Leasing attitudes : with poll

[01RedDX]

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[revelations]

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Your EP3 is no 'mere Civic' but I agree, there no comparison unless you own a rare sports or luxury car, or maybe a used bagged Range Rover.

HAHA, type R civics are just slightly better grocery getters than the average one. Nothing exotic !

Sadly though, because 3 door hatches are so rare in North America - I dont see myself with any other vehicle for a long time.

[Mitsu3000gt]

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^ its bizarre how financially illiterate many people are.

I tried to explain to one person the cost of ownership of my winter beater (15 y/o civic) and they vehemently claimed it was WAY more to maintain than leasing/buying a newer vehicle. Plus it would DEFINITELY break down more.

For eg. 500$ month lease/finance rate - compared to 500$/year in maintenance (high estimate for a mere civic) and no payments , apparently this is financial rocket science.

To be fair, if you are comparing to your 15 year old Civic winter beater, you can lease a similar brand new car for less than half of the $500/mo used in your example. Probably won't be cheaper than maintaining your winter beater, but it's also not the same value proposition. $500/mo lease gets you a pretty nice $40-45K car. $500/mo finance over the same period gets you a fairly basic economy car.

[revelations]

Sure, lets take a look - a bare bones 2020 Civic hatch is about 4300$ /y for a lease (83$ per week, 52 weeks).

Thats a lot more than 500$ / year in maintenance on my beater.

This is one reason why poor people, stay poor. Basic financial thinking.

[88CRX]

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Given the fact that I cant stand most new vehicles (too much cumbersome tech, engines too complex/unreliable, questionable styling, lack of manual) - leasing is just something that will never happen for us.

Regarding the 'no worries' attitude, I have a winter 'beater' (in decent shape) vehicle and nice summer vehicles. If the beater gets damaged (cosmetically), its not a big deal. Winter tires stay on and the vehicle gets parked in the summer with a cover.

Leasing makes no FINANCIAL sense for the average low/middle income earners though. Having no car payments = huge savings.

I think you're arguing the cost/benefit of new vehicles VS old vehicles. Which is valid 100%.

This discussion should be financing a new vehicle VS leasing a new vehicle.

Edit: Also I was leasing a brand new TLX for under $400/month. It had 290hp, AWD, bluetooth, traction control, autostart, heated seats, way better safety feature, a backseat etc etc etc. The FWD EP3 had power locks/window and that's about it. It's OK in the winter but the comparison isn't even in the same ballpark.

[pheoxs]

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Sure, lets take a look - a bare bones 2020 Civic hatch is about 4300$ /y for a lease (83$ per week, 52 weeks).

Thats a lot more than 500$ / year in maintenance on my beater.

This is one reason why poor people, stay poor. Basic financial thinking.

On that logic why do you eat anything other than just bulk rice? If I have any kind of long commute I'd much rather be comfortable than as cheap as possible.

Also you aren't factoring buying the beater in the first place too. Not a big amount but still needs to be considered since eventually it will need to be replaced.

[88CRX]

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On that logic why do you eat anything other than just bulk rice? If I have any kind of long commute I'd much rather be comfortable than as cheap as possible.

Also you aren't factoring buying the beater in the first place too. Not a big amount but still needs to be considered since eventually it will need to be replaced.

This also. My Honda Element that I purchased used (i believe it was 4 years old when I bought it) lost about $180/month in depreciation over the 6 years I owned it. That does not include any repair or maintenance work.

