Doesn't Anyone Buy Anymore?

just dont crash any of them, or get crashed into

Originally Posted by chris328

just dont crash any of them, or get crashed into

Agreed, leasing does provide more protection against loss of value in those situations. But at these prices, I'll play the odds

Originally Posted by SamS

If you put down a down payment, then your payments can be the same or less than a lease. And "sell a lease at anytime" is typically with financial consequences, moreso than with a purchase + down payment. Much of this depends on your original negotiated price, but it is clearly more easily done with a traditional note.

As a point of reference, I bought a brand new $76K '12 M3, kept it for exactly one year and sold it outright to purchase another car. I got back every penny of my down payment, and my out of pocket costs to own the car for the 12 months were ~$650/month. Exactly how would I have down this with a lease, on a $76K car?

exactly i don't get some of these idiots.

if you buy the car , uh you can sell it for whatever its worth. you can't sell your lease car... so you get your money back anyway. so how is leasing cheaper?

if the lease money factor was for 2% interest, and your bank loan was for 2% interest , it would be a wash there too. and if you paid cash, well you are just paying yourself the money (i.e. loaning from yourself at 2% effectively).


i mean if i say buy a RWD car, then move to NY, or say i had a coupe and wanted to buy an suv if i had say a kid, with buying the car i can sell it and buy the new car if my situation changes.

granted you can buy out a lease etc, but that usually doesnt work remotely in your favor as you are bound to whatever the dealership claims your residual is not what say a carmax / autotrader or private party will buy your car for.

Originally Posted by hans007

granted you can buy out a lease etc, but that usually doesnt work remotely in your favor as you are bound to whatever the dealership claims your residual is not what say a carmax / autotrader or private party will buy your car for.

Yep. This part especially bears repeating 1000x over. In my case, my wife became pregnant with our second kid, after I bought the M3. In other words, situations change, and I wanted to get a 4-door car. Because I was not bound by residuals/buy out price vs. what I owed, I was able to sell my year-old M3 within two weeks, and was out-of-pocket for less than my prior monthly payments totaled.

This is way more flexible than a lease, with less financing costs, as well.

Originally Posted by SamS

Yep. This part especially bears repeating 1000x over. In my case, my wife became pregnant with our second kid, after I bought the M3. In other words, situations change, and I wanted to get a 4-door car. Because I was not bound by residuals/buy out price vs. what I owed, I was able to sell my year-old M3 within two weeks, and was out-of-pocket for less than my prior monthly payments totaled.

This is way more flexible than a lease, with less financing costs, as well.

Moral of the story here being, don't impregnate women.

Hans007, one thing you're overlooking is sales tax. On a lease, you pay tax only on the lease cost, whereas on a purchase, you're paying it on the whole car.

The other key point is the embedded option (the guaranteed buyout price) which favors the the customer.

The downsides? Yes, the term is fixed, and the bank fee of $800 - $1,000.

Originally Posted by hans007

i don't really get the whole leasing logic.


i mean, i am about to buy a bmw. i have had my current car for just about 3 years. the car before that a little over 4. i just uh trade them in or sell them. my current audi, had i leased it would have ended up costing me more to lease, than it would have to buy... and then sell to carmax / trade to bmw.

even on an equivalent 3 year term. i dont know, i just would rather buy the car, so i am not tied to an exact date for when i have to turn it in. i tend to buy a car somewhere between every 3-5 years. but its not exactly 36 months or whatever, so seems to me if a lease is all about residual , you can also sell the car and get the same amount o fmoney (and its usually more, unless theres weird circumstance like say you bought an escalade in 2006 and gas prices shot up).


i mean, paying for a car (especially with low rates or cash) and then selling it 3-4 years down, seems to still beat most leases.... and you aren't tied to some preset number of miles, or number of months or whatever. granted i always actually have enough cash to buy my car when i buy one. its not like leasing is the only way to own a car for a short amount of time? i mean as far as i know leasing is just the manufacturer taking the risk of having the car depreciate away from you while you pay a premium over the normal depreciation to have them assume that risk. it is almost like buying a put contract on a stock you own to insure against some of the loss. stock doesnt go down, you lose the money you paid for the options right.

Originally Posted by Chris90

Moral of the story here being, don't impregnate women.

Originally Posted by Robert A

Hans007, one thing you're overlooking is sales tax. On a lease, you pay tax only on the lease cost, whereas on a purchase, you're paying it on the whole car.

