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Thinking about one-pay lease of ES350 but have a question?

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Old 03-04-14, 04:57 PM   #31
SW13GS
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Originally Posted by Joeb427 View Post
Interesting.
I've always heard getting a lease is tougher with bad credit vs buying.
Leasing in general requires better credit than buying, its riskier for the lender.

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Originally Posted by christcorp
I'm still trying to figure out, except for the person who's got the type of job where their car is a "STATUS SYMBOL" and they require a new car continuously; why in the world anyone would LEASE a car instead of buying it.

If the answer is you can't afford the monthly payments of owning vs monthly payments of leasing, then you most likely shouldn't have that car in the first place. You should get a car you can AFFORD and save up money for the car you WANT.

There are no advantages to "Leasing" a car. You're restricted on the amount of miles you can put on it. You're restricted from adding modifications or changing the car. And this topic is even more confusing because the OP mentioned paying the entire 3 year lease up front. If you can afford to do that, they you shouldn't have any problem buying the car.
I can't tell you why everybody leases, but I can tell you why I lease. Just to set the stage, I make plenty of money...I could pay in cash, finance, whatever vehicles costing well more than this. I choose not to, I choose to lease. Its not about driving a car one cannot afford, the payments on this car are a very small fraction of my monthly income. Here is why I choose to lease:

1. I can write off a vehicle for business use. You get tax deductions for business use when you purchase too, but they are more complicated involving depreciation, and if you trade a car before it is fully depreciated you have to recapture some of that depreciation and pay it back to the IRS. My taxes are complicated enough, leasing makes it simpler and I save a little more on taxes also.

2. I'm going to replace the car every 3 years or so anyways. This is a big one...if you're someone that would happily keep a car 5+ years...you should buy. I am someone that around year 3...I'm going to get that itch and want something new. Because of that fact, I'm going to have issues recapturing depreciation (see reason 1), and I'm going to have to deal with trading in or selling the car and the hassles that come with that. Quite frankly my most valuable resource is my time, and I want it to be as simple as possible.

3. My money is invested, not sitting in the bank. Why would I want to take $60,000 out of a performing investment when I can lease a car or finance a car for such absurdly low interest rates? Not only do the returns on my investments cover the cost of that interest...they surpass it...and since I'm self employed the interest is tax deductible.

Those are my reasons. Yes, I'm sure people lease because they "can't afford to buy", but dont think everyone does. Leasing is one of those financial management tools like an interest only mortgage that is certainly overused, but has its place for the right consumer. I'm that consumer.

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The financial truth is: If instead of leasing a new car every 3 years, if you would buy the 1-2 year old car, hold it for 5-6 years instead of the 3 year lease, you will have the equity in the car so you can sell it; put that money as a down payment towards the next 1-2 year old car, and have the same payments 4 years as you would with the lease. The difference however is, if you don't sell the car after 5 years, you're actually MAKING MONEY. You're making $4000-$5000 a year.
Nothing inaccurate about this statement. However...life is not always about doing something the cheapest, most cost effective way. I work hard, I am successful, I love cars and I am going to drive what I want and I'm going to replace that car as often as I want. Is it expensive? Yes. Do I care? Not really...I derive a great deal of enjoyment from my cars.

Bottom line...I don't want someone else's used car...and I don't want to drive an old outdated car whether its paid for or "making me money" or not. Cars are my passion, and I will spend on them. If we don't enjoy our passions why be alive? Why work so hard? I don't want to eat at Applebees. I don't want to go on vacation and stay at the Comfort Inn...and I don't want to buy a 3 year old car and drive it until it stops running. Bottom line.
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Old 03-05-14, 12:54 AM   #32
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SW13GS - Well stated and you made your points without coming off as arrogant, insulting and condescending.
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Old 03-05-14, 05:45 AM   #33
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SW13GS - Well stated and you made your points without coming off as arrogant, insulting and condescending.
I agree...
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Old 03-05-14, 05:47 AM   #34
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Originally Posted by MikePA View Post
SW13GS - Well stated and you made your points without coming off as arrogant, insulting and condescending.
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Originally Posted by LexBob2 View Post
I agree...

I also agree....
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Old 03-05-14, 09:55 AM   #35
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I'm still trying to figure out, except for the person who's got the type of job where their car is a "STATUS SYMBOL" and they require a new car continuously; why in the world anyone would LEASE a car instead of buying it.

