Trying to Lease/buy first car...why is this process so confusing!?!
09-04-2007, 04:13 PM
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Trying to Lease/buy first car...why is this process so confusing!?!
OK guys, I need some advice..ive been surfing your post for days and I just cant skim through anymore!! haha
...So im 24 year old mechanical engineer, two years out of college and have been looking for a house. I have about 20K saved up for down payments on a car or house and a credit score of 820 thats well built up over the last 7 years...So anyways, i started looking at the G35's but realized they are 20K!??! and i can finance a car and keep the cash in my pocket still...
So I dont get this lease vs buy issue....from what i understand, see below..and correct me if im wrong.
It looks like your leases are about 63% residual which puts you at paying around $26,460.00 for 36 mouths or $735.00 a month w/o putting a deposit down (assuming car tag is $42,000.00).
So the confusing thing to me is, why would you want to pay 63% of the cars worth and then in 3 years get nothing??
because If i Buy...i have the following rates from USAA if i put down 12,000
Amount:1 $30,000.00 $30,000.00 $30,000.00 $
Your Rate: 4.99% fixed 4.99% fixed 4.99% fixed Fixed Variable
Term: 48 months 60 months 72 months months
Payment: $690.74 per month $566.00 per month $483.01 per month
I was always under the assumption that on a lease, you only pay the depreciated value...so the 37% but have to give the car back (100-63=37).
Someone explain why I would want to lease instead of buy?
They dont seem to able to do loans for over 40K without making it a 60 month.
But for 60months and no downpayent at 4.99% it is $792.40 per month
...So im 24 year old mechanical engineer, two years out of college and have been looking for a house. I have about 20K saved up for down payments on a car or house and a credit score of 820 thats well built up over the last 7 years...So anyways, i started looking at the G35's but realized they are 20K!??! and i can finance a car and keep the cash in my pocket still...
So I dont get this lease vs buy issue....from what i understand, see below..and correct me if im wrong.
It looks like your leases are about 63% residual which puts you at paying around $26,460.00 for 36 mouths or $735.00 a month w/o putting a deposit down (assuming car tag is $42,000.00).
So the confusing thing to me is, why would you want to pay 63% of the cars worth and then in 3 years get nothing??
because If i Buy...i have the following rates from USAA if i put down 12,000
Amount:1 $30,000.00 $30,000.00 $30,000.00 $
Your Rate: 4.99% fixed 4.99% fixed 4.99% fixed Fixed Variable
Term: 48 months 60 months 72 months months
Payment: $690.74 per month $566.00 per month $483.01 per month
I was always under the assumption that on a lease, you only pay the depreciated value...so the 37% but have to give the car back (100-63=37).
Someone explain why I would want to lease instead of buy?
They dont seem to able to do loans for over 40K without making it a 60 month.
But for 60months and no downpayent at 4.99% it is $792.40 per month
Last edited by caper; 09-04-2007 at 04:26 PM.
09-04-2007, 04:31 PM
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So with leasing I pay 26,460...with buying I pay 47,544.00 but have a 5 ear old car at the end. which the 2003 G35's sell for about 20K in mint condition.
Sooo I would have 47,544 -20K out of pocket = 27,544. and thus I saved 1,084.00 by leasing it have having to stay within 12K miles per year?
Sooo I would have 47,544 -20K out of pocket = 27,544. and thus I saved 1,084.00 by leasing it have having to stay within 12K miles per year?
09-04-2007, 04:53 PM
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Lease or Buy
Leasing is just another way to buy a car that gives you more options. On a 36 month lease you have the option to walk away from the car at the end of the 36 month term. You also have the option to trade the car in at the dealership. (this would work in your favor if the car held its value well, then you could actually make some money on the deal. eg. your lease payoff is 26,000 and the car is valued at 27,000.) You could also sell the car anytime on your own to a private party and possibly make even more money. Or last you could keep your car and finance the remaining residual on the lease so that you could own the car. On every lease you have a milage allowance (usually 12,000 miles a year) that you must stay under only if you decide to walk away from the car at the end of the 36 month lease. The miles on the car dont matter if you choose to sell the car on your own, keep it, or trade it in at the dealership
On a purchase of say 72 months (6 years) you may sell your car anytime to a private party or trade into a dealership, but you cannot just drop it off after 36 months and walk away. Keep in mind that everyone always thinks they own the vehicle when they purchase it, but you don't own it till you get the pink slip in the mail. You can own your lease too, by just financing the remaining lease payoff. (eg you pay for 36 months on your lease then finance the remainder for another 36 months your total loan only goes for 72 months and you own it!)
On a lease you pay tax on every payment. So you can decide if you want to pay all the tax on the vehicle by keeping it, otherwise you only pay half of the tax.
