Are you leasing or buying?

[roneel]

I am buying mine as leasing is for the big spenders who want to rent a car long term..Already got my Plates reserved and on a layby and m saving up for the Red 86...hope we can get the full blown version here in New Zealand as well as i will only take the top spec for the best bargin!

[n2oinferno]

Not sure really. Considering leasing, and then seeing what's around in a few years. Never leased before, but I'm not as against it now as I used to be. I have a company car, so I'm not at all worried about going over on mileage.

That you can't modify a leased car isn't exactly true.. You just can't do irreversible mods. Even at that, I've seen them done as well. There were VW guys that notched their frames and bagged their cars, and they were leased. Not sure what happened when they turned them back in though, because I was sorta forced out of owning a VW when the dealership crashed mine, so I stopped paying attention to the community.

[KidWonder]

So if I want to buy the FR-S would I be able to make monthly payments on it? I've always thought you could only make monthly payments on the leasing option. Sorry for my ignorance.

[Swancoat]

Originally Posted by Tainen

I think a lot of people here have hit it on the head- leasing is a big waste of money- but no one has proven it.

Here's some basic figures to think about.

Let's take a standard 3 year lease. 12k miles a year max, with insane overage charges (which btw, the vast majority of people go over on, and make these calculations even crazier)
let's say it's a fairly standard $250 a month, as with most cheap sporty cars.

OK, 250 a month for 36 months, without going over 12k miles a year. And we're talking base model car, because they don't lease fully optioned models without jacking up the price a ton. (and they don't give incentives or deals on those either).

Let's take a fairly standard $2300 downpayment on the lease.

$2300 downpayment (10%, average)
$9000 in payments over three years
$11,300 total. for 3 years. You just paid around 3800 a year just to have the ability to drive this car less than the national average (15k a year). Say the base model FR-S was 23 grand out the door. You just paid 11 grand to drive it for 3 years, and you give it back, and now you have nothing to show for it, and the car is still worth 18 grand or so (because it's low miles and unmodified).

OK, now let's do the math on financing the same exact car.

23 grand base price
same $2300 downpayment
let's say a 3.9% interest rate. You would be financing 20,700 and your payments would be:
$380 a month.
(I did not factor in tax- it varies by state)
So after 3 years, you've paid off 13,680 dollars on the car, plus your $2300 downpayment, and you owe $8,766.36 on the car. It has as many miles as you want on it, it's yours, and you can mod it.

The difference: With the purchase, you had an extra $130 a month in payments over 3 years, a total of $4,680. But you own the car, you only owe $8,800 on it, and you can sell it at that time for let's say 17 grand (less than what the lease buyout would be worth by far). you'd walk away with 3-5 grand MORE than the lease option, even after you subtract the extra 4700 you paid over the 3 years.

SO- the math on the lease doesn't make sense. Unless you are willing to walk away from a car that you invested 11 grand in after three years, and have nothing to show for it- and you can afford that. (and again, I did not factor in all of the fees they charge you when you return the lease. on average, over a thousand dollars for regular wear and tear, and mileage overages).

Please read and learn, and don't waste your money. The only reason dealerships offer leases, is because they make a lot of money on them.

Honestly dude, you're dreaming here. You made a nice example with 'simple numbers' but it's completely unrealistic and shows that you REALLY don't know how the calculations work.

The problem with your leasing example is that you take a 23000 car and assume an 18000 residual after 3 years. As IF. Using your insane residual combined with your 'typical' payments, it implies you're borrowing money at about 11%. Yet in your purchase example you borrow money at 3.9%! So of course purchasing is a better deal in your example - you've rigged the game.

Here's how it works kids: IF the interest rate on the lease is the same as what you can get when purchasing (and it should be close), AND IF the residual is what that car will actually be worth at that time, then you should be INDIFFERENT between buying and leasing (net of fee differences, etc).

Now in reality, no one really knows if the residual is what the car's market value is at that time, (but the lease includes a free put option on that value), and convenience, ability to mod the car, etc is certainly worth something too, so it's still going to vary person to person.

[Longhorn248]

Originally Posted by KidWonder

So if I want to buy the FR-S would I be able to make monthly payments on it? I've always thought you could only make monthly payments on the leasing option. Sorry for my ignorance.

Have you heard of financing?

http://auto.howstuffworks.com/buying...-financing.htm

Do a little bit of reading and then come back if you have some more questions

[KidWonder]

Originally Posted by Longhorn248

Have you heard of financing?

http://auto.howstuffworks.com/buying...-financing.htm

Do a little bit of reading and then come back if you have some more questions

Thanks

[3scapist]

Buying, I don't lease or finance toys.

[ashtray]

Actually, since the interest rate on a lease is hidden in the payment (not advertised, or able to shop around at different banks for a better rate), the rate is usually above 10%, unless they are running a lease special. You can ask what interest rate they are using when you talk to the dealership finance people.

As there might be a bunch of younger adults (or teens) here, cars you drive in high school are "important". Usually you either get mom and dad's hand me down Accord, a cheap beater or your parents buy you that new BMW. That's your normal groupings. There's a few people that work jobs to afford their own car of choice. But the point is you're "that guy with the Mustang" - everyone know what everyone drives and you show it off daily.

Fast forward to college - most freshman are not allowed to have a car on campus (depending on the school), and if you do, it's parked a mile away in a massive lot and you rarely drive it. And no one cares WHAT you drive - only props are IF you have a car bc then people you don't know will be asking for rides to the store. "Hey, I hear that guy in room 110 has a car...".

So -FRS = cool car for high school image, no one cares in college. Get out of college and you'll be in with peers who earn 5x your pay and are driving $40k cars, which aren't even impressive - its the CEO who drives a new AMG, or the guy in Engineering who has the ZR1. No one will care about the fresh new hire with the $22k Scion.

