you can pseudo save thousands in a crap situation. For example, you finance a vehicle you're likely to sell in 3 years to get something new anyway, someone hits your vehicle and it is now tainted with a collision on the carproof. When you go to sell most people won't be interested, and those that are interested will lowball the shit out of you due to the accident claim. If you had leased, you lose no value because the residual value is decided at start of purchase not the end. For this reason alone I will always lease.

Hasn't been mentioned yet, but I'm sure it will be. People will say it is stupid to put money down at the start of a lease. I would argue that is incorrect and based purely on your situation. Personally I don't like huge monthly payments. So when I leased my Mercedes, I put 20k down up front. All this did was decrease the amount I am financing. Residual amount stays the same, so instead of financing 50k of the vehicle, I knocked it down to 30k and got a much lower payment instead. I would've paid that 20k regardless, it was just a matter of whether it was drawn out monthly over the 48 month term, or cash up front.

[ExtraSlow]

Not sure I agree with you on this. Apples to apples, unless the interest rate is completely whack with a near 0 residual, finance payments will almost certainly be higher than lease payments. You are amortizing a way larger amount of money when you finance than when you lease. But with financing at least you own something at the end of your term.

Yeah, you can think of financing as a lease with a residual of $0. Lease payments should be lower for similar term in every case, shouldn't they? (Note, I've never leased a car, and only financed one, so I'm no expert)

[killramos]

Yeah, you can think of financing as a lease with a residual of $0. Lease payments should be lower for similar term in every case, shouldn't they? (Note, I've never leased a car, and only financed one, so I'm no expert)

Yup. Again as long as the interest rate isn’t wack. Like say 0% finance and 6% lease rate for some reason. Even then, lease still probably has lower payments.

[rage2]

As mentioned, if you pick something with great residual value, you can sell private for more than dealership residual value and pay out the lease, pocket the difference. Lexus vehicles are well known for this, doesn't have to be something crazy like a G wagon. This is actually what I did with my first Lexus lease.

Hasn't been mentioned yet, but I'm sure it will be. People will say it is stupid to put money down at the start of a lease. I would argue that is incorrect and based purely on your situation. Personally I don't like huge monthly payments. So when I leased my Mercedes, I put 20k down up front. All this did was decrease the amount I am financing. Residual amount stays the same, so instead of financing 50k of the vehicle, I knocked it down to 30k and got a much lower payment instead. I would've paid that 20k regardless, it was just a matter of whether it was drawn out monthly over the 48 month term, or cash up front.
You're literally loaning money for free in these 2 cases.

[killramos]

You're literally loaning money for free in these 2 cases.

Presumably you save on interest?

[JfuckinC]

Pick up my first lease today, definitely didn't put much this much thought into it haha.. Just got what i wanted.

[ExtraSlow]

Pick up my first lease today, definitely didn't put much this much thought into it haha.. Just got what i wanted.

Gotta live your life bro. Whatcha get?

[Misterman]

You're literally loaning money for free in these 2 cases.


That's the other way to look at the first scenario. If lexus just offered you a better residual value, you'd pay less through your lease.

You're not loaning free money when you put a downpayment on the front of a lease. You're reducing the amount you pay interest on. But by all means one could make the argument that I could've invested that 20k and make more ROI than I would save on interest by using it as downpayment. As I mentioned, it is based on your personal situation.

[dirtsniffer]

Lots of companies doing the finance with a balloon payment at the end. Now that I don't get..

[Misterman]

Lots of companies doing the finance with a balloon payment at the end. Now that I don't get..

I'm guessing you don't have the option to give it back at the end? Then when most people can't pay the residual off at the end, they can finance you for it and make money on the financing. Or they low ball you a trade in and roll your negative equity into a new vehicle.

[danno]

What happens if you get in a accident? Does it get repaired and then returned at the end of the lease without a penalty?? Wear and tear items, like glass and tires what condition do they need to be?

[Masked Bandit]

I'm guessing you don't have the option to give it back at the end? Then when most people can't pay the residual off at the end, they can finance you for it and make money on the financing. Or they low ball you a trade in and roll your negative equity into a new vehicle.

BINGO! This is how the finance companies get to charge you interest for 8-10 years assuming you keep the car, which most people don't. We see SOOOO many people rolling negative equity into the next deal it makes me want to barf. The proverbial out of the pan and into the fire situation.

[Mitsu3000gt]

What happens if you get in a accident? Does it get repaired and then returned at the end of the lease without a penalty?? Wear and tear items, like glass and tires what condition do they need to be?

Yup. This is one of the biggest reasons (of many) why leasing is so good IMO. There are a few conditions on return, but they are typically very generous - glass and tires are usually the non-negotiable parts.

You can crash you $100,000 car, with the repair estimate $1 below what the insurance company will declare a write off, and the dealership has to take back your disaster of a repaired car that nobody wants that you'd have to practically give away otherwise. You're just out the deductible, same as if you owned the car. Same with hail damage, and often a surprising amount of day-to-day damage is OK too (like golf ball to credit-card size dents depending on the brand). On top of this, if you want, you can just do the bare minimum looking after the car - no need to wash it, plug it in for the winter, doesn't matter if you park outside, etc. Just use it like a rental and return - as long as tires are above 50%, windshield isn't cracked, and there is no major unrepaired damage, that has you covered in most instances. Leasing a van while you have kids for example would be ideal - they can practically destroy it and then you just hand it back.

My lease the agreement says I am allowed 15 rock chips per panel on the front, 5 on each side panel, unlimited scuffs/light scratches and up to 3 significant dents per panel. On the interior, I am allowed unlimited scuffs, cracks, tears and singes (burns) to seats & trim as long as they are 1.5cm diameter or less. Scratches/scuffs in leather are unlimited as long as it's not punctured. Curb rash up to 7.5cm strips is unlimited. It even says you can have 2 different brands of tires on the car.

I don't think I'll ever finance/purchase again - there is almost no upside IMO, assuming similar deals/promotions. My #1 rule though is if you have to put money down to afford the monthly payment, you can't afford that car - in most cases it's a bad idea to do anything other than $0 down because anyone can make more than the 1.9% or whatever the lease is with simple investments, and nobody wants to give the dealer an interest free loan.

