jrmckinley

Lots of smart folks on here.. lots of folks who lease. Curious as to why you choose to lease vs. buy. I don't mean that to come across negatively, more looking for different viewpoints on the positives of leasing. With the new LS on the horizon, I'm looking to expand my thought process. Thanks,

Chuckinnj

This is my opinion: I would never buy a NEW car again because of the depreciation........ I always purchase a 2-3 year old car with low miles and in excellent (like new) condition. Leasing works for some people but it is not for me because I keep all my cars in great condition and get rid of them when they start nickel/dimeing me or they start rusting. I currently have a 2005 Ford Explorer that I purchased "used" (with 5k miles on it) and I now have over 300k miles on it and it looks and runs great..... I replaced the transmission on it but other than that it has treated me well and I own it. I also have a 2008 Dodge Charger SRT that I purchased used (with 8k miles on it) and I have just turned 120k. miles on it and it has not given me any problems and I own it.
If you drive less than 15k miles per year, love the new car smell, and don't want to do anything to the car then leasing may be for you..... Keep in mind that you will be making payments basically forever but have the luxury of driving a nice new car every 3-4 years. Most people lease high end cars because of the low monthly payment and they don't mind this because of their income....... My son who is a CPA is one of these people.
BTW! I am very skeptical of car dealers when they say a car lease (aka: car fleece) is a good deal, maybe a good deal for them but not for me........ Just my $.02 and hope it helps you make up your mind!

Now get ready for a barrage of anti/pro leasing replies to confuse you even more!

mikedozz

I'm 34 and have been leasing since I was 19, but I've been thinking about doing what u said to not have a payment for a while..but I will always lease a new car for my wife since she transports our kids around.

salesguy

Leasing is handy for the reasons Chuck mentioned.

I agree with him, I prefer to pay cash and take good care of my cars for a long time. Buying 2-3 years old and keeping for 8-10 is the cheapest way to own a vehicle hands down.

There are tax benefits to buying new (still can finance) with bonus depreciation and such, but that is highly individual. Even though my accountant really wanted me to buy new and finance for tax reasons I couldn't quite make sense of the numbers.

If you can't afford to pay for the car, you can't afford the car. Leasing will cost you a fortune in the long run if you do it every 3 years. Rule of thumb (taken from millionaire next door) is your car should cost LESS than 1% of your net worth. Hopefully much less.

FatherTo1

I've heard of millionaire next door a long time ago but maybe I'll finally read a copy now. Thanks for the book reference!

I have vowed never to buy a car new again (unless we hit the lottery, but we don't play lottery). I have also always subscribed to the theory that owning longterm is much cheaper than leasing. However, my wife's ownership experience has led me to reconsider that notion. I'll explain and please, anyone, point out where I may be wrong in this specific case:

Before we met, my wife purchased a 2006 ES330 brand new in October 2005. She basically walked into the dealership and said I need a car today. She paid MSRP + tax/title/reg, cash. She is sentimentally attached to the car as it was the first car she bought. She still drives it and the interior is immaculate but the tyranny is jerky (welll-documented for that generation ES). So, after 11 years, her ES is now worth maybe $6,500. If I tally all the maintenance on it (starter, timing belt, water pump, Michelins, DIY oil changes and sparkplugs and brake pads, etc.), the true cost of ownership spread over those 11+ years amounts to about $325/month. That is awfully close to a $349/month lease on a new ES every 3 years with full warranty and practically zero maintenance (plus leases used to be cheaper 10 years ago) and you can negotiate the price of a new car to get your lease payment lower. The other kicker is that my wife drove far for work in the early years but now only drives 5k-6k miles a year. Our household drives 24k miles a year but the majority of those miles are placed on my car. I am starting to really re-evaluate my stance on leases and if anyone is a prime candidate for a lease, I think my wife may be. Plus technology is quickly advancing in the car space and a new car every three years may have better tech and safety features. I would love to lease but I know I'm a poor candidate to do so because I drive almost 20k miles a year. Leases also typically require a down-payment and that could skew the cost calculations (but again, you could negotiate the car price of the lease; then again, my wife didn't negotiate her purchase price either).

Doublebase

It depends on what your situation is and what you value. Long term financial gains would of course put you in a vehicle that is a few years old and keep the thing for ten plus years. Eventually you'll have a five year window where you won't have a car payment and you'll save yourself $20,000, but keep in mind you'll be driving around in a 12-15 year old car. And like someone else said, there's the maintenance factor to consider - a car that's 7-8 years old is going to have things break. and you're going to maybe put a transmission, or some other major repair into it. That'll tear into your savings a bit. And when you find yourself driving around in a fifteen year old car it's not the best feeling in the world. I did it once, it becomes a little embarrassing driving the kids to the soccer field in a 15 year old Honda, when half the people there are pulling up in Lexus's and BMW's. Yeah your net worth may actually be higher than their's, but when you go out to dinner with friends and they insist that they take their car...you start to wonder if it's worth saving 20k. And then there's the comfort/life quality factor...do you want to go without any advancements in technology and comfort? That gets old, especially if you drive a lot. At some point joy, and some material things mean something. Try doing an 80 mile commute in a 15 year old car, when your heat doesn't work right, the thing shakes, the radio is not working, no sunroof, worn out seat, steering wheel that looks like a chainsaw went over it...

