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F10 / F11 (2011 - Current)
The new chapter in the highly successful story of the BMW 5 Series Sedan (F10) and wagon (F11)

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  #76  
Old 11-22-2010, 07:03 PM
dpwr dpwr is offline
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people who buy arguing how bmw is reliable and will last, people who lease argue how bmw is a nightmare to own... common people, there is no perfect formula, everyone chooses to buy or lease based on their lifestyle... either way it's a depreciating object
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  #77  
Old 11-22-2010, 07:41 PM
Gaucho Gaucho is offline
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richschneid ---- you make excellent points both on the "preference" and "estimation" issues. I completely agree with you that in many cases our "preferences" and bias can lead us to make inferences from data that may not be completely free of emotional influence. Your points on estimates of cost are well taken. All that one can go on is "best guess" on the law of averages. If you happen to be the one that gets a lemon - with any brand - you have just been a victim of the law of averages. This will likely emotionally scar someone for life and regardless of what the "data" may show, they will allow their personal experience be the predominant influence in their decision.

This topic has been extremely benefial. I have also struggled with the own vs lease issue. The comments here have been beneficial in giving me a lot of different points of view to consider trying to use facts, data, and analysis considering my comfort zone based on my biases!

Great job!!!
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  #78  
Old 11-22-2010, 08:05 PM
richschneid richschneid is offline
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Quote:
Originally Posted by Newmanium View Post
My point was that you're assuming a normal distribution, which is unknown in this case. Can't just smash any random car comparison guestimation into a normal distribution.

And as for your gripes about why a BMW warranty isn't necessary... it probably isn't. But otherwise the comparison to leasing is biased. It'd be like comparing two insurance rates, but increasing the deductible by $5000 for one of them - and then arguing that most people rarely even use insurance anyway, so you should go with the "cheaper" one that has the higher deductible. Apples/oranges.

The point is that always leasing a car is like buying premium insurance, and buying is like carrying the higher deductible. Unless you compensate by buying a warranty, you're essentially saving the money by "self-insuring", which of course is cheaper if nothing goes wrong - which is where the anecdotal evidence comes to play, e.g., "Me and my 4 friends have never had major repairs out of warranty!" As you should know, n=5 isn't worth much, statistically speaking.

And having such a strong stats background, you should also know that prior experience doesn't predict future results. Do 20 tails in a row increase the odds of a heads coming up on the next flip? You've had a string of luck, reading any wider trends into this is silly.
The very fact that you are calling these occurances "random" means they are in a Gaussian or Normal distribution. That's the fundamental meaning of statistical analysis. You don't have to "force" random occurances into a random distribution that's what they are. You are agreeing with me and don't realize it.

Now what you really need to look at is the actual frequency repair in cars purchased new and owned by the original owner for 10 years to see the actual freqeucy of repair. This data probaly exists. N=5 is not much statistically, but when you have 5 people claiming no repairs and zero people claiming significant repairs the statistical probabilities rise dramatically. That's why polls that only look at 1000 people can give an accurate analysis of the opinions of 300 million people to within an error of +/- 3-4%. Now my sample is a random sample and there is a sampling bias built in because I am less likely to come in contact with those who have had problems.

But, on the other hand, no one on this board has given any examples of someone having any major repairs on a BMW that they owned new for 10 years. That, too, is a biased sample because this thread is about the new F10, but a large percentage have owned previous 5 series. I think my analysis is correct.

Besides, it is important to understand that the basic engineering and manufacturing of BMW components are designed from the ground up to last a really long time if properly maintained. The premature failure of a component is, as you so aptly point out, a random occurance. Some, such as the failure of the HPFP, are design flaws. But this is unusual at BMW. The fact that almost all are random occurances means that anlysis as a Normal distribution is exactly correct.

If statistical analysis of frequency of repair rates were "silly" all the warranty companies would have gone out of business a long time ago. That's why they always try to sell you one, they make a ton of money doing so. If you want to pay for a warranty you know in advance that the probability you will save money with it is low. That's why I do self insure. That's why I never buy the extended warranty on anything. I know the odds are stongly in favor of my losing money by doing so.