If the answer is you can't afford the monthly payments of owning vs monthly payments of leasing, then you most likely shouldn't have that car in the first place. You should get a car you can AFFORD and save up money for the car you WANT.

There are no advantages to "Leasing" a car. You're restricted on the amount of miles you can put on it. You're restricted from adding modifications or changing the car. And this topic is even more confusing because the OP mentioned paying the entire 3 year lease up front. If you can afford to do that, they you shouldn't have any problem buying the car.

Don't worry though. Leasing is a marketing ploy that the ignorant have been suckered into for many many years. No one, other than the individual who NEEDS the new car all the time for their job status; e.g. broker, realtor, etc. where their IMAGE is part of their business; is the only people that need to lease. But anyone else, there's NEVER been a legitimate reply as to WHY LEASE. Having spent many years traveling around the world and working in 14 countries, I still couldn't justify leasing a car. I know some will say: "To each their own". So true. It's your money. You earned it. You are free to waste it if you want. I'm still trying to hear a legitimate reason for leasing a new car instead of buying it. All I've ever heard is "Rationalization". Not reasons.
I

My thoughts exactly!!
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Old 03-05-14, 11:47 AM   #36
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I

My thoughts exactly!!
Then make a decision for yourself not to lease. Nobody's coming in here saying you're crazy for buying or paying cash or buying used or whatever.

Don't however try to insinuate that all of us who lease are "ignorant" as "christcorp" did. I assure you, I am not ignorant.
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Old 03-05-14, 03:25 PM   #37
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Then make a decision for yourself not to lease. Nobody's coming in here saying you're crazy for buying or paying cash or buying used or whatever.

Don't however try to insinuate that all of us who lease are "ignorant" as "christcorp" did. I assure you, I am not ignorant.
Okay, point taken. I DO feel that the majority that do lease are trying to get into a car that they really can't afford. Yes, for business purposes, I see your point. But as one that holds on to cars for 10-15 years, leasing would make absolutely no sense. I am also allergic to car payments, but that is MY problem, I guess.
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Old 03-05-14, 03:35 PM   #38
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Okay, point taken. I DO feel that the majority that do lease are trying to get into a car that they really can't afford. Yes, for business purposes, I see your point. But as one that holds on to cars for 10-15 years, leasing would make absolutely no sense. I am also allergic to car payments, but that is MY problem, I guess.
I can't speak to the majority, but I can tell you that there are legitimate plusses to leasing for a lot of people. Just because some people may use it as a way to get into a car they can't afford doesn't mean that the product itself is not worthwhile.

It has nothing to do with business really, it has everything to do with trading cars often. It would make no sense for you because you keep cars for a long time. If someone is going to trade every few years anyways, leasing may make a lot of sense for them even without the tax benefits. It streamlines the process, it removes the risk of short term resale and depreciation losses. In most states it keeps them from paying sales tax over and over again because their state only charges a monthly use tax (I'm not so fortunate).

It also begs the question...what does "not being able to afford" something mean? To you it may mean being able to pay something in cash. To someone else it may mean the payments to buy. Well...everybody has different priorities, and if someone can't pay for something in cash, or comfortably make the higher finance payments, but they can make the lower lease payments and are comfortable always having a car payment...who is to say they "cannot afford" the car?
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Old 03-05-14, 05:10 PM   #39
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Leasing lowers monthly payments, although you will have payments for your life's duration. But... if you only keep the car for three years, you really do not incur any repair bills on the car as it is always under factory warranty. The only thing you pay for is gas, insurance, wear items like tires and maintenance costs like oil changes etc. The guy that buys your off lease car and keeps it for another three years will be buying a new battery, brakes and other costlier maintenance items. So, in comparing your costs versus say me, that bought the 2011 ES350 and will keep it for a long time. Your monthly costs are lower than mine until my car is paid off. But then, my repair bills may replace my monthly payment if something big goes wrong. So in a nutshell, your strategy works well so long as you can deduct the majority of the lease cost for business.
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Old 03-05-14, 06:51 PM   #40
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Yes. You mentioned many of the reasons I said were pseudo exceptions. I mentioned that depending, you can write a lease on taxes. I also mentioned that money isn't everything and there are some who will continue with a car payment forever and want a new car every 3-4 years. I admitted those reasons. Most who lease however don't fall into those 2 categories. And I even admitted that for some, financial reasons and money aren't important to them. There's no arguing that financially it costs more than owning. But you're correct. If you want a new car every few years, accept that you'll have car payments forever, then leasing can be rationalized.