But these people that have to have a new vehicle every two years I don't quite "get" either. I mean, sometimes the vehicles you're trading in are actually better than the one you're driving off with. Then again you'll be back in two years to roll that lease into the next one. But it gets a bit ridiculous after a while - and I see it all the time - so and so has a great car, but they hit a little financial slump...then the next lease they have isn't the same "quality" or "prestige" as the last one. Before you know they're driving around in a Hyundai Elantra base model, because the money ran out...the job isn't going as well as it was five years ago...and they've refinanced their house five times to refurnish it and add that addition (that they can't afford). I've seen so many people that look like they have money, be so broke that it's mind boggling. I rent a house out to a guy that makes more than I do...leases a brand new Mercedes...the car is worth $90,000...but he can't afford a house. And that's fine...it's what he wants to do. I understand that there's more things than saving money and being "fiscally responsible".

I think there's a balance somewhere in all of this...a sweet spot...and once you find it you kind of settle in and always have yourself a nice car.

FatherTo1

Very good points, Doublebase. Definitely agree with you on having balance in life. Wow, I'm shocked that your tenant makes more but has opted to direct most of his resources into a depreciating asset. I suppose we all do that to varying degrees.

I never thought about the possibly of trading in a lease for a lesser car. At first, I thought you meant the newer model lacked features and creature comforts of the previous model, such as when the 2011 Sienna took away the powered third row windows that the previous generation had or when the Lexus removed the middle sun visor and oscillating vents from later generations. I see what you're saying about the poor souls that continually have to downgrade their lease vehicles to maintain a certain lifestyle.

Doublebase

Yeah I was a little surprised when I pulled up and saw a big brand new Mercedes in the driveway. I had been going back and forth with myself over raising the lease...decided against it because he's such a good tenant. Funny thing is, he said he test drove the new LS460 F Sport but decided against it because the Mercedes just blew him away. Lol. Should have gone up on the lease.

He lives large because he makes so much money. This guy prints money. Doesn't matter what year it is, he's always doing good. Smart guy, maybe he knows something I don't? I should start renting and leasing $100,000 dollar cars....and spend $50,000 on furniture. I hope the guy rents my house for the rest of his life, he's been great.

DaveGS4

iTrader: (2)

If you do lease, good primer thread here https://www.clublexus.com/forums/car...nd-buying.html

chuckNX

I typically purchase new or slightly new.

Of our 3 cars (435i convertible, NX 200t, and CT200h) we do lease the Lexus CT. A lot of change happening in the hybrid/electric car space and I want to be able to unload the thing for a Tesla 3, Chevy Bolt, or something that gets 200-300 miles per charge in the next few years.

I am more concerned with difficulty in selling than depreciation. I don't think depreciation is a big deal in general if your car allowance has no impact on savings, retirement and wealth building goals. Some of my friends spend more on a monthly basis on golf, travel, or wine for example. It is all discretionary income.

salesguy

Raise your rent every year. Even if just a $55 or $85/month increase. Rents are rising every single year in strong markets and not raising rents for fear of losing a tenant is a mistake many make (even commercial owners).

We set our rates daily (via lease rate optimization) on our commercial assets.

LS430FL

I'm on my third LS. What I have always done is save my maintenance receipts for the life of the car in my ownership or have lexus print them. I bought an 01 LS430 first then an 06 LS430 and now a 2011 LS460L. What I do is take the cost of the car plus the maintenance and divide it by how many months I've kept the car. I have yet to get close to the price of a new LS460 lease so for me it has always been cheaper to buy a car. I usually keep them for 3 years max.

Duck05

Leasing makes sense for capital stressed businesses that can sustain the run rate expense. Companies that lease high end vehicles for owners, executives and senior sales staff result in pool of cars available for sale at more achievable prices for those of us not able to write off a car's costs. I know that means acquiring a 2-3 year old car but at least with the Lexus line if a car has less than 30K it is not even broken in yet.

We also keep our cars a long time (being in Cali allows for that versus the snow belt area) so the reliability comes into play and as for maintenance and repairs, we have been lucky to find local, experienced independent shops that have reasonable prices compared to the dealerships.

I have a hard time doing the math when individuals lease cars and turn them back in after the lease ends often with nothing to show for it.

FatherTo1

We definitely saved money by buying a used Sienna and driving it four years. You're right, LS430FL, the cost of ownership on the Sienna is was barely $200/month during that period, much less than a lease. Wondering why 11 years of ownership on my wife's ES330 hasn't proven to be as cost effective. I know she overpaid and bought it new but still. Seems she's just breaking even compared to a lease after over a decade of maintenance costs.

mikedozz

I also think it depends on the type of car you are buying 3 years old vs leasing, some people have a monthly budget. For example, car budget right now is around 600 per month, so I lease my GS and it works out it is my favorite car since the GS400, but my next move may be a GSF, S550, 750Li, CLS63, you get the point, I could never afford to lease them, but with 3 years depreciation, they would fit my current budget give or take a few bucks, even as a cpo. Depending on the car, you truly save a ton of money buy letting the 3 year mark set it and I'm not even saying keep it 10 years. If I go get an S550 next 3 years old as a cpo, I would probably keep it 5 or 6 years and then trade it, take that 12k that it's worth and slap that down on the next 3 year old beast that I would never afford new as a lease. Of course you run the risk of repairs but that's like anything in life. Just my 2 cents