Tipping point between leasing and buying
12-24-13, 02:21 AM
#46
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I completely agree and i don't think financing is wrong if you plan on keeping a luxury car more than three years. Who the hell wants to keep a luxury car more than three or four years though? It is just that, a LUXURY car. Not a car of necessity but rather a car you buy to have the latest and greatest and spoil yourself with the newest tech and luxury features. Buying a luxury car to drive it into the ground makes no sense at all. Honestly is a luxury car stlll luxurious five years down the road? A 2013 Corolla is more of a luxury car than a 1st generation IS. Again my point in all of my posts on this thread is that most people choose to lease luxury cars because it makes more sense for them not because they cant afford to buy it in cash.
12-24-13, 06:24 AM
#47
Lexus Test Driver
You should always, always get term insurance. Also, my only point about leasing vs writing a check is this - what costs more over the long run? Buying a car outright and driving it until it breaks down, or perennially leasing a brand new car every 3 years? The answer is it depends on how long you're able to drive the car until it breaks down. Roughly speaking, if it's anywhere around 10-12 years you will almost certainly come out ahead by buying the car outright versus leasing. Of course by leasing you're renting a brand new car every 3 years, but you're paying dearly for that in the long run. The point here is that it's more expensive in the long run to lease a relatively reliable car like a Lexus IS than it is to write a check for one outright and drive it for 10 years. Thus, logically, if you can't afford to write a check for the car with the intention of driving it for 10+ years (in principle), then you cannot afford to lease a comparable car every 3 years. It's simple math that most people don't bother to go through. That was my only point about leasing vs buying outright, and I think that was the point that McBrain was trying to make.
Your right about only 1 thing you can't be guaranteed 8.5%
But since you don't understand how an IUL builds index segments each year based on s&p performance, you don't understand how insurance companies invest their money and you don't understand what a ripoff is buying term insurance.
Do you know the odds of ever collecting a death benefit from term insurance are less than 1%! Because people either out live the contract or they fail to make the premium payments. That's why it's so cheap and makes the insurance company nearly 100% profit!
That's why they can afford to pay interest on cash value life insurance because of all the fools who bought term!
What you failed to realize is that you only die once!
Name me one other investment tool or strategy that you can buy with 100k investment and turn it into a million guaranteed tax free money! You see the guarantee is that you WILL die the trick is to make certain you have a policy in force on that day! Forget the cash value for a moment, just get that concept and tell me how a term policy that the odds are will only last you till your 60 and then evaporates is going to do anything for you. It's like renting a car! You give the money to the ins company and have no ownership in the policy when it's done.
Verses having a policy that's guaranteed to pay out nearly 10 times what you put into it and you can use the money before you die and pay no taxes on it!
The problem that you and most people miss is you can't guarantee your "investments" will pan out when you retire especially in this econometric mess. By then your term insurance will have lapsed offering you nothing at that point and any money you might have made will be taxed all to hell!
Trust me the govt will have no shame if they are able to tax the rich at a 50-60% tax rate! That's exactly where they are headed now!
With that said your rolling the dice buying term and investing the rest, what happens to your retirement if your strategy fails? You don't get to go back to your 30's and bet again! So why risk it just because some dumbass told you should rent your life insurance so you can invest the rest! The only people who preach these things are the very same ones who make commission off the money your investing! DUH!
That's cool man you can continue to play Russian roulette with your retirement but meanwhile I'm going to stick with things that I can predict the outcome with 100% accuracy!
After all it weren't for al the stupid people buying term life insurance at a 99% profit for the insurance company they would not have the cash to pay on policies like mine.
So on a way your helping to make my retirement possible, so thanks! Ha ha!
The bigger picture is insurance companies works a little like a casino in this example, what they loose at the craps table they more than make up for on the slot machines.
Absolutely amazing to me how easily people get brainwashed.. Buy term and invest the rest! Lol in what? Stocks that have 0 guarantee of returning a gain? The saying should be "buy term and gamble the rest!" At least if you gambled it and won it's not likely the casino will charge you taxes on the winnings!