To put this in another way. You know for an absolute fact that the depreciation of an $80,000 BMW for the first five years of ownership will be around $50,000 and that for the second five years will be around $25,000. That's a guarenteed savings of $25,000. You can easily estimate the maintaince costs. You cannot estimate the repair costs. Since you state that you cannot know the repair costs how do you know that you are NOT throwing away ten or fifteen grand. You are still doing a statistical analysis of future repair costs when you decide to pay for the new car waranty. That is based on your probability analysis which is not any different than what I am doing.
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Last edited by richschneid; 11-23-2010 at 02:48 PM.
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  #79  
Old 11-22-2010, 08:07 PM
richschneid richschneid is offline
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Quote:
Originally Posted by Gaucho View Post
richschneid ---- you make excellent points both on the "preference" and "estimation" issues. I completely agree with you that in many cases our "preferences" and bias can lead us to make inferences from data that may not be completely free of emotional influence. Your points on estimates of cost are well taken. All that one can go on is "best guess" on the law of averages. If you happen to be the one that gets a lemon - with any brand - you have just been a victim of the law of averages. This will likely emotionally scar someone for life and regardless of what the "data" may show, they will allow their personal experience be the predominant influence in their decision.

This topic has been extremely benefial. I have also struggled with the own vs lease issue. The comments here have been beneficial in giving me a lot of different points of view to consider trying to use facts, data, and analysis considering my comfort zone based on my biases!

Great job!!!
Thank you!
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  #80  
Old 11-22-2010, 09:47 PM
njstrane njstrane is offline
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Quote:
Originally Posted by richschneid View Post
Thank you!
This is very simple. Leasing is more costly than owning. There is a caveat. You should own and keep a car well maintained for 8-10 years.

Let's talk about the duration of adulthood.

Let's for argument sake say from 18-68, you leased a car for $900/month. By age 68 you would have spent $540,000 in car payments.

In contrast, let's say you bought a $50,000 car every 10 years. During those 10 years your cars were well maintained. For those worried about maintenance, let's for argument sake say there were an average of $1,000 in repairs and maintenance yearly from years 6-10 out of warranty. Each car with taxes, interest, etc would cost about $60,000. This would be $55,000 if bought out right with cash. By age 68, you would have spent only $300,000 on car payments.

Listen close everyone. Here's the catch. Take the difference of $240,000. Over 50 years that's $4,800/year. Take that money and invest in an index fund like Vanguard annually. With the average rate of return over the past 30 years of the S&P 500 of 8.8% you will hit retirement age (68 in this case) with . . . Drum roll. . . .

$4,700,000

If you don't believe me, believe the power of compounding interest and check the numbers yourself.

Long story short.

Buy, keep your money and get rich.

Lease, waste your money and make BMW rich. ;-)
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  #81  
Old 11-23-2010, 12:34 AM
dpwr dpwr is offline
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Quote:
Originally Posted by njstrane View Post
This is very simple. Leasing is more costly than owning. There is a caveat. You should own and keep a car well maintained for 8-10 years.

Let's talk about the duration of adulthood.

Let's for argument sake say from 18-68, you leased a car for $900/month. By age 68 you would have spent $540,000 in car payments.

In contrast, let's say you bought a $50,000 car every 10 years. During those 10 years your cars were well maintained. For those worried about maintenance, let's for argument sake say there were an average of $1,000 in repairs and maintenance yearly from years 6-10 out of warranty. Each car with taxes, interest, etc would cost about $60,000. This would be $55,000 if bought out right with cash. By age 68, you would have spent only $300,000 on car payments.

Listen close everyone. Here's the catch. Take the difference of $240,000. Over 50 years that's $4,800/year. Take that money and invest in an index fund like Vanguard annually. With the average rate of return over the past 30 years of the S&P 500 of 8.8% you will hit retirement age (68 in this case) with . . . Drum roll. . . .