I would never buy a previously leased car though, precisely for all the reasons leasing is so attractive.

[shakalaka]

Not sure I agree with you on this. Apples to apples, unless the interest rate is completely whack with a near 0 residual, finance payments will almost certainly be higher than lease payments. You are amortizing a way larger amount of money when you finance than when you lease. But with financing at least you own something at the end of your term.

I was more thinking of scenario where the maximum allowable terms for leasing are 3-4 years whereas you can finance for up to 7-8 years. Or even better say balloon financing over 5-6 years with a residual in the end. In those cases financing payments are going to be lower than leasing payments. I guess I should have elaborated. Residuals of course play a big role in determining what the payment on a lease will be.

Also in regards to giving a large down on a lease, sure you can do it and bring the payment down but I think that defeats one of the most important purpose of a lease. The scenario mentioned above - if you get into a crash and take a big hit on the value of the vehicle, do you just want to give it back to the dealer at the end then and lose your large downpayment? Giving a large down on a lease makes sense when you KNOW you're gonna end up either keeping the car, or buying it out and sell it privately and you're not worried about accidents, hail etc claims diminishing the value of the car. If the plan is to return it to the dealer at the end of the term or trade it in before the end, I don't think a down makes sense on a lease - unless you can't afford the monthly payments, in which case well I won't 89coupe it.

[rage2]

That's the other way to look at the first scenario. If lexus just offered you a better residual value, you'd pay less through your lease.

You're not loaning free money when you put a downpayment on the front of a lease. You're reducing the amount you pay interest on. But by all means one could make the argument that I could've invested that 20k and make more ROI than I would save on interest by using it as downpayment. As I mentioned, it is based on your personal situation.
It's basically interest free. Some leases are structured so you get 0 interest savings with a downpayment. Others limit how much you're able to put down, or restrict the interest savings. $20k down on a Mercedes lease is like $600 in savings over 36 months at 3.9%.

[03ozwhip]

Alot of info in this thread. I'm not looking for anything real soon, but I want to be prepared to look into this route when I do.

[Misterman]

I was more thinking of scenario where the maximum allowable terms for leasing are 3-4 years whereas you can finance for up to 7-8 years. Or even better say balloon financing over 5-6 years with a residual in the end. In those cases financing payments are going to be lower than leasing payments. I guess I should have elaborated. Residuals of course play a big role in determining what the payment on a lease will be.

Also in regards to giving a large down on a lease, sure you can do it and bring the payment down but I think that defeats one of the most important purpose of a lease. The scenario mentioned above - if you get into a crash and take a big hit on the value of the vehicle, do you just want to give it back to the dealer at the end then and lose your large downpayment? Giving a large down on a lease makes sense when you KNOW you're gonna end up either keeping the car, or buying it out and sell it privately and you're not worried about accidents, hail etc claims diminishing the value of the car. If the plan is to return it to the dealer at the end of the term or trade it in before the end, I don't think a down makes sense on a lease - unless you can't afford the monthly payments, in which case well I won't 89coupe it.


Payments are generally still more expensive to finance for 5 years, as opposed to leasing for 3. I'm sure there is scenarios where you can contort numbers to get a bigger lease payment, but that'll be more rare.


What's the difference if you give the car back or keep it at lease end? Or whether you have an accident or not? If you lease a 60k car, with a 30k residual on it. You are financing 30k. You can either space that 30k into payments for the entire term. Or you can put 15k down, and only space 15k into payments for the term.

I think you might be confusing where a downpayment goes towards. It goes towards the part you're financing, not the residual.

[Misterman]

It's basically interest free. Some leases are structured so you get 0 interest savings with a downpayment. Others limit how much you're able to put down, or restrict the interest savings. $20k down on a Mercedes lease is like $600 in savings over 36 months at 3.9%.


If someones main reasoning for putting a downpayment on a lease was to save money on interest, then that would be a silly decision. But putting a down payment isn't automatically a stupid idea, like what seems to be the general consensus last time this came up.

[killramos]

I was more thinking of scenario where the maximum allowable terms for leasing are 3-4 years whereas you can finance for up to 7-8 years. Or even better say balloon financing over 5-6 years with a residual in the end. In those cases financing payments are going to be lower than leasing payments. I guess I should have elaborated. Residuals of course play a big role in determining what the payment on a lease will be.

fudging around with dates on the payments just masks cost of ownership further and isn’t an apples to apples anymore. Sounds like a something a dealership would do to trick you into thinking you can afford a car :rofl:

[Mitsu3000gt]

All else equal, in what scenario would you put money down on a lease? If you can't make more than 2% or whatever on your investments, there are probably bigger issues to be dealt with.

[ExtraSlow]

Well, as we discussed in the mortgage/HELOC thread, paying down debt is zero risk, while most investments have at least some level of risk, so you need to look at your risk-adjusted return. Also, there's mental value in paying down debt and simplifying your monthly finances beyond the strict mathematics.

[killramos]

Right. If you can realize 6% interest or something on a high rate lease , which is after tax dollars, by paying a down payment you can afford on a lease that can make a lot of sense in my mind.

That’s a pretty good ROI especially considering tax.

Putting money down on a 0% lease (or finance). That’s just stupid.

Key is if you can realize the rate, rage made some points on technicalities where that isn’t true. That’s obviously something to watch out for.

[Misterman]

All else equal, in what scenario would you put money down on a lease? If you can't make more than 2% or whatever on your investments, there are probably bigger issues to be dealt with.

There is a number of reasons someone might do that. In my case, I'm not an employee, so my income might not be completely secure for the next 4 years. So I prefer smaller payments. There is a host of reasons I'm sure people could come up with on why they want a smaller payment.

But just to put things in context based on what you said. Why would you put money down on a finance then either? Most places are 0-2% now for financing, so comparatively it is just as stupid to put money down on a fully financed vehicle as it is on a lease with that logic.

[killramos]

also, there's mental value in paying down debt and simplifying your monthly finances beyond the strict mathematics.

no there is only math

[16hypen3sp]

Good thread. I'm tempted to lease my next car (G80) but only if I can write off 100% of the leasing costs against driving for Uber. For 2018, I wrote off every drop of fuel, every kilometer traveled, and all vehicle depreciation against my income with my Genesis. Total deductions were just under $6000. Leasing would significantly bump that number up.

