Junk that *****box!

[singpilot]

Drive it until it dies.

My '85 MB 380SL has 363K on it. In 1989 (at 100K) I decided I was gonna drive it until it dies. Am still on that plan.

[sammyg2]

Life is too short to drive a POS that is ready to crap out on you.

I hate the idea of having to worry if a car is going to get me there and back so I won't do it.
Dump the POS and find something that is more reliable.

[Porsche-O-Phile]

In three years and over 30,000 miles of 944 driving I've been let down due to mechanical issues exactly three times. On one occasion a distributor rotor went bad and the car died a half mile from work. No biggie. I parked it, went to work and at the end of the day got a lift to the local auto parts store and bought a rotor. Installed it in about 10 minutes and drove it home. B.F.D. A total delay of about two hours out of my day.

The second time, I had the half-shafts on my 944 go "clunk" at about 5mph. If Porsche had used allen bolts instead of those infernal triple-squares (or if I'd had the presence of mind to swap them out or simply check the bolts more regularly, which I now have done and do) it wouldn't have been a big deal. I'd have reached under there with my trusty 6mm allen from the tool kit and driven it home. Oh well. So that was one AAA tow. Got it home and fixed it within 10 minutes with the proper tool. Total delay of about 2 hours versus what it would have normally taken me to get home.

The third time was when a cooling fan relay went bad causing the electric fans to run the whole day, killing the battery. I walked to Sears (two blocks from my office), bought a spare battery and drove home. When I got home I pulled the relay and fixed it. It's been fine since. I even ended up using the battery and use it in another car, so it was something I'd have needed to do eventually anyway. Very minor inconvenience. Took about 45 minutes and 150 bucks total.

All-in-all not too bad. I can live with that. It's no different than the amount of inconvenience I'd get with a new car and simply leaving the headlights on a couple of times or running out of gas or whatever. Hardly makes me feel like I'm on the brink of a breakdown all the time. Certainly not bad for 20-ish year-old sports cars driven 70+ miles a day in L.A. traffic.

[pmajka]

Yearly maintainance cost, less Oil changes and the such, and divide by 12.

if the number is less than 40% of a new car payment (monthly), and you dont mind how it looks.....

Keep it, and fix it.

if ya didnt do squat to the car last year, then divide by 24.....

[Jims5543]

Dad had a Honda Accord it had over 300K miles on it when he took it to the neighborhood shop to have them look at a problem I cannot recall right now but it was going to cost a lot to fix.. The car was rusting and was just beat. Dad wanted to get 500K miles out of it before retiring it. His mechanic looked at him and sadi give it up, let it go.

He bought a 3 year old Civic and is piling the miles on that now.

I am in my 1st and last lease ever. The bad I am being ripped off and I am stuck for 36 months. The good its been in 2 wrecks now and in 27 more months its not my problem anymore.

I'll never lease again.

[DonDavis]

Originally posted by azasadny
I don't want the expense, depreciation or aggravation of owning a car any more. We don't put many miles on our cars, so we're the perfect lease candidates. I can budget for the lease/insurance payments, but it's impossible to budget for repairs/breakdowns. Just my .02 worth...

Just re-read your post.....and I have a question...

WHAT THE HELL ARE YOU TALKING ABOUT??

You say you lease your "drivers" plus a company lease vehicle. I also have a company vehicle and while I don't pay for the maint, I do have to take it in for oil changes and repairs as necessary. On the other lease(s), are you doing regular maintenance and/or repairs as needed? You mention expense and aggravation. Please elaborate. I can list people all day long that have used cars that run well and last forever. Just look at the previous posts here. What kind of lease do you have that absolves you from regular oil changes or repairs? I know you did not say you were not doing those things but what other stuff are you talking about?

[89911]

I'll take the opposite approach. I own my 911, bought my x5 used, and lease the Honda Oddysey minivan. I've had days for one reason or the other I've had loaner cars, either my parents Mitsubishi or a Camry or some other "invisible" car from the dealer. I hate it. There are many people that just don't care what they drive around in, as long as its transportation. I'm not one of them that want to disappear into the pavement like so many others driving forgettable cars. If you don't care how a car looks, drives, or the pleasure it returns to the driver, why not just take a bus?

[Hugh R]

Took it to a trannie shop and he changed the fluid and internal filter and it seems OK for the time being. Guess I'll get it aligned and a front brake job tomorrow. According to Kelly Blue Book (Kbb.com) it worth about $800 dealer trade in. That's about 3 months payment on an average new econo car. I'll just drive it until it has a major coronary.

[slow&rusty]

Hugh - My sister just bought her first car its the exact same Mazda as yours.