[adam c]

if you lease a vehicle then buy it out in the end, are you not paying more for the vehicle than if you had financed it at the start?
For most people to come up with the thousands at the end to buy it, there's a finance for 3/4/5 years there, so a potential 5 year finance turns into a 8-10 year lease & finance

As someone who keeps cars for a while, I still see an outright owned car as an asset regardless if it depreciates or not, in a financial pinch I could sell that vehicle (after outright owned) if absolutely needed, for a lease I would be onto the next lease and now having to pay out financial penalties
As I get older, I'm not caring about the mods anymore, but more on the quality, comfort, tech and performance, sure you don't get that with an older vehicle however I also don't have a monthly (perpetual) car payment

Trying to understand if I'm in the right ball park or not

[revelations]

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On that logic why do you eat anything other than just bulk rice? If I have any kind of long commute I'd much rather be comfortable than as cheap as possible.

Also you aren't factoring buying the beater in the first place too. Not a big amount but still needs to be considered since eventually it will need to be replaced.

Again, low/middle income mindset. When I was in that class, I was eating bulk rice (or other such things). Fiscal austerity. Buying a 1000-2000$ vehicle vs spending 4300$ a year - after 5 years the numbers look pretty ridiculous.

Now, I just use the cheap vehicle in the winter when damage is most likely.

Also, my lowly Civic is certainly not uncomfortable by any means.

[killramos]

Buying a new car rarely makes anything in the way of financial sense. But neither does buying most anything else people buy.

If the 4000 dollars a year makes you happy that’s money well spent.

[pheoxs]

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if you lease a vehicle then buy it out in the end, are you not paying more for the vehicle than if you had financed it at the start?
For most people to come up with the thousands at the end to buy it, there's a finance for 3/4/5 years there, so a potential 5 year finance turns into a 8-10 year lease & finance

As someone who keeps cars for a while, I still see an outright owned car as an asset regardless if it depreciates or not, in a financial pinch I could sell that vehicle (after outright owned) if absolutely needed, for a lease I would be onto the next lease and now having to pay out financial penalties
As I get older, I'm not caring about the mods anymore, but more on the quality, comfort, tech and performance, sure you don't get that with an older vehicle however I also don't have a monthly (perpetual) car payment

Trying to understand if I'm in the right ball park or not

Lease per month will always be less than finance per month so if you save/invest the difference you can come out again. But it does depend on the interest rate and terms.

Let's say for example both are 3.25% because thats whats on Mazda's lease rate now. A top of the line loaded CX5 will be around 45k out the door so I'll use that because I kind of want one. (Obviously cheaper vehicles out there but also people sometimes go for fancier than that).

Lease 48 months @ 3.25% = 562$/month with a residual of 20k$
Finance 48 months @ 3.25% = 990$/month and you own it outright (I adjusted the % because their current finance promos are less, but trying to compare apples to apples)

Difference of 428$ per month. 428$ / month invested in a index fund which nets 6% return (Which is historically close to average, but significantly less than the past decade actually) would give you a final value of 23,154$ (with 2,610 taxable as capital gains at 50% of your tax rate so lets say 20% net is 522$.

So 23154 - 522 = 22.6k left over and you pay off the residual as soon as your lease is done and you have 2.6k$ left over in cash at the end.

Now thats with a 6% return, historically the S&P500 has increased 9.4% year over year across the last 5 years which would've netted closer to 4k in profit. Obviously at some point markets do drop and such so it is a riskier option. But if you can get finance/lease rates of 0-2% then you could even beat them just getting a basic 3% GIC

[nickyh]

Typically we pay cash for our cars, i set money aside every month for a "car payment" so when we are done with our cars we have cash on hand to buy.
Usually my husband and I keep our cars for ~6-12 years, so it makes sense.

But, I had just purchased my car and the fund was depleted, while we planned to keep my husbands car for another 3 years a costly repair forced our hands to sell it. Husband did not know what he wanted, other than he wanted 1) car, 2) AWD, and 3) manual. So we are currently leasing his car. We should be able to buy it and sell it privately, and pocket $5-6K to go towards something he wants when the term is up. If not, we walk away.....
We put zero down on the lease and our friend negotiated the deal (the finance office had to approve the deal with the manager as we were basically taking it for cost).