[Mitsu3000gt]

There is a number of reasons someone might do that. In my case, I'm not an employee, so my income might not be completely secure for the next 4 years. So I prefer smaller payments. There is a host of reasons I'm sure people could come up with on why they want a smaller payment.

But just to put things in context based on what you said. Why would you put money down on a finance then either? Most places are 0-2% now for financing, so comparatively it is just as stupid to put money down on a fully financed vehicle as it is on a lease with that logic.

I didn't say anything about putting money down on a finance, those are your words. At 0% though I would hope nobody is putting money down on that unless they are the worlds worst investor with no other debt to pay off.

Leasing is ideal for insecure income because if you buy the right car you are cash positive after a relatively short period of time, and lots of manufacturers have programs that allow you to return early with little or no penalty. So, if you lose your job or something you don't have to worry about taking a big hit on a car you financed. Even worse would be if you needed to sell your financed car due to losing your job and it had a big insurance claim or hail damage - you'd have to practically give it away. Most people I know working solely on commission (variable income) or worried about their jobs are leasing right now for the protection leasing offers.

It's all just a spreadsheet at the end of the day, whatever has you coming out ahead the farthest at the end is probably the best option. I acknowledge that there are niche cases where one might make sense over the other.

[Aleks]

Due to always switching cars, I feel like leasing might be my best option for the next vehicle. What do I need to look for?

I see that people are talking about residuals, but honestly have no clue what that means when it pertains to vehicle leasing.

I think it just makes more sense for me, since I get rid of vehicles usually before 2 years and drive maybe 12k a year.

Opinions and advice would be appreciated.

I am basically the same way. Usually lease and get rid of after 2 years. Usually either have them taken over or sell them. I just sold my Tacoma lease after 20 months and got into a Wrangler lease. With the money I got back from the sale my effective payment on it was around $450/m. My Tundra lease was something ridiculous like $250/m after selling it. That was more due to USA exports affecting resale on trucks during that time though.
I only sign up if the deal is right and it's gonna be easy to get out. That limits choices big time though. I put money down once a long time ago and never again.

[Mitsu3000gt]

I know so many people who finance, but end up swapping cars every 2-5 years anyway and I don't understand it. Most of those people should be leasing and enjoying a much smaller monthly payment with the laundry list of lease perks/protections.

Even if you are going to keep your car for 10 years, you can lease the first ~4 and enjoy some protection vs zero protection.

[rage2]

I know so many people who finance, but end up swapping cars every 2-5 years anyway and I don't understand it. Most of those people should be leasing and enjoying a much smaller monthly payment with the laundry list of lease perks/protections.

Even if you are going to keep your car for 10 years, you can lease the first ~4 and enjoy some protection vs zero protection.
It just depends on the numbers. I financed my C63 Black Series because for some hilarious reason it was delivered late spring with a ton of C class incentives. 0% finance, first 3 month payments free (up to $1200) so I opted for the balloon finance knowing that this car won't depreciate much, and kept my payments relatively low. Sure enough, 4 years later, I broke even on the car. Basically drove the car 4 years for free. Well, almost free, for the price of wheels and tires.

I did pretty well on the RCF as well thanks to trunk money in October when I leased it, plus 0.5% rate. I think my effective payment over the term of ownership was something like $490/month.

I'm losing money on my current 2 cars though, depreciate like a motherfucker. But I am planning to keep them and drive them to the ground.

[Mitsu3000gt]

It just depends on the numbers. I financed my C63 Black Series because for some hilarious reason it was delivered late spring with a ton of C class incentives. 0% finance, first 3 month payments free (up to $1200) so I opted for the balloon finance knowing that this car won't depreciate much, and kept my payments relatively low. Sure enough, 4 years later, I broke even on the car. Basically drove the car 4 years for free. Well, almost free, for the price of wheels and tires.

I did pretty well on the RCF as well thanks to trunk money in October when I leased it, plus 0.5% rate. I think my effective payment over the term of ownership was something like $490/month.

I'm losing money on my current 2 cars though, depreciate like a motherfucker. But I am planning to keep them and drive them to the ground.

The Black Series sounds like one of the niche scenarios I mentioned earlier, but that's awesome - just a simple spreadsheet at the end of the day to see what's better financially. In your case though it sounds like you also had to make some assumptions on resale value and it's great you were right!

How are the A-Class leases looking? I've had my eye on an A250 4matic for a while as a replacement for my current car.

[03ozwhip]

I am basically the same way. Usually lease and get rid of after 2 years. Usually either have them taken over or sell them. I just sold my Tacoma lease after 20 months and got into a Wrangler lease. With the money I got back from the sale my effective payment on it was around $450/m. My Tundra lease was something ridiculous like $250/m after selling it. That was more due to USA exports affecting resale on trucks during that time though.
I only sign up if the deal is right and it's gonna be easy to get out. That limits choices big time though. I put money down once a long time ago and never again.

Ya man, even right now I wouldnt even know what a good lease deal looks like. I was thinking probably next year going for either an M car or an AMG, but I'm not sure what kid of lease rates would be any good.

[shakalaka]

M's and AMG's typically don't have the best lease or finance rates but they come along every now and then so it's just a matter of keeping an eye out for it.

Why I think it makes no sense in putting money down on a lease is because you're not keeping the car in the end. So essentially you lose that large downpayment. Whereas putting money down on finance means, it's your car to keep at the end of the term. Surely you get a little bit lower payment when you put money down on a lease (approx. $100 for every $5K down) but I would rather use that downpayment elsewhere and have a slightly higher monthly lease payment than to put the down on the lease and ultimately getting nothing in return for that money except a slightly lower monthly payment.

That's just how I look at it though, obviously different people have different perspectives about this.

[03ozwhip]

M's and AMG's typically don't have the best lease or finance rates but they come along every now and then so it's just a matter of keeping an eye out for it.

Why I think it makes no sense in putting money down on a lease is because you're not keeping the car in the end. So essentially you lose that large downpayment. Whereas putting money down on finance means, it's your car to keep at the end of the term. Surely you get a little bit lower payment when you put money down on a lease (approx. $100 for every $5K down) but I would rather use that downpayment elsewhere and have a slightly higher monthly lease payment than to put the down on the lease and ultimately getting nothing in return for that money except a slightly lower monthly payment.

