Doesn't Anyone Buy Anymore?

Originally Posted by windsor027

don't agree with this. depending what your credit rating is, in today's economic environment you can get a better return on your money just buy buying a blue chip stock and collecting the dividend, rather than tying up your money for 3 years. if you are doing it for the lower payment then maybe you should be leasing a less expensive car.

Highly speculative at best, but I'm willing to take your stock recommendations. In any event, the amount of money that you would tie up in MSDs to reduce the money factor on a lease is in the economic noise and far less than most people have in interest static rainy day savings accounts.

In that I'm in a health dependent profession, I pay cash for everything (other than using a credit card to leverage somebody else's money for the 28 day float) and have not taken too bad of a financial beating trading my BMWs while they still have some retained value - generally every 3 to 4 years.

It has always been my view that, with a few notable exceptions, most people use automobile leases to leverage assets they cannot afford.

Originally Posted by voip-ninja

This thread should really be stickied because it covers everything very very well in the lease vs buy discussion. At the end of the day, even if you negotiate great leases on cars that are good lease candidates (like 3 series) leasing is always more expensive then buying up-front with cash (new or used) and driving and maintaining the car long term. Reality though is that few people have the stomach to keep a car for 12-15 years... especially high earning professional types!

I love Lease vs. Buy debates.

All the "substantial" savings others are pointing out over and over again are based on buying a car and keeping it for 10 years and 70% of BMW owners reject that concept outright.

Yes, leasing is a few grand a year more frivolous and when you add up 30 years it looks like you could have had enough money for a small house. But the same can be said for pack-a-day smokers ($1,300 a year), bagel & coffee diners ($2,700), smartphone users ($2,800), vacationers ($12,000), NFL season ticket holders ($8,000), or beer drinkers ($2,200) as we all have our little indulgences. For many of us, and particularly BMW owners, our cars are our only vices.

Anyone own a dog? If so, better take Fido out back and shoot him because he's costing you $1,800 a year. Using myself over 30 years as an example:

I don't smoke. $39,000 savings.
I don't drink. $66,000 savings.
I don't own a dog. $54,000 savings.

That's $159,000 I won't spend in the 30 years I'll be leasing, so others can go lecture smoking drinking dog owners and leave our leased cars alone.

BJ

Originally Posted by GVFlyer

It has always been my view that, with a few notable exceptions, most people use automobile leases to leverage assets they cannot afford.

No one is saying that a lease is a better financial decision; we are saying that the savings isn't enough to make us want to go through the hassle of ownership.

Many of us drive 3 Series because at $50,000 it is a very affordable luxury car, the cheapest way to keep up with the Joneses for those of us who can afford a lot more and choose not to. I can afford a $1,500 car payment quite easily but cap myself at $549 because it's the right thing to do. I don't need the hassle of buying and selling every three years to "save" another $30 a month. In my mind I'm "saving" $1,000 a month that I could be spending but aren't.

BJ

Originally Posted by beden1

It depends on the stock and the stock market on what positive returns (or losses) you will get as compared to the term period of the lease. Paying cash is always the cheapest option if you have enough savings that it does not dent your ability to still earn adequate returns on your investments (and, you keep a car for 6+ years, or less if you happened to get a great deal and buy a car with a strong resale value).

Aside from a business owners advantage to leasing, younger individuals just starting out in the workplace and those raising families with high demands on their cash flow are probably better off leasing, especially as compared to a loan to buy where the monthly payments are mostly considerably higher by comparison.

In PA, we have to pay 9% sales tax on leasing as compared to 6% sales tax on purchasing. We can also use a trade to lower the purchase price and pay the 6% on the balance.

the person you describe has no business in leasing/buying a 45k car. He/she thank their lucky stars that companies have some decent transportation for around 15K or they should be looking in the used car market. This is the problem with a lot of young folks starting out, no money sense.

Originally Posted by Chris90

I've had mine for 7 years, paid cash for it when it was 18 months old (13k miles), saving like $13k off a new car. It's cost me roughly $3800/year in depreciation and maintenance. Not sure how that compares to leasing.

