Cheaper for me to lease too

 

Not to be nosy or pry into your financial affairs, but, being a real-estate agent and driving clients around, my guess is that you can deduct at least part of your lease-payment on your taxes, if not all.

 

I can, but even outside of that its cheaper for me to lease. I lease the van but I can't write it off for instance.

I've done the math on it, 5 years is a magic number. If you can keep a car for more than 5 years then you are saving money vs leasing. If its less than that though, you may as well lease every 3 years, worst case you're breaking even just with less downside risk of repairs, an accident destroying resale value, etc.

My numbers were always done with a 5 year loan though, as thats the longest *I* would ever finance a car for, if it were a 6 or 7 year loan that would make that magic break even number even bigger.

 

Lots of informative comments on this topic.

But these longer loan terms don't really surprise me. What I'd like to know is what percentage of these longer termed loans are sub-prime? And what are the overall default rates on all loans beyond 60 months? Because of the frequency of these loans I assume the finance companies considers them a profitable risk.

 

69.3 months is average??? Damn I mean I understand interest rates are low, but almost a 6 year loan??

I have the same mentality as mjeds ^^^, if you cant pay it off in 3 years, you cant afford the car and you should look elsewhere.

Does 717 really get people a good rate? Idk, that still seems like a low score to me to be getting the best rates.

 

717 is definitely not a low score, it's just not an "elite" score. No score over 700 is a bad score.

I see people's credit scores every day, a score over 800 is very rare. Most I see are 700-740 so that makes sense 717 would be average.

 

Interesting. I'm over 800 and it drew me to look up the % of people who are 800+. It said 20.4% of Americans have a credit score of 800-850. Wonder how accurate that is because I was really surprised, thought it would be much much lower than that. You also mentioned you see them everyday and how rare it is to see people over 800.

 

i am in that 20.4%.I think thats about right.

 

I completely disagree with this strategy as you still have housing expenses unless you live with parents. 15 years of housing expenses plus 15 years loss in RE appreciation I do not think there is much savings.

 

there are strategies living in debt just like living debt free...look at trump :P

 

There's a whole reverse mortgage generation, and we're not talking about milennials, we're talking about people who are seniors today....not leaving anything to heirs probably is financial freedom...is it wrong, is it right, I suppose the way I was brought up, it's wrong, but I am only one person and my parents are two. I hope they live as long as humanly possible, we're 6.x yrs away from no house payment, I look forward to it. I mentioned the car payment thing today to a colleague and he said ye gads if we didn't have a car payment we'd be rich (he has a 5 and 3 series both leased)

 

I'll have to disagree with you.

my housing costs from 1997 - 2012 when I bought my house were roughly $110,000, but I saved over $300,000 in that time.. I lived in a 420 sq ft. studio apartment, wasn't married, no kids, and the apartment was for sleeping and showering basically. started at $440 a month in 1997 and ended at $890 a month in 2012.

The house I bought sold for $340K in 1999, $540K in 2005, $670K in 2007, and I bought it after the RE bubble in 2012 for $375K. my mortgage is only $900 a month, about the same I was paying for rent..

If I had bought in 1999 with 5% down I would have been paying $3000 a month. paid a much more in interest, and been living paycheck to paycheck.

from 1999 - 2012 I wasn't married, had no kids, didn't need a house, but I knew I would be remarried some day with a family and want a house.

 

Not talking about you, good for you to be able to save, not a lot of people can do it and you should be proud of it.

in 1997 median home value in LA was 170K
in 2012 it was 398K

Let's forget about kids, family and other choices that you've made. You lost an opportunity to make over 200K in housing appreciation (or you would have an opportunity to sell it for $580 in 2006). In addition you lost available tax deduction. So in reality it is a wash in your case.


Edit: For apples to apples comparison do not swing from 400sq.f. apartment to 2000sq. f. home otherwise your opportunity loss will be even larger. For example you would have bought house for 240K and in 2006 it would sell for 740K.

 

real estate doesn't always go up, and yeah i know about "the long term" but sometimes timing sucks... many moved to san francisco in various peaks to take a nice high paying job only to get laid off in a dip and be upside down on a house to the tune of hundreds of thousands of dollars and they couldn't stay in the house with the huge mortgage and so go bankrupt.

in the end there's prudent timing but there's also luck. i've made money and lost money on real estate, mostly because of timing. i did save hard though and invest, and am very fortunate to own my home, so my overhead is lower than most with mortgages, although in recent years with interest rates so low it's been a real help to many. but i do worry for those on ARMs if rates begin to climb again...

save some for a rainy day folks, it will likely happen at some point no matter how good your strategy.

 

Tell this to my buddy....due to job changes they moved from FLA to SC, back to FLA, and then from WPB to Tampa, losing money all along the way, that he said they'll never be able to recoup. I cry about how I missed 25k by selling FB too soon, and he just said mulitply by 2 and add a zero. He always tells me to be satisfied, you'll have your modest house paid off in 6 years. We have 29 to go, and it will never in fact be paid off, they'll downsize once their girls go to college. I tell him all I want is to experience that 3,500 sq ft 5 bed/4 bath McMansion, everybody is doing it, and he tells me believe me brother, it's very overrated, debt free is what we wish we were. He just told me he wants to get 250k out of the Navigator, and it's at 150k right now. His kids don't understand, when his door opener bezel broke, they told him he really should get a new car, this one is too old....