vlydog Posted August 11, 2010 Report Share Posted August 11, 2010 About to come off a 36 month lease. I can either finance for up to 66 months interest free or sign another lease agreement. Both deals are 0 dollars out of pocket. The 66 month finance option is only 20 dollars more per month. I also keep my cars spotless and extremely well maintained. which deal would you take? Thanks Quote Link to comment Share on other sites More sharing options...
donerix Posted August 11, 2010 Report Share Posted August 11, 2010 I guess it depends on the residual value after the lease. Then you can compare the two options at the time of the end of the lease and see what's better (also depending on the market value at this time). My 2 cents ... Quote Link to comment Share on other sites More sharing options...
vlydog Posted August 11, 2010 Author Report Share Posted August 11, 2010 I know What the buy out is on the lease but how one predict the market value of a car three years down the road? Quote Link to comment Share on other sites More sharing options...
jmb Posted August 11, 2010 Report Share Posted August 11, 2010 Another thing to consider, which is what I usually do, is do you really like the car and enjoy driving it and will it be nice to not have a car payment? If you don't really get wood driving/maintaining/playing with the car then it might be better to look elsewhere... Quote Link to comment Share on other sites More sharing options...
redwatch Posted August 11, 2010 Report Share Posted August 11, 2010 Do you really want to keep a 3 year old car another 5 years? It's hard to predict the residual value of the vehicle now, but the other thing to consider is once the warranty is up, how's the service and maintenance going to be? Quote Link to comment Share on other sites More sharing options...
vlydog Posted August 11, 2010 Author Report Share Posted August 11, 2010 should have mentioned that even with the finance deal, I most likely would be selling or trading in the car After three years anyway. This is for a different car the the current car. Quote Link to comment Share on other sites More sharing options...
panerai153 Posted August 11, 2010 Report Share Posted August 11, 2010 So what you're saying is you can either finance another car for 66 months, or lease that same car for 36 months, is that correct? You would be starting out with a new vehicle, not the one you have now. I believe that there are several factors to weigh in the lease vs purchase of a car. One very important consideration is the number of miles per year. If you have no problems staying under the maximum allowed miles, then a lease may be OK. If you put a lot of miles on a car, the mileage penalty can be pretty Draconian. Also your leased car will be under warranty the entire length of the lease. Your purchased vehicle will be out of warranty for 2+ years, if you drive it until it's paid for. Some folks used to say, stay away from leases because you never build up any equity in the vehicle. the problem with that theory is that if you decide to trade after 3 years, the car will likely not be worth any more than what's owed on it, so that theory doesn't hold water unless your purchase length is the same as your lease length, both 36 months in your case. If that were the case, at the end of 36 months you can walk away from the lease and you are basically back at zero, if you purchase, you own the car with some value still in it. You just came off a lease deal, how satisfied were you with the lease terms? I never leased a vehicle, because for many years, I put too many miles on a car each year to make a lease feasible, but I know it has become very popular. My son has a large farming operation, and they lease almost all their equipment. In his case, it's a direct write off instead of a depreciation, which in the case of some farm equipment the depreciation schedule is 5-10 years. they lease for 2 years, always have pretty new equipment, and it's always in warranty. Yours is a hard question, because every individuals situation is different. A lease may be ideal for some folks and a costly trap for others. Depends on what you want to do and feel comfortable with. Quote Link to comment Share on other sites More sharing options...
vlydog Posted August 11, 2010 Author Report Share Posted August 11, 2010 One very important consideration is the number of miles per year. 19,000 in three years current car. I will be turning This one in. Quote Link to comment Share on other sites More sharing options...
vlydog Posted August 11, 2010 Author Report Share Posted August 11, 2010 So what you're saying is you can either finance another car for 66 months, or lease that same car for 36 months, is that correct? That is correct. Some early morning research uncovered a CNNMoney.com story that indicates my new car will retain 51% of its value over 5 years. Quote Link to comment Share on other sites More sharing options...
vlydog Posted August 11, 2010 Author Report Share Posted August 11, 2010 Any other have opinions? Thank you so much for the responses so far; they have been very helpful. Quote Link to comment Share on other sites More sharing options...