It doesn't. you are driving an 8 year old car while I am about to get into the latest and greatest. For that privileged I pay a lot more than you. That is the bottom line. And I hate agreeing with BJ but he is spot on. You need to break down you money in terms of savings for the short term, long term, immediate needs and fun. if you can do the first 3 well then whatever is left is for fun (vacations, and various "toys"). Some people have never been outside of this country and spend all their money in Vegas...their choice. Some love to have a nice boat (talk about a money pit). The deal is as long as you don't go into any debt you are doing it right. And when i say any debt i also mean you house. don't understand why people think they own their house when they are in to a bank for a million.

Originally Posted by boltjaM3s

I love Lease vs. Buy debates.

All the "substantial" savings others are pointing out over and over again are based on buying a car and keeping it for 10 years and 70% of BMW owners reject that concept outright.

Yes, leasing is a few grand a year more frivolous and when you add up 30 years it looks like you could have had enough money for a small house. But the same can be said for pack-a-day smokers ($1,300 a year), bagel & coffee diners ($2,700), smartphone users ($2,800), vacationers ($12,000), NFL season ticket holders ($8,000), or beer drinkers ($2,200) as we all have our little indulgences. For many of us, and particularly BMW owners, our cars are our only vices.

Anyone own a dog? If so, better take Fido out back and shoot him because he's costing you $1,800 a year. Using myself over 30 years as an example:

I don't smoke. $39,000 savings.
I don't drink. $66,000 savings.
I don't own a dog. $54,000 savings.

That's $159,000 I won't spend in the 30 years I'll be leasing, so others can go lecture smoking drinking dog owners and leave our leased cars alone.

BJ

Ultimately it's a personal decision, but I will agree with the sentiment that leases are often used as ways for people to get into cars that they otherwise could not afford. Suse Orman said it well when she commented that if you can't write a check for that new car, you probably can't really afford it in the first place. People "need" reliable transportation, even if they can't afford to write an up-front check, hence the popularity of the five and even six year loan. Cars are also badges of status and accomplishments for some people (*cough* BJ *cough*) so they would stretch to get that nicer car than drive an older reliable used one even if that makes more economic sense (obviously not BJ).

Now for those who CAN write a check for that new car, leasing might make sense on a number of levels.

I personally am now a fan of leasing initially for no other reason than getting three years with a car before committing to it long term, even if that results in a higher overall cost. It's also awfully nice to hand over the keys and walk away vs the typical headache of trading or selling a vehicle.

As to the dog comments... well, I am not sure what my six year old dog has cost total, but I've gotten way more than that cost out in the enjoyment of having a canine companion. I would take the dog over the BMW in a heartbeat.

Originally Posted by voip-ninja

Ultimately it's a personal decision, but I will agree with the sentiment that leases are often used as ways for people to get into cars that they otherwise could not afford.

yes but you can also say this about the new car loans that go out to 7 years, WTF?

Originally Posted by voip-ninja

Now for those who CAN write a check for that new car, leasing might make sense on a number of levels.

I personally am now a fan of leasing initially for no other reason than getting three years with a car before committing to it long term, even if that results in a higher overall cost. It's also awfully nice to hand over the keys and walk away vs the typical headache of trading or selling a vehicle.

Exaclty why I like leasing, I am not a salesman and I don't like the hassle of trying to sell a car. Plus I love getting a new car every 1.5 years in the family. Its worth the extra long term cash to me to do so.

Originally Posted by voip-ninja

As to the dog comments... well, I am not sure what my six year old dog has cost total, but I've gotten way more than that cost out in the enjoyment of having a canine companion. I would take the dog over the BMW in a heartbeat.

++++++++++1. Hell VOIP I would take my dog over a lot of things, probably over everything except my wife and kids. I always say unless you own a dog you never really understood true love and loyalty.

Originally Posted by windsor027

It doesn't. you are driving an 8 year old car while I am about to get into the latest and greatest. For that privileged I pay a lot more than you. That is the bottom line.

