You’re not wrong, but a lot of people live beyond their means.
For my family back in 2018 we bought a base Macan because the way pricing worked out, we could either have a loaner Macan base with almost no options or a well-optioned Lexus RX for the same price out the door (parents disliked the X3 30i, I thought the base GLC300 was anemic, they wouldn’t touch a Q5 2.0T for some reason which is what I thought we should have bought).
Macan handled a little better, transmission was way better, interior was a good design despite no options, it was a decently sound purchase. I was still in high school back then so there was no chance of me lease-hacking anything. 252hp is also more than enough power to have fun depending on how hard you’re willing to thrash the car. We’ve taken the car on Porsche rallies and taken it on dirt trails since then and it’s been a blast.
That said, my mom recently drove an M4 and now she wants a G80 M3. The base Macan doesn’t look nearly as nice now I guess…
We are interested in leasing primarily because we want to upgrade every few years and basically never worry about maintenance even if we track or rally the cars. Especially with EVs, if we find out we don’t like something a few months into the lease, we don’t want to be burdened to spend weeks selling the car and take huge depreciation losses.
Some more info (Bloomberg article with Cox data). Sad times for the ~10% BMW EV units that go to buyers instead of to lessees. Too bad they didn’t find out about LH. Also, I don’t know who Chris Hilbert is, but if he can be swayed to join the leasing scum, then I guess anything is possible.
Pasted below because paywall.
EV Leases Go as Low as $20 a Month to Help Dealers Clear Their Lots
By Keith Laing
September 10, 2024 at 10:00 AM UTC
Chris Hilbert used to think of leases as “scummy” and a waste of money. But now that he’s in the market for a cheap electric car, he says, “the prices are just hard to pass up.”
The 44-year-old IT professional from Indianapolis already owns a Tesla Model S sedan and a Rivian R1S SUV. He recently spotted an offer to lease a Hyundai Ioniq 5 SUV for just $259 a month. But he thinks he can do even better. “I need a smaller car for my son to drive,” Hilbert says. “I would be very interested in paying less than $200 a month.”
Leases have emerged as a rare sign of optimism in an otherwise sluggish electric-vehicle market, in part because they can often be had at monthly costs that are far less than a new-car loan. Affording a set of wheels right off the lot has become increasingly difficult, with the average new-car buyer in the US paying $48,401 in July, according to vehicle price tracker Kelley Blue Book.
One painful result: Average payments for buyers of new vehicles in the US rose to $735 a month in the first quarter of 2024, according to credit reporting firm Experian. But the average monthly lease payment for new vehicles fell to $595.
This has led would-be EV buyers across the US to snatch up leased vehicles. Leases accounted for a record 32% of EV transactions in the US during the first quarter of this year, according to Cox Automotive. That’s up from 11% a year earlier and well above the auto-industry-wide rate of 19%. EV leases on average cost $88 less a month than a new electric-car loan, Experian says.
Lease payments for battery-powered models have lately come at a relative discount because of cooling consumer demand for those vehicles, additional incentives carmakers are using to help offload EVs that might otherwise linger on lots for months, and changes in the rules for the $7,500 federal tax credit for battery-powered vehicles that often favor leasing over outright purchases.
The Inflation Reduction Act of 2022 severely restricted tax breaks for purchases of battery-powered vehicles, so now just a handful of models qualify. Moreover, many of the roughly 75,000 EVs that Americans are leasing wouldn’t qualify for tax credits if they were bought because they exceed price caps in the law ($80,000 for SUVs and trucks; $55,000 for cars), use battery materials from China or aren’t assembled in the US. And the law put a cap on the net income of buyers applying for tax credits.
But there was a loophole for any EV marked for lease. The law considers leased EVs as commercial vehicles, allowing them to qualify for the full credit, even if they don’t meet federal battery and parts sourcing requirements. That’s allowed car companies or dealers to bundle the $7,500 tax credit savings into the lease financing cost, lowering consumers’ monthly payments.
The savings can add up big time. In Colorado, some leases on 2025 electric Nissan Leaf models were available in July for as little as $20 a month after EV tax credits and special state incentives. That’s less than a tank of gas.