Then again, there are still those who will refinance their home over and over and think that's better than paying off their mortgage.

But I will say that not always is leasing stricter on credit checks. I've seen first hand where a person couldn't get a car loan but could lease a car.
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Old 03-05-14, 07:44 PM   #41
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I would like to clarify. SW13GS falls into the "Exception" that I mentioned numerous times. But lets be real; that IS the exception. Most people who lease are not doing so for business expenses and tax write offs. There are some that "believe" that they will have car payments forever, and therefore they might as well lease forever being it's a lower payment. But that doesn't me that it's financially smart. Again; I'm not talking about the exception like SW13GS. While I don't know SW13GS net worth, I can speak for myself and say with the exception of an exotic specialized car, like the Lamborghini Veneno Roadster, which retails for $4.5 million; there isn't a brand new mass produced vehicle that I couldn't buy in cash if I really wanted to. But I still wouldn't lease. But again; I've mentioned the exception and SW13GS apparently falls into this category. But to believe most people who lease have similar circumstances is naive.

And finally, while we're at it, why do so many people take offense to word "ignorant". If you do, then maybe you're ignorant of what the word "ignorant" means. I happen to be ignorant when discussing how a particle accelerator works. All ignorant means is; lack of knowledge, information, or experience. It doesn't imply that someone is stupid. It doesn't imply that someone is acting arrogantly or contemptuous. It's simply a statement saying that many people simply "DON'T KNOW" or they don't have the information needed to make an educated decision or have an educated conversation of. All of us are "ignorant" of something. Yet, some people think that it's a derogatory word.

Anyway, bottom line: Most people who lease a vehicle are not doing it for business reasons or for any reason that is financially prudent. They're doing it so they can drive a car that they otherwise can't afford or they think is the financially smart this to do because they they they HAVE to always have a car payment. And in the long run, it is costing them a whole lot more than if they bought it. And those who believe that you save a lot of money leasing a car because you're saving lots of money on "Routine Maintenance" like brakes and such don't know how inexpensive it is. I'm not talking major malfunctions (That warranties cover). Most repairs are relatively inexpensive compared to a never ending car payment. Unless of course you believe you must go to the LEXUS , BWM, Caddy dealer for all your maintenance.

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Old 03-05-14, 08:54 PM   #42
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As I said, the tax implications are one reason I lease. Not the only reason, and not even the main reason. The main reason is that I want a new car every 3 years, and the easiest most cost effective way to accomplish that goal is to lease. Believe me, I've done the math. It is less expensive than owning and trading every 3 years in the calculations I've run. It's obviously more expensive than buying a car and driving it for 10 years, If I was happy driving a car for 5, 10 years then I would not lease. But I'm not. Like I said...we all have different goals. I obviously approach things I want to do for a value perspective, but I do what I want to do. Leasing lets me do what I want to do in the least costly way possible.

Say what you will about your intentions, but the tone of your post was certainly derogatory and negative about leasing and the people who are "suckered" into it. The language was very clear.

You were ignorant (remember, not a word to be taken negatively) about the subject and we educated you. You're welcome.
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Old 10-05-14, 09:08 PM   #43
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christcorp-Old Topic- but let me explain leasing with this view.

Take 45k at 4 percent a year which comes out to be about 57k if invested. 45k invested at 7 percent at six years has a value of 67,500.

Now your average car will depreciate to about 20 percent by year six. So it equals 9k.


So after 6 years- two new cars -lease total cost would be 12-24k after savings growth.

The cash purchase cost would be 36k. Lease has 57-67k in the bank- the cash guy- has a 9k valued car. Now if the cash purchase guy- took the 500 a month and put it into savings every month- he comes out with 41k-45k cash. Advantage to lease here. Lots of unknown but when it really comes down to it - pretty much a wash between the two with the edge to the lease..

Now the leaser that doesn't put any money away initially- costs 36k over six years. But saves about 200 a month over the purchase loan costs. 200 a month at 4-7 percent, lease guy has 16k-18k at cash end of lease.

On I final note- in my state- I only pay tax on the lease payment- not the entire cost of the car. Yes- As the purchased car gets older- it gets more attractive to own- but I don't keep my cars long and I don't have many neighbors driving cars much older than 5 by me. .

I can change these numbers many ways- but its not as ugly or stupid as you make it seem. And for many it can be a very smart financial decision. I think you are very misinformed about leases and some advantages.
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Old 10-05-14, 09:08 PM
 
 
 
 
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