She thought she got a deal on it, it has a little over 100K...and she paid $1700 for it. When she had it inspected at two independent Mechanics they found a whole host of things wrong with it only due to negligent previous owners. They quoted over $1500 in labor only for the following items:
1) Replace timing belt
2) Replace water pump
3) Replace A\C belt
4) Replace P\S belt
5) Oil change and filter needed
6) Flush tranny
7) Both CVs have cracked boots (left one was quite bad and knocking)
8) Rear brakes needed
9) Front brakes needed (rotors and pads)
10) Wipers needed
11) Lower ball joints needed
12) Full tune-up recommened (plugs, cap, rotor, wires, coolant flush, fuel and air filters as well)

As she is a student...she did not have the ca$h and so I told her to make the 600+ mile to my place and I replaced everything on the above list for less than $400 (parts cost) and it took me about 20hours to do everything.

After that the car ran superbly...very smooth and not bad power at all. She was happy...car will be good for another 100K.

FWIW...the tranny on these cars are made by Ford and her car shifts like butter.

Yasin

[Big Ed]

Originally posted by Wayne at Pelican Parts
I've got a BMW 5-Series that I picked up for about $15K a few years ago. Worth every penny. I drove crappy cars for a while - it gets old. For not that much $$$, you can get a great commuter car that you actually like driving. It doesn't have to be extremes - 911 and beater, it can be better...

-Wayne

Originally posted by sammyg2 Life is too short to drive a POS that is ready to crap out on you.

I'm with these guys. Buying new or leasing is a sucker's bet, although one I'm guilty of myself too often. I'm self-employed and the vehicle is deductible, so the offense isn't *QUITE* as egregious, but still I know better. Having said that, driving some POS each day is not for me.

My opinion is a 2-4 year old used car with low miles is the way to go. I don't agree with valuation models for high vs. low miles cars...it seems that the high miles cars don't sell for as much of a discount as I'd expect; likewise, the low mileage ones don't command as much of premium as it would seem they should.

Earlier this year I bought my wife a 2002 BMW 325xi with 18,000 miles for $21K, about 1/2 the cost of a similarly equipped new model. Looks, runs, drives exactly like new. Works for us!

[kaisen]

Originally posted by Porsche-O-Phile
Never.

Leasing is for suckers and new cars are for even bigger suckers. Maybe if I win the lottery or similarly end up in a situation where I have money to blow I'd consider it, but to dump that much money into a rapidly-depreciating item is even more financially suicidal than "investing" in the current housing market, IMHO.

Originally posted by DonDavis
VERY solid advice! A car lease is silly and costs more than buying a car. Don't think its true? Why do car dealers push leases so much? You think its because they care about your bottom line? Puh-leez!!

Leasing obviously has its misconceptions.

'Leasing' is only good or bad when compared to 'purchasing' the same car. Everyone has valid points about driving a paid-for used car over a long period of time. For the people who would rather have a new or newer car, leasing may have benefits.

The simplest positive point about a lease is that, all else equal, you have a guaranteed buyer and you know your worst case scenarios.

Had you leased a Suburban three years ago you would be ecstatic that GMAC were 'buying' your Sub today for $25K. If you were 3 years into a 5 year loan (with higher payments), you would owe the same $25K, but with no guaranteed buyer and a $20K market value. It would cost you $5000 more for the pleasure of being able to say I 'owned' it.

The manufacturers and their finance arms are happy to assume these risks. Why? They sell more cars the first time, AND the second time. The first time: Lower payments and shorter commitments. The second time: Shorter commitments mean higher customer satisfaction and therefore higher retention / repurchase. The manufacturers usually throw more money at lease incentives than purchase incentives because of this.

The biggest benefit besides guaranteed future value is opportunity cost on cash flow. If a purchase payment is $400 and a lease payment is $250, what could you do with $150/month? Invest it in an appreciating asset (rather than a depreciating car), or even 'invest' it by putting the extra toward your mortgage, credit card balance, or some other debt.

If you wanted to keep your new car forever, it still might be cheaper to lease. Most states have different tax language for leasing that defers tax on the residual until the end of the lease, and some even tax based on 'use' that allows you to pay tax each month, skipping the interest charges of 'carrying' tax. In any case, the tax can be a benefit.

Give me almost any scenario on a new car, and I can tell you why leasing may be better, certainly no worse, than buying one.

E

[ronin]

Originally posted by Wayne at Pelican Parts
I've got a BMW 5-Series that I picked up for about $15K a few years ago.

lemme guess, E34...

I had one for about seven years myself. probably one of the best driving cars around. I loved it

[DonDavis]

Originally posted by kaisen
Leasing obviously has its misconceptions.

