Lease craze

[Payman]

I'm 79,000 km into a 80,000 km lease, and I have another year left on it. I'm going to be raped. 

[MX793]

Do you have to pay the mileage penalty if you buy out the lease when the term ends?

[AutobahnSHO]

Leasing is still not a good deal compared to buying a used car that has bottomed out on depreciation and just paying the occasional repair bill. The net cost of a well used car is only repairs. The purchase price can be recovered.
The only thing leasing beats is renting.

Oh I completely agree!!!!!      Most people are scared of repairs when really they should just put a little aside to be ready and no big deal. Get decent insurance or AAA and the tow is free.

[AutobahnSHO]

I'm 79,000 km into a 80,000 km lease, and I have another year left on it. I'm going to be raped. 

how much per (insert sensible measure of distance here) is it???

[Payman]

Do you have to pay the mileage penalty if you buy out the lease when the term ends?

No, but I want to return it. I'll most likely have to keep it and drive it into the ground.

[Payman]

how much per (insert sensible measure of distance here) is it???

15 cents/km overage fee. So @ 20,000k over, I'm looking at $3000. 

Last. Lease. Ever.

[AutobahnSHO]

15 cents/km overage fee. So @ 20,000k over, I'm looking at $3000. 

Last. Lease. Ever.

which car is it??

[Payman]

which car is it??

2013 Focus.

[MX793]

Oh I completely agree!!!!!      Most people are scared of repairs when really they should just put a little aside to be ready and no big deal. Get decent insurance or AAA and the tow is free.

I think it depends greatly on where you live, too.  In the rust belt, repairs due to corrosion get to be frequent and difficult.  Especially when you start talking about structural parts needing replacement after 8-10 years.

[JWC]

15 cents/km overage fee. So @ 20,000k over, I'm looking at $3000. 

Last. Lease. Ever.

Ouch.

The last dealership I worked wasn't really involved with leasing, but the Caddy/GMC/Pontiac/Jeep dealer before really moved leases. GM customers either walked away or owed a lot---meaning they ended up buying the car. Jeep customers, around 1997, could go over their mileage without concern---and usually the dealership had to write them a check. The value at the end of the lease was a lot more than originally estimated.

I've paid more than the minimum due on a lease, just to bank the money while I had it. I don't know if you can do that now---or if it is advisable. It ended up being a smart move in 1998 though.

[Lebowski]

All anti-lease/financing folks actively manage their 6 figure retirement accounts to the tune of double digit returns, and naturally pay for all cars they own cash and drive them for at least 15 years. Anything outside of that, even financing at 0%, is just the result of welfare state brainwashing.

Meh, there are plenty of people who lease or finance a brand new luxury or entry luxury (or otherwise pretty darn nice new) car every 3 years or so. These people are not financing because they don't make enough, they choose to be a slave to the perpetual monthly payment (and the issues ChrisV brought up, ie being underwater despite earning a good income) vs choosing to drive a 5 year old and/or cheaper car.


Granted, plenty of people finance because it is the only way they can afford a reasonably safe/reliable/practical vehicle. That's different than leasing a new 5-series every 2 years just cause.

[12,000 RPM]

Let me ask another question.

What are we defining as "being able to afford a car?" And why is a car payment "slavery"?

I think the overrepresentation of millionaires and 1%ers (as well as 1%er wannabes) here is skewing what makes for reasonable auto buying decisions. What exactly is the criteria for purchasing a luxury car that will render a positive judgement here?

[MrH]

Yeah, I don't think leasing is a bad idea if you know what you're doing.

I'm considering it simply because my mileage is pretty predictable, I switch cars a lot, and it's a lot easier than buying and selling all the time. An extra $50 a month difference is worth it to save the headache IMO.

[Lebowski]

Let me ask another question.

What are we defining as "being able to afford a car?" And why is a car payment "slavery"?

Well there's a different between a need and a want, and a car can span both ie a basic reliable car for most is a need, a 911 or a 5-series is a want. For the latter, if you can't comfortably to pay cash  (comfortably = w/o tapping emergency stash, retirement/LT savings funds etc or otherwise sacrificing important goals) you can't afford it IMO.  That's not the case for something that meets the basic reliable transportation requirement.

WRT "slave" I was talking more about getting stuck in the cycle of the perpetual car payment, facing the prospect of being upside down on a vehicle etc.