$4,700,000

If you don't believe me, believe the power of compounding interest and check the numbers yourself.

Long story short.

Buy, keep your money and get rich.

Lease, waste your money and make BMW rich. ;-)
and if you don't make it to 68? can't take that with you
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  #82  
Old 11-23-2010, 01:57 AM
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EvolutionTheory EvolutionTheory is offline
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Quote:
Originally Posted by njstrane View Post
This is very simple. Leasing is more costly than owning. There is a caveat. You should own and keep a car well maintained for 8-10 years.

Let's talk about the duration of adulthood.

Let's for argument sake say from 18-68, you leased a car for $900/month. By age 68 you would have spent $540,000 in car payments.

In contrast, let's say you bought a $50,000 car every 10 years. During those 10 years your cars were well maintained. For those worried about maintenance, let's for argument sake say there were an average of $1,000 in repairs and maintenance yearly from years 6-10 out of warranty. Each car with taxes, interest, etc would cost about $60,000. This would be $55,000 if bought out right with cash. By age 68, you would have spent only $300,000 on car payments.

Listen close everyone. Here's the catch. Take the difference of $240,000. Over 50 years that's $4,800/year. Take that money and invest in an index fund like Vanguard annually. With the average rate of return over the past 30 years of the S&P 500 of 8.8% you will hit retirement age (68 in this case) with . . . Drum roll. . . .

$4,700,000

If you don't believe me, believe the power of compounding interest and check the numbers yourself.

Long story short.

Buy, keep your money and get rich.

Lease, waste your money and make BMW rich. ;-)
This is a great point, among other well written posts. Thank you.
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  #83  
Old 11-23-2010, 03:50 AM
ihumphrey ihumphrey is offline
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Quote:
Originally Posted by njstrane View Post
This is very simple. Leasing is more costly than owning. There is a caveat. You should own and keep a car well maintained for 8-10 years.

Let's talk about the duration of adulthood.

Let's for argument sake say from 18-68, you leased a car for $900/month. By age 68 you would have spent $540,000 in car payments.

In contrast, let's say you bought a $50,000 car every 10 years. During those 10 years your cars were well maintained. For those worried about maintenance, let's for argument sake say there were an average of $1,000 in repairs and maintenance yearly from years 6-10 out of warranty. Each car with taxes, interest, etc would cost about $60,000. This would be $55,000 if bought out right with cash. By age 68, you would have spent only $300,000 on car payments.

Listen close everyone. Here's the catch. Take the difference of $240,000. Over 50 years that's $4,800/year. Take that money and invest in an index fund like Vanguard annually. With the average rate of return over the past 30 years of the S&P 500 of 8.8% you will hit retirement age (68 in this case) with . . . Drum roll. . . .

$4,700,000

If you don't believe me, believe the power of compounding interest and check the numbers yourself.

Long story short.

Buy, keep your money and get rich.

Lease, waste your money and make BMW rich. ;-)
Of course you assume that the most important thing is the money. Your analysis that leasing actually costs more is absolutely true under your scenario. However, there is more to the decision than money alone. The fact is the average american keeps a new car between 3-4 years, in this scenario they eat the depreciation and don't get the monetary benefits of long term ownership and the discussion is a bit different with this reality. Personally, I would never drive a car for 10 years (how boring)...sometimes spending money for the entertainment is better than money in the bank. Of course this is easy to say when you have money, but if you are buying 60K cars and don't then I can't help you.

-Life is too short to drive crappy cars!
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  #84  
Old 11-23-2010, 05:27 AM
richschneid richschneid is offline
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Quote:
Originally Posted by ihumphrey View Post
Of course you assume that the most important thing is the money. Your analysis that leasing actually costs more is absolutely true under your scenario. However, there is more to the decision than money alone. The fact is the average american keeps a new car between 3-4 years, in this scenario they eat the depreciation and don't get the monetary benefits of long term ownership and the discussion is a bit different with this reality. Personally, I would never drive a car for 10 years (how boring)...sometimes spending money for the entertainment is better than money in the bank. Of course this is easy to say when you have money, but if you are buying 60K cars and don't then I can't help you.

