New Truck Buy or Lease?

[garyp4951]

I'm still looking at new trucks (first time in 17yrs), and wondered if leasing would be a good option or not. I went and drove the Ram, and next will try the Ford, and Chevy. I do kind of favor the Cummins diesel, but will check out the Ford 6.2 gas model.

[babock]

TomG2 wrote:
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.

Suggesting that a retiree has to finance a truck means that retiree didn't do enough financial planning before he retired.

Better option is to buy a 2 year old truck with cash if that's the financial situation.

[Grit_dog]

^ I know... I keep wanting to go buy the wife a new car, but it's nice staring at the savings account!
Boy, I'm gonna be a cheap bassturd when I get old!

[Jayco-noslide]

Debt free is addictive once you achieve it. It's not a short term thing. The interest saved by not having any loans over a 20 year period is huge. It's not about being deprived of fun but all the fun I can have by spending that cash on other things I want. It's not just the interest either. It's the joy of having no monthly payments. I will probably buy another car to tow behind our motor home within the year to replace our 2012 Chevy Sonic (bought with cash). Will probably be a Ford Fiesta bought with cash and no trade. I'll be the first to admit, I will not have enough cash to buy a new truck or motor home so I guess I'll Miss that fun.

[wing_zealot]

mike-s wrote:
If that's the metric, DJI was at the same point in November 2011 as in January 2001 (dividends reinvested, inflation adjusted).

So that money you been saving in the bank since 2001 so you could pay cash, that's been earning a paltry 0.1 percent dividend must be worth almost nothing adjusted for inflation. While the price of that new truck goes up year after year by the rate of inflation plus some more just for good measure.

[garyp4951]

TomG2 wrote:
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.

Thanks Tom, I agree, at my age I plan for next week not 5 years ahead.lol

[mike-s]

troubledwaters wrote:
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.

If that's the metric, DJI was at the same point in November 2011 as in January 2001 (dividends reinvested, inflation adjusted).

[troubledwaters]

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.

[mike-s]

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?

[troubledwaters]

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.

[mike-s]

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.

[TomG2]

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.

[troubledwaters]

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%.

[toedtoes]

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.

[Jayco-noslide]

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.

[troubledwaters]

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.