Itchytoe

I was going post this as a reply in another thread, but then I realized it had nothing to do with the original post, so here's a quick rundown of the difference between buying and leasing.

New lease: 2,000 down, 480 a month for 3 years. You pay a total of $19,280, then you get a bicycle because they get the car back.

Purchase of 3 year old vehicle: Decent deal, not the best, not the worst, $31,000. Sell it at the end of 3 years for again not the best deal, not the worst, $18,000. That's an $12,000 investment. Ok, yea you finance it, and you pay back $14,000 in that time. Maintenance cost? pfft, you've got to maintain any vehicle you get, even a lease so that cancels out.

19,280-14000=5,280. First lease costs $5,000 more buying someone's that just came off of lease. Let's say you do it again, cuz you still have to drive. 3 years later, that next lease costs you another $19,280. Let's buy another vehicle, we did the math and that's a $14,000 investment. Oh look, you save another $5,000. So at the end of 6 years, you're $10,000 ahead, and instead of driving a new vehicle, you drove a 3 year old vehicle.

Let's not sell it and see if that makes a lease more mathmatically attractive. Most you're putting into it is $31,000 because that's the original price. Ok, finance it. $34,000. Cost of lease - cost of purchase = $7,560. Oh and you have a vehicle that is now essentially free. Go for a third lease, and you spend another $19,280 when I spend nothing on my vehicle. Now the purchase is $26,840 ahead. Eh, ok, maintenance costs now. Nah, I don't like maintenance, I'll dump it on someone for $8,000. Now neither of us have a vehicle, but I've got $34,840 sitting in the bank. Now I pay cash for a 3 year old vehicle just coming off lease. It's mine, free and clear, and you get to drop another $20,000 on a lease. Three years later, I'm $20,000 and a car ahead of you.

True, I drove an older vehicle than you, but over 10 years, I've got $20,000 in the bank, and a vehicle with no note. That's $20,000 and a 2006 G35S that's 100% paid for. What to do with this $20,000? Twin turbo? Body kit? Wheels? Suspension? All of the above? Oh, trade it and my $20,000 on a brand new G that will also be 100% paid for. Now we're both driving new vehicles, except you've got a lease, and mine's paid for. $480 a month towards wheels, suspension, twin turbo, whatever I want, and worst I can do is break even with a lease.

*I got all of my prices from NADA guides since that is what most banks use to finance. Prices for purchased vehicle are about what I would pay for a vehicle of stated age, fully loaded at a dealer. You save even more if you buy from a private party.

cy7878

iTrader: (1)

Lease and purchase question is heavily dependent on the person, the car and how often one changes cars.

your analogy works for you and the G. But may not work for my real estate agent and his MB.

Itchytoe

It's not an analogy, and it works for every production vehicle in the world. After 10 years, the difference is roughly the cost of the vehicle.

Every car dealer works off the same financial principles. MB, Aston Martin, Chevrolet, Rolls Royce, Dodge... Do the research and be honest with yourself and you'll see. Try it with a Toyota Corolla, MB C class. Numbers will come out a little different, but they're all basically the same.

cy7878

iTrader: (1)

I agree with you that if the car is kept for 10 years. The guy who gets a MB or Bently for business is not interested in keeping the car that long.

gooddeal

You will save even more money if you buy a 7 years old car and drive to the ground. You pay more for maintenace but it's still a lot less than the new car depreciation.

1BadAssG

You would save about $60000 if you just rode your bike, but again, why do we work everyday? To enjoy life and spend the money we make. If we all save and buy used cars, then who's gonna buy the new ones. If we don't buy the new ones, then there won't be used ones. As a matter of fact, that company will go out of business. Circle of life.

cy7878

iTrader: (1)

Different people have different views on what is a good option.

I for one, will never buy a BMW or MB. The forums are riddled with reliability issues past warranty periods. I would lease for 3 years and give it back.

I would consider keeping the G for 7-10 years because I feel it will go the distance and not cause much trouble. In OP's analogy, if I buy used and drive it 10 years, I would save about the purchase price..... BUT the fun of car buying for me is to get a new car that I KNOW has never been molested and any problems that arise is between me and the car maker.