-Life is too short to drive crappy cars!
That's the entire point. You pay more if you want to drive a newer car. You pay less if you drive an older car. The only point in which I disagree with you is that a 10 year old E39 540i is NOT a crappy car, it is a great car. It was a great car in the year 2000. It is still a great car in the year 2010.

Would you rather drive a new 30k car every five years, or drive a new 60k car every ten years? That is a personal preference. For the same approximate amount of money I could drive a new 40k car every three years or a new 80k BMW every 6 years. I choose the latter. Which would you choose? "Life is too short to drive crappy cars!" Of course, you can choose to drive a new 80k car every three years, it just costs a lot more. It's called personal preference.
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Last edited by richschneid; 11-23-2010 at 05:30 AM.
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  #85  
Old 11-23-2010, 05:48 AM
ihumphrey ihumphrey is offline
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Quote:
Originally Posted by richschneid View Post
That's the entire point. You pay more if you want to drive a newer car. You pay less if you drive an older car. The only point in which I disagree with you is that a 10 year old E39 540i is NOT a crappy car, it is a great car. It was a great car in the year 2000. It is still a great car in the year 2010.

Would you rather drive a new 30k car every five years, or drive a new 60k car every ten years? That is a personal preference. For the same approximate amount of money I could drive a new 40k car every three years or a new 80k BMW every 6 years. I choose the latter. Which would you choose? "Life is too short to drive crappy cars!" Of course, you can choose to drive a new 80k car every three years, it just costs a lot more. It's called personal preference.
You are right, of course would not refer to an E39 as a crappy car...was more along lines of the "average american" mentioned earlier in my post and the crappy 10 y/o whatever they drive...Oh well, as you say personal choice...My only point was it is not just dollars and cents to many people when it comes to cars, thats all. Everyone knows any car is basically a money pit, some just less so than other and some are a hell of a lot more fun to drive than others
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  #86  
Old 11-23-2010, 06:06 AM
richschneid richschneid is offline
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Originally Posted by ihumphrey View Post
You are right, of course would not refer to an E39 as a crappy car...was more along lines of the "average american" mentioned earlier in my post and the crappy 10 y/o whatever they drive...Oh well, as you say personal choice...My only point was it is not just dollars and cents to many people when it comes to cars, thats all. Everyone knows any car is basically a money pit, some just less so than other and some are a hell of a lot more fun to drive than others
Actually, my wife drives an 11 year old Honda Accord V6 with 90,000 miles, which she bought new for $22,500. One could say she is an "average American". I drive it sometimes and it is a great car. It feels brand new and is a lot of fun to drive. She did have to rebuild the tranny for 3 grand a few years ago, but that was a one time expense. Of course, that may have been her fault because she always downshifted going down all the hills here in Pittsburgh. She doesn't do that any more. Brakes are less expensive than transmissions. She can certainly afford to buy a new Accord for 30k, but she doesn't want to because she thinks it would be waste of money and she really likes her current car. She follows the reccommended service intervals and the car has never broken down on the road.

My personal philosophy in this regard is to buy the best car you can afford, one you really, really like and keep it for a long time. If you really liked it when you bought it, then you might continue to really like it. I wouldn't have changed my '06 650i for a new 2011 550i xDrive because I really liked the 650i and people always told me it looked brand new. I did it because I need a four door car and AWD for the winter. The depreciation would have been about 20k for my 6 over the next five years, it will be about 50k for my 550 over the next five years. I can afford 10k a year for a car, but most people can't.
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Last edited by richschneid; 11-23-2010 at 02:52 PM.
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  #87  
Old 11-23-2010, 08:24 AM
ihumphrey ihumphrey is offline
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Originally Posted by richschneid View Post
Actually, my wife drives an 11 year old Honda Accord V6 with 90,000, which she bought new for $22,500. One could say she is an "average American". I drive it sometimes and it is a great car. It feels brand new and is a lot of fun to drive. She did have to rebuild the tranny for 3 grand a few years ago, but that was a one time expense. Of course, that may have been her fault because she always downshifted going down all the hills here in Pittsburgh. She doesn't do that any more. Brakes are less expensive than transmissions. She can certainly afford to buy a new Accord for 30k, but she doesn't want to because she thinks it would be waste of money and she really likes her current car. She follows the reccommended service intervals and the car has never broken down on the road.