That's just how I look at it though, obviously different people have different perspectives about this.

Only reason I'm thinking of leasing M or AMG is based on never owning one and hearing horror stories of issues owning them after warranty, so it just kinda scares me.

[03ozwhip]

Looking(sort of) at leasing an X3M. For a 90k car with 5k down at 3% for 4 years at almost $1200 a month with a residual of about 36k sounds like a terrible deal, does it not?

[Tik-Tok]

Looking(sort of) at leasing an X3M. For a 90k car with 5k down at 3% for 4 years at almost $1200 a month with a residual of about 36k sounds like a terrible deal, does it not?

Any money down sounds like a terrible deal.

[03ozwhip]

Any money down sounds like a terrible deal.

I wouldnt put any money down, so ya, that's part of it lol

[ExtraSlow]

$1200 a month is almost as much as my mortgage. Holy shit.

[shakalaka]

Okay so putting money down on a lease means you're basically pre-paying your payments which in result makes your monthly payments lower. You don't 'lose' any money if you put a downpayment per se as you end up paying the same amount during the entire leasing term regardless. With the down you've just lowered your monthly payments so if low monthly payments is your goal on a lease then putting money down isn't necessarily stupid if you can't think of anything else to do with that.

What could potentially go wrong with putting a large down on a lease is say a few months into the lease you total the vehicle - the insurance is going to pay out the market value and if the market value is pretty much just what the residual is or is an amount significantly less than what you paid, you potentially lose that large downpayment as you won't get it back. I hope this makes sense.

Now about this specific deal - paying $1200 a month for the X3 (notwithstanding it's a M) to me seems excessive as I know X5's can be had for a grand a month if you pick and choose the right unit. I don't know much about the X3M's though so perhaps it's an okay deal but just in general that amount for a X3 type of vehicle does not appeal to me. Also, if you don't have a vehicle to trade in, I highly suggest going on Leasebusters and seeing if you find something that you like that you can take over the lease of.

I found my brother a deal on a 440 M Performance Edition, special edition colour etc a while back where he took over someone's lease at their monthly payments and they gave him a $13K cheque on the side. So basically one year free and he got a mint car, next to new, with only having to pay for it for a year and drive it for free for one entire year. But to do this you have to not be married to the idea of one specific vehicle and keep your options open. My brother couldn't care less about that and just wanted something fun on the side.

PS: You should care about the interest rate even though it is a lease where you walk away from the vehicle (not to start that convo again lol) but that interest rate will be directly relevant to the amount you will be paying monthly. And also if you want the choice being able to buyout the vehicle at the end of the lease and sell it privately to get some equity out of it (did this on my dad's Range Rover Autobiography) interest rate will definitely be relevant.

[JohnnyBlaze]

What do you guys think about using a refundable security deposit to lower monthly payments for a lease?

this wouldnt be a down payment and should be fully refundable at the end of the term

[Aleks]

PS: You should care about the interest rate even though it is a lease where you walk away from the vehicle (not to start that convo again lol) but that interest rate will be directly relevant to the amount you will be paying monthly. And also if you want the choice being able to buyout the vehicle at the end of the lease and sell it privately to get some equity out of it (did this on my dad's Range Rover Autobiography) interest rate will definitely be relevant.

What type of discount did your dad get on the lease rate on the RR? :burnout:

[Misterman]

Okay so putting money down on a lease means you're basically pre-paying your payments which in result makes your monthly payments lower. You don't 'lose' any money if you put a downpayment per se as you end up paying the same amount during the entire leasing term regardless. With the down you've just lowered your monthly payments so if low monthly payments is your goal on a lease then putting money down isn't necessarily stupid if you can't think of anything else to do with that.

Good luck. Nobody seems capable of grasping this.


What could potentially go wrong with putting a large down on a lease is say a few months into the lease you total the vehicle - the insurance is going to pay out the market value and if the market value is pretty much just what the residual is or is an amount significantly less than what you paid, you potentially lose that large downpayment as you won't get it back. I hope this makes sense.

This is going to be incorrect in 99% of cases. A lease company is not going to leave their asset uninsured. It is built right into the paperwork that full replacement insurance is required. So it doesn't matter if you write the vehicle off, you get back every penny you paid.

[rage2]

This is going to be incorrect in 99% of cases. A lease company is not going to leave their asset uninsured. It is built right into the paperwork that full replacement insurance is required. So it doesn't matter if you write the vehicle off, you get back every penny you paid.
There are 2 types of insurance. Gap insurance, and full replacement value. Gap just covers the gap between value of vehicle and what's owed, in which case shakalaka is 100% correct that you'll lose any down payment you put towards the vehicle. Full replacement value isn't susceptible because you get 100% of the purchase price back.

Gap insurance is mandatory on leases, replacement value is not.

[jutes]

With leasebusters it almost makes more sense to take over some else's contract. I know when I go looking for a new X5 in the near future I'll hit up LB first. I've seen some with cash back and winter wheels/tires. If you don't care about a slightly used lease its a great option.

[Misterman]

There are 2 types of insurance. Gap insurance, and full replacement value. Gap just covers the gap between value of vehicle and what's owed, in which case shakalaka is 100% correct that you'll lose any down payment you put towards the vehicle. Full replacement value isn't susceptible because you get 100% of the purchase price back.

Gap insurance is mandatory on leases, replacement value is not.

Fair enough. I would hope there is nobody so cheap they would skimp on the 50$ a year for replacement insurance when it comes to leasing.

This saved my ass when our car got stolen. Insurance just cut a check for 54k, I paid out the lease company the 30k we still owed them to buy out the lease. Took the 20k difference and dumped it down on the Benz.

[Misterman]

With leasebusters it almost makes more sense to take over some else's contract. I know when I go looking for a new X5 in the near future I'll hit up LB first. I've seen some with cash back and winter wheels/tires. If you don't care about a slightly used lease its a great option.