Maybe instead of turning a blind eye do yourself a favor and google indexed universal life insurance from any company and read about it before you downplay it. It might be the smartest financial decision you ever made
12-24-13, 06:42 AM
#48
Lexus Test Driver
12-24-13, 07:34 AM
#50
Lexus Test Driver
but the word investment is just a less risky sounding word for gambling.
I don't gamble, I deal with contracts that have guarantees! guarantees I can actually calculate with a calculator and know with 100% accuracy where I will be at a minimum at retirement.
Any interest i make beyond that is a bonus and also tax free.
15 years ago investing and dollar cost average was a solid plan! buying term insurance made sense because it was cheap!
but things have changed, the market cannot be trusted nor guaranteed to return you anything! in fact in light of the economic situation we are in the odds are far better you'll loose money verses gain. after all, we have never been 17 trillion in debt before have we? and even if i am wrong about the future value of stocks what harm is there in putting my money into something that has no risk? why take the chance?
12-24-13, 08:16 AM
#51
Lexus Test Driver
I never said it was an investment, just a strategy with a predictable outcome.
but the word investment is just a less risky sounding word for gambling.
I don't gamble, I deal with contracts that have guarantees! guarantees I can actually calculate with a calculator and know with 100% accuracy where I will be at a minimum at retirement.
Any interest i make beyond that is a bonus and also tax free.
15 years ago investing and dollar cost average was a solid plan! buying term insurance made sense because it was cheap!
but things have changed, the market cannot be trusted nor guaranteed to return you anything! in fact in light of the economic situation we are in the odds are far better you'll loose money verses gain. after all, we have never been 17 trillion in debt before have we? and even if i am wrong about the future value of stocks what harm is there in putting my money into something that has no risk? why take the chance?
but the word investment is just a less risky sounding word for gambling.
I don't gamble, I deal with contracts that have guarantees! guarantees I can actually calculate with a calculator and know with 100% accuracy where I will be at a minimum at retirement.
Any interest i make beyond that is a bonus and also tax free.
15 years ago investing and dollar cost average was a solid plan! buying term insurance made sense because it was cheap!
but things have changed, the market cannot be trusted nor guaranteed to return you anything! in fact in light of the economic situation we are in the odds are far better you'll loose money verses gain. after all, we have never been 17 trillion in debt before have we? and even if i am wrong about the future value of stocks what harm is there in putting my money into something that has no risk? why take the chance?
12-24-13, 08:44 AM
#52
Im not sure if leasing is better or worse than financing, but in my case I just ordered an IS 350 F Sport and will lease it for 36 months for $184.00 a month versus financing one for $625.00 for 5 years. Traded in a 2011 Hyundai Sonata for $14,000 to do this. If it wasn't for leasing I would have been getting another Hyundai. No brainer for me after driving an F Sport. Granted in 36 months I need to make a decision on purchasing it for $31,000 or get something else then. But in the end the difference is around $50 bucks or so if I financed it or buy it after the lease.
12-24-13, 08:54 AM
#53
And my point is most people who perennially lease luxury cars are either extremely wealthy or squarely middle class, and this kind of wanton spending on cars is going to bite the latter group in the *** when they're 45 or 50 and they realize that they have squadoosh for a nest egg. The moderately affluent (Net worth ~$1M-$10M) buy cars in cash and keep them for a long time. That's just a fact.
12-24-13, 08:56 AM
#54
Im not sure if leasing is better or worse than financing, but in my case I just ordered an IS 350 F Sport and will lease it for 36 months for $184.00 a month versus financing one for $625.00 for 5 years. Traded in a 2011 Hyundai Sonata for $14,000 to do this. If it wasn't for leasing I would have been getting another Hyundai. No brainer for me after driving an F Sport. Granted in 36 months I need to make a decision on purchasing it for $31,000 or get something else then. But in the end the difference is around $50 bucks or so if I financed it or buy it after the lease.