Itchytoe

If you read the post, you'll see that none of the vehicles are driven for 10 years. Most are purchased at 3 and sold at 6 (driven for 3 years just like the lease), but you get way more for your money if you drive one for 6 years instead of 3. If you did drive one for 10 years, you'd save even more money, yes, but that's not part of the post. I even got rid of the vehicle at 6 years admitting that it's old, and sold it cheap.

cy7878, really, there's no analogy. I also posted nothing about buying a used vehicle and driving it for 10 years. Did you read the post?

TheIvoryG

iTrader: (3)

Your math is off, as you wouldn't have a $34K car and 20K in the bank after just 10 years. But I get what you're saying and you make a perfectly valid point. But if its all about finances, then why not do it with a Civic? Save more on principal, more on gas, way more on maintenance, ultimately leaving you with even that much more in the bank. You don't because there is more to it than dollars and cents, you want to drive a G. Everybody just needs to make the decision that works for them.

Tazicon

iTrader: (1)

I bought my Jeep for 28k, paid it off in 5 years drove it for another year then traded it in and got 15k for it. It cost me 13k to drive it for 6 years. This just doesn't work with leases.

gooddeal

This is not a thread about buying v. leasing. This thread is about keeping the car longer saves money OR buying used v. buying (leasing) new.

QX4cor

I'll jump in as I was the one who started this debate with you in the other thread.
I totally understand your point, but still think your math is a bit off: if you financed 34k over 5 yrs, you'll pay back 20k in the first 3yrs. Then there is the selling price. 18k for a 6 yr old G? Hmmm, there are 2005 sedans loaded all over eBay for 12,000.
Saying that maint is all the same is just not true. In 3yrs you won't need tires or exhaust work. You'll need both within 6 yrs though. You may luck out on brakes in 3 yrs, but it's an Infiniti, so maybe not.
I've done all scenarios. Leased for 3yrs, then bought it out over 5 more. I've bought a 3yr old vehicle, and driven it for 5 years. Both cost A BUNCH in maint over the last 2yrs.
I've lease my last 4, and will never own again. As I stated in the previous post, this only works if you drive low miles. Clearly if you're pointing 15-20k miles a yr one a car, you need to buy. In this case, I'd prob buy used myself. But if you're driving under 12k miles a year, the difference in cash is not what you're talking, and in my opinion well worth it to have a brand new ride (that you know has been driven in a certain way), under a full warranty.
To each his own, but your Nathan is just plain old off.

QX4cor

*math is off.
Also, on your buying a 3yr old, and driving it until it's paid fir scenario: I'm not sure many people over 20 yrs old are going to be putting rims and turbos on an 8-9 yr old car. C'mon.

LSUtigerME

I'll chime in here since I've been running numbers on this scenario a lot lately. These are actual numbers from a vehicle I am looking at (2011 Toyota Highlander).

You are not comparing apples to apples. You can't compare a 3 year old car, to a brand new car. Typical depreciation rates are weighted in first 2 years, diminishing after that. A person is not typically comparing a used (older) car to a brand new one. It's possible I guess, I would just have to dig harder for the numbers (used car interest rates are higher as well).

Here's what I have for my example lease. The goal was to have the same amount due at signing, and assumes the purchase option resale value is equivalent to residual value. It does not include any interest earned from the money saved on monthly payments.


The whole point it, unless you run the numbers, leasing is NOT like "just renting". You're actually only paying for the portion of the vehicle you'll be using.

gooddeal

1. The residual on the lease is usually higher than the actual resale value but you also pay more when you lease. So, I think it's about even.

2. Sale tax- you will get the credit for sale tax in most states when you trade in so, 22588 x 9.5% = 2145 should be minus from you total.
Lease Total = 18,734
Purchase Total = 20,299 - 2,145 = 18,154

3. Also, if you have the cash, you don't have to finance. You're still losing the 1-2% interest - 25% tax. Leasing is good for me when I can find a bank that offers a 5% CD.