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ALL About Leasing and Buying

 
Old 02-09-19, 05:06 PM
  #226  
vfr700f2
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I know I don't have all the numbers I should, but see if you can rate this deal.

2019 RX350
MSRP $53753
45 month lease
15000 mi/yr
.00085 mf
TTF down
$559 per month

Atomic Silver/Stratus Gray
Blindspot/park assist/auto braking
Heated/vented seats
Heated wheel
Nav
Moonroof
Premium
Touchfree gate
Tow prep
Mats/flaps/crossbars

Thanks
kevin
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Old 04-10-19, 01:20 PM
  #227  
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Just read through most of this thread- very helpful info. In particular, wanted to re-post something Steve (now going by SW17LS) points out that is very interesting to think through. This is worth a read for anyone who buys brand new cars and doesn't keep them longer than a few years before getting a new one. Leasing can be beneficial- the detail below helped me better understand some leasing advantages.

Originally Posted by SW13GSThis is a different scenario...but I don't want to wait for 5 years. I want a new car every 2.5-3 years...and I'm not interested in compromising on that. Its twice as long...which to me is a lot longer to wait.

Even if I could wait that long, I'm not going to be able to bring myself to wait longer than that...so its going to get traded at the end of 5 years for sure. So lets do the math there:

Using the numbers from above, it will have cost me $57,697.20 to purchase and finance the car.

Using kbb.com 2009 GS350 AWD with all the options, 82,500 miles (16,500 per year for 5 years) I get "Very Good" trade value as $19,487. So, subtract that from the $57,697.20 and the car cost me $38,210.20 to "own" for 5 years...with an outlay of nearly $1,000 a month the whole time...and the risk of loss, and it being out of warranty, the cost of brakes and tires, and so forth.

Lets again look at our lease figures, and we won't factor in being able to trade the car with any equity at the 3 year mark. Lets assume I have to pay $50 more per month to lease a new GS after 3 years. So for the first 3 years I've paid $22,139.64. Now, my new payment on my new car leased year 3 is $50 more, so $664.99...24 months of that is $15,959. So at year 5 of this scenario my cost is $38,099.40.

SO...leasing has saved me $111 over those 5 years, AND I've not had to drive a car older than 2.4-3 years old, AND I don't have to worry about tires, brakes, being out of warranty, fluctuations in resale value (hence...its WAY lower than you thought)...and thats assuming my new lease is $50 a month more. If I can lease the same car for the same payment, then leasing saves me $1310 over those 5 years. Thats also assuming I cannot trade out with equity, like I said I have never leased a car I couldn't trade out of with at least $1,000 in equity.

If I continued buying and trading every 5 years over and over again...its going to cost me the same as leasing and trading every 3 years, with more downside risk, with 35% more out of my pocket every month and a less happy me because I have to drive an old car past when I want a new one. The only way it saves you money is if you keep them for a good while with no payment...and I'm just not going to do that.
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Old 04-10-19, 01:28 PM
  #228  
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Originally Posted by jrmckinley View Post

Using kbb.com 2009 GS350 AWD with all the options, 82,500 miles (16,500 per year for 5 years) I get "Very Good" trade value as $19,487. So, subtract that from the $57,697.20 and the car cost me $38,210.20 to "own" for 5 years...with an outlay of nearly $1,000 a month the whole time...and the risk of loss, and it being out of warranty, the cost of brakes and tires, and so forth.

Lets again look at our lease figures, and we won't factor in being able to trade the car with any equity at the 3 year mark. Lets assume I have to pay $50 more per month to lease a new GS after 3 years. So for the first 3 years I've paid $22,139.64. Now, my new payment on my new car leased year 3 is $50 more, so $664.99...24 months of that is $15,959. So at year 5 of this scenario my cost is $38,099.40.
.
Lease vs buy is always a hot button topic. From your post, what I do not understand is the following?: What is the break down for miles? 16,500 per in your example is not standard, Lexus is 15,000. In your lease calculations, what is the interest you are paying? What any fees are to paid compared to an outright buy (one time payment) purchase?
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Old 04-11-19, 04:27 AM
  #229  
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Originally Posted by LexsCTJill View Post
Lease vs buy is always a hot button topic. From your post, what I do not understand is the following?: What is the break down for miles? 16,500 per in your example is not standard, Lexus is 15,000. In your lease calculations, what is the interest you are paying? What any fees are to paid compared to an outright buy (one time payment) purchase?
Steve said that going over the miles doesn't matter on a lease when you trade it in for another lease. It only matters when you turn the car in and don't lease again from the same brand. Interest rate is mentioned throughout the thread but the thread is very old so not relevant today. But, since it's factored into this example and in this example shows it's the same or cheaper than buying 2 new cars, it's irrelevant.
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Old 04-11-19, 02:09 PM
  #230  
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Originally Posted by jrmckinley View Post
Steve said that going over the miles doesn't matter on a lease when you trade it in for another lease. It only matters when you turn the car in and don't lease again from the same brand..
That does not sound right. So the lease customer goes 15K over, it does not matter?