12-24-13, 08:58 AM
#55
Lexus Test Driver
If you think that has no risk you foul yourself. The investment account is subject to market fluctuations. Policy owners have discovered in the past that a negative return means they have to increase their payments to keep the policy in force. How many universal life owners had to put out extra money in 2008′s bear market? They increase payments based on negative returns on the investment side. But this is way off topic now.. Hope it works for you but stop marketing it like a guaranty 100% risk free investment. It is a bs and people more got burned. Just like someone say it above.. If it sounds too good to be true it always is.. Let's get back on lease vs buy, shall we.
look up Indexed Universal life. The problem is like you, many just hear 1 bad thing about a product and become an expert on the subject matter that it's a ripoff! Too bad people who invest and got burned don't learn the same lesson as easily.
do you have an insurance license? clearly not! so you don't have credentials to backup your theories.
go get a license and and study insurance products for 10 years and you'll be in a position to question what's real and what's myth.
but your right we are off topic, but i will not just back down and and let you go on assuming you know what your talking about. and telling me i an wrong! I guess i never should have mentioned anything to do with retirement and investing because most the people who can't comprehend the design of a product such as an IUL are naturally going to assume its a bad thing.
I just want get my point across that you and i are talking about 2 totally different product's
do you really think that for the past 10 years of selling life insurance i wouldn't know the difference between the products i sell?
trust me when i tell you i know way more than you about how these products work, which are risky and which aren't. and IUL has only been around since 1997 and only popular in the past 3 years or so.
I am quite sure if you haven't been involved in these products on a daily basis as i am its no surprise you don't know anything about them.
12-24-13, 09:01 AM
#56
I fell in love with the IS as soon as I got in it, its perfect for me a smaller car that still has a smooth enough ride and quietness. Drove an ES and GS also but liked the IS better due to the handling of it. The problem now is I have wait a couple of months to get it. It going to be a long winter
12-24-13, 09:39 AM
#57
Driver School Candidate
And my point is most people who perennially lease luxury cars are either extremely wealthy or squarely middle class, and this kind of wanton spending on cars is going to bite the latter group in the *** when they're 45 or 50 and they realize that they have squadoosh for a nest egg. The moderately affluent (Net worth ~$1M-$10M) buy cars in cash and keep them for a long time. That's just a fact.
My uncle with a similar net worth buy cars outright but they also only buy chevy impalas when the prior impala breaks because they don't need anything more than that.
Trying to justify why someone might lease versus finance a vehicle is dumb when you don't know the specific situation of each individual.
12-24-13, 11:20 AM
#58
To add to what kadify said, I've started leasing due to a number of reasons:
* Cars are depreciating assets, whether you hold them for one year or ten years. Whatever equity you have in it from ownership will continually depreciate and repairs will likely cost you more out of pocket once the warranty is up.
* The equity from a car is negligible compared to the equity you or I may have in our homes and other holdings.
* Personally, there are few things I hate more than unexpected repair bills for a vehicle. My Subaru was rock solid for 6 years, then cost me $6K in repairs (power steering pump, AC condenser, etc - not general wear items) over the last 20 months I owned it.
* I tend to get the itch for something new every 2-3 years and damn it feels good to scratch it.
* Cars are depreciating assets, whether you hold them for one year or ten years. Whatever equity you have in it from ownership will continually depreciate and repairs will likely cost you more out of pocket once the warranty is up.
* The equity from a car is negligible compared to the equity you or I may have in our homes and other holdings.
* Personally, there are few things I hate more than unexpected repair bills for a vehicle. My Subaru was rock solid for 6 years, then cost me $6K in repairs (power steering pump, AC condenser, etc - not general wear items) over the last 20 months I owned it.
* I tend to get the itch for something new every 2-3 years and damn it feels good to scratch it.
12-24-13, 12:31 PM
#59
When you return a car at the end of lease is it guaranteed certain value or is that up to the dealer to decide based on various factors like condition, maintenance and history? One poster said if you had an accident it's bank's problem but will the dealer devalue it when you return it because they will get less for them when they sell and then you have to pay the difference? I hear people are upside down on their leases, how does that happen?
If you purchase $50k car at 0% over 10 years it would be ~ $417/month not factoring in any repairs out side of warranty.