Taking over can make sense. It gets you a lot shorter term, which is valuable to some people. But if they want you to give them a down payment to take over the lease, it's almost always a bad deal. Essentially they got to drive a brand new vehicle with zero repercussions. If someone has downpayment on their lease, that is the depreciation they should be paying if they want to exit the lease early. So I would never give someone cash to take over a lease, as essentially I would be paying payments for a new vehicle that is now used.

[Aleks]

Taking over can make sense. It gets you a lot shorter term, which is valuable to some people. But if they want you to give them a down payment to take over the lease, it's almost always a bad deal. Essentially they got to drive a brand new vehicle with zero repercussions. If someone has downpayment on their lease, that is the depreciation they should be paying if they want to exit the lease early. So I would never give someone cash to take over a lease, as essentially I would be paying payments for a new vehicle that is now used.

What if they prepaid the whole thing? Or, for what ever reason they put such a huge down payment on it that monthly payments are a fraction of what a new one would be?

This is why rule of thumb is never put a down payment on a lease. It kind of defeats the purpose of it, it makes it harder to get out of it since most potential buyers aren't looking to compensate you for it.

[rage2]

Fair enough. I would hope there is nobody so cheap they would skimp on the 50$ a year for replacement insurance when it comes to leasing.

This saved my ass when our car got stolen. Insurance just cut a check for 54k, I paid out the lease company the 30k we still owed them to buy out the lease. Took the 20k difference and dumped it down on the Benz.
Replacement value insurance is only cheap the first year. It ramps up huge in subsequent years without them telling you. Lots of people cancel it after the first year because of this.

[killramos]

Yea I would have a hard time keeping it after more than 2-3 years. Still it’s nice to know that if your car is written off you win the lottery haha

[spike98]

What if they prepaid the whole thing? Or, for what ever reason they put such a huge down payment on it that monthly payments are a fraction of what a new one would be?

This is why rule of thumb is never put a down payment on a lease. It kind of defeats the purpose of it, it makes it harder to get out of it since most potential buyers aren't looking to compensate you for it.

I paid for my BMW lease with a lump sum payment. I had the cash and didn't want a payment for the 3 years. Yes, i could have put it in a HISA and made a few bucks, but i wasn't losing money, just lost opportunity. And that was enough for me because i knew i would have dipped into the money for some stupid reason.

Leasebusters are typically for people that are locked into a lease but need to get out of the car for likely a financial reason. I dont' have an affordability issue with my car because i have no payment obligation thus making it moot that i prepaid the whole amount.

[Misterman]

What if they prepaid the whole thing? Or, for what ever reason they put such a huge down payment on it that monthly payments are a fraction of what a new one would be?

This is why rule of thumb is never put a down payment on a lease. It kind of defeats the purpose of it, it makes it harder to get out of it since most potential buyers aren't looking to compensate you for it.

It's nothing more than a simple math problem of comparing market value of the vehicle and ensuring you aren't over paying. It definitely makes it WAY easier to get out of a lease if you have put money down on it. Because now you have an attractive low payment. If you have a zero down lease, you'll have to pay someone cash to take it off your hands in most cases, because anyone else can go get the exact same payment on a brand new one.





Replacement value insurance is only cheap the first year. It ramps up huge in subsequent years without them telling you. Lots of people cancel it after the first year because of this.

Depends on your insurance company perhaps? It's more like 4 years before it gets expensive with my insurance. It is an absolute no brainer.

[Aleks]

It's nothing more than a simple math problem of comparing market value of the vehicle and ensuring you aren't over paying.

It definitely makes it WAY easier to get out of a lease if you have put money down on it. Because now you have an attractive low payment.

If you have a zero down lease, you'll have to pay someone cash to take it off your hands in most cases, because anyone else can go get the exact same payment on a brand new one.



Agree on first 2 lines.

The last point I will argue that if you got a good deal on a lease and you're half way into it or more you shouldn't have to give any incentive out. If you do, you didn't get a good lease deal, or you have a car that no one wants to have, lease or not.
As you pointed out it's like math problem, essentially buying a used car, with some added lease benefits. Leases are designed so that they cover depreciation and by the time they are done, they need to have a residual that's lower or at least close to market value, otherwise the lease company won't be around long. Given this, unless you're getting rid of a fresh lease your residual plus remaining payments should be close to what the car is worth on the used market.

As far as just walking into a dealer and getting a new lease for that same payment, that's not really a fair comparison, since one is new one is used now. What's left on the lease is thousands less than what the new lease will carry as a lien amount off the lot. It's like saying why buy a 2 year old used car for $30k when I can get a new one for $40k.

[HiSpec]

What if they prepaid the whole thing? Or, for what ever reason they put such a huge down payment on it that monthly payments are a fraction of what a new one would be?

This is why rule of thumb is never put a down payment on a lease. It kind of defeats the purpose of it, it makes it harder to get out of it since most potential buyers aren't looking to compensate you for it.

What about those up-front lease initiation fee, where it covers the first payment and bunch of fees. I've only heard of this fee from BMW.

[Aleks]

What about those up-front lease initiation fee, where it covers the first payment and bunch of fees. I've only heard of this fee from BMW.

First payment is ok and pretty standard as that's counted towards your first month. Some will have a security deposit. I've only seen "lease registration/initiation fees" a couple times. I think VW was one of them.

Jeep/Chrysler was a simple setup. No talk of admin, security or any other fee. Just one price and then a payment based on that. Looks like Genesis may be a simple setup too as they roll everything into one price including freight/pdi.

[16hypen3sp]

Just to be clear here... probably a dumb question but just want to make sure and hoping you guys might have knowledge about this. I emailed an accountant but they haven't gotten back to me yet.

I lease a car for commercial purposes. I can claim the lease amount (max $800 per month, $9600 per year) against my TOTAL income for the year. Total income being full time employment income as well as secondary sole proprietor income. Correct?

[killramos]

Do you use the lease to earn your full time employment income ( guess is no )?

Contrary to popular belief leasing a car isn’t some life hack for not paying taxes.

[16hypen3sp]

Do you use the lease to earn your full time employment income ( guess is no )?

Contrary to popular belief leasing a car isn’t some life hack for not paying taxes.

Not for the full time employment income no. But I'd be driving it almost 100% of the time for the sole prop income.