Had you leased a Suburban three years ago you would be ecstatic that GMAC were 'buying' your Sub today for $25K. If you were 3 years into a 5 year loan (with higher payments), you would owe the same $25K, but with no guaranteed buyer and a $20K market value. It would cost you $5000 more for the pleasure of being able to say I 'owned' it.


If you wanted to keep your new car forever, it still might be cheaper to lease. Most states have different tax language for leasing that defers tax on the residual until the end of the lease, and some even tax based on 'use' that allows you to pay tax each month, skipping the interest charges of 'carrying' tax. In any case, the tax can be a benefit.

Hmm, how much did the buyer have to pay at the front of the lease? Cap reduction, I think its called? Or some other BS line he sales guy fed the buyer. So when they buy the Sub they are 5k upside down in 3 yrs, but when they "fleece" it they have to kick in 4k-5k in the front.

And tax benefits? Another BS line the banks have fed people for decades. How much interest have the buyers sent the bank to keep from sending money to Uncle Sam? If people would look it up, they would realize its way skewed toward the banks favor. The banks have people all over the country saying..."Ha ha, I wrote off on my taxes $3200 dollars in intrest. That put my's taxable income down an' I saved $800 in taxes. I are a tax gene-ous"

Originally posted by kaisen
Give me almost any scenario on a new car, and I can tell you why leasing may be better, certainly no worse, than buying one.

E

Sounds like you either work for a bank, a dealer, or a fleecing company. That or you have ate the porridge and drank the kool-aid.

People who buy/fleece a new car every 3 years are making poor choices. Look at the deal Bid Ed quotes. He has a great car at a fraction of the cost of new. Smart move!

[Moneyguy1]

And at the end of thelease, unless the individual either buys the vehicle or leases another, he walks home.

Five years of lease payments: owns nothing.

Five years of loan payments: at least you have some transportation!!

And, the average car, given reasonable care should last reliably between 10 and 12 years, giving the individual 5 to 7 years to save up for a replacement bought with cash. (What a novel idea!!)

[kaisen]

No surprise that there would be a couple uninformed comments.

First, Cash Cap Reduction (CCR) is just another name for 'down payment. You can lease with zero down, if you wish.... just like any loan. Will your payments be higher? Yes, again, just like a loan. The more money you put down, the lower your beginning balance, just like a loan.

Let's assume you are going to get a new Saturn VUE for $19425.

You could buy it for 60 months at 3.9% (GMAC supported rate) and get a $750 rebate as well. Assume $1000 cash from you and a 5.5% sales tax ($1027), and you would be financing $18702 for 60 months at 3.9% for a payment of $345 /mo x 60= $20615 plus the $1000 you put in is $21615.

Or you could lease it for 39 months at 1.3% (GMAC supported rate) and get the same $750 rebate. Assume the same $1000 cash from you. The only tax due up front is on CCR (Your $1000) so $55 in tax. You leave owing $17730 ($972 less). You have 39 payments of $268 (including $14/mo in tax) and a residual of $8741 (calculated with 15,000 miles per year). $268 x 39= $10452 plus $8741 residual plus $481 tax on residual plus $1000 you put in is $20674 (That's $941 less).

Even if you took out a 21 month loan to pay the residual balance ($9222 with tax) you could have as high as a 10.8% interest rate and still come out EVEN taking the same 60 months to pay for it. After five years of payments you have a paid-for VUE, just like five years of payments on a loan.

Of course, you may not want to keep it at the end of 39 months, for many that's the allure of leasing. At the end of the lease you owe nothing, you just turn in your VUE and walk away. There are no lease termination charges (drop off fees, etc.) with GMAC. 39 months into that 60 month loan, you only owe $6960 ($1781 less) but paid $3003 more in payments ($345-268= $77x39= $3003) so the lease came out $1222 ahead.

And that is only if the VUE is worth $8741 or more 39 months from now. If it is worth any less than $8741 (GMAC's guarantee) then the lease becomes a better deal. If it is only worth what you owe on your loan, WHAT DO YOU OWN? In this example, you own a $6900 VUE that you owe $6900 on, but paid $3000 more in payments to say you owned compared to the lease you COULD have signed up for. You CAN'T have inequity on a lease, but you CAN have equity (You have first right to buy your car for the residual).

AND, what would you have done with the $77 each month in cash flow????? You can assign your own values here, but it can only help the case for the lease.

There's one more thing. What happens if your VUE gets stolen when it is exactly 12 months old? In either case, you owe more than what the VUE is worth. With the lease, you walk away owing nothing.... just get a new one. It's called GAP and it's included in every major manufacturer's lease. If you OWN it and the insurance company writes you a check for market value and your loan is less, you still owe the bank the difference in the balance. And because of taxes, the balance WILL be higher ($972 less at start, plus higher interest in our example). Great thing you 'own' it, huh?