[12,000 RPM]

Well there's a different between a need and a want, and a car can span both ie a basic reliable car for most is a need, a 911 or a 5-series is a want. For the latter, if you can't comfortably to pay cash  (comfortably = w/o tapping emergency stash, retirement/LT savings funds etc or otherwise sacrificing important goals) you can't afford it IMO.  That's not the case for something that meets the basic reliable transportation requirement.

WRT "slave" I was talking more about getting stuck in the cycle of the perpetual car payment, facing the prospect of being upside down on a vehicle etc.

IDK man this seems a little silly to me. A house is a need too. What's the affordability cap on that?

Not to mention there's often no way to know if a car was bought new or used, and luxury car values drop like rocks. So what's a ~$25K spend that's worthy of a less harsh snap judgment.... a used 5 series with a warranty, or a new Camry that will probably lose more value over the same period?

[Lebowski]

IDK man this seems a little silly to me. A house is a need too. What's the affordability cap on that?

You asked my opinion.  A house is a lot different than a car, although my metrics there would be more conservative than most as well IMO. 

Not sure what you're asking in your second paragraph or how it's relevant. I wouldn't finance a used 5-series either, personally, and would guess over a ~5yr ownership period it's more expensive to own than a new Camry.

[Raza]

15 cents/km overage fee. So @ 20,000k over, I'm looking at $3000. 

Last. Lease. Ever.

Yup, I've had to pay an overage like that before. That's what happens when you get a 10K mile lease and then get a job that has you commuting 25K a year. That's the worst thing with leases; the mileage inflexibility. I wouldn't lease again unless I knew I was in a stable job situation. If I end up working in the city, a 10K lease would be fine, but if I commute out to a firm in the suburbs (or worse, another state), a lease is only an option if I still have the Z4.

[MrH]

Yup, I've had to pay an overage like that before. That's what happens when you get a 10K mile lease and then get a job that has you commuting 25K a year. That's the worst thing with leases; the mileage inflexibility. I wouldn't lease again unless I knew I was in a stable job situation. If I end up working in the city, a 10K lease would be fine, but if I commute out to a firm in the suburbs (or worse, another state), a lease is only an option if I still have the Z4.

Yeah a second car to mitigate the mileage would be preferable with a lease.

[GoCougs]

15 cents/km overage fee. So @ 20,000k over, I'm looking at $3000. 

Last. Lease. Ever.

That's what they count on.

[GoCougs]

All anti-lease/financing folks actively manage their 6 figure retirement accounts to the tune of double digit returns, and naturally pay for all cars they own cash and drive them for at least 15 years. Anything outside of that, even financing at 0%, is just the result of welfare state brainwashing.

Close, though I'd add the clarifier that the debt state is a kissing cousin of the welfare state, and a ~5-7 year turnaround.

[BimmerM3]

All anti-lease/financing folks actively manage their 6 figure retirement accounts to the tune of double digit returns, and naturally pay for all cars they own cash and drive them for at least 15 years. Anything outside of that, even financing at 0%, is just the result of welfare state brainwashing.

Do what you want with your money, but you can't deny that leasing or financing cars every few years is almost always going to be more expensive than paying cash and keeping cars for a long time.

I mean I get it. I'm never stop thinking about what my next car/cars is/are going to be. I financed the S2000 for 2.5 years (though I could have paid it off at any point - just would have made my emergency fund uncomfortably small), but I paid for the Explorer in cash and it was a huge load off my chest when I paid off the S2000. I hope to stay away from car payments as long as possible, hopefully forever.

And actively manged portfolios and funds are for suckers.

[BimmerM3]

Let me ask another question.

What are we defining as "being able to afford a car?" And why is a car payment "slavery"?

I think the overrepresentation of millionaires and 1%ers (as well as 1%er wannabes) here is skewing what makes for reasonable auto buying decisions. What exactly is the criteria for purchasing a luxury car that will render a positive judgement here?

The problem isn't so much about the car itself, it's just whether or not you have a solid financial plan. If you have short and long term financial goals, and you can fit a lease payment into your budget while still being on track to meet those goals, then whatever. But these guys are talking about people who constantly drive the newest luxury cars, but don't have any money saved up and are just waiting on "the next big thing" that will never come so that they might be able to retire some day. They don't have a plan - they just fit as much as they can into their monthly budget and assume it'll all work out eventually.

[Lebowski]

Yup, I've had to pay an overage like that before. That's what happens when you get a 10K mile lease and then get a job that has you commuting 25K a year. That's the worst thing with leases; the mileage inflexibility. I wouldn't lease again unless I knew I was in a stable job situation.