[speedog]

Just to be clear here... probably a dumb question but just want to make sure and hoping you guys might have knowledge about this. I emailed an accountant but they haven't gotten back to me yet.

I lease a car for commercial purposes. I can claim the lease amount (max $800 per month, $9600 per year) against my TOTAL income for the year. Total income being full time employment income as well as secondary sole proprietor income. Correct?

The commercial purpose, is that the source of your sole proprietor income? And the full time employment is not related to the commercial purpose?

If the vehicle is being used for the sole proprietor income then it can only be written off against that income. If you use the vehicle for anything else then you have to keep track of those kilometers so you can report your vehicle expenses/lease properly.

I have a brother-in-law who bought a bunch of woodworking tools years ago with the intent of starting up a small side business but writing off the tools against his unrelated full time employment income. He didn't believe me when I told him he couldn't do that and he quickly found out he couldn't do that. The side business earnd him practically nothing and he ended up with a bunch of expensive tools collecting dust.

[killramos]

My guess is his Uber driving (the sole prop income) isn’t enough to offset the lease costs so he wants to write it off against some of his day job income too.

The answer is an obvious no, but people always try and sneak things through.

[bjstare]

Haha believe it or not, the taxman has thought through this scenario. Nothing to add, just another +1 that leasing and writing off is actually really tough to justify if you get audited.

[16hypen3sp]

My guess is his Uber driving (the sole prop income) isn’t enough to offset the lease costs so he wants to write it off against some of his day job income too.

The answer is an obvious no, but people always try and sneak things through.


The commercial purpose, is that the source of your sole proprietor income? And the full time employment is not related to the commercial purpose?

If the vehicle is being used for the sole proprietor income then it can only be written off against that income. If you use the vehicle for anything else then you have to keep track of those kilometers so you can report your vehicle expenses/lease properly.

That is correct. Right now I own a car. Currently claiming all fuel and kilometres that I drive for Uber as well as depreciation. It’s basically giving me a boost on my tax deductions which equals a larger refund. I was just wondering how it would work if I do leasing instead of owning.

[shakalaka]

With leasing, you don't depreciate the value of the vehicle as a write-off. Instead you can write-off a maximum of $800 of monthly payments as long as the vehicle can be justified for 80% business use. That's my understanding anyway - this is the reason I have a meeting set up with my CA tomorrow. Haha.

So essentially the math is; if $800 x 12 is a larger deduction for you as opposed to depreciating the vehicle (I think 5%-10% per year is considered reasonable) then it's better to lease, otherwise not.

[16hypen3sp]

Shak, let me know what your CA says about it. My current usage is ~90% business use.

Basically, it seems the most legal way of using a sole prop income to offset taxes from full time income is to lease (lets say $5k per year as example), earn $5k in sole prop income, deduct the 5k leasing cost against sole prop income and keep any and all money earned from sole prop in RRSP, thereby lowering the tax burden on full time income.

That seem about right?

[ExtraSlow]

For sure check with an accountant, but my understanding of how this all works is that you can deduce the expenses you use to earn income against the income you earn doing that activity only. There's probably some sort of reasonableness test too. If you earn $100k in your day job, $20k in your side gig, and lease a $100k car, and you somehow manage to write off that entire lease against the side gig, I think you are a scammer, and you'll be treated as such. Govern yourself accordingly.

Another good rule of thumb with taxes is that any time you think you can do something that creates an advantage (as opposed to reducing your disadvantage slightly), then it's probably not allowed.

[Twin_Cam_Turbo]

I considered putting my truck and trailer in my company but the amount of income I actually made using it last year was like $1000 gross. There’s just no benefits unless you make reasonable money using the vehicles for work I guess.

[ExtraSlow]

There's a lot of things happening in this thread. Corporations, sole prop, etc. Rules are similar, but details are different.
If Corp owns it, you may have to report taxable benefit when you use it for personal use. Or if you own it personally, Corp can pay you a per km rate when you use it for biznazz.

I never got my company anywhere where I could contemplate these things. Sigh.

[pheoxs]

Shak, let me know what your CA says about it. My current usage is ~90% business use.

Basically, it seems the most legal way of using a sole prop income to offset taxes from full time income is to lease (lets say $5k per year as example), earn $5k in sole prop income, deduct the 5k leasing cost against sole prop income and keep any and all money earned from sole prop in RRSP, thereby lowering the tax burden on full time income.

That seem about right?

Also might be worth looking into insurance costs as well. Having it insured under the business for the purpose of customer transport likely will cost differently than personal insurance + ride sharing add-on.

[16hypen3sp]

Also might be worth looking into insurance costs as well. Having it insured under the business for the purpose of customer transport likely will cost differently than personal insurance + ride sharing add-on.

The only thing I need in terms of insurance is the ride share endorsement. The cost to add it to my existing policy was pretty small. Admittedly, that's the extent of my knowledge on the subject. I'm just going by what Intact and the Alberta Government set up to accommodate ride share drivers.

[ercchry]

There's a lot of things happening in this thread. Corporations, sole prop, etc. Rules are similar, but details are different.
If Corp owns it, you may have to report taxable benefit when you use it for personal use. Or if you own it personally, Corp can pay you a per km rate when you use it for biznazz.

I never got my company anywhere where I could contemplate these things. Sigh.

Hey! Someone gets it :rofl:

For sole prop the T2125 is pretty straightforward for car expenses

91240

https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2125/t2125-19e.pdf

[ExtraSlow]

Hey! Someone gets it :rofl: I'm quoting this. My head will swell now.

[shakalaka]

Shak, let me know what your CA says about it. My current usage is ~90% business use.

Basically, it seems the most legal way of using a sole prop income to offset taxes from full-time income is to lease (lets say $5k per year as example), earn $5k in sole prop income, deduct the 5k leasing cost against sole prop income and keep any and all money earned from sole prop in RRSP, thereby lowering the tax burden on full-time income.

That seem about right?

So met him today. I was right partly. $840 per month is the maximum lease payment you can write-off as long as you can justify it's required for a business. From his perspective, pretty much anyone can do that in more or less any line of work.

It also depends on the kind of vehicles. If it's a passenger vehicle - I believe he mentioned things like pick-up trucks etc. that are classified by CRA as more work-oriented or something then the deductions can be 100%. But lease payments are capped at the $840 amount.

