Anyone here lease cars?

HardDrive · 09:49 PM

Dantilla · 05-06-2007, 10:08 PM

Nope.

Jims5543 · 05-07-2007, 03:25 AM

My Audi and its the LAST lease I'll ever have in my life. Unless you have an car allowence at work its a total waste of money.

Rick Lee · Rick Lee's Garage

Jim, you're self-employed, right? If you keep under the mileage limit and can write the lease off as a business expense, I don't know why it's a waste of money. I know plenty of folks who run their leases throguh their businesses. In fact, I've been toying with the idea of starting an eBay store, incorporating and running my vehicles through the business. Leasing has to make sense for some folks, or it wouldn't be so popular.

on-ramp · 05-07-2007, 07:04 AM

Leasing is for people who have an extra $400 a month burning a hole in their pocket PLUS they have a need to drive a brand new car all the time.

For me, leasing is financial suicide.

syncroid · 05-07-2007, 07:21 AM

My wife's car is a lease. For us, it made sense. She writes off the expense to her business. Its a four year lease. She gets a new car every four years with a warranty. That in itself is peace of mind.

kaisen · 05-07-2007, 07:24 AM

Yes, many, many times. Wouldn't do a new car any other way. What questions are you really asking?

Super_Dave_D · Super_Dave_D's Garage

Quote:

Originally posted by on-ramp
Leasing is for people who have an extra $400 a month burning a hole in their pocket PLUS they have a need to drive a brand new car all the time.

For me, leasing is financial suicide.

Please explain your theory?

If someone wants a new car every 3 years and has no ambition on keeping one, why not lease? Nissan now leases up to 100K miles on the contract.

Leasing is less expensive (monthly) than buying the same new car.

Try this - buy a new car with no money down and finace it for 5 years. Try to trade it at 3 years and see how upside down you are.

Lease it and you trade it in at 3 years and walk away or you can buy out the lease and own it.

Rick Lee · Rick Lee's Garage

Leasing is just paying for the depreciation, which you would eat if you bought new, drove it xx miles and years and then sold it again. For people who always want a near-new car and one that's always in-warranty, it can be a good deal. I know a guy who leased a Boxster, ran through his dental practice, tracked the $hit out of it at every local DE and handed it back just before he reached the mileage limit. No questions asked. How else could you work a deal like that?

the · 05-07-2007, 07:59 AM

Quote:

Originally posted by Super_Dave_D

If someone wants a new car every 3 years

That's the key.

If that assumption is made, it doesn't matter what you do, you'll be paying through the nose for your transportation. You are perpetually on the steepest part of a very steep depreciation curve.

It can be financial suicide for a lot of people. They get hooked into it, never build up equity in a car so they never own a car and never have the ability to choose to not have a big payment. It's the same financial suicide as other forms of credit which is used to purchase or rent items which quickly lose their value.

In a world where lots of people have a savings rate of ZERO and lots of even "good" savers save maybe $10K per year, that $500 per month lease payment hurts over time. Anyone with a job can make that payment, but at the end of 3 years, that's over $20,000 gone. And the car is gone, too.

For a biz, yes you can deduct a lease payment in certain circumstances, but you can also deduct purchase payments if you buy. You could even pay cash and deduct the depreciation if used in a business.

the · 05-07-2007, 08:00 AM

Quote:

Originally posted by Rick Lee
I know a guy who leased a Boxster, ran through his dental practice, tracked the $hit out of it at every local DE and handed it back just before he reached the mileage limit. No questions asked. How else could you work a deal like that?

There's lots of things you can do if you are willing to engage in tax fraud like that.

Rick Lee · Rick Lee's Garage

Not sure it's tax fraud. He commuted to work in the car too.

on-ramp · 08:15 AM

Sure it can be tax deductible. However, it's doesn't make too much sense to spend $400 just to save $100 on your tax bill.