[Gearbanger]

Im buying and paying straight cash.

[Longhorn248]

Originally Posted by ashtray

Actually, since the interest rate on a lease is hidden in the payment (not advertised, or able to shop around at different banks for a better rate), the rate is usually above 10%, unless they are running a lease special. You can ask what interest rate they are using when you talk to the dealership finance people.

As there might be a bunch of younger adults (or teens) here, cars you drive in high school are "important". Usually you either get mom and dad's hand me down Accord, a cheap beater or your parents buy you that new BMW. That's your normal groupings. There's a few people that work jobs to afford their own car of choice. But the point is you're "that guy with the Mustang" - everyone know what everyone drives and you show it off daily.

Fast forward to college - most freshman are not allowed to have a car on campus (depending on the school), and if you do, it's parked a mile away in a massive lot and you rarely drive it. And no one cares WHAT you drive - only props are IF you have a car bc then people you don't know will be asking for rides to the store. "Hey, I hear that guy in room 110 has a car...".

So -FRS = cool car for high school image, no one cares in college. Get out of college and you'll be in with peers who earn 5x your pay and are driving $40k cars, which aren't even impressive - its the CEO who drives a new AMG, or the guy in Engineering who has the ZR1. No one will care about the fresh new hire with the $22k Scion.

Very good perspective and accurate on all accounts.

[Tainen]

Originally Posted by Swancoat

Honestly dude, you're dreaming here. You made a nice example with 'simple numbers' but it's completely unrealistic and shows that you REALLY don't know how the calculations work.

The problem with your leasing example is that you take a 23000 car and assume an 18000 residual after 3 years. As IF. Using your insane residual combined with your 'typical' payments, it implies you're borrowing money at about 11%. Yet in your purchase example you borrow money at 3.9%! So of course purchasing is a better deal in your example - you've rigged the game.

Here's how it works kids: IF the interest rate on the lease is the same as what you can get when purchasing (and it should be close), AND IF the residual is what that car will actually be worth at that time, then you should be INDIFFERENT between buying and leasing (net of fee differences, etc).

Now in reality, no one really knows if the residual is what the car's market value is at that time, (but the lease includes a free put option on that value), and convenience, ability to mod the car, etc is certainly worth something too, so it's still going to vary person to person.

Residual sale price doesn't change the calculations at all. could be 10k, could be 20k- what matters is what the difference between leasing and buying would be at the end of that period. slightly higher for the leased car, of course, due to potentially less miles/mods.
I pulled the math from amortization calculators and used common lease terms, downpyaments, and figures. The illustration was chalkboard style for sure, but it gets the point across. If you want to show math to back up your claims then cool- but dealerships don't work that way. They just ask how much you can pay a month, for a lease, they don't get into interest rates, it's all invisible to you the buyer. (you ignored the vast majority of my math and attacked the single most worthless number to the value proposition, because if residual is so crazy low, you can still sell the car compared to lease buyout cost with a favorable outcome, pretty much gauranteed)

Anyways- no need to get angry. If you can't debate respectfully, don't debate at all.

[WingsofWar]

whats also really nice about leasing when you are planning on getting rid of the car anyway is someone can take over the lease really easily, wipe your hands clean and opt out of the payments. And the person who is taking over the remaining lease is getting a great fucking deal. Especially if the person taking over decides to buy the car, its substantially cheaper even with the "low" miles.

(usually)

[ucla bruin]

If you guys are comparing leasing vs buying, how much depreciation are you assuming at the end of, say, 2 years?

20% loss, 25% loss?

[hwoalang]

Originally Posted by Tainen

I think a lot of people here have hit it on the head- leasing is a big waste of money- but no one has proven it.

Here's some basic figures to think about.

Let's take a standard 3 year lease. 12k miles a year max, with insane overage charges (which btw, the vast majority of people go over on, and make these calculations even crazier)
let's say it's a fairly standard $250 a month, as with most cheap sporty cars.

OK, 250 a month for 36 months, without going over 12k miles a year. And we're talking base model car, because they don't lease fully optioned models without jacking up the price a ton. (and they don't give incentives or deals on those either).

Let's take a fairly standard $2300 downpayment on the lease.

$2300 downpayment (10%, average)
$9000 in payments over three years
$11,300 total. for 3 years. You just paid around 3800 a year just to have the ability to drive this car less than the national average (15k a year). Say the base model FR-S was 23 grand out the door. You just paid 11 grand to drive it for 3 years, and you give it back, and now you have nothing to show for it, and the car is still worth 18 grand or so (because it's low miles and unmodified).

OK, now let's do the math on financing the same exact car.

23 grand base price
same $2300 downpayment
let's say a 3.9% interest rate. You would be financing 20,700 and your payments would be:
$380 a month.
(I did not factor in tax- it varies by state)
So after 3 years, you've paid off 13,680 dollars on the car, plus your $2300 downpayment, and you owe $8,766.36 on the car. It has as many miles as you want on it, it's yours, and you can mod it.

The difference: With the purchase, you had an extra $130 a month in payments over 3 years, a total of $4,680. But you own the car, you only owe $8,800 on it, and you can sell it at that time for let's say 17 grand (less than what the lease buyout would be worth by far). you'd walk away with 3-5 grand MORE than the lease option, even after you subtract the extra 4700 you paid over the 3 years.

SO- the math on the lease doesn't make sense. Unless you are willing to walk away from a car that you invested 11 grand in after three years, and have nothing to show for it- and you can afford that. (and again, I did not factor in all of the fees they charge you when you return the lease. on average, over a thousand dollars for regular wear and tear, and mileage overages).

Please read and learn, and don't waste your money. The only reason dealerships offer leases, is because they make a lot of money on them.

+1 :happy0180: