If anybody here were unlucky enough to be bit by a shark, it would be me lol

 

I find it very superfluous that we have three vehicles when we really only need one.

We used to both be gone from the house at the same time at different places, which never, ever happens anymore ever since Covid.

 

It will happen again.

 

I hate math, but this one is interesting. So I went to the Toyota site and built a pretty basic Camry SE. MSRP of $27,125 per the payment estimator from Toyota. If I put 0 down and have no trade in, my monthly is $275 for 36 months (12K miles per year). Total cash outlay by year 3 is $9,900 + taxes and whatever fees required. Big assumption, but assuming I can get a similar deal at the end of the lease, let's say I can get another 36 for $300 given price increases. My payments between year 3-6 would be $10,800 + taxes + fees for a total payment of $20,700 over the 6 years.

If I finance with 0 down with no trade in for 60 months, I can get this for 0% APR and a monthly payment of $452. Total payment over the 5 years would be the full $27,125 (+ taxes etc) and I would drive payment free in year 6+. For the remaining value, I'm using KBB value for a 2014 Camry SE, standard equipment @ 72,000 miles in very good condition. Trade in range is between $7,072 and $8,401.

Number will vary depending on the deals that individual people are able to strike, but paying basically the same thing and getting to drive a new car at year 3 sounds a lot more interesting to me

 

Yep, this math is correct. Based on all the calculations I have made, you have to keep a car longer than 5 years to make buying make sense over leasing. When you do the numbers on luxury cars with steeper depreciation its even clearer.

And that math doesn't factor in tires, brakes, other repairs etc you will have to make on a Camry you own for 5 years vs driving a new Camry from year 4-6 where you likely can skip those expenses.

So truly, I never see me buying a car again.

 

Allen, wouldn’t the math for the purchase model start with a trade in each time (or $$ down from private sale of the vehicle you own at the end of loan period)?

 

I think you have to start fresh as if you’re looking to decide what the best way to operate going forward.

If you trade a car in and then start leasing, that money just gets pocketed.

 

Right, but the model should assume you are either a buyer or a leaser. The buyer will have the asset to start with and the leaser will not.

if the car owner is changing their approach from purchase to lease that’s a totally different thing or mixed model where the new leaser could also trade in an owner car to reduce their Lease payments. Or vice versa with a leaser buying next.

if comparing apples to apples like I assume Allen is trying to do, IMO the purchase model should always start with an asset applied as trade in. I don’t think the math is correct as posted.

 

I think it makes more sense that past decisions are in the past, otherwise the numbers can never be objective. For one, not everybody has a trade in.

 

Could certainly offer an ongoing scenario where there is a continuous rollover of value. I didn't have a trade in when we picked up the Odyssey or my wife's previous CX-5 (but did with the GS and the Model 3s). A $7,500 trade in would bring monthly payments over 60 months to $307, $19,725 paid over the 60 months. To Steve's point, regular maintenance is usually included during the first couple of years so we'd also have to include maintenance costs in years 3-6 as well as tires and other consumables.

 

Don't forget. In year 6, you are no longer making car payments. Your model of $452 a month X12 is $5424....that is going straight into the pocket/wallet/purse. You also never paid any interest on any of the payments in year 1-5......how much interest was on the lease in your Camry scenario?

It would definitely be an advantage to not owe anything during the inflationary time. However, you 100% want a fixed rate if you have a loan. You also do not want to hoard during inflation, savings get hurt. Credit card debt is bad.
At the end of the day, you truly want to buy real things with money like stocks, commodities etc.

 

He factored the lack of payments in year 6 in.

Thats why you have to keep it longer in the paid off phase to make buying it vs leasing become cheaper. If you keep a car for 10 years and are happy with that then its cheaper to buy. If you're going to trade in 5 years or sooner, its worst case no more expensive to lease, and may very well be cheaper.

 

I mentioned in the post that the last year had no car payment. Toyota has 0% on 60 months for qualified borrowers

Edit: I can see the wording isn't great. But yeah you wouldn't be paying more than the cost of the car after paying it off

 

Thanks. So let’s say 5 years ownersship for the Camry. How does the math factor in at 10 year mark for two Camry purchases and (trades) vs 3 leases in the 9 years. Do you still feel it is worth it? (From the larger picture). 0% for the finance. Not sure what the interest is for the Camry lease

 

Ok buying versus leasing.....hot topic. I'm personally pro-buy, because leasing doesn't benefit my needs (or wants for that matter).

I get that others are complete opposite but, as a fellow gearhead, I must ask to you guys, don't you ever want to just buy a great car and keep it forever???

A paid off car that you love is a glorious thing, it really is.

I just had to drive around for about an hour, in and outside of town. There is nothing, (nothing worth paying for, at least) that drives better than that thing especially at higher speeds. I have tonnnnns of sentimental value re: my LS430, plan to drive til wheels fall off. Spouse can have a much newer car if desired, but I don't care about age, at all. Don't you guys ever just get stuck on a car like I'm talking about? I have friends with different cars who are the same.

I have entertained the notion of one of us leasing a German car new, but it would be a very nice car, and a fortune of a payment. Then you don't get to keep the car because it will not be reliable nor was it ever yours in the first place. Not really for us, leasing.

But I get it, businessmen with writeoffs, etc. etc. many reasons to lease for others. But I still wonder why you don't desire to buy a car you love and just baby and keep it forever.