is a 2 year old Samsung S6 phone 'just as good' as a new Samsung S8? NO. and cars are changing just as fast. and when you've had that 2 year old car for 2 years, you're driving a 4 year old car, vs. a 2 year old car if you bought new. and guess what, the 2 year old car you say is 'just as good' will also depreciate a ton in the next 2 years. yes, new cars depreciate a lot from their MSRP when driven off the lot, but who pays MSRP?! my cars over the years all seem to depreciate 4-5k a year from new, regardless of how long i keep them.

yes, if you don't mind driving old[er] cars. hell, driving one vehicle your whole life probably makes the most financial sense since it can almost always be repaired cheaper than getting another one.

agreed, but IF one wants a new car every 3 years, then leasing vs. purchasing pretty much makes no difference... one big upside to leasing if it your car gets in a bad accident, and you get it fixed, the leasing company takes the bath on depreciation, not you!

by the way, i've never leased in my life, but i see the upsides, and may do next time, mainly because tech and vehicles are changing faster than ever - i don't want to drive a 5+ yr old car.

again, leasing is only 'a horrible idea' if you can stand driving a car for 5+ years or often much longer to make sense. i get bored of cars long before they're worn out! and i don't drive a ton of miles, so i may well lease next time.

 

You are going back and forth with multiple people (and them to you as well). Not surprising, but no one is convincing the other to change their mind. Your signature shows you own older cars, cut the cord, and one of your responses says you buy houses with cash. You have a different financial mindset than someone who wants to lease (or buy) a new car. I just personally think it's a wasted effort to attempt to convince someone into thinking along your line of thought. Some people just love driving new cars. I'm all for it- if they take great care of them, I'm in the market to buy them once they turn them in!

The world's best sales person is you. Translation: once someone justifies something to themselves, it can almost never be undone. Everyone within this thread has justified their own position on this topic to themselves and seem quite content with their position!

 

I have to disagree with you on this point. Cars do not change as fast a cell phones. You don't see them changing engines every year or even get infotainment upgrades every year. And if you are buying a lexus product, the chances are you are using 10 year old technology with minor tweaks in between. So no, a two year old car is not a 4 year old car. Second, depreciation is at it's highest the first couple years of ownership and starts leveling off afterwards. Might as well let someone else eat that depreciation.

At the end of the day when you lease cars it's pretty much a lifetime payment and it's more of an luxury than necessity. Given the median american savings is $5K I think most should think twice before leasing and set there priorities. There is a reason why the rich get richer and the poor get poorer.

 

I'm not trying to convince anybody that buys old cars and keeps them a long time they should lease. My point is that it always seems it's the ones that do that who are consistently trying to convince those of us that lease that what we are doing is irresponsible and reckless and that they're so smart and we're so dumb. I find that really interesting. Perhaps trying to convince themselves of something?

 

I think everyone has different goals and financial situations. For some it makes sense to lease and for others it doesn't. Whatever decision a person makes it should be respected.

I think sometimes leasing gets a bad wrap because there are a lot of people out there with their $1K/mth lease, but still live with mommy and daddy.

 

Isn't that the same as $1K/month in payment and still living with parents?

 

convincing oneself of something is one thing, but thinking everyone who isn't equally convinced is 'wrong' is uh, pretty closed thinking.

if someone can afford to lease, or buy rolls royces and change them every year, or fly their gulfstream, or sink shatloads of money into boats (easily done ), etc., more power to 'em! there's no one size fits all financial model. of course if someone spends their limited funds on 'must have' goodies with nothing for a rainy day let alone the future then no one can deny they're taking a huge risk, but some people just live for today. i used to be all about the future, but now i live more for today, enjoying many things as i go, while still saving also.

 

It's almost not worth explaining. When you finance and sell your car at the end, you basically paid for the depreciation since selling price=MSRP-depreciation. When financing, you rely on the market at the time you sell to see what the depreciation is. Then you pay a tax and have to bother with selling it. When you lease, you rely on the bank's prediction of depreciation depending on your lease terms and lock it in. Of course this is only if you plan on getting a new car every 3 years or so, which many of us do simply because we want to. I own 2 cars, I lease one: my most expensive car, because it will be too expensive to maintain after it's outside warranty. It also happens to have the best residual of the three, so leasing made financial sense. Additionally, as a business owner, lease payments are a deductible business expense, while only the interest on finance payments are deductible.