My personal philosophy in this regard is to buy the best car you can afford, one you really, really like and keep it for a long time. If you really liked it when you bought it, then you might continue to really like it. I wouldn't have changed my '06 650i for a new 2011 550i xDrive because I really liked the 650i and people always told me it looked brand new. I did it because I need a four door car and AWD for the winter. The depreciation would have been about 20k for my 6 over the next five years, it will be about 50k for my 550 over the next five years. I can afford 10k a year for a car, but most people can't.
Good philosophy...my wife drives a 7 y/o Highlander and we have never put a penny into that car except for routine maintenance and she still likes it as well, so average american wives we have in common(it is not fun to drive though). Her and I just don't agree on cars...to me I love getting a new car every few years, and as long as it fits my budget I will continue to do so. To her it is just A-B lug the kid around transport...I appreciate her stance as having a paid for car for her means I can buy a better car and stay in the budget!
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  #88  
Old 11-23-2010, 11:45 AM
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1985mb 1985mb is offline
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Quote:
Originally Posted by njstrane View Post
This is very simple. Leasing is more costly than owning. There is a caveat. You should own and keep a car well maintained for 8-10 years.

Let's talk about the duration of adulthood.

Let's for argument sake say from 18-68, you leased a car for $900/month. By age 68 you would have spent $540,000 in car payments.

In contrast, let's say you bought a $50,000 car every 10 years. During those 10 years your cars were well maintained. For those worried about maintenance, let's for argument sake say there were an average of $1,000 in repairs and maintenance yearly from years 6-10 out of warranty. Each car with taxes, interest, etc would cost about $60,000. This would be $55,000 if bought out right with cash. By age 68, you would have spent only $300,000 on car payments.

Listen close everyone. Here's the catch. Take the difference of $240,000. Over 50 years that's $4,800/year. Take that money and invest in an index fund like Vanguard annually. With the average rate of return over the past 30 years of the S&P 500 of 8.8% you will hit retirement age (68 in this case) with . . . Drum roll. . . .

$4,700,000

If you don't believe me, believe the power of compounding interest and check the numbers yourself.

Long story short.

Buy, keep your money and get rich.

Lease, waste your money and make BMW rich. ;-)
I don't doubt this calculation will always produce a big drum roll number, but I don't think the assumptions need to be tilted one way or another to make the point. The lease number on a $50K car is closer to $700/month, while only $1,000/year for both maintenance and out-of-warranty repairs is severely an underestimate IMO. It will still result in big savings, but the assumptions need to be more realistic.

The larger point is that your big drum roll number could be a lot bigger if you didn't buy a $50,000 BMW in the first place. By applying the same principle, you could save a heck of a lot more by buying a $15K car and investing both the upfront savings as well as the annual maintenance/repair expenses.
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  #89  
Old 11-23-2010, 12:04 PM
solstice solstice is offline
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"The larger point is that your big drum roll number could be a lot bigger if you didn't buy a $50,000 BMW in the first place. By applying the same principle, you could save a heck of a lot more by buying a $15K car and investing both the upfront savings as well as the annual maintenance/repair expenses."

The question was about buying or leasing an F10. That a cheaper car is more economical than an expensive car should be obvious but the lease vs. buy equation is difficult for some.
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  #90  
Old 11-23-2010, 03:39 PM
njstrane njstrane is offline
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Originally Posted by solstice View Post
"The larger point is that your big drum roll number could be a lot bigger if you didn't buy a $50,000 BMW in the first place. By applying the same principle, you could save a heck of a lot more by buying a $15K car and investing both the upfront savings as well as the annual maintenance/repair expenses."

