Quote:
Originally Posted by 89911
....As far as buy vs lease, I have done it both ways. When I leased it felt like I never owned the car, was keeping it nice for its eventual owner, knew that I had no other choices until the end of the lease for changing vehicles, and was always weighing its use of miles with the mileage limits. After hanging on to cars 6-12 months longer then I would of because of the lease, I vowed I wouldn't do it again. I know, my issue but thats how I feel.
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Do what you want, of course. But I'll address this only because others reading this thread may feel the same way, and might as well set it straight.
It is your issue. Psychological.
When you own it (cash or loan) aren't you keeping it nice for the next owner? Have you kept a daily driver until died of old age? I'm not sure how "ownership" feels different than stewardship.
You knew you had no other choices until the end of the lease? BS. You have
more options in a lease. Look, if you paid cash and "own" it, you'll sell it or trade it whenever you feel like it, right? And put as many miles on it as you feel like, right? But cash, loan, or lease your car is worth what it's worth on the day you sell or trade it, period. Paid cash? You take the cash value, that day. Have a loan? You'll have to pay off whatever you owe, that day. Have a lease? Now you have options. It can be exactly like a loan, because that's really what it is. Call the bank/leasor that day and get your payoff. Sell or trade your car for what it's worth that day, then pay the balance due. Exactly like a loan. *OR* figure out whether it's a better deal to pay the remaining payments and give the car back to the lease company as if it's the end of the lease. Read my scenario above. It might represent a much better deal to have leased and paid the remaining payments and gave it back than to have paid cash and owned it. Sometimes thousands less. Choose the lesser of costs. Your choice.
Will miles, condition, timing have something to do with the car's value? Always. Whether you paid cash, took out a loan, or leased. Again, leasing gives you more options because you have a guaranteed buyer lined up, and they told you exactly what they'd pay for it. Think you can do better? Sell it to someone else and pay the lease off (just like a loan). Let's say you're 8,000 miles over your agreed miles. Remember, YOU are the one that chose how many miles you signed up for -- could have been 10,000 miles per year, 12K, 15K....all the way up to 30K miles per year. So your lease agreement states you could have purchased miles up-front (built into the lease) at 12 cents per mile, or waited three years and paid 15 cents per mile (some luxury cars or low-mile leases can be 15-18-20, still the same point). So, you can pay a PENALTY of $0.15 x 8000 = $1200 and give it back. Or, call them and get the total payoff and go sell it/trade it yourself if the impact will be less than $1200. If you OWNED your car, you'll take the hit, whatever it cost. It might have been a lot more than $1200.
Want to dispose of your car earlier than planned? Lease gives you more options, as well as the exact same options as if you owned it (cash/loan).
Want to put on more or less miles than planned? Lease gives you more options, as well as the exact same options as if you owned it (cash/loan).
Got into a bad accident, but not enough to total the car? Lease gives you more options, as well as the exact same options as if you owned it (cash/loan).
Think of it for a moment...... Someone broadsides your 550i while it were in that parking lot and wipes out the fenders and doors. Not totalled, but 50% of the value of the car. It gets professionally repaired and you go on with life. Now it's time to sell it. Carfax shows the accident. Maybe a pro like me can tell it was painted. How much less is the car worth? $1000? $2000? And it may take you a lot longer to sell. In any case, the accident cost YOU money. If you leased it? Nope. Not a cent. You have a guaranteed buyer, and they stated in writing, up front, what they'd pay you. A professionally repaired accident wouldn't change that. You'd return it to BMW Financial at the end of the lease and move on.
What if it was totalled? Let's say you paid cash for that $64K S4 for $55K plus tax for that $58,850 total. Then exactly ten months later some asshat totals it in a parking lot. The insurance company pays you market value. Maybe after a month of fighting they pay you HIGH market value. Maybe that's $49,500 (it's a model year old with 12,500 miles). You have no choice. You just lost $9,350.
Now let's say you took out a loan at 1.9%. $58,850 for 48 months at 1.9% for $1274/mo. You've paid ten payments, $12,740. You'd still owe $46,960. Ins co pays you $49,500 and you pocket the $2540. You just lost $10,200.
Now let's say you leased it. 36 month lease per our example. $708 per month. You paid 10 months. That's $7080. When it's totalled, that's between the lease company and the insurance companies. Period. You're not on the hook. Your contractual obligation is fulfilled. Any gap is covered. You just lost $7,080.
Want to pay cash? Want to take out a loan? Want to assume all the risks? Want to "own" a quickly depreciating asset? Go for it.
I'd rather have more options, pay less tax, have a lower payment, and assume no risks that my (lower) payments won't keep pace with depreciation.
Having said all that, I have ZERO to gain with this advice. I don't offer new cars. I don't offer leases to any clients. I can't make any money if a client chooses to lease a new car.
My bread and butter are people who'd rather pay $43K for a two year old Audi S4 and take out a five year loan commitment at a $850 payment (incl tax) than get a brand new 2013 S4 for a three year lease commitment at a $708 payment (incl tax). Funny how there are enough of those people to make a living....
On second thought, leasing is BAD. You should all just buy two or three year old cars!!