Manufacturers technically receive the credit on leased EVs, but they’re inclined to pass it along to consumers as a rebate or discount if it helps move cars off the lot. At the Koons Kia dealership in Woodbridge, Virginia, Finance Director Ramon Nawabi estimates that only a couple of customers a month ask about electric cars, and the price tag sometimes scares them off. He’s got a few EV6 electric SUVs that have been sitting around for at least six months. Kia has been offering discounted leases on top of the $7,500 tax credit “just to move the car,” he says. “In a sense, we’re giving them away.”
The dealership rarely carries Kia’s most expensive electric model, the EV9, because at as much as about $80,000 each, “that takes a lot of Kia people out of the market,” Nawabi says. “They’re typically looking for a cheaper vehicle.”
Dealers say many people shopping for an electric car today aren’t aware that the rules have changed and haven’t budgeted for higher prices. “I think the $7,500 is a must in this climate,” says Andrew Starling, dealer principal at Starling Automotive Group, which operates a Chevy dealership in Orlando and other dealerships in Florida and South Carolina.
The carmaker with the highest percentage of EV leases in the first quarter of 2024 was BMW AG, at 89%, followed by Volkswagen AG’s Audi at 87%. Tesla Inc., the biggest EV maker in the US, leases just 24% of its cars, according to Cox.
Sebastian Mackensen, BMW of North America’s chief executive officer and president, says leasing appeals to customers who like the idea of EVs but aren’t ready to make a long-term commitment to an evolving technology. “You have the flexibility to hand the car back,” he says. Buying an EV can be risky if battery technology or market demand changes and the car loses its resale value.
Tesla leases are less attractive because the company doesn’t offer lease-to-purchase options like some other carmakers, and many of its new models qualify for the $7,500 tax credit outright, lowering the incentive to lease. Tesla has also been cutting prices, and there are some bargains on its models to be found in the used-car market.
Jim Trammell, an 83-year-old Air Force retiree from High Point, North Carolina, was considering buying a new Kia Niro earlier this year. But he found a lease in April that cost just $307 a month. That’s less than half what he would pay to buy the car with a six-year loan and no down payment.
Trammell was so excited that he drove 60 miles to a Kia dealership in Danville, Virginia, to sign the paperwork. “You can’t do anything for $300 a month,” he says. —With David Welch
1 Like
WSJ article about younger folks basically leasing/renting much more than previous generations. When everything in life is temporal, people are released from the burden of ownership. Fun times ahead until you’re dead. You can rent your casket… Leasing FTW.
https://www.wsj.com/personal-finance/renting-lifestyle-economy-cars-furniture-clothes-b7329a4a?
By Kailyn Rhone
kailyn.rhone@wsj.com
Aug. 17, 2024 5:30 am ET
The Extreme Renters Who Own Nothing, Not Even Their Jeans
It’s not just leasing your car. Christmas trees, camping gear and even caskets are up for rent.
Brittany Catucci rents everything she can.
Like lots of 20-somethings, she doesn’t own the place where she lives, a three-story townhouse in Emeryville, Calif. But she and her boyfriend, Eric Markley, also rent their queen-size bed, Catucci’s work clothes and repair tools from Home Depot or AutoZone.
“My friends don’t even blink at the fact that I’m constantly renting stuff,” said Catucci, a 27-year-old account director at a public-relations agency. “It’s my parents who were like, ‘Oh my gosh, you guys are still living in a place where you don’t own any of the furniture?’”
Their townhouse came with the furnishings, and they pay around $1,100 each in rent. They figured they could find something a little cheaper that didn’t have furniture, but it would have cost at least $5,000 to bring their own stuff during their cross-country move from North Carolina.
Catucci spends about $100 to $200 a month on renting other items, including about $100 a month for clothes. The rest varies: One month she might need a short-term hiking backpack; the next month she doesn’t.
Americans are embracing a rent-first lifestyle, preferring to try things out rather than committing to ownership. More than one in four Americans say they rent or lease their car, clothing, electronics or furniture, according to a new survey commissioned by the personal-finance firm Credit Karma.
Some extreme renters say they can save money by not owning their high heels, hand drill or sofa. With prices for so many things much higher than they were a few years ago, it can feel like a cost saver to pay for maternity clothes for a few months or camping equipment for a weekend instead of buying them outright.
A lot of people say they just prefer the flexibility—even if they end up spending more money over time. After all, it is a lot easier to pick up and move if you don’t have to take the kitchen table with you.
The rent-it-all ecosphere isn’t limited to daily necessities. Baby equipment, art pieces and even caskets are available. Potted Christmas trees are also up for rent; they are returned to a forest nursery when the holiday season is over.