ispytonyv Posted August 11, 2010 Report Share Posted August 11, 2010 My current car is the 10th I've owned, and the last I'll buy outright for a while. I'm 2 years into the 5 year repayment and way under water, so when I go to sell (even though like you I baby my cars) in another 6 months or whenever... yeah I don't keep them long either... I'll have to come up with $4-5,000 out of pocket. Been in the same spot many times, and each time I think "for the same money I could have leased a nicer/newer car, then just turned it in and walked away." Compounded on top of that is when you trade in a lease but have kept it in great shape, often you can use the buy out option for hypothetically $15k and turn around and sell your just-off-lease car for $17-20k. In the scenario you described, you're paying more per month to buy, and because of the shape of a depreciation curve you'll owe money when you get rid of it in 3 years. More up front and in the hole later? This one is a no brainer, go for the lease! Quote Link to comment Share on other sites More sharing options...
maxman Posted August 11, 2010 Report Share Posted August 11, 2010 Im In the car business and I will never buy a new car again,why? depreciation. The average car looses about $3.000 the day you drive It off the lot. I like to keep my cars for at least five years,so the lease option Is not for me,I like to own my [censored] after making payments for years. Maybe the lease works for some but not me. I like to purchase a car about two or three years old with really low miles. Last year I purchased a 2007 Infinity M35x for $26.000,the car had 17.000mi and could not be told from new,still smells new. The car was over $49.000 when new. I keep my car In the garage and It Is pamperd like a baby.It now has 23.000 mi and will be payed off in a little less than a year. This Is the way I like to buy cars,It works for me.Good luck Vlydog Mike Quote Link to comment Share on other sites More sharing options...
TeeJay Posted August 11, 2010 Report Share Posted August 11, 2010 If you like it, keep it, if not, why not treat yourself to a new runabout Quote Link to comment Share on other sites More sharing options...
chronoluvvv Posted August 11, 2010 Report Share Posted August 11, 2010 so basically what most of you guys are saying is that leasing is a bad idea unless you can write off the payments and it makes better sense to buy a 'used' car versus a new one, right ? I'm paying close attention to this thread because I'm in the market for a decent set of wheels as well Quote Link to comment Share on other sites More sharing options...
vlydog Posted August 11, 2010 Author Report Share Posted August 11, 2010 My brother-in-law always says "buy used/lease new." Quote Link to comment Share on other sites More sharing options...
Watchmeister Posted August 11, 2010 Report Share Posted August 11, 2010 Im In the car business and I will never buy a new car again,why? depreciation. The average car looses about $3.000 the day you drive It off the lot. I like to keep my cars for at least five years,so the lease option Is not for me,I like to own my shit after making payments for years. Maybe the lease works for some but not me. I like to purchase a car about two or three years old with really low miles. Last year I purchased a 2007 Infinity M35x for $26.000,the car had 17.000mi and could not be told from new,still smells new. The car was over $49.000 when new. I keep my car In the garage and It Is pamperd like a baby.It now has 23.000 mi and will be payed off in a little less than a year. This Is the way I like to buy cars,It works for me.Good luck Vlydog Mike I am with Maxman. Cars are like watches although not good for 50 years. I prefer to buy 2-3 years old coming off lease with under 30,000 miles and pay a premium to buy Certified Pre-Owned with a top-of the line warranty. If you catch a dealer at the right time you can often get them to provide an extended warranty for the same price. And I tend to go local as you have someone to yell at who wants your next car purchase if you have a problem. It also enables you to buy much more car that way. Quote Link to comment Share on other sites More sharing options...
TwoTone Posted August 11, 2010 Report Share Posted August 11, 2010 I am with Maxman. Cars are like watches although not good for 50 years. I prefer to buy 2-3 years old coming off lease with under 30,000 miles and pay a premium to buy Certified Pre-Owned with a top-of the line warranty. If you catch a dealer at the right time you can often get them to provide an extended warranty for the same price. And I tend to go local as you have someone to yell at who wants your next car purchase if you have a problem. It also enables you to buy much more car that way. +1 Although after being in the car business for 25 years minus a 3 year sabbatical, and leasing to many to count vehicles, if you can stand pre-owned, then that's the way to go... My current ride is a 2006 Mercedes E350... Had a retail of $58,600 in '06... I picked it up via Mannheim auto auction in Newport Beach after it came in on a lease return [24 months] for $18,500... The car is fully loaded and only had 17k miles on it... Needless to say, I'm very happy with it... If you insist on new, then what your doing is the right approach... Crunch numbers... If they come out fairly close, then lease... You have much less risk... J. Paul Getty always said - Lease things that depreciate and purchase things that appreciate... Good advice when it applies... TT PS: If you'd like current Mannheim info feel free to shoot me a PM Quote Link to comment Share on other sites More sharing options...