 

That's nice that you can get 0% financing on a Camry, but I don't want a Camry. And who puts money down on a lease? It's ZERO down or go home. I've done the calculations on buying my car and keeping it for 6 years vs leasing 2 new cars in that same timeframe. You know what the difference came out to? About what you said... $4-6k. Consider the advantages of the lease for the price of $4-6k:

1) A NEW car under warranty for the full 6 years, and in my case, free maintenance. Compared to only 4 years of warranty and free maintenance for a purchased car.
2) A deductible business expense for the FULL monthly lease payment vs interest only on financing.
3) Residual is LOCKED IN no matter what the market will dictate in the future. That means less risk. Energy crisis? Meh. Oil crisis? Meh. Subprime Auto Loan bubble? Meh.
4) More fluidity in funds of $400-500/month that would see a 10% return on average in a S&P500.

So, add up the maintenance expenses for 2 years, loss in deductions, market instability, and less fluidity... and you get pretty close if not exceed that $4-6k advantage of financing. Lets not forget that you get a NEW CAR every 3 years. Admittedly, if you have a rock solid car that will last 10 years, or course you will be much more in the green vs the car you sell after 6 years of ownership vs the 3.3 leases in that same timeframe, but not all of us have a lifestyle that suits a 10 year old car.

So you see, your blanket statement isn't universally accurate. The right answer isn't that simple and there are a lot of factors in place. So it really isn't fair to say that leasing is a horrible idea. Lets see what happens later this year when the used car market get saturated and that $5k Camry only sells for $2.5k because there are about 100 other Camrys in the area that just appeared on the market.

 

I agree 100%, but that doesn't happen here. Those of us who lease are constantly berated by people who buy used and hold.

Try this experiment:

1. Look in the forums for the used cars, or in threads in current model forums where people are buying used models and asking questions about pricing...look and see if anybody is posting off topic "You know you really should lease a new one etc etc" and trying to convince them that buying used is the wrong approach. You won't find this happening.

2. Look in the new forums when anybody asks a question about whether a specific lease deal is a good deal, or asking about lease terms or advice on leasing...look and see if anybody is posting off topic "You know leasing is really stupid, its a poor financial decision and you're being irresponsible etc etc". "why would you buy a new one? I saved thousands etc etc". It happens every G-D time. EVERY time. We're not talking "lease vs buy" threads, these opinions are totally unsolicited in these threads, the questions are only about leasing or negotiating deals on new cars.

Why is that? The only conclusion I can come to is these people really do want to buy new and they either can't afford to or their money hangups make them unable to and they are constantly in conflict over what they have and what they want, and they're constantly over-compensating by trying to convince themselves they're right and they do the right thing. Otherwise...why would these people feel the need to drag EVERY leasing thread off topic? Us new car leasers/buyers don't feel the need to drag threads about buying used cars off topic. Every thread about leasing disintegrates into this. EVERY one.

My question is, if somebody drives an old Toyota and is happy with it, why would they spend time on a Lexus forum overwhelmingly pointing out to Lexus owners that "they make unwise financial decisions" by buying new Lexus cars? What other purpose does that serve other than to fulfill some need that individual personally has?

 

I really think it comes to a bit of ignorance and justification for their decisions. I'm not trying to be mean spirited, but ignorance is actually the correct word. They just don't know the whole story.

 

I was using the Camry just as an example as someone else mentioned it.

 

The point being, it's hard to find a truly desirable car for 0% financing.

 

Another very important point is that if one actually uses the vehicle for their business (as described in the IRS code), one can deduct lease-payments on their Federal taxes.....which is usually not the case with a regular car-loan, unless one takes out a home-equity loan instead of a regular car-loan to cover the cost. Home-equity interest is deductible, but, IMO, not potentially a very wise thing to do with a car (I usually don't recommend it), since you, in effect, are putting up equity in your house as loan-collateral. That's fine, as long as nothing happens to your job or financial circumstances...but lose your job and the bank could foreclose on your car and home at the same time. Not a very enticing prospect.

Steve, for example, as a real-estate agent, ferrying clients and potential clients around, in the LS, to look at homes, could probably take advantage of the lease-payment deduction. So could people who use their cars for things like delivering pizzas...though one is not very likely to be working for Pizza Hut or Papa John's with an $80,000 leased BMW 7-series LOL.

Jill, didn't you say that you work with clients? If you have to use your car to drive them around on a regular basis (within mileage limits), or for any other business reason, it might pay to look into a lease on your next Corolla, or whatever vehicle you choose, although Canadian law on that might (?) be different from the IRS tax code here in the U.S.

Also, of course, we could (?) be facing some significant tax reform here in the U.S. (that is a major objective of the Trump Administration), and we'll have to wait and see what is put into the new bills coming up.

 

Yup, I mentioned this twice already. The full least payment is a business deduction (with stipulations), while only the interest is a business deduction on financing. That's my understanding anyway, and please someone correct me if I am wrong.