The question was about buying or leasing an F10. That a cheaper car is more economical than an expensive car should be obvious but the lease vs. buy equation is difficult for some.
Thanks Solstice. The title of the thread is "F10; lease vs buy", not cheap car buy vs expensive car lease.
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  #91  
Old 11-23-2010, 04:32 PM
lawbuz lawbuz is offline
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It's simple -- you buy because you gain an asset. True, it's a depreciating asset, but it's something you can always own.

Even though the car may not be worth much after 6-8 years, you still have a decent car you rightfully own. Given unpredictable times (whether you'll be able to afford a new lease every 3 years or a new car in 6 years), that 6-8 year old BMW will be much more worthwhile to you as an asset than its book value may suggest.

Assets = power.
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  #92  
Old 11-23-2010, 05:25 PM
Newmanium Newmanium is offline
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Originally Posted by lawbuz View Post
It's simple -- you buy because you gain an asset. True, it's a depreciating asset, but it's something you can always own.

Even though the car may not be worth much after 6-8 years, you still have a decent car you rightfully own. Given unpredictable times (whether you'll be able to afford a new lease every 3 years or a new car in 6 years), that 6-8 year old BMW will be much more worthwhile to you as an asset than its book value may suggest.

Assets = power.
Tell that to all the poor suckers who bought houses in overinflated real estate markets and watched them tank. Getting a thrill from owning or equating it with "power" is a foolish way to make a decision. It's a hunk of metal, whoever owns it is exposed to depreciation risk - if it makes economic sense to absorb that risk (i.e. 10+ years of ownership planned), buy.

So many people romanticize owning a car... it's the same thing with a house, asset is unchanged whether the mortgage is 0% or 100%. Have an accountant's attitude towards your finances/possessions, be cold, dispassionate, and objective. Anything less just colors your judgment, leads to short-sighted or biased decisions.
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  #93  
Old 11-23-2010, 05:30 PM
solstice solstice is offline
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Originally Posted by Newmanium View Post
Tell that to all the poor suckers who bought houses in overinflated real estate markets and watched them tank. Getting a thrill from owning or equating it with "power" is a foolish way to make a decision. It's a hunk of metal, whoever owns it is exposed to depreciation risk - if it makes economic sense to absorb that risk (i.e. 10+ years of ownership planned), buy.

So many people romanticize owning a car... it's the same thing with a house, asset is unchanged whether the mortgage is 0% or 100%. Have an accountant's attitude towards your finances/possessions, be cold, dispassionate, and objective. Anything less just colors your judgment, leads to short-sighted or biased decisions.
Absolute nonsense. There would not have been a financial crisis if people bought their homes cash.
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  #94  
Old 11-23-2010, 06:04 PM
DXK DXK is offline
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Originally Posted by solstice View Post
Absolute nonsense. There would not have been a financial crisis if people bought their homes cash.
Yep. If we bought everything in cash: cars, houses, other things, there would be no debt or credit markets, no bond market, no capital for R&D, no start up capital for businesses, no business loans, no educational loans. Financial industry ceases to exist as we know it they won't have money to lend for anything, no instruments to hedge the risk (risk creates opportunities). Basically, the U.S. will resemble southern Italy, where the economy is all about small cash transactions, and how many companies and employment opportunities have been created there?
At least that is what they teach in B-schools in Boston / Cambridge, but hey they might have a bias opinion.
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Old 11-23-2010, 06:33 PM
solstice solstice is offline
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Originally Posted by DXK View Post
Yep. If we bought everything in cash: cars, houses, other things, there would be no debt or credit markets, no bond market, no capital for R&D, no start up capital for businesses, no business loans, no educational loans. Financial industry ceases to exist as we know it they won't have money to lend for anything, no instruments to hedge the risk (risk creates opportunities). Basically, the U.S. will resemble southern Italy, where the economy is all about small cash transactions, and how many companies and employment opportunities have been created there?
At least that is what they teach in B-schools in Boston / Cambridge, but hey they might have a bias opinion.
Well it sure ain't my responsibility to keep Goldman & Sachs and Co. going by overpaying for cars or homes. You are stretching by saying so.
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Old 11-23-2010, 06:40 PM
richschneid richschneid is offline
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Originally Posted by DXK View Post
Yep. If we bought everything in cash: cars, houses, other things, there would be no debt or credit markets, no bond market, no capital for R&D, no start up capital for businesses, no business loans, no educational loans. Financial industry ceases to exist as we know it they won't have money to lend for anything, no instruments to hedge the risk (risk creates opportunities). Basically, the U.S. will resemble southern Italy, where the economy is all about small cash transactions, and how many companies and employment opportunities have been created there?
At least that is what they teach in B-schools in Boston / Cambridge, but hey they might have a bias opinion.
It's the MBA's who taught everyone that the value of houses could never go down so that it didn't matter how much you borrowed to buy one are the one's who got us into this mess, along with the fact that people were allowed to borrow the full price of the house with 0% down without proof of income. At least everyone on this blog agrees that the value of a car, except with very rare exceptions eg classics, always goes down.