Well, suppose I'd sold the car after 3 years, it would probably have cost me $3000/year. I don't know what a 3-year lease would have cost me, $6000/year?

But that's really a used vs new argument, not lease vs buy, cause if I'd bought a new car and sold it in 3 years, that would definitely cost more than leasing.

So if I were buying a new car instead of used, I might lease it, especially with BMW's sweet lease deals. And it took a lot of work to find my 1 year old ZHP in perfect condition, nowadays I don't have time for that.

Leasing makes sense on a BMW forum cause BMW has crazy good lease deals. If this were an Audi forum, there wouldn't be much argument.

Audi has stepped it up lately, the residuals and MF improved quite a bit on their 2013 cars, to the point that an S4 would not have cost me much more to lease than my 328i. It doesn't hurt that I would have gotten a 6% from MSRP discount via my employer as well as Audi loyalty benefits (waived lease acquisition fee plus $1250 off of the cap of the car).

Leasing is a fine option for those who could buy the car but choose not to... generally those people understand that they are paying a premium to lease vs. buy. In my humble opinion leasing is a terrible option for most people who are strapped financially and live pay check to pay check. It's far better to suck it up and buy used, and save money for the time when a new car lease/purchase makes sense.

Originally Posted by windsor027

++++++++++1. Hell VOIP I would take my dog over a lot of things, probably over everything except my wife and kids. I always say unless you own a dog you never really understood true love and loyalty.

You hit it on the head, a non dog owner can't understand the bond between a dog and an owner. I'd probably take a bullet for mine.

Originally Posted by boltjaM3s

I love Lease vs. Buy debates.

All the "substantial" savings others are pointing out over and over again are based on buying a car and keeping it for 10 years and 70% of BMW owners reject that concept outright.

Yes, leasing is a few grand a year more frivolous and when you add up 30 years it looks like you could have had enough money for a small house. But the same can be said for pack-a-day smokers ($1,300 a year), bagel & coffee diners ($2,700), smartphone users ($2,800), vacationers ($12,000), NFL season ticket holders ($8,000), or beer drinkers ($2,200) as we all have our little indulgences. For many of us, and particularly BMW owners, our cars are our only vices.

Anyone own a dog? If so, better take Fido out back and shoot him because he's costing you $1,800 a year. Using myself over 30 years as an example:

I don't smoke. $39,000 savings.
I don't drink. $66,000 savings.
I don't own a dog. $54,000 savings.
That's $159,000 I won't spend in the 30 years I'll be leasing, so others can go lecture smoking drinking dog owners and leave our leased cars alone.

BJ

If you are having so little fun, then you can shoot yourself as well..

Just curious: if you guys have cash to buy, would you lease, and if yes, what is the reason? I've never leased, but I am not saying I am right, I might consider one day.

Originally Posted by 55

If you are having so little fun, then you can shoot yourself as well..

Originally Posted by 55

Just curious: if you guys have cash to buy, would you lease, and if yes, what is the reason? I've never leased, but I am not saying I am right, I might consider one day.

I could have written a check for my car. Why did I lease?

1. 3 year "option" on the new car.
2. I am commuting and putting a lot of miles on now, I'm not sure that I will want to keep long-term an expensive to maintain BMW (had an Audi, been there done that) that I am putting 15K+ miles on per year.
3. Lease deals on 3-series are quite good. 59% residual for 45,000 miles with an option to buy more miles up front for .10 a mile? Yes please, I'd like some more.
4. I'd rather keep my money in my investment account, money market account, etc. It's a "pad" in case something unexpected happens. Easier to keep making lease payments and draw on my "pad" if something awful happens then have $50,000 tied up in a new car that is an asset that takes a huge depreciation hit over the first 5 yrs.

At the end of the day, for people that can't write a check (if they would choose to) I would still recommend going the used car route.... having said that, I have been known to buy a new car when I was young, stupid (naive), and wanted to impress the ladies.

We all have our little foibles, and unless you have incredible will power it is tough to earn six figures and live like a pauper just so you can retire early and dote on your dogs/grandchildren into your old age (or in BJs case create a new generation of trust-fund kids screaming that the government is ripping them off).

