Sorry. Poor use of words. I personally believe a never ending car payment is not way to go. The person leasing also pays for all of the depreciation costs.

 

But as stated by Hammertime, if you want a new vehicle every 3 or 4 years, leasing is the way to go. I personally would rather buy a used vehicle, pay it off, and spend the $300 at my leisure until the car dies.

 

I pay cash for reliable used cars (me and wife currently drive '97 (210K) & 98 (150K) Jeep Grand Cherokees, have had '97 for 8 years and '98 3 years. Paid $7200 cash for both, without car payments I can make sizable contributions to my 401K and Roth IRA's. :thumb:

I pay cash for reliable used cars (me and wife currently drive '97 (210K) & 98 (150K) Jeep Grand Cherokees, have had '97 for 8 years and '98 3 years. Paid $7200 cash for both, without car payments I can make sizable contributions to my 401K and Roth IRA's.

 

...and every concession stand he comes across.

99 Le Sabre and a 07 Silverado, both purchased new with cash, are my rides. The Buick just turned 98,000, so it's just getting broke in.

 

My daughter purchased a 2012 BMW 328i, late last year, but she still drives her 2000 Jeep Grand Cherokee for everything. The Jeep's got over 300K on it. Why she got herself car payments, and the insurance that goes along with that type of car under a loan, is beyond me. The Beemer sits under a car cover. She rarely drives it.

...and every concession stand he comes across.

 

:laugh:

 

They make more profit on the leased car than they do a new car sale. You can't convince me otherwise. I've seen it happen time and time again. What happens when the leasee decides they don't want the car after 3 years? The dealership turns arounds and sells it again, this time at a much higher profit point. Now a car that if they sold it outright would've brought them profits of roughly 10% is bringing them a profit of double that. It occurs over time, but it still happens.

 

 

 

The err in your logic is that the dealership gets the car back. As has been pointed out the dealer doesn't own the car. The lending source does. When the lease expires the car is either sold to the customer or it goes back to the manufacturer and ends up at auction. The dealer is not on the hook for the residual value that the manufacturer put on the car three years ago. Ex: When the car was leased the residual value was determined to be $20k. Now it's 3 years later and the car is worth $16k. The dealer is clear of that.

 

So the dealer is NOT making profit on the back end by selling the car again. It's not their car.

 

Just like with the traditional loan, the dealer makes profit two ways: sale price of the car and the spread on the interest rates.

I should add that dealers often rely on profits from the F&I office on a new car transaction. Since it's easy to know what a new car costs dealers often have to have slim profits on the sale. They use the profits generated in the F&I office to make the transaction profitable.

 

Leasing can hurt F&I income since many people end up not buying an extended warranty.

I'm going to be in market for an SUV here shortly and it looks like leasing is the way to go. My wife doesn't like to keep a car more than 2-3 years so it doesn't make any sense to keep buying.

I'm going to be in market for an SUV here shortly and it looks like leasing is the way to go. My wife doesn't like to keep a car more than 2-3 years so it doesn't make any sense to keep buying.

 

Your wife sounds as bad as mine with cars. It's a terrible idea to put $2,000 down on a car, pay $200 a month for something you give back in 3 years with nothing to show for.

 

Probably not sustainable if you all are gonna have 2-3 kids. Pay the SUV off over 5 years, then drive it free 3-5 years. That's the only value in a car.

Your wife sounds as bad as mine with cars. It's a terrible idea to put $2,000 down on a car, pay $200 a month for something you give back in 3 years with nothing to show for.

 

Probably not sustainable if you all are gonna have 2-3 kids. Pay the SUV off over 5 years, then drive it free 3-5 years. That's the only value in a car.

Not to mention you are paying the majority of the interest in the first few years of the loan so you are getting nowhere.

...and every concession stand he comes across.

 

This post is funnier after watching you eat 3 chicken sandwiches at the NCC SK Game.

I'm going to be in market for an SUV here shortly and it looks like leasing is the way to go. My wife doesn't like to keep a car more than 2-3 years so it doesn't make any sense to keep buying.

 

You are the perfect buyer of a lease if you want to get into a new car at a certain payment range. Anyone that a)wants a new car and b)usually gets out of the vehicle in 2 to 3 years should ALWAYS lease.

Your wife sounds as bad as mine with cars. It's a terrible idea to put $2,000 down on a car, pay $200 a month for something you give back in 3 years with nothing to show for.

 

Probably not sustainable if you all are gonna have 2-3 kids. Pay the SUV off over 5 years, then drive it free 3-5 years. That's the only value in a car.

 

 

Your scenario is great for people that want to drive a car for 5 to 8 years. He's saying that he and his wife do not do that.

 

Money factors are so low now that you're really just paying for expected deprecation of the vehicle. The interest expense is minimal on leases.

Explorers hold their value very well...not sure about Edges.

 

They seem to hold value as well. Paid ~30,000 for my 2008 LTD version and it is still worth 16,000.

Just for kicks, what is the penalty per mile you go over your lease mileage these days?

 

Depends on if you prepay for pay for it after the lease expires.

 

Most lease payments now are based upon a low-mileage vehicle being returned after the lease. Most leases have you pay about $.20 per mile if you pre-pay and $.25 per mile if you pay after the lease expires.

 

I drive around 25k to 30k miles per year. It just doesn't work out very well for me but neither does financing a brand new ride so I buy a high-quality depreciated used vehicle and bury it with miles.

Your scenario is great for people that want to drive a car for 5 to 8 years. He's saying that he and his wife do not do that. Money factors are so low now that you're really just paying for expected deprecation of the vehicle. The interest expense is minimal on leases.

 

I'm saying having a monthly car payment is a bad financial decision unless you are very wealthy. A car gets you from A to B and only goes down in value. You can get a used Toyota or Honda payment free for a little more than what it cost to put down on a lease.