The price of houses had never gone down since the great depression, until now. Solstice is correct about if we bought houses for cash, but you are also correct about the importance of credit. Realistically, if everyone had been required to put down 20% of the price of a house and only be allowed to take a mortgage of 80%, which is what had been required for decades after the great depression, then the housing bubble would not have been able to happen.
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Old 11-23-2010, 06:45 PM
DXK DXK is offline
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Most of what Goldman is doing is good for America; it gives us competitive advantage in financing. They trade, invest, and create financial instruments that help companies and people. Have you tried starting a company in Germany or Sweden? Vilifying our financial leaders only serves our competitors since the demand for financial instruments is increasing all over the world. If the center of finance moves from NY to China, it will be our loss not gain. There is a demand for smart people and creative financing everywhere. Besides, who do you think makes markets for our government's debt?
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Old 11-23-2010, 06:48 PM
DXK DXK is offline
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It's the MBA's who taught everyone that the value of houses could never go down .
It's B.S. Not a single finance professor that I've had said anything of this kind! Exact opposite.
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Old 11-23-2010, 06:50 PM
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GHOST PROTOCOL GHOST PROTOCOL is offline
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This question can not be answered by looking at the numbers alone. There is also another factor, quality of life. As a business owner who has dedicated years of life to developing, growing, and maintaining a business, I want some rewards. One of those rewards is a new vehicle every three years. With regards to the financial end of it, the lease payments are run through the business so that car costs me less than the actual monthly payment. For me, leasing makes more sense when both the financial and non-financial factors are both taken into consideration.

As to the financial crisis, the problem was that home buyers had zero at stake when purchasing their homes. These buyers were given both primary and secondary mortgages covering the entire purchase price without having to put their own money into the deal (usually they had none). Moreover, the buyers did not even have to pay closing costs because they were built into the deal (seller's concession) and they wound up coming out of the financing. In short, people with no money were allowed to buy houses without paying any of their own money. Since creative financing provided them with the money to buy a house they could not afford in the first place, they had no problem walking away when they could not afford the mortgage. Had these same people been required to put down at least 20% of their own money, a healthy environment would have been maintained in which homes could be purchased with the appropriate financing.
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Old 11-23-2010, 07:09 PM
DXK DXK is offline
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BTW, you guys realize that up to 50% of BMWs are leased depending on the model? Here is the important think: due to our 'greedy bankers' and their dirty creative financing, two things are possible: lower car prices and low lease payments. For example: in Germany, the lease payment for the same priced car could be 50% higher. Second: since the leasing increases the volume of cars sold, the U.S. prices are lower and not only due to taxes. And for purchasers, the interst rates on bank loans are lower here as well. No 0.9 % for 36 months in Europe! And I am not even talking about Euro vs $ hedging.
I hope nobody thinks that buying too many cars with lower payments made the car companies like GM seek government protection
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Last edited by DXK; 11-23-2010 at 07:14 PM.
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