maxman Posted August 11, 2010 Report Share Posted August 11, 2010 I am with Maxman. Cars are like watches although not good for 50 years. I prefer to buy 2-3 years old coming off lease with under 30,000 miles and pay a premium to buy Certified Pre-Owned with a top-of the line warranty. If you catch a dealer at the right time you can often get them to provide an extended warranty for the same price. And I tend to go local as you have someone to yell at who wants your next car purchase if you have a problem. It also enables you to buy much more car that way. Quote Link to comment Share on other sites More sharing options...
maxman Posted August 12, 2010 Report Share Posted August 12, 2010 +1 Although after being in the car business for 25 years minus a 3 year sabbatical, and leasing to many to count vehicles, if you can stand pre-owned, then that's the way to go... My current ride is a 2006 Mercedes E350... Had a retail of $58,600 in '06... I picked it up via Mannheim auto auction in Newport Beach after it came in on a lease return [24 months] for $18,500... The car is fully loaded and only had 17k miles on it... Needless to say, I'm very happy with it... If you insist on new, then what your doing is the right approach... Crunch numbers... If they come out fairly close, then lease... You have much less risk... J. Paul Getty always said - Lease things that depreciate and purchase things that appreciate... Good advice when it applies... TT PS: If you'd like current Mannheim info feel free to shoot me a PM Dam T,you should have been arrested for grand theft auto. Fantastic price on a E series, Im a cerified auto broker and I dont think I could have done better than that,nice Quote Link to comment Share on other sites More sharing options...
eddhead Posted August 16, 2010 Report Share Posted August 16, 2010 Dam T,you should have been arrested for grand theft auto. Fantastic price on a E series, Im a cerified auto broker and I dont think I could have done better than that,nice Another vote for Maxman. The other consideration of course is how much down for each option. But generally speaking, if you plan to hold the car for 3 years or less, leasing or buying used is generally a good option. This is because new cars depreciate at high rates when they are closest to being new; indeed, they depreciate dramatically the moment you drive it out of the dealer's lot. The rate of depreciation declines as the car gets older. So to a period up to three years, you probably will not have owned the car long enough to cover the bulk of the depreciated value. At 5 years or so, the rate of depreciation declines. Between 3 and 5 it is a crapshoot (some models hold their values better than others) Of course other considerations have already been mentioned; i.e. how many miles do you put on, what is the mile allowance on the lease, how much down for each option, etc... But generally if you hold the car for 3 or so years, lease. If more, considering buying. For premium cars (think porsche, Benz and BMW's) consider certified pre-owned. For lease and pre-owned, someone else will be or is paying for the bulk of the depreication. Quote Link to comment Share on other sites More sharing options...
maxman Posted August 25, 2010 Report Share Posted August 25, 2010 Another vote for Maxman. The other consideration of course is how much down for each option. But generally speaking, if you plan to hold the car for 3 years or less, leasing or buying used is generally a good option. This is because new cars depreciate at high rates when they are closest to being new; indeed, they depreciate dramatically the moment you drive it out of the dealer's lot. The rate of depreciation declines as the car gets older. So to a period up to three years, you probably will not have owned the car long enough to cover the bulk of the depreciated value. At 5 years or so, the rate of depreciation declines. Between 3 and 5 it is a crapshoot (some models hold their values better than others) Of course other considerations have already been mentioned; i.e. how many miles do you put on, what is the mile allowance on the lease, how much down for each option, etc... But generally if you hold the car for 3 or so years, lease. If more, considering buying. For premium cars (think porsche, Benz and BMW's) consider certified pre-owned. For lease and pre-owned, someone else will be or is paying for the bulk of the depreication. Works for me Quote Link to comment Share on other sites More sharing options...
vlydog Posted August 25, 2010 Author Report Share Posted August 25, 2010 Went with a three year lease and 0 out of pocket. Basically it was a sign and drive deal. Thanks to all who offered their suggestions and advice. I am strongly considering a certified pre-owned model next time. Quote Link to comment Share on other sites More sharing options...
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