In Texas, you pay for the entire sales tax amount of the car, up front.

Originally Posted by Robert A

Hans007, one thing you're overlooking is sales tax. On a lease, you pay tax only on the lease cost, whereas on a purchase, you're paying it on the whole car.

yeah , it still tends to work out pretty well i'd say. i know in CA you do pay the tax up front, but even factoring that in, i'd say you probably still win most of the time with a purchase instead of lease.


i mean, on a BMW it almost alwyas works in your favor.


my one example of when it wont work for you if its some car that the original lease residual was too high on (in which case you'd want to lease, not buy).

my cousin just bought a 2008 infiniti QX56. no one wants a car like that now that suvs aren't cool and it gets 12mpg. so he bought it used. some dealership probably took a bath on it if it was originally a lease given how fast the residuals on giant SUVs fell from what they originally assumed.

Originally Posted by hans007

my one example of when it wont work for you if its some car that the original lease residual was too high on (in which case you'd want to lease, not buy).

Actually I briefly considered a lease of a Chevy Volt, and was going to keep my M3. That was when they were giving them away for something ridiculous, like $199 month. The real costs weren't really that low, but maybe someone got that deal.

Originally Posted by dgoss

I can't make it through the whole thread but did a quick search and saw at least one person point out the potential tax advantages of a lease. If you have a business paying for a purchased car the money is simply moved over from an asset (cash) to another asset (the car) and not off the books. You can then depretiate that asset on a schedule but it is only partial and over time.

The complaint that you aren't buying anything or getting anything when leasing is the advantage here. By definition the lease payment is pure expense - 100% comes right off your books. The only issue becomes if the car usage is then a taxable benefit (or what portion of it is).

Paying for the use a car with pre tax dollars can be a huge incentive to lease if you can make that work for your situation.

I know lots of business owners lease their cars and write off the expense, but I would sure love to be made aware of this loophole.

My wife and I own a dental practice. We only write off the mileage on our cars that is spent on non-commuting business trips we take (if I drive my car to her office to work on her computers I might claim that mileage, or if she drives her car to Costco to buy office supplies she claims that mileage).

What are the legalities of simply writing off the entire lease as a business expense?

Sorry for the tangent question but I've seen this thrown around a lot so I would like to better educate myself. Our accountants have advised us NOT to try to write off 100% of a car lease for business purposes as it is a red-flag to the IRS.

Also in the spirit of the thread, I will point out one more reason that leasing is more expensive (I've already acknowledged that it is)... new car registration on my 328xi were $1050 in Colorado. Yes, $1050 dollars... for yes, just one year. The last year I put plates on my A4 it was something like $150.

Originally Posted by voip-ninja

new car registration on my 328xi were $1050 in Colorado. Yes, $1050 dollars... for yes, just one year. The last year I put plates on my A4 it was something like $150.

That can't be every year? Our registration is like $100 for 2 years, but every year we pay an excise tax, which would be $1200 on a new car, and drops off rapidly after the 1st year.

Originally Posted by Chris90

That can't be every year? Our registration is like $100 for 2 years, but every year we pay an excise tax, which would be $1200 on a new car, and drops off rapidly after the 1st year.

Next year it will be something like $800 and then it keeps dropping down.

The plus side is that we don't pay an excise or ownership tax, as they do in some states.

However, in VT, where I'm originally from, it costs about $35 to register your car for a year and get it inspected and there is no excise or ownership tax on vehicles.

Look up IRS publication 463 here for the rules on business miles.

Essentially, leasing isn't a "loophole." If you didn't lease the car, you would still be entitled to deduct depreciation and interest costs, although at a slower rate as compared to a lease.

Originally Posted by voip-ninja

I know lots of business owners lease their cars and write off the expense, but I would sure love to be made aware of this loophole.

My wife and I own a dental practice. We only write off the mileage on our cars that is spent on non-commuting business trips we take (if I drive my car to her office to work on her computers I might claim that mileage, or if she drives her car to Costco to buy office supplies she claims that mileage).

What are the legalities of simply writing off the entire lease as a business expense?

Sorry for the tangent question but I've seen this thrown around a lot so I would like to better educate myself. Our accountants have advised us NOT to try to write off 100% of a car lease for business purposes as it is a red-flag to the IRS.