Purchase= $40,000 +fees is $44,000 amount financed
Lease= $40,000 and fees are spread out on every payment
The 63% residual that you reffered to will be the same if you purchase it as well. Leases are designed by the banks to reflect the actaully market value of the car after the lease term is up. This math holds true for purchases as well!
In my opinion a lease is the way to go becuase you could keep your money in the bank, and have a payment that would be close to $80 a month cheaper. Plus you get more options.
The only time a lease does not work for someone is when you modify your car. The bank requires you to turn in the car in the same condition as when you took delivery. Tint is ok but as far as like upgrades to stereo's and engine mods, you cant do any of that stuff.
On a purchase of say 72 months (6 years) you may sell your car anytime to a private party or trade into a dealership, but you cannot just drop it off after 36 months and walk away. Keep in mind that everyone always thinks they own the vehicle when they purchase it, but you don't own it till you get the pink slip in the mail. You can own your lease too, by just financing the remaining lease payoff. (eg you pay for 36 months on your lease then finance the remainder for another 36 months your total loan only goes for 72 months and you own it!)
On a lease you pay tax on every payment. So you can decide if you want to pay all the tax on the vehicle by keeping it, otherwise you only pay half of the tax.
Purchase= $40,000 +fees is $44,000 amount financed
Lease= $40,000 and fees are spread out on every payment
The 63% residual that you reffered to will be the same if you purchase it as well. Leases are designed by the banks to reflect the actaully market value of the car after the lease term is up. This math holds true for purchases as well!
In my opinion a lease is the way to go becuase you could keep your money in the bank, and have a payment that would be close to $80 a month cheaper. Plus you get more options.
The only time a lease does not work for someone is when you modify your car. The bank requires you to turn in the car in the same condition as when you took delivery. Tint is ok but as far as like upgrades to stereo's and engine mods, you cant do any of that stuff.
09-05-2007, 12:40 AM
#5
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Here's a little lesson about "theory" vs. "reality".
In theory, you would be able to sell your 5 year old G and make some of your money back... more or less about the same as you would pay for a lease (as long as you stay within the 12k or 15k miles per year...).
In reality, this only applies if you have no paint work, no accidents, no damage whatsoever to your car. I learned this the hard way as I was trying to sell my Lexus. Thieves tried to steal the HID headlights, in the process destroying my hood, fender and bumper. The fender had to be replaced and repainted. The bumper and hood needed to be repainted as well. Unfortunately, when you go value your car at the end... with hopes of selling it, a buyer would be able to pull a Carfax report and see that there was body work done to the vehicle. An appraiser would be able to tell without anything, just by the paint marks...
Moral of the story, buying vs. leasing comparisons in a vacuum (devoid of any real world input) may screw you. Try to take into consideration your accident history, how well you take care of your vehicles, etc...
For me it was easier to lease (and cheaper).
Try www.leaseguide.com. They have a leave v. buy calculator. It should put you on the right path as far as money is concerned, and then take into consideration the above real world advice... good luck.
BTW.. if your residual is 70%, that's probably after 24 months... make sure you read your terms carefully.
In theory, you would be able to sell your 5 year old G and make some of your money back... more or less about the same as you would pay for a lease (as long as you stay within the 12k or 15k miles per year...).
In reality, this only applies if you have no paint work, no accidents, no damage whatsoever to your car. I learned this the hard way as I was trying to sell my Lexus. Thieves tried to steal the HID headlights, in the process destroying my hood, fender and bumper. The fender had to be replaced and repainted. The bumper and hood needed to be repainted as well. Unfortunately, when you go value your car at the end... with hopes of selling it, a buyer would be able to pull a Carfax report and see that there was body work done to the vehicle. An appraiser would be able to tell without anything, just by the paint marks...
Moral of the story, buying vs. leasing comparisons in a vacuum (devoid of any real world input) may screw you. Try to take into consideration your accident history, how well you take care of your vehicles, etc...
For me it was easier to lease (and cheaper).
Try www.leaseguide.com. They have a leave v. buy calculator. It should put you on the right path as far as money is concerned, and then take into consideration the above real world advice... good luck.
BTW.. if your residual is 70%, that's probably after 24 months... make sure you read your terms carefully.
09-05-2007, 09:53 AM
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Honestly, if you are someone who gets tired of cars quickly (like I do) then leasing is the way to go. I could never keep a car for more then 3 years so for me to buy it and then sell it after three years I would get hosed. Not to mention I would spend a lot more money and have to deal with the selling of my car. On a lease I can get a brand new car every few years and satisfy my need for a brand new vehicle. Also, if you drive more then 15k miles per year you may want to consider purchasing a car vs. leasing due to the extra costs in mileage penalties.