The agreements range from standard leases, such as a two-year plan for a rented iPhone, to short-term deals such as monthlong ownership of a sweater. Many funeral homes now offer casket rentals, through which the casket is used for the viewing and funeral service. Then the deceased is placed into another container for cremation.
Catucci and Markley actually do own their 2014 Subaru Outback. They bought it last year for about $10,000, figuring it would be cheaper in the long run to cough up the cash than to rent a car each time they wanted to go on a weekend trip. They also own a standing desk and a couple of surfboards and road bikes. For them, it is less about money and more about the ability to move around without worrying, “Where are these items going to go?” said Catucci.
A super-expensive housing market has changed the way that many Americans think about all types of ownership, especially young Americans. Members of the Greatest Generation might have burned the mortgage note when they paid off their houses; lots of Gen Zers feel as though they will never be able to buy.
“Over the last decade, we’ve seen the rental economy gain popularity as more opportunities to rent goods and services have flooded the market,” said Courtney Alev, consumer financial advocate at Credit Karma.
While the types of items for rent have multiplied, they all have the same obvious drawback: You are making payments for something you don’t get to own.
‘We get tired of wearing the same thing’
Tyla Harrington, a freelance photographer and videographer, used to rely on a Sony camera that she bought secondhand for about $1,100. Almost as soon as she got it, a newer version came out. Then, at a wedding about five years ago, a client requested a higher resolution than the Sony could deliver.
“So I started renting almost right away,” said Harrington, 36.
Renting camera gear can cost a hefty $500 a week, and Harrington does that about once a month, before a big gig. She estimates this method has saved her thousands of dollars. The latest new cameras and gadgets, like tripods, lenses and lights, can easily cost as much as $10,000 and have to be upgraded regularly to stay up to speed.
Jami Jackson-Cole, an elementary-school teacher in Oklahoma, started renting her work outfits last year from Nuuly. The company, which is owned by Urban Outfitters, mails her six items each month for about $100, then another six after she mails those back.
Cole learned about clothing rentals from her 26-year-old daughter, Keely, after seeing her sporting a pink heart sweater around Valentine’s Day last year.
Recently, a fellow teacher complimented Cole on her dress, a pink-and-green number with a horse print. When she confessed it was rented, the colleague replied that she rented clothes too.
“We get tired of wearing the same thing over and over,” said Cole, 53. She does purchase the occasional irresistible item from her Nuuly delivery, such as a tiered dress from Anthropologie for about $75—a 50% discount from the retail price.
The clothing-rental old-timer, Rent the Runway, launched in 2009, offering the chance to borrow high-end gowns and evening wear. Nuuly and other companies such as Pickle now use similar models for everyday wear, letting people rent even their jeans and T-shirts.
Nuuly’s sales jumped more than 51% in the first quarter from the previous year, driven by a 45% rise to 224,000 average active subscribers. Rent the Runway subscribers remained flat in the first quarter from the prior year, at almost 136,000 average active subscribers.
‘Life is just unpredictable’
Berkley Brooks feels as though she was raised to rent. Her parents told her never to buy anything that would lose its value within five or so years.
So she rents her phone, an iPhone 13 Pro, as do her three siblings. And while she doesn’t currently need a car because she lives in New York City, leasing is all she has ever known. When she turned 16, her parents got her a Mercedes-Benz CLA 250—sort of. They gave her a three-year lease on one.
For her phone, Brooks is on a plan under which she pays $28 a month. Buying it outright would easily cost $900 or more up front, plus she likes the excitement of being able to upgrade to a new model every few years.
“Maybe one day that will change, but I think it’s more realistic for me,” said Brooks, 23. “Life is just unpredictable.”
In Houston, Mason Choate is a car guy, but he doesn’t want to own one. He and his wife lease a Tesla Model 3 and a Ford Explorer for a total of about $1,600 a month. Choate, who is 28 and works at a Ford dealership, said he witnesses daily how a car’s value drops the moment it is driven off a lot.
“It’s a hard pill to swallow, to throw $25,000 in something that’s obviously going to depreciate,” he said.
Choate recently saw a deal on a Ford F-150 Lightning, for a lease of $487 a month. He and his wife now lease three vehicles.
Melanie and James Adams bought a fixer-upper in Denver in 2018—and then moved into a bigger fixer-upper four years later. That means they have needed lots