By the way Don, I wasn't talking about income tax benefits .... that is going to be individual. Some people and businesses benefit from leasing (expense/liability) versus owning (asset). Talk to your tax accountant.
I was talking about the way SALES TAX is calculated. In many states your tax obligation on a lease is determined on your 'USE' of that vehicle over time (usually determined by your payment), not your 'ownership' of an asset valued by the purchase price (due today). Some states do not.

I'd be happy to respond to any other questions, scenarios, or attacks. Just trying to clear up the misconceptions.

E

[sewell94]

I think one big thing is being left out, the amount of miles thats is driven. i drive double what a typical lease allows for mileage, my wife is triple that.

[Porsche-O-Phile]

Originally posted by kaisen
No surprise that there would be a couple uninformed comments.

First, Cash Cap Reduction (CCR) is just another name for 'down payment. You can lease with zero down, if you wish.... just like any loan. Will your payments be higher? Yes, again, just like a loan. The more money you put down, the lower your beginning balance, just like a loan.

Let's assume you are going to get a new Saturn VUE for $19425.

You could buy it for 60 months at 3.9% (GMAC supported rate) and get a $750 rebate as well. Assume $1000 cash from you and a 5.5% sales tax ($1027), and you would be financing $18702 for 60 months at 3.9% for a payment of $345 /mo x 60= $20615 plus the $1000 you put in is $21615.

Or you could lease it for 39 months at 1.3% (GMAC supported rate) and get the same $750 rebate. Assume the same $1000 cash from you. The only tax due up front is on CCR (Your $1000) so $55 in tax. You leave owing $17730 ($972 less). You have 39 payments of $268 (including $14/mo in tax) and a residual of $8741 (calculated with 15,000 miles per year). $268 x 39= $10452 plus $8741 residual plus $481 tax on residual plus $1000 you put in is $20674 (That's $941 less).

Even if you took out a 21 month loan to pay the residual balance ($9222 with tax) you could have as high as a 10.8% interest rate and still come out EVEN taking the same 60 months to pay for it. After five years of payments you have a paid-for VUE, just like five years of payments on a loan.

Of course, you may not want to keep it at the end of 39 months, for many that's the allure of leasing. At the end of the lease you owe nothing, you just turn in your VUE and walk away. There are no lease termination charges (drop off fees, etc.) with GMAC. 39 months into that 60 month loan, you only owe $6960 ($1781 less) but paid $3003 more in payments ($345-268= $77x39= $3003) so the lease came out $1222 ahead.

And that is only if the VUE is worth $8741 or more 39 months from now. If it is worth any less than $8741 (GMAC's guarantee) then the lease becomes a better deal. If it is only worth what you owe on your loan, WHAT DO YOU OWN? In this example, you own a $6900 VUE that you owe $6900 on, but paid $3000 more in payments to say you owned compared to the lease you COULD have signed up for. You CAN'T have inequity on a lease, but you CAN have equity (You have first right to buy your car for the residual).

AND, what would you have done with the $77 each month in cash flow????? You can assign your own values here, but it can only help the case for the lease.

There's one more thing. What happens if your VUE gets stolen when it is exactly 12 months old? In either case, you owe more than what the VUE is worth. With the lease, you walk away owing nothing.... just get a new one. It's called GAP and it's included in every major manufacturer's lease. If you OWN it and the insurance company writes you a check for market value and your loan is less, you still owe the bank the difference in the balance. And because of taxes, the balance WILL be higher ($972 less at start, plus higher interest in our example). Great thing you 'own' it, huh?

By the way Don, I wasn't talking about income tax benefits .... that is going to be individual. Some people and businesses benefit from leasing (expense/liability) versus owning (asset). Talk to your tax accountant.
I was talking about the way SALES TAX is calculated. In many states your tax obligation on a lease is determined on your 'USE' of that vehicle over time (usually determined by your payment), not your 'ownership' of an asset valued by the purchase price (due today). Some states do not.

I'd be happy to respond to any other questions, scenarios, or attacks. Just trying to clear up the misconceptions.

E

I think what he's trying to say is that whether you plop down a huge wad of cash up front or you finance, you still do the dealership's job of eating the depreciation. At the end, the dealership gets the car back in easily resellable condition (due to mileage & maintenance restrictions placed on you, on your dime of course) and they simply spray some "That New Car Smell" crap in it and mark it up $2,000 over market value for someone looking for a "certified pre-owned". The dealer wins - you lose.

Common sense: if the dealership is pushing these things as aggressively as they do, whom do you think it benefits? You? Hahahaha!!!