Also in the spirit of the thread, I will point out one more reason that leasing is more expensive (I've already acknowledged that it is)... new car registration on my 328xi were $1050 in Colorado. Yes, $1050 dollars... for yes, just one year. The last year I put plates on my A4 it was something like $150.

Originally Posted by Robert A

Look up IRS publication 463 here for the rules on business miles.

Essentially, leasing isn't a "loophole." If you didn't lease the car, you would still be entitled to deduct depreciation and interest costs, although at a slower rate as compared to a lease.

Yes, I've read it. The section on leasing is quite clear;

Deductible payments. If you choose to use actual expenses, you can deduct the part of each lease payment that is for the use of the vehicle in your business. You cannot deduct any part of a lease payment that is for personal use of the vehicle, such as commuting

It is very clear that you can't write off the percentage of the vehicle that is used for commuting or personal travel, yet people in this thread have implied that business owners frequently do this. I guess they just claim 100% business use and hope they don't get audited.

My accountant makes us actually keep a log book for the business purpose trips we make with our cars.

Your accountant is right to tell you keep logs. Most people don't and just make up a number.

As a dentist, you have a very difficult time coming up with significant business auto use because all your patients come to you. Driving to Costco or Staples isn't going to add up to much.

Originally Posted by voip-ninja

Yes, I've read it. The section on leasing is quite clear;



It is very clear that you can't write off the percentage of the vehicle that is used for commuting or personal travel, yet people in this thread have implied that business owners frequently do this. I guess they just claim 100% business use and hope they don't get audited.

My accountant makes us actually keep a log book for the business purpose trips we make with our cars.

Originally Posted by Robert A

Your accountant is right to tell you keep logs. Most people don't and just make up a number.

As a dentist, you have a very difficult time coming up with significant business auto use because all your patients come to you. Driving to Costco or Staples isn't going to add up to much.

My wife is the dentist. She still manages to come up with 5,000 or so business miles a year. Keep in mind that as a dentist she goes to a lot of continuing education courses, makes trips to meet with other professionals, etc, so it's a reasonable amount of mileage, but nowhere near the amount of someone who travels to their clients.

One 'trick' that another dentist friend whose father is an accountant came up with is to have her write off the trips she makes home every couple of days, as she makes a bank deposit at the nearby branch and that can be argued to be business purpose mileage.

Originally Posted by Chris90

Hey, if fudging the numbers makes you feel better, knock yourself out. The cash buyer saved $21,000 over 10 years vs your lease. Maybe the leaser can make that up investing $45k, maybe he used Bernie Madoff, who knows.

$45,000 invested (into fairly safe blue chip company such as BP,AT&T, etc) around 5.5% annual dividend, if price stays the same as when you bought it 10 years ago, you would make $24750, so in reality you would actually make $3750... here is where the crazy part is, look at the stock charts over past 10 years, all those blue chip companies (on average) more then doubled their dividends and prices gone up (down in 08 but since recovered)...some companies did stock splits... your 45k investment 10 years ago would probably be close to 100-150k easy today... sure nobody knows what will happen in the next 10 years but we are talking as an example to last 10 years

Originally Posted by SamS

Actually I briefly considered a lease of a Chevy Volt, and was going to keep my M3. That was when they were giving them away for something ridiculous, like $199 month. The real costs weren't really that low, but maybe someone got that deal.

Yeah certain exceptions of course. There was a really good deal on the leaf a few weeks back too

Originally Posted by dpwr

$45,000 invested (into fairly safe blue chip company such as BP,AT&T, etc) around 5.5% annual dividend, if price stays the same as when you bought it 10 years ago, you would make $24750, so in reality you would actually make $3750... here is where the crazy part is, look at the stock charts over past 10 years, all those blue chip companies (on average) more then doubled their dividends and prices gone up (down in 08 but since recovered)...some companies did stock splits... your 45k investment 10 years ago would probably be close to 100-150k easy today... sure nobody knows what will happen in the next 10 years but we are talking as an example to last 10 years

I didn't include that cause suppose you invested your $45k in 2000. It would be worth $30k 10 years later.

Now I'm someone who likes to play the stock market, which is one reason I could never blow $45k cash on a car, I regret doing it back in 2005. But you can't count stock market gains in this kind of calculation, only guaranteed gains, which are pretty low.

Originally Posted by Chris90

I didn't include that cause suppose you invested your $45k in 2000. It would be worth $30k 10 years later.