Originally Posted by voip-ninja

Ultimately it's a personal decision, but I will agree with the sentiment that leases are often used as ways for people to get into cars that they otherwise could not afford. Suse Orman said it well when she commented that if you can't write a check for that new car, you probably can't really afford it in the first place. People "need" reliable transportation, even if they can't afford to write an up-front check, hence the popularity of the five and even six year loan. Cars are also badges of status and accomplishments for some people (*cough* BJ *cough*) so they would stretch to get that nicer car than drive an older reliable used one even if that makes more economic sense (obviously not BJ).

Now for those who CAN write a check for that new car, leasing might make sense on a number of levels.

I personally am now a fan of leasing initially for no other reason than getting three years with a car before committing to it long term, even if that results in a higher overall cost. It's also awfully nice to hand over the keys and walk away vs the typical headache of trading or selling a vehicle.

As to the dog comments... well, I am not sure what my six year old dog has cost total, but I've gotten way more than that cost out in the enjoyment of having a canine companion. I would take the dog over the BMW in a heartbeat.

I think a lot of people overthink the car as if it's something special, something other than what it is- a necessary utility.

There was a time 30 years ago where a car was this precious commodity, some big-ticket investment second only to a mortgage on a house. Today, a car is just another necessity, nothing different than a phone, cable TV, or electricity. A car is just another monthly bill, just another utility that has to be paid. Like your cellphone plan, your cable package, your lawn service, and your central air, you pick something you can afford in your monthly budget and that's that.

If you can afford it, you get the $129 cable package that includes every channel.

If you can afford it, you get the $200 smartphone bundle with unlimited data, calls, and text.

If you can afford it, you spend the $500 to run the central air all summer.

If you can afford it, you get the $399 BMW 3 Series with a few options.

Once someone comes to grips with the fact that the car is necessary, just another utility, they pick a monthly price they can afford and they pay it. And for those "buy the car outright and keep it for 10 years" types, well, they can do the multiplication and division too, average that out to a monthly payment and lease it for just that amount and always be in brand new cars.

Owning a car is an archaic concept. No one needs to spend life in a used version of a depreciating utility.

BJ

Originally Posted by voip-ninja

You hit it on the head, a non dog owner can't understand the bond between a dog and an owner. I'd probably take a bullet for mine.

+1 I'd definitely let our cats take a bullet for me.

Originally Posted by 55

Just curious: if you guys have cash to buy, would you lease, and if yes, what is the reason? I've never leased, but I am not saying I am right, I might consider one day.

My situation: It's 2006 and my lease is up on my 2004 Acura TL, I have the $24,000 it takes to buy it and own it. I'd been paying $499 a month for it. I have two choices:

1. Buy the car for $24,000 cash and keep it for another 3 years.

2. Keep the $24,000 in the bank and pay it out slowly, 1 month at a time, and be in a brand new BMW 3 Series for 48 months for the exact same money.

For Choice 1, I'd wind up in 2010 having driven the same car for 6 years. Out of style, worn, and tired. Would have a value of about $7,000 when all is said and done but subtract out-of-warranty repairs and high mileage and probably I'd net back $3,000.

For Choice 2, I'd wind up in 2010 having driven 3 brand new cars in the same 6 year span. Always in style, never worn, never get tired. Would have no value when the final lease is up, but with the car always in warranty and with zero repair cost I'm in a good place.

A simple example, but it's what happened. At the end of 6 years, I was $3,000 "poorer" than if I'd driven the same Acura for the whole duration. But I was in 3 exciting new cars, and over the course of 6 years that $3,000 is equal to $500 a year or $41 a month or $1.39 a day. Half the price of a pack of gum and I'm in brand new BMW's instead of a ratty old Acura.

BJ

Originally Posted by voip-ninja

I could have written a check for my car. Why did I lease?