500 a month is 6,000 a year, that's 30,000 over 5 years.. PLUS you never own the car. you are good business for the dealers.

better to buy a 20K "used" car and fix it along the way. If you ever wanted to upgrade, you can still sell it, take the cash, and apply it to your newer car.

I am of the philosophy that if you don't have the cash to buy something(except maybe for your home), then you can't really afford it. Sure you can borrow and/or pay through the nose, but that just adds to your anxiety. I don't like having debt and too many monthly liabilities. That makes me feel powerless when it comes to my money.

Rick Lee · Rick Lee's Garage

Quote:

Originally posted by on-ramp
Sure it can be tax deductible. However, it's doesn't make too much sense to spend $400 just to save $100 on your tax bill

I don't know anyone who does that. But I know plenty of folks who spend $400 a month to have a nice car that they use for work and business and get the bonus of being able to write it off.

the · 05-07-2007, 08:21 AM

Quote:

Originally posted by Rick Lee
Not sure it's tax fraud. He commuted to work in the car too.

Exactly.

You can't deduct the miles that you use commuting to work.

That's tax fraud.

on-ramp · 05-07-2007, 08:23 AM

Quote:

Originally posted by the
Exactly.

You can't deduct the miles that you use commuting to work.

That's tax fraud.

The IRS code is so complicated, I bet you 1/2 the US population commits "tax fraud" in one way or another.
LOL

Bob's Project · 05-07-2007, 08:23 AM

This seems to me to be a discussion between older values of saving and then purchasing vs the new method of managing your debts.

Society has been brainwashed into thinking that buying something on credit and making payments is normal behavior.

There seems to be a huge absence of education on how to manage peoples finance on daily/monthly level. People are being encouraged to save for retirement while at the same time enticed into making payments on new TV's and cars.

the · 05-07-2007, 08:28 AM

Quote:

Originally posted by on-ramp
The IRS code is so complicated, I bet you 1/2 the US population commits "tax fraud" in one way or another.
LOL

Maybe.

But a dentist using a Boxster as a commuter vehicle and an autocross car, and deducting the lease payment, is not a "complicated" issue. It's just blatant tax fraud, the same as making up some bogus deductions or taking cash payments from patients and not reporting the income.

Big Ed · 05-07-2007, 08:33 AM

Quote:

Originally posted by Rick Lee
Jim, you're self-employed, right? If you keep under the mileage limit and can write the lease off as a business expense, I don't know why it's a waste of money. I know plenty of folks who run their leases throguh their businesses. In fact, I've been toying with the idea of starting an eBay store, incorporating and running my vehicles through the business. Leasing has to make sense for some folks, or it wouldn't be so popular.

I have never understood why leasing is considered a better deal for the self-employed. I am self-employed, and have a vehicle that I use for my business. I purchased it outright. Tax rules allow me to depreciate the cost of the vehicle, plus deduct any of the actual costs of operating it for the business miles driven. I did not finance the purchase with a loan, but if I had, the interest on the note is deductible as well.

So, can any financial gurus explain to me what I'm missing?

HardDrive · 05-07-2007, 08:34 AM

Quote:

Originally posted by kaisen
Yes, many, many times. Wouldn't do a new car any other way. What questions are you really asking?

I was basically looking for any huge 'gotchas'.

I barely drive 5k a year, so mileage is not a problem.

I'm asking because I have had the urge to get into a newer Porsche or Mercedes. The fact is I like to change cars every couple years, and I'm certainly not buying a new Cayman, then trying to sell it in 2 years. It would be a collosal depreciation hit.

Changing cars frequently is financially stupid on every level. I'm trying to figure out a way to take the least depreciation hit. I've looked at the numbers, and you get killed either buying or leasing. But at least with the lease, you just walk away at the end, and don't need to deal with marketing the car, and potentially ending up massively 'upside down'.

I have considered simply freeing up enough cash to buy a car outright. But the thought of handing a $50,000 check to a dealer......yikes.