Now I'm someone who likes to play the stock market, which is one reason I could never blow $45k cash on a car, I regret doing it back in 2005. But you can't count stock market gains in this kind of calculation, only guaranteed gains, which are pretty low.

dividends of a blue chip companies are pretty much guaranteed, they mostly always increase them... your 45k in 2000 could of been worth 30k 10 years later sure, but unless you sold you don't loose anything (it's a loss on a paper) while collecting dividends for those 10 years... don't forget about 2:1,3:1 splits, over a 10 year period there's a good change you hit that... dividend is a constant, share price can go up and down.. and lastly i'm not talking about penny stocks or some crazy risky companies

I was deciding to lease or buy, I ended up buy because the deal was better. Now I want the 4 series when it comes out so what I saved will be lost. I am looking to lease my next car. Like BJ said, how much we make does not matter, dont buy or lease if you cant afford it. Seeing that some people have different needs, choose the path that will save you the most while still fulfilling those needs and move on. Leasing is going to be my future, at least for the next 20 years while im still young.

Originally Posted by dpwr

dividends of a blue chip companies are pretty much guaranteed, they mostly always increase them... your 45k in 2000 could of been worth 30k 10 years later sure, but unless you sold you don't loose anything (it's a loss on a paper) while collecting dividends for those 10 years... don't forget about 2:1,3:1 splits, over a 10 year period there's a good change you hit that... dividend is a constant, share price can go up and down.. and lastly i'm not talking about penny stocks or some crazy risky companies

yeah unless they are... BP or HP or whatever.

or countless other blue chip companies. that it could totally work in your favor if you say bought verizon stock or whatever.

i dont consider that in my calculations. i mean i could have taken the money i'm spending on a car and bet it on black or whatever. i figure a reasonable calculation for this is whatever a CD or a treasury/govt backed bond fund is yielding to be fair. i've got cash in a fund of mostly AAA bonds, and its maybe 3% and super conservative. but any higher than that and i dont think its a reasonable assumption.

Originally Posted by SamS

Sure, I listed all the info! But I will be happy to give you more.

Drive off price $70,763
Cap cost reduction (technically this is a down payment, but probably should be referred to as a MSD since I got it back) $21K
Amount financed, $50K @ 2.49% 60 months (rates are lower, now). I paid $963 in interest over the 12 months. Go ahead and add that to my drive off price of $70,763 for a total of $71,726. Selling price of $61K plus tax credit of $3500 towards any new vehicle still nets an out of pocket of $602.66/month for 12 months. Add my $500 dealer fee in there, I'm still under $650 a month.

There is no way you're leasing a $76K M3 for under $650/month, for a 12 month term. But I did! BTW, how much is your lease per month?

This is not a non-typical sale. This how to buy/sell cars, smartly.

First. Do you honestly believe you got all 21k back? On a 5 year loan the first year is over 70% interest payments. It works like reverse slopes. The last two years of a 5 year loan you are finally paying mostly balance not interest. What was the payoff for the 50k loan after one year?

But that isn't the big thing. Lets use your numbers for a lease.
76k MSRP
Cap cost: 50k thanks to 21k cap cost reduction
Residual 62% 47,120
Monthly payment 180.00
Payoff at 12 months. 52k approx
Sell car for 61k

Same end result as you but only 180 a month in payments.

Third.

You do realize you are simply making the same crazy points as everyone else. If you read my first post in this thread you would understand you are not a typical buyer and in no way is your purchase traditional. Most people don't put 30% plus down. Most people aren't buying m type cars. Most people are not getting rid of the car in 12 months. You can't say leasing doesn't give you the same options. Just like a financed purchase sometimes you might be upside down. Oh well.

Your system works for you. However, my argument is based solely on removing variables and using standard features across the board.

Please oh please read my first post on page 20 or 19 I think.

Originally Posted by hans007

yeah unless they are... BP or HP or whatever.

or countless other blue chip companies. that it could totally work in your favor if you say bought verizon stock or whatever.

i dont consider that in my calculations. i mean i could have taken the money i'm spending on a car and bet it on black or whatever. i figure a reasonable calculation for this is whatever a CD or a treasury/govt backed bond fund is yielding to be fair. i've got cash in a fund of mostly AAA bonds, and its maybe 3% and super conservative. but any higher than that and i dont think its a reasonable assumption.

well said.