The thing is very few people have this kind of visibility with any certainty, and it is one more reason I personally wouldn't lease.  People move, change jobs, go back to school, etc, kids' activities change that they need to be shuttled around to etc. A lot can change in 3 years.

[ChrisV]

Oh I completely agree!!!!!      Most people are scared of repairs when really they should just put a little aside to be ready and no big deal. Get decent insurance or AAA and the tow is free.

So, make payments to yourself to cover repairs instead of making payments to the lease company to pay for repairs. Is there really a difference?

Bought the car outright with cash? you made payments to your savings account to buy it, so again, is there really a difference between making $300 a month payments to your savings account for 5 years to have the cash to buy a car outright?

[ChrisV]

The thing is very few people have this kind of visibility with any certainty, and it is one more reason I personally wouldn't lease.  People move, change jobs, go back to school, etc, kids' activities change that they need to be shuttled around to etc. A lot can change in 3 years.

It's the same for financing, and if you are saving up for a car and have to spend it on moving befire you've bought the car, you 're still out a car the same as if you had to sell it/let it go to move because you can't afford to make payments any more.

BTW, I've been working the same job for 14 years. But then again, I work for the governemnt, so I'll have this job as long as I want it.

[ChrisV]

Leasing is still not a good deal compared to buying a used car that has bottomed out on depreciation and just paying the occasional repair bill. The net cost of a well used car is only repairs. The purchase price can be recovered.
The only thing leasing beats is renting.

But that holds true for ANY newer car vs some old crap car that you don't give a shit about. And it holds tru for traditional financing a newer car vs a cheap old crap car. I've HAD old crap cars that onlly cost to repair. I don't WANT old crap cars anymore. And I'm not going to put my wife in an old crap car just to make some moron on the internet happy.

[Lebowski]

Bought the car outright with cash? you made payments to your savings account to buy it, so again, is there really a difference between making $300 a month payments to your savings account for 5 years to have the cash to buy a car outright?

It's the difference between making a purchase out of yesterday's saved income vs tomorrow income.  I prefer to make discretionary purchases with money I've already earned, out of conservatism.

You were the one who brought up the risk of being upside down on a vehicle and paying cash avoids that. Honestly if you're a gainfully employed adult and you face the propsect of being caught upside down on a car, you're doing something wrong IMO.

[Lebowski]

It's the same for financing, and if you are saving up for a car and have to spend it on moving befire you've bought the car, you 're still out a car the same as if you had to sell it/let it go to move because you can't afford to make payments any more.

BTW, I've been working the same job for 14 years. But then again, I work for the governemnt, so I'll have this job as long as I want it.

I was talking about committing to future mileage.

I've been at the same job 13 years, lived in the same neighborhood 8 years now, things can still change and I don't like the idea of committing to driving x miles per year with penalties for over or under shooting that.

[2o6]

Do what you want with your money, but you can't deny that leasing or financing cars every few years is almost always going to be more expensive than paying cash and keeping cars for a long time.

I mean I get it. I'm never stop thinking about what my next car/cars is/are going to be. I financed the S2000 for 2.5 years (though I could have paid it off at any point - just would have made my emergency fund uncomfortably small), but I paid for the Explorer in cash and it was a huge load off my chest when I paid off the S2000. I hope to stay away from car payments as long as possible, hopefully forever.

And actively manged portfolios and funds are for suckers.

I feel like it's only more expensive on a case by case basis. Some cars (not even higher end cars) can be expensive to maintain if a serous component fails, and some makes/models are more prone to failing. For example; a new CVT transmission is like $5000-6000 for install on something like a Sentra. Plus other basic things that need to be done.


I feel like things like that start closing the gap in regards to whether or not buying another car or maintaining your old one is the best idea

[AutobahnSHO]

So, make payments to yourself to cover repairs instead of making payments to the lease company to pay for repairs. Is there really a difference?

yes, the repairs rarely are as much as payments would be anyway. So instead of debt, you have savings and flexibility.

Bought the car outright with cash? you made payments to your savings account to buy it, so again, is there really a difference between making $300 a month payments to your savings account for 5 years to have the cash to buy a car outright?

Yes, income tax refunds or whatever.  Also cheaper car to begin with. I spent $5k on my last vehicle, a used van with high miles, pristine interior.  Also you can find deals on buying the car and you skip dealership fees and paying someone's salary. You can buy when you find what you want, rather than dealing with trying to finance and hope someone else doesn't buy it out from under you.