I make the point because, if the standard lease is 15,000, the trade in value should be based on that.

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Old 04-11-19, 02:12 PM
  #231  
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Originally Posted by jrmckinley View Post
But, since it's factored into this example and in this example shows it's the same or cheaper than buying 2 new cars, it's irrelevant.
so are we in agreement that if you keep your bought car for 10 years, it is far cheaper than leasing over and over again (the same car lease price) for 2-3 leases?
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Old 04-11-19, 06:04 PM
  #232  
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Originally Posted by LexsCTJill View Post
so are we in agreement that if you keep your bought car for 10 years, it is far cheaper than leasing over and over again (the same car lease price) for 2-3 leases?
Yes, I'm not sure there is any disputing that scenario. What Steve was pointing out in this (old) thread is for people who buy a new car and keep it 2-4 years and then buy another brand new car, there's no difference in leasing every 3 years (and leasing may potentially provide some additional perks). I learned a few things in this thread about leasing - while I didn't read the entire thing, I read most of it and found it informative. I have never leased - in fact, I have never bought a new car - I don't mind driving an older car since I've always put 40k-50k miles/year on my cars I would absolutely kill new car depreciation. So I try to buy at the peak of depreciation where I can maximize my value knowing I will keep the car for 5-8 years and put 200k or more miles on it. We are starting to consider changing our car lineup which may have us look at something new so I'm educating myself on leasing. I've changed my opinion on it thanks to this forum over the years. I used to think leasing was for people who couldn't afford to just buy the car, now I look at it much differently.
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Old 04-11-19, 06:07 PM
  #233  
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Originally Posted by LexsCTJill View Post
That does not sound right. So the lease customer goes 15K over, it does not matter?

I make the point because, if the standard lease is 15,000, the trade in value should be based on that.
It would likely matter in that scenario where you have gone substantially over. In Steve's example, he mentioned in a GS he leased that he was putting 16,500 miles/year (for 3 years) on his lease even though his lease was for 15k miles. At the time of trading the car in for another Lexus lease, he was not penalized for the overage of roughly 4,500 miles. I think a lot of it has to do with how you negotiate the sale price and the residual on the front end as well.
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Old 04-11-19, 06:39 PM
  #234  
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Originally Posted by jrmckinley View Post
I've changed my opinion on it thanks to this forum over the years. I used to think leasing was for people who couldn't afford to just buy the car, now I look at it much differently.
So why are you looking at it differently? Those who leased the car, they did not buy it. So whether they could afford it or not means nothing IMO. They either buy the car or they did not. Kudos for you getting your car slightly used, very smart. I have not been able to pull the trigger. I don't know how old you are, but look at leasing from the long view of 10 years, or go even longer. The costs are astronomical compared to just buying a car and keeping it for while.

I posted this in another thread:

For what is worth: I used Toyota Land Cruiser because it is the only Toyota with no options:

From Toyota.com lease calcuator
Lease per month $1364, X 12 months = $16,368, X 10 years = $163,680, you get to drive 120,000 miles over than lifespan
Buy, MSRP: $85,015 KBB: 2009 model $21,787 (sellable asset) at 120,000 miles.

I cannot believe someone with an honest straight face would rather have a "new" car in this case every 3 years with the costs involved long term

Last edited by LexsCTJill; 04-11-19 at 06:47 PM.
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Old 04-11-19, 08:40 PM
  #235  
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Originally Posted by jrmckinley View Post
What Steve was pointing out in this (old) thread is for people who buy a new car and keep it 2-4 years and then buy another brand new car, there's no difference in leasing every 3 years (and leasing may potentially provide some additional perks).
Technically, there is one important difference. New vehicles that are purchased are not subject to the Wear-and-Tear clause, so, if you get a scratch on it, or a stain on the upholstery, you don't have to worry if there will be an additional penalty for it.......you only answer to yourself.
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Old 04-12-19, 06:52 AM
  #236  
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Originally Posted by LexsCTJill View Post
So why are you looking at it differently? Those who leased the car, they did not buy it. So whether they could afford it or not means nothing IMO. They either buy the car or they did not. Kudos for you getting your car slightly used, very smart. I have not been able to pull the trigger. I don't know how old you are, but look at leasing from the long view of 10 years, or go even longer. The costs are astronomical compared to just buying a car and keeping it for while.

