New Truck Buy or Lease?

mike-s wrote:

troubledwaters wrote:

mike-s wrote:

troubledwaters wrote:
I love these one size fits all answers. That allows me to borrow other peoples money at 4.5% while keeping my money invested at 9.5%.

That 4.5% is fixed. Where are you getting a fixed (risk free) return of 9.5%, and have you deducted taxes to calculate that return?...

You're right it's not fixed. Actually, over the first 3 quarters of this year it's over 12% and I still have 1 quarter to go. Your one size fits is alright by me, but I'm sure you won't mind if I don't follow your advice.

So, how did that work out for you in 2000-2003, or 2008?

Seriously?
At it's lowest point DJIA went from 10,300 down to 7,500.
Within a year it was back to 10,300
Today it's at 22,331
I'm a masochist, zo please tell me again how I took a beating.

troubledwaters wrote:

mike-s wrote:

troubledwaters wrote:
I love these one size fits all answers. That allows me to borrow other peoples money at 4.5% while keeping my money invested at 9.5%.

That 4.5% is fixed. Where are you getting a fixed (risk free) return of 9.5%, and have you deducted taxes to calculate that return?...

You're right it's not fixed. Actually, over the first 3 quarters of this year it's over 12% and I still have 1 quarter to go. Your one size fits is alright by me, but I'm sure you won't mind if I don't follow your advice.

So, how did that work out for you in 2000-2003, or 2008?

mike-s wrote:

troubledwaters wrote:
I love these one size fits all answers. That allows me to borrow other peoples money at 4.5% while keeping my money invested at 9.5%.

That 4.5% is fixed. Where are you getting a fixed (risk free) return of 9.5%, and have you deducted taxes to calculate that return?...

You're right it's not fixed. Actually, over the first 3 quarters of this year it's over 12% and I still have 1 quarter to go. Your one size fits is alright by me, but I'm sure you won't mind if I don't follow your advice.

troubledwaters wrote:
I love these one size fits all answers. That allows me to borrow other peoples money at 4.5% while keeping my money invested at 9.5%.

That 4.5% is fixed. Where are you getting a fixed (risk free) return of 9.5%, and have you deducted taxes to calculate that return?

To the OP:
Leasing firms make money by buying the vehicle, getting payments from you, then selling it at the end. You're paying for the depreciation and their profit. They're way, way better at knowing how much a vehicle will be worth at the end of the lease than you are, so they can make a profit. Unless you're a business where there may be tax advantages (expense vs. capital), leasing costs more overall. Sure, there may be some anecdotal incidents where someone comes out ahead. But that's the exception rather than the rule, or the leasing companies would be out of business.

Some people like leasing because the monthly payment is lower - but only because you're not building equity. Others like to get a new vehicle every few years, don't want the hassle of selling/trading - just turn it in and get a new one - and are willing to pay for that luxury.

Ultimately, which is "better" is up to you, based on your priorities.

Suggesting that a 74 year old retiree save $600/month for five years so he can buy a 2022 pickup seems a little strange to me. Who cares if it costs him a few dollars in interest if he has one hundred thousand dollars worth of fun during those five years? These things always come down to "I am smart because I have money". Congratulations. It is one thing to put off having a good time when one is thirty, another when they are seventy.

Jayco-noslide wrote:
The 3rd and best option to leasing or buying (with a loan) is to buy and pay cash. No monthly payments, no interest. It benefits in ways you don't anticipate until you do it. Start by buying only what you can pay for up front, then save every month toward next vehicle. Don't listen to the financial people who will tell you borrowing is not only OK but that it's a good thing. Wrong except maybe for a home. See Dave Ramsey for more.

I love these one size fits all answers. That allows me to borrow other peoples money at 4.5% while keeping my money invested at 9.5%.

When you have good credit and can nail 0 percent interest, the benefits of paying cash are less.

Why pay $50,000 now and lose 5 years of interest on it when I can pay that $50,000 over time and earn interest on the balance each month?

In the end, it really depends on the individual. There is not one best way to do it. There are many other factors involved.

The 3rd and best option to leasing or buying (with a loan) is to buy and pay cash. No monthly payments, no interest. It benefits in ways you don't anticipate until you do it. Start by buying only what you can pay for up front, then save every month toward next vehicle. Don't listen to the financial people who will tell you borrowing is not only OK but that it's a good thing. Wrong except maybe for a home. See Dave Ramsey for more.

The last new car I bought in 2000 I leased. I leased it for 4 years for several reason, none of which are important. At the end of the 4 years I decided I would keep it and bought it for the residual value that was already agreed upon when the car was bought new.

When you lease, you are only financing the depreciation of the vehicle over the life of the lease. The balance is the residual value. If you understand what how a lease works, understand what the terms and values in a lease mean, you will then understand that a lease is just as viable an alternative as buying.

By the way, just because you buy/lease from a particular dealer doesn't mean that is where the vehicle has to be leased from. You can get leases at various lending institutions with varying terms and values; just like buying.

The important thing to know with a lease is, you want to negotiate the buying price same as buying new. Then you figure out the residual value and finance terms.

Anytime I can use someone else's money at 4.5% and keep my own money invested at 9.5%+ I'm interested.

As far as the salesman/dealer is concerned, there is no difference between buying and leasing; unless you don't know what the buying price and residual value are.

Walaby wrote:

guidry wrote:
There is a reason salesmen push leasing over buying; ever wonder why!?

Actually my experience is just the opposite. In my 40 years of adulthood, buying multiple cars I have never had a salesman mention leasing. Im confident the salesman makes more on purchases, as does the dealership.

Mike

I can assure you that the salesman and the dealership make every bit as much money on a lease as a sale. In most cases the gross average on a lease will be higher than a purchase. Many salesman do not bring up leases because they are not properly trained on them or their area is not a very lease active area. Leasing is growing rapidly in the past few years and is up to more than 30% of the sales.

The popularity of leasing is very simple. The monthly payment is 30% less than a purchase payment on average. New vehicle loans are now up to an average of 66 months to make the payments affordable for the majority. Most people are never going to pay off the vehicle before trading and will need to make somewhere around 50 payments before they are even in value to balance. People can disparage leasing all they want but, until vehicles start getting cheaper or people start making a lot more money, leasing is a fact of life.