1. 3 year "option" on the new car.
2. I am commuting and putting a lot of miles on now, I'm not sure that I will want to keep long-term an expensive to maintain BMW (had an Audi, been there done that) that I am putting 15K+ miles on per year.
3. Lease deals on 3-series are quite good. 59% residual for 45,000 miles with an option to buy more miles up front for .10 a mile? Yes please, I'd like some more.
4. I'd rather keep my money in my investment account, money market account, etc. It's a "pad" in case something unexpected happens. Easier to keep making lease payments and draw on my "pad" if something awful happens then have $50,000 tied up in a new car that is an asset that takes a huge depreciation hit over the first 5 yrs.
At the end of the day, for people that can't write a check (if they would choose to) I would still recommend going the used car route.... having said that, I have been known to buy a new car when I was young, stupid (naive), and wanted to impress the ladies.

We all have our little foibles, and unless you have incredible will power it is tough to earn six figures and live like a pauper just so you can retire early and dote on your dogs/grandchildren into your old age (or in BJs case create a new generation of trust-fund kids screaming that the government is ripping them off).

If you needed to consider keeping the $50,000 invested as opposed to buying the car (as a safety "pad") then you could not afford to buy the car outright and should not have.

It's when you have the extra $50,000 and it's just a relative/inconsequential amount of cash as compared to your total nest egg, is when buying a car makes sense (paying cash) because it is the cheapest route in the long haul.

Ah, but modern cars are extremely reliable and if someone chooses something more sensible than a BMW, they can pay $30,000 cash and have something extremely reliable that will get them around with very little fuss for a period of 10-15 years.

You have to see the other side of things which is the joy of living for years with zero car expenses other than gas, insurance and the occasional servicing.

Lawn service? I do that myself (good exercise).
Electricity? Who pays for that? (I have a 7,000 watt solar array, nice hedge against inflation).

Basically, like most people, I save where it makes sense for me to do so, in order to splurge in other areas, like buying a new $51,700 x-drive BMW.

Originally Posted by beden1

If you needed to consider keeping the $50,000 invested as opposed to buying the car (as a safety "pad") then you could not afford to buy the car outright and should not have.

It's when you have the extra $50,000 and it's just a relative/inconsequential amount of cash as compared to your total nest egg, is when buying a car makes sense (paying cash) because it is the cheapest route in the long haul.

Well, I have more than that of course in my investment account (not to mention 401K(s), home equity (hundreds of 100K)) etc, but not going to share specifics here. My wife and I do "well" but don't consider ourselves wealthy.

I am frankly highly doubtful that for many people $50,000 is a "trivial" purchase as you imply, and most of those people probably aren't prospective 3-series customers. If you are that person then perhaps this is all comical to you.

I'm comfortable with the decisions I made, so I'll leave it at that.

Originally Posted by voip-ninja

You hit it on the head, a non dog owner can't understand the bond between a dog and an owner. I'd probably take a bullet for mine.

yeap. Same here.

Originally Posted by boltjaM3s

And for those "buy the car outright and keep it for 10 years" types, well, they can do the multiplication and division too, average that out to a monthly payment and lease it for just that amount and always be in brand new cars.

What kind of lease can I get for $300/month? A Honda Accord?

To you the car may be an appliance, or a set of shiny earrings, but to some of us, it's also entertainment, which is why we're not eager to spend more money to get into a less entertaining new car. If I was gonna blow $600/month, it would be on a slightly used 911.

Originally Posted by Chris90

+1 I'd definitely let our cats take a bullet for me.

LOL, yeah. I am sooo not a cat person. It probably doesn't help that I'm allergic to the little buggers.

Originally Posted by boltjaM3s

Owning a car is an archaic concept. No one needs to spend life in a used version of a depreciating utility.

BJ

Now coming from a youngin' the thing I like about owning is the fact that if S* ever hit the fan, the only thing that would stop me from driving is insurance, and gas.

This logic does not mean I have a panic room, and large stockpiles of weapons for a possible zombie attack

Originally Posted by voip-ninja

Well, I have more than that of course in my investment account (not to mention 401K(s), home equity (hundreds of 100K))

You have 10s of millions in home equity?