I posted this in another thread:

For what is worth: I used Toyota Land Cruiser because it is the only Toyota with no options:

From Toyota.com lease calcuator
Lease per month $1364, X 12 months = $16,368, X 10 years = $163,680, you get to drive 120,000 miles over than lifespan
Buy, MSRP: $85,015 KBB: 2009 model $21,787 (sellable asset) at 120,000 miles.

I cannot believe someone with an honest straight face would rather have a "new" car in this case every 3 years with the costs involved long term
I have seen you post what is in bold before, but I don't understand what you're saying. Can you explain what you're saying? I don't care if someone leases or buys - what I'm saying is in certain situations I think leasing a brand new car instead of buying it actually makes more sense. It seems you are hung up on the fact that someone didn't buy the car, but I don't understand why. If it's to your advantage to lease, why wouldn't you? Maybe you are trained to see value in owning something even if it's not ultimately the best decision? Just like some people are so reluctant to have debt, they'd pull out $50k from savings to pay cash for a car they could finance at a super low interest rate. They're losing money by doing that... but some people just hate debt so they make a counter-intuitive decision.

I don't know about the math on your LandCruiser example- something isn't right. I find it hard to believe you'd pay almost $50k in lease payments over 3 years on a car with $85k MSRP. That means it's only "worth" $35k at time the lease is up with 36k miles (in your example of 12k miles/year) which means it has depreciated almost 60%. If you can find me a 3 year old Landcruiser with 36K miles for $40k I'll buy it right now... I just looked at a 2016 (3 years old) LX570 with 26k miles at my local Lexus dealer and the asking price was $68k. Remember, with a lease what you're paying for is the anticipated depreciation. And again, I'm not arguing that in your "buy new and keep 10 years" example is going to come out ahead in a lease. I just don't think it's nearly as extreme as what you have pointed out in your example. Also, some people have no desire to drive a 10 year old car. Whether it be due to maintenance concerns, tech is outdated, wear & tear, the look of dated cars, they just don't want to do it. I pass no judgment - just as I would hope no one passes judgement on me for buying a 6 or 7 year old car and keeping it for 5-7 years.

I'm 39 and have bought used cars ever since I was 21. I bought used at 21 because it's all I could afford. Now I am in a different financial situation and can do what I want, but my situation isn't like everyone else's in the sense of how much I can drive in a given year - new cars depreciate quickly enough at 15k miles/year. I don't need to accelerate that depreciation by doubling or tripling the mileage. So I buy used Toyota/Lexus for dependability & luxury and have been very happy. In 2008, I bought a 2004 LS430 with 70k miles for $22k and traded it in a couple of years ago with just over 250k miles for $4k when I bought a 2010 460L with 65k miles for $22k. In the case of the 430, I kept it 7 years, drove it 180k miles, spent about $1,200 on unexpected maintenance during my entire time of owning, and "lost" $18k in the value of the car in the process ($2,500/yr). This is the situation that works best for me - I get to drive a flagship sedan at roughly $200/month.

My wife doesn't drive nearly as much as I do, so we could consider a lease for something she would primarily drive. I'm still tempted by 3-4 year old cars though so it will be hard to break my thought process when it comes time to pull the trigger. She loves BMW 5 series and I could easily grab a 2015 or 2016 with around 35k miles for $30k in my market. That's pretty tempting- the midsize luxury cars seem to have the fastest depreciation so buying slightly used is very attractive.
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Old 04-12-19, 06:42 PM
  #237  
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Thanks for an interesting discussion BTW, my response from your post might get some heated comments from others.