Coles notes:
If you plan to keep it, buy it.
If you don't know what you want or change cars often, leasing is better.

[Mitsu3000gt]

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Sure, lets take a look - a bare bones 2020 Civic hatch is about 4300$ /y for a lease (83$ per week, 52 weeks).

Thats a lot more than 500$ / year in maintenance on my beater.

This is one reason why poor people, stay poor. Basic financial thinking.

Like I said, it's not the same value proposition. A 15 year old econobox will always be cheaper than leasing a new vehicle. The question becomes if you can lease a brand new vehicle with full warranty, recent safety features, etc. for a couple hundred a month, it might be worth it to some. If all you care about is price, I'm sure you could find an even cheaper way to go about it. You also did not account for what it cost you to buy that beater, tires, breaks, further depreciation, any repairs, an accident, etc. It's not automatically way cheaper and nobody has a crystal ball. The proper comparison though is new vs new, since a super old beater vehicle will always be very cheap, but comes with it's own list of disadvantages.

[Buster]

the argument for running older cars to minimize depreciation isn't as good nowadays, with safety tech improving so dramatically. A car even a few years old isn't nearly as safe as new ones.

[Thaco]

I have always considered leasing to be more like renting, its alright if you don't want to have any of the responsibility, but i'd rather finance, that feels more like a mortgage where you're paying to eventually own.

That said i have never and likely will never buy new so the initial depreciation isn't really something i take in to consideration.

[shakalaka]

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I have always considered leasing to be more like renting, its alright if you don't want to have any of the responsibility, but i'd rather finance, that feels more like a mortgage where you're paying to eventually own.

That said i have never and likely will never buy new so the initial depreciation isn't really something i take in to consideration.

You could always buy out your car at the end of your leasing term by paying whatever the residual is.

Sometimes you can even come out ahead with leasing depending on the car you buy and the demand for it and the amount you pay.

For example, my father's last Range Rover Sport Autobiography was leased and the payments weren't exactly low. Not quite sure definitely around $2500 vicinity a month. At the end of the 3 year lease, his residual was supposed to be just under $70K. He kept it for 3 years and drove it maybe 30-40K km's as he has several other vehicles (well below the allowed limit). Before turning it in back to RR I suggested to look into selling privately. I literally sold the car overnight for $10K more than what his residual was and even at that price point the buyer got a sweet deal as the vehicle was somewhere like $7-$8K cheaper than the next comparative version.

Porsche's (not all) from what I understand also work out similarly as they too tend to not depreciate as much as other vehicles.

[e31]

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the argument for running older cars to minimize depreciation isn't as good nowadays, with safety tech improving so dramatically. A car even a few years old isn't nearly as safe as new ones.

Who is this soccer mom that hacked into Buster's account?

The argument for running nice older cars is to minimize the owner's depression, not the vehicle depreciation.

"Buy vs lease" can only be deliberated if the auto market produces new vehicles that get people into showrooms. Unfortunately for humanity, the "Samsung A-to-B auto appliance" shitboxes seem to do well in sales.

[Buster]

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Who is this soccer mom that hacked into Buster's account?

The argument for running nice older cars is to minimize the owner's depression, not the vehicle depreciation.

"Buy vs lease" can only be deliberated if the auto market produces new vehicles that get people into showrooms. Unfortunately for humanity, the "Samsung A-to-B auto appliance" shitboxes seem to do well in sales.

huh?

I'm saying that running an older car to save a buck isn't worth it any more because a new car buys you a much safer car.

[C4S]

I highly recommend Lease over finance or Cash, especially most luxury brands don't offer any additional discount for Cash anyway .. (Domestic may still do)

Some people say they only finance, never lease, because they never own the car when lease .. but if they finance for 96 month, they don't own the car till the have made the last 96th payment anyway ...

[benyl]

One key thing people are forgetting is the mileage requirement. If you are driving 30K kms per year, leasing might not work for you even if the payment is lower.