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09-05-2007, 10:14 AM
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im thinking that buying an older G35 outright may be the way to go....but i havent seen any 04 or 03's under $23,000.00
mainly because i like the boxer look, i can modify it, and the depreciation value has started to settler out
mainly because i like the boxer look, i can modify it, and the depreciation value has started to settler out
09-05-2007, 11:12 AM
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It looks like your leases are about 63% residual which puts you at paying around $26,460.00 for 36 mouths or $735.00 a month w/o putting a deposit down (assuming car tag is $42,000.00).
So the confusing thing to me is, why would you want to pay 63% of the cars worth and then in 3 years get nothing??
09-05-2007, 02:29 PM
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Just got my quote in from the dealer...im confused again.
CAR PRICE: $42,415.00
Black 2008 G37, full loaded...every option in 6speed
LEASE:
36 Months, 12,000 miles
$685-695 per month
$2200 due at sign for 1st payment and tag/tax title
FIANCE though dealer:
72 Months
$750-760 per month
zero down
So calculating the buyout, thats 72 X 750 = 54,000. how is that possible?
that mean 54,000/42,415 = 1.273% interest rate? Keep in mind he did a "ballpark" quote without getting my true credit score which is about 820. My bank auto loan would give me about 5.99% rate.
CAR PRICE: $42,415.00
Black 2008 G37, full loaded...every option in 6speed
LEASE:
36 Months, 12,000 miles
$685-695 per month
$2200 due at sign for 1st payment and tag/tax title
FIANCE though dealer:
72 Months
$750-760 per month
zero down
So calculating the buyout, thats 72 X 750 = 54,000. how is that possible?
that mean 54,000/42,415 = 1.273% interest rate? Keep in mind he did a "ballpark" quote without getting my true credit score which is about 820. My bank auto loan would give me about 5.99% rate.
Last edited by caper; 09-05-2007 at 02:44 PM.
09-05-2007, 03:04 PM
#11
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you're comparing apples to oranges... you have a 3 year lease vs. a 6 year buy...
If all you care about is low monthly payments, I would suggest a lease, as leases usually tend to be a little lower per month. However, in your scenario, by the time you pay off your car (6 years) you could have had 2 leased vehicles...
Leasing allows you to pay only for the depreciation of the vehicle along with a rental fee (interest rate from bank), without having to worry about your resale value for the car at the end of that time.
Purchasing a vehicle allows you to buy the vehicle from the start, and at the end of the term you own your vehicle and no more payments follow (I personally dont want to be driving a 5-6 year old vehicle).
Consult one of the many websites offering a "buy v. lease" calculator or decision maker. You should be able to see which one is right for you.
By the way... in your above example you're using the wrong numbers. To see how much you're paying over the price of the vehicle, you take your 54000-42000 = $12,000. That's how much you're paying in sales tax and interest. You can work the percentages from there.
If all you care about is low monthly payments, I would suggest a lease, as leases usually tend to be a little lower per month. However, in your scenario, by the time you pay off your car (6 years) you could have had 2 leased vehicles...
Leasing allows you to pay only for the depreciation of the vehicle along with a rental fee (interest rate from bank), without having to worry about your resale value for the car at the end of that time.
Purchasing a vehicle allows you to buy the vehicle from the start, and at the end of the term you own your vehicle and no more payments follow (I personally dont want to be driving a 5-6 year old vehicle).
Consult one of the many websites offering a "buy v. lease" calculator or decision maker. You should be able to see which one is right for you.
By the way... in your above example you're using the wrong numbers. To see how much you're paying over the price of the vehicle, you take your 54000-42000 = $12,000. That's how much you're paying in sales tax and interest. You can work the percentages from there.
Last edited by marsb007; 09-05-2007 at 03:07 PM.
09-05-2007, 03:06 PM
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Why are you multiplying 72*750? All that is giving you is the amount you are paying for the vehicle which is the purchase price and interest so yes 54,000 is possible. Also, if you are looking for a used 05 coupe I have one that is possibly for sale. PM me and I will give you the details.
The lease is predicated on a couple of things. The purchase price, the residual value, and the money factor which is in essence the interest rate. Based on those three things you can enter the numbers into a lease calculator and determine your monthly payment on the car for the 3 year period you will have it.
The lease is predicated on a couple of things. The purchase price, the residual value, and the money factor which is in essence the interest rate. Based on those three things you can enter the numbers into a lease calculator and determine your monthly payment on the car for the 3 year period you will have it.
09-05-2007, 03:14 PM
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Just got my quote in from the dealer...im confused again.
CAR PRICE: $42,415.00
Black 2008 G37, full loaded...every option in 6speed
LEASE:
36 Months, 12,000 miles
$685-695 per month
$2200 due at sign for 1st payment and tag/tax title
FIANCE though dealer:
72 Months
$750-760 per month
zero down
So calculating the buyout, thats 72 X 750 = 54,000. how is that possible?
that mean 54,000/42,415 = 1.273% interest rate? Keep in mind he did a "ballpark" quote without getting my true credit score which is about 820. My bank auto loan would give me about 5.99% rate.