If you can get the same car leased for <= $417/month with $0 or low down for 24 to 30 months like I've seen some get, it seems to me a very good deal and perhaps financially very small difference over 10 years of ownership if you factor in getting new car more frequently and no out of warranty repair cost vs same car for the duration and cost of out of warranty repairs.
Additional financial benefit to owning may come if you are able/willing to own your car for more than 10 years and you encounter no major repairs or if you are paying significantly higher lease payment but if you can get your payment to be same or less as 10 year amortized payment I think financial benefit to owning becomes less assuming you don't get taken when you return the car!
Also want to add that if you mod, tint, PPF ect on your leased car like some do here than your cost would be significantly higher for lease since you can't recoup this and may need to repurchase with each car but you do get new toy every couple years!
If you purchase $50k car at 0% over 10 years it would be ~ $417/month not factoring in any repairs out side of warranty.
If you can get the same car leased for <= $417/month with $0 or low down for 24 to 30 months like I've seen some get, it seems to me a very good deal and perhaps financially very small difference over 10 years of ownership if you factor in getting new car more frequently and no out of warranty repair cost vs same car for the duration and cost of out of warranty repairs.
Additional financial benefit to owning may come if you are able/willing to own your car for more than 10 years and you encounter no major repairs or if you are paying significantly higher lease payment but if you can get your payment to be same or less as 10 year amortized payment I think financial benefit to owning becomes less assuming you don't get taken when you return the car!
Also want to add that if you mod, tint, PPF ect on your leased car like some do here than your cost would be significantly higher for lease since you can't recoup this and may need to repurchase with each car but you do get new toy every couple years!
Last edited by SonyHome; 12-24-13 at 01:09 PM.
12-24-13, 01:33 PM
#60
When you return a car at the end of lease is it guaranteed certain value or is that up to the dealer to decide based on various factors like condition, maintenance and history? One poster said if you had an accident it's bank's problem but will the dealer devalue it when you return it because they will get less for them when they sell and then you have to pay the difference? I hear people are upside down on their leases, how does that happen?
If you purchase $50k car at 0% over 10 years it would be ~ $417/month not factoring in any repairs out side of warranty.
If you can get the same car leased for <= $417/month with $0 or low down for 24 to 30 months like I've seen some get, it seems to me a very good deal and perhaps financially very small difference over 10 years of ownership if you factor in getting new car more frequently and no out of warranty repair cost vs same car for the duration and cost of out of warranty repairs.
Additional financial benefit to owning may come if you are able/willing to own your car for more than 10 years and you encounter no major repairs or if you are paying significantly higher lease payment but if you can get your payment to be same or less as 10 year amortized payment I think financial benefit to owning becomes less assuming you don't get taken when you return the car!
Also want to add that if you mod, tint, PPF ect on your leased car like some do here than your cost would be significantly higher for lease since you can't recoup this and may need to repurchase with each car but you do get new toy every couple years!
If you purchase $50k car at 0% over 10 years it would be ~ $417/month not factoring in any repairs out side of warranty.
If you can get the same car leased for <= $417/month with $0 or low down for 24 to 30 months like I've seen some get, it seems to me a very good deal and perhaps financially very small difference over 10 years of ownership if you factor in getting new car more frequently and no out of warranty repair cost vs same car for the duration and cost of out of warranty repairs.
Additional financial benefit to owning may come if you are able/willing to own your car for more than 10 years and you encounter no major repairs or if you are paying significantly higher lease payment but if you can get your payment to be same or less as 10 year amortized payment I think financial benefit to owning becomes less assuming you don't get taken when you return the car!
Also want to add that if you mod, tint, PPF ect on your leased car like some do here than your cost would be significantly higher for lease since you can't recoup this and may need to repurchase with each car but you do get new toy every couple years!
The car Im leasing lists at $48,600 they discounted it around $1,500 which helps lower your lease cost a little. At the end of the lease I can buy the car for $31,300 or so. The buyout cost is based on percentages depending on your lease length. 3 year lease with Lexus is around 65% of MSRP depending on the car, a 4 year lease may be 60% of MSRP. The longer the lease the lower the buyout price but your monthly payment will be more. The thing I hate about the final buyout cost is its based on the MSRP of the car and not what you can buy the car for with financing.