Things are different if you own a vehicle outright, then the maximum allowable over the life of the vehicle is $30K and you can do a percentage of that each year. 5% first year and then so forth, until the maximum amount is reached. So in my case lease write off is better due to the value of the vehicle. You just need to do the math as to what works out better for you. Ultimately, what you said near the end is pretty much it. I will say though, I am incorporated as a Professional Corporation so all discussions I had were from that context. But in the past, prior to being a PC, I was a sole proprietor and I am pretty sure I followed the same idea more or less.

Also, always better to track mileage. There's an app that can do all that so I am going to buy that.

[pheoxs]

So met him today. I was right partly. $840 per month is the maximum lease payment you can write-off as long as you can justify it's required for a business. From his perspective, pretty much anyone can do that in more or less any line of work.

It also depends on the kind of vehicles. If it's a passenger vehicle - I believe he mentioned things like pick-up trucks etc. that are classified by CRA as more work-oriented or something then the deductions can be 100%. But lease payments are capped at the $840 amount.

Things are different if you own a vehicle outright, then the maximum allowable over the life of the vehicle is $30K and you can do a percentage of that each year. 5% first year and then so forth, until the maximum amount is reached. So in my case lease write off is better due to the value of the vehicle. You just need to do the math as to what works out better for you. Ultimately, what you said near the end is pretty much it. I will say though, I am incorporated as a Professional Corporation so all discussions I had were from that context. But in the past, prior to being a PC, I was a sole proprietor and I am pretty sure I followed the same idea more or less.

Also, always better to track mileage. There's an app that can do all that so I am going to buy that.

In theory depending how much he drivers for Uber could he not write off more if he keeps it personal and expenses mileage? 52 cents a km is only 1,600 kms a month. Pretty sure you could rack up 3-400km in a 8hr shift and if you do that each week you'd be close. Depending on how much he drives could you not get a bigger deduction keeping it per mile.

[oster]

91245

What do you guys think about this? High interest rate, and seems to have a high residual..

[Twin_Cam_Turbo]

91245

What do you guys think about this? High interest rate, and seems to have a high residual..

It’s a 2.7 Sport Lariat so pretty minimally loaded, $430ish/month seems to be a pretty standard “deal” they throw out there on these things.

[shakalaka]

In theory depending how much he drivers for Uber could he not write off more if he keeps it personal and expenses mileage? 52 cents a km is only 1,600 kms a month. Pretty sure you could rack up 3-400km in a 8hr shift and if you do that each week you'd be close. Depending on how much he drives could you not get a bigger deduction keeping it per mile.

I'd imagine so. I never discussed anything about mileage deductions as it's not quite applicable to me so I am not sure on that end. The accountant just said to keep track of mileage as a matter of good practice but not for deductions in my case.

[ExtraSlow]

It’s a 2.7 Sport Lariat so pretty minimally loaded, $430ish/month seems to be a pretty standard “deal” they throw out there on these things.

A common, mid-spec truck for a common price. Okay deal, not amazing.

[Misterman]

That is correct. Right now I own a car. Currently claiming all fuel and kilometres that I drive for Uber as well as depreciation. It’s basically giving me a boost on my tax deductions which equals a larger refund. I was just wondering how it would work if I do leasing instead of owning.

The biggest thing I see to worry about with a lease for Uber, is whether you can write off the big fine you'll have at lease end for KM overages.

Pretty hard to go wrong with just writing off KM I drive 50,000km a year which is a 25k tax write off.

If your choice is leasing or buying, but you're getting a new regardless, then leasing seems like the more efficient way to go for tax purposes, assuming you get that KM overage accounted for in calculation. Otherwise, you're better off not getting a new car at all from a money perspective. Not sure what you know about tax "write offs"? But I know there is a lot of people still out there that think a write off means it is free.

[16hypen3sp]

So met him today. I was right partly. $840 per month is the maximum lease payment you can write-off as long as you can justify it's required for a business. From his perspective, pretty much anyone can do that in more or less any line of work.

It also depends on the kind of vehicles. If it's a passenger vehicle - I believe he mentioned things like pick-up trucks etc. that are classified by CRA as more work-oriented or something then the deductions can be 100%. But lease payments are capped at the $840 amount.

Things are different if you own a vehicle outright, then the maximum allowable over the life of the vehicle is $30K and you can do a percentage of that each year. 5% first year and then so forth, until the maximum amount is reached. So in my case lease write off is better due to the value of the vehicle. You just need to do the math as to what works out better for you. Ultimately, what you said near the end is pretty much it. I will say though, I am incorporated as a Professional Corporation so all discussions I had were from that context. But in the past, prior to being a PC, I was a sole proprietor and I am pretty sure I followed the same idea more or less.

Also, always better to track mileage. There's an app that can do all that so I am going to buy that.

Thanks for this Shak. Much appreciated. I keep track of everything. I'm very disciplined with that, much more now than when I first started doing it.


The biggest thing I see to worry about with a lease for Uber, is whether you can write off the big fine you'll have at lease end for KM overages.

Pretty hard to go wrong with just writing off KM I drive 50,000km a year which is a 25k tax write off.

If your choice is leasing or buying, but you're getting a new regardless, then leasing seems like the more efficient way to go for tax purposes, assuming you get that KM overage accounted for in calculation. Otherwise, you're better off not getting a new car at all from a money perspective. Not sure what you know about tax "write offs"? But I know there is a lot of people still out there that think a write off means it is free.

Yes, that is certainly one thing I have looked at. The only piece of data I have for that is my current car and the amount I have driven over a two year period... ~29000km. I'm definitely getting new. I'm just trying to see what the best route is for getting a small tax advantage.

[flipstah]

Question: Do people lease supercars often to offset the depreciation and the repair costs of owning one long-term? Are there other reasons why leasing would be favourable in these type of cars?

What app do you guys use for tracking mileage? I just use Google sheets and just auto calculates for me.

[ercchry]

Thanks for this Shak. Much appreciated. I keep track of everything. I'm very disciplined with that, much more now than when I first started doing it.