CAR PRICE: $42,415.00
Black 2008 G37, full loaded...every option in 6speed
LEASE:
36 Months, 12,000 miles
$685-695 per month
$2200 due at sign for 1st payment and tag/tax title
FIANCE though dealer:
72 Months
$750-760 per month
zero down
So calculating the buyout, thats 72 X 750 = 54,000. how is that possible?
that mean 54,000/42,415 = 1.273% interest rate? Keep in mind he did a "ballpark" quote without getting my true credit score which is about 820. My bank auto loan would give me about 5.99% rate.
I'll tell you this much you need to do some research on car financing, leasing etc. There is so much information on the internet...Google is your friend.
The 72 X 750 is the total amount paid for the car, taxes, title, tags, interest, etc. Taxes will vary depending on where you live. So the amount is higher than the 42,415 shown there. You need the total amount of money financed not just the sticker price of the car.
If you did use that as the Total Amount financed (42,415), your interest rate would be about 8.25% with a monthly payment of $750, which is very high if you have excellent credit. At 5.99% your payment is approximately $700.
A Simple way to calculate payments, interest rate etc is search for: car finance calculator on google. Edmunds.com has a caluclator and tons of information.
http://www.edmunds.com
http://auto.howstuffworks.com/car-financing.htm
Your best bet is to read about financing/leasing and how it all works though instead of someone trying to explain it to you directly. If you have questions after reading up on them, then ask them here.
09-05-2007, 04:39 PM
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soo...i have an APPT with the dealership in 30 minutes...what are some things i need to get down.
im just unsure how the loans go...my USAA says I can get an $43K auto loan at 683.00 a month for 72months at 4.99% Fixed rates... Yet the dealership is quoting me $750-760 a month on a buyout....the 683 is exactly the same as the lease from the dealership..quoted 685-695
So what does this mean? (and thanks for the websites..ive just finished reading them) I just realized that calculate i did was ridiculous..just stressin about what to buy...not to mention the first time ive dealt with pushy salesmen...i had to scrap him off just so he wouldnt drive to my work and come pick me up after lunch)
im just unsure how the loans go...my USAA says I can get an $43K auto loan at 683.00 a month for 72months at 4.99% Fixed rates... Yet the dealership is quoting me $750-760 a month on a buyout....the 683 is exactly the same as the lease from the dealership..quoted 685-695
So what does this mean? (and thanks for the websites..ive just finished reading them) I just realized that calculate i did was ridiculous..just stressin about what to buy...not to mention the first time ive dealt with pushy salesmen...i had to scrap him off just so he wouldnt drive to my work and come pick me up after lunch)
09-05-2007, 04:51 PM
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soo...i have an APPT with the dealership in 30 minutes...what are some things i need to get down.
im just unsure how the loans go...my USAA says I can get an $43K auto loan at 683.00 a month for 72months at 4.99% Fixed rates... Yet the dealership is quoting me $750-760 a month on a buyout....the 683 is exactly the same as the lease from the dealership..quoted 685-695
So what does this mean? (and thanks for the websites..ive just finished reading them) I just realized that calculate i did was ridiculous..just stressin about what to buy...not to mention the first time ive dealt with pushy salesmen...i had to scrap him off just so he wouldnt drive to my work and come pick me up after lunch)
im just unsure how the loans go...my USAA says I can get an $43K auto loan at 683.00 a month for 72months at 4.99% Fixed rates... Yet the dealership is quoting me $750-760 a month on a buyout....the 683 is exactly the same as the lease from the dealership..quoted 685-695
So what does this mean? (and thanks for the websites..ive just finished reading them) I just realized that calculate i did was ridiculous..just stressin about what to buy...not to mention the first time ive dealt with pushy salesmen...i had to scrap him off just so he wouldnt drive to my work and come pick me up after lunch)
1. The Dealer interest rate is a lot higher
2. You need to find out the exact loan amount the dealer was quoting that monthly payment on. Most likely the interest rate they were quoting at was approx. 8.25% if 42,415 is what the loan amount was.
A loan for $43K will not cover taxes, title and tag if it is not included in the price above...
Honestly...if I were you, I'd put this purchase off until you understand everything. Obviously you aren't going to use Infiniti's financing when you have USAA available and is pretty much the cheapest around if you are military etc.
Actually I wouldn't even go to the dealership. Learn this stuff first. Get financing through USAA. Have someone you know who understands all of the details go with you if possible because even if you do know how to negotiate and understand the numbers, etc the finance guy there is going to just keeping throwing stuff at you to confuse you and jack the price up.