Originally Posted by jrmckinley View Post
I have seen you post what is in bold before, but I don't understand what you're saying. Can you explain what you're saying? .
I said it in your response to the mention that you thought people who lease cannot afford to buy. I am a woman of action, not talk. I find more value in what people "do" instead of what people "say" I recall getting beat up pretty bad on a thread when I called out someone who say they could of afforded a certain car but instead they bought something far cheaper. That is all, what is the point of telling me that. . I have employees, I don't really care what they say most of the time, its what they do. I also know the ones that cut corners sometimes or cut off work early, but they make up for it in other ways. I have no interest in hearing how great of a workers someone is, I already know by what they do. So if someone leases, good for them, if someone buys, good for them. I just think there is no point telling someone you could of bought because you could afford it, but chose to lease it. People with real wealth know that acquiring assets by the least costly methods is the smartest way to, turning over your car every 3 years by lease and then viewing it from a 30-40 year viewpoint, you realize how costly that is.


Originally Posted by jrmckinley View Post

I don't know about the math on your LandCruiser example- something isn't right. I find it hard to believe you'd pay almost $50k in lease payments over 3 years on a car with $85k MSRP. That means it's only "worth" $35k at time the lease is up with 36k miles (in your example of 12k miles/year) which means it has depreciated almost 60%. If you can find me a 3 year old Landcruiser with 36K miles for $40k I'll buy it right now....
I took the Land Cruiser number right off of Toyota.com and lease calculator. Maybe my numbers are off, but I did not make them up, just took them off Toyota.com

Originally Posted by jrmckinley View Post
My wife doesn't drive nearly as much as I do, so we could consider a lease for something she would primarily drive. I'm still tempted by 3-4 year old cars though so it will be hard to break my thought process when it comes time to pull the trigger. She loves BMW 5 series and I could easily grab a 2015 or 2016 with around 35k miles for $30k in my market. That's pretty tempting- the midsize luxury cars seem to have the fastest depreciation so buying slightly used is very attractive.
So if you look at the long term view, is leasing still attractive? Go onto any manufacturer website and they have the least calculators.

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Old 04-12-19, 08:15 PM
  #238  
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Originally Posted by LexsCTJill
I recall getting beat up pretty bad on a thread when I called out someone who say they could of afforded a certain car but instead they bought something far cheaper.
Why call someone out for that? IMO, it makes perfect sense to not bite off too much on a vehicle purchase if it could potentially interfere with something that, down the road, might end up being a more practical use of the money. There are a number of reasons, for example, why I can afford, if I want to, to write a check for just about any non-exotic or non-mega-expensive vehicle in production today, but simply choose not to. Among them is the fact that I'm well-satisfied with a 39K Lacrosse....in my book, it drives better than some sedans twice its price, though with some build-quality issues. Not spending excessive amounts of money (forgoing expensive vacations, constant new clothes, expensive meals, etc....) for enough years helped me retire early, save up a nice nest-egg to add to my pension, and, yes, give me the ability to write a check today for almost any vehicle I could reasonably want. I won't say this is the best lifestyle for everyone (each to his or her own), and, true, other people admittedly have responsibilities that I don't (spouse, kids, pets, mortgage, college-tuition, etc...). But, for those who can, and do, forgo biting off more than can (eventually) chew, I see no point in calling them out...IMO it makes sense.
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Old 04-14-19, 05:32 PM
  #239  
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This is a discussion about HOW to lease guys, not whether or not to lease or how to retire or whatever. Please don't spoil it for everybody else.

Originally Posted by LexsCTJill
That does not sound right. So the lease customer goes 15K over, it does not matter?

I make the point because, if the standard lease is 15,000, the trade in value should be based on that.


The answer is, if you trade the vehicle in the excess mileage only matters so far as it reduces the value of the vehicle. Vehicle resale value is not impacted by .25c a mile, as long as you are able to trade or sell the car at the end of the lease for what the residual value is, it doesn't matter how far over the mileage you are.

I've leased many cars and I have NEVER turned one in at the end of the lease, I have always traded out of them.
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Old 04-15-19, 07:55 AM
  #240  
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Originally Posted by LexsCTJill View Post
I recall getting beat up pretty bad on a thread when I called out someone who say they could of afforded a certain car but instead they bought something far cheaper. That is all, what is the point of telling me that. . II just think there is no point telling someone you could of bought because you could afford it, but chose to lease it.
You look at that as un-necessary info...I look at it very differently. I view that (someone who could buy but chooses to lease) as an opportunity to learn their viewpoint, just as I have done on the CL forum over the last couple of years, and see if it possibly applies to my situation and if it may benefit me. When someone has options (leverage) and they explain to you why they made a certain decision over other options, I view that as an excellent learning opportunity.

Not sure if I'll end up leasing, but at least I now understand the potential benefits and how to structure my approach & negotiations.
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