Yes, that is certainly one thing I have looked at. The only piece of data I have for that is my current car and the amount I have driven over a two year period... ~29000km. I'm definitely getting new. I'm just trying to see what the best route is for getting a small tax advantage.

You do realize Shak is incorporated right?? The T2125 form is what you will use as an SP, fill it in with both scenarios and see which gives a larger deduction

[shakalaka]

Question: Do people lease supercars often to offset the depreciation and the repair costs of owning one long-term? Are there other reasons why leasing would be favourable in these type of cars?

What app do you guys use for tracking mileage? I just use Google sheets and just auto calculates for me.

It depends on how the company is structured but supercar or not, if justifiable, you can offset a bit of a cost of any vehicle and make long term ownership not as bad. Of Course that becomes a bigger consideration if you have high value vehicles. Other than that one of the reason why most supercars are leased is to keep the monthly payments 'low'. As a portion of the value of the vehicle is due at the end as a balloon amount the per-month amount doesn't end up being as large as it would be if you were straight financing.

As I explained above, unless the vehicle is classified as a 'passenger vehicle' as per CRA (there is a specific criteria) such as a pick-up truck, you can only depreciate $30K (as opposed to 100%) over the life of the vehicle. So if you spend $200K on a car only $30K can be 'written-off' over the entire period of ownership as supercars don't fall into that category as set up by CRA. So then it makes sense to lease as the per month maximum payment write-off of $840 ends up being a much higher amount to write-off over the term of the lease of say 4 years or 5 years.

I just started using this app called MileIQ. It's absolute amazing - based on other people that recommended me it. Automatically logs all your drives and then you later go into the app to classify which drive was for business and which was for personal. 40 drives a month is included for free but that's not enough and then it's a paid subscription of I believe $80 a year. It's a business expense anyway. lol.

[16hypen3sp]

Hey guys, question...

When I lease, my name and address are on the registration as well as the leasing company name (lender) and address right? Is that how that goes?

[shakalaka]

Hey guys, question...

When I lease, my name and address are on the registration as well as the leasing company name (lender) and address right? Is that how that goes?

Yes. Because the company is the lien holder and you are essentially renting the vehicle.

[16hypen3sp]

Yes. Because the company is the lien holder and you are essentially renting the vehicle.

Figured as such. Thanks shak.

[03ozwhip]

Alright leasing gurus, what do you guys think of these lease rates?

2022 Ram sport

24,000km
54 month term
3.49% with $1500.00 rebate
$936.55 Monthly

24,000km
54 month term
6.59% with $4750.00 rebate
$1024.89

Residual at 70%

This will be my first time actually leasing, but this doesn't sound great to me. I didn't want to lease for more than 3 years first of all and 24k a year is way more than I need.

What do you guys think?

[Twin_Cam_Turbo]

Absolutely insane. Run away.

[03ozwhip]

Absolutely insane. Run away.
Twin_Cam_Turbo Since you seem to know what trucks are worth right now, what is a good lease rate on these trucks?

They also say 2.49 up to 42 months with a 1500 incentive

[ExtraSlow]

I don't understand leasing, but if you buy tomorrows Calgary sun, there will be more than one dodge dealer advertising the current deals. Use those as stating points.

- - - Updated - - -

The current truck market is fucked pretty badly though, so who knows if there's deal to be had. Does seem insane to borrow money at 6% though. For anything. HELOC that shit.

And if you are wondering, Dodge does a 18,000 km/yr lease option too, which may save you money.

[Twin_Cam_Turbo]

Twin_Cam_Turbo Since you seem to know what trucks are worth right now, what is a good lease rate on these trucks?

They also say 2.49 up to 42 months with a 1500 incentive

Truthfully I don’t pay attention to the cost of new trucks much, but $50-55k to “rent” a Ram for over 4 years seems ridiculous, especially if they are quoting 70% residual. The numbers don’t add up well.

[ExtraSlow]

I'm no mathmagician, but you should check if just financing the truck is actually cheaper. (EDIT: I mean finance over a long term, like 96 months).

[03ozwhip]

I don't understand leasing, but if you buy tomorrows Calgary sun, there will be more than one dodge dealer advertising the current deals. Use those as stating points.

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The current truck market is fucked pretty badly though, so who knows if there's deal to be had. Does seem insane to borrow money at 6% though. For anything. HELOC that shit.

And if you are wondering, Dodge does a 18,000 km/yr lease option too, which may save you money.

I generally won't finance over 2% and ya 6% seems crazy, at least I know that lol

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I'm no mathmagician, but you should check if just financing the truck is actually cheaper. (EDIT: I mean finance over a long term, like 96 months).

I'm specifically looking at leasing for my business as the write off is 100% at $840 a month, not sure what it's like fir financing.

[you&me]

Alright leasing gurus, what do you guys think of these lease rates?

2022 Ram sport

24,000km
54 month term
3.49% with $1500.00 rebate
$936.55 Monthly

24,000km
54 month term
6.59% with $4750.00 rebate
$1024.89

Residual at 70%

This will be my first time actually leasing, but this doesn't sound great to me. I didn't want to lease for more than 3 years first of all and 24k a year is way more than I need.

What do you guys think?

Are you sure about those numbers?

You're paying ~$50k over 4.5 years and the residual is still 70%? Unless the Ram sport is a $120k truck, there's something funny with those numbers.

And I wouldn't want to sign a 70% residual deal on a Ferrari, let alone a truck. For reference, the "standard" residual on a 3 year lease is usually in the ballpark of 50%.

[redblack]

I think a nicely optioned sport is hitting the 75K mark which is insane. But ya, this is a terrible lease deal, most likely lots of hidden fees inside.

[03ozwhip]

I think a nicely optioned sport is hitting the 75K mark which is insane. But ya, this is a terrible lease deal, most likely lots of hidden fees inside.

I know nothing, im trying to learn what is good and what isn't, some valuable info in here though. And ya, it's 72k.

[Twin_Cam_Turbo]

I know nothing, im trying to learn what is good and what isn't, some valuable info in here though. And ya, it's 72k.

$72k truck. 50-55k lease cost, but $50k residual?

https://i.postimg.cc/XN1N7WgX/316-CAEE7-AE9-A-4-D8-B-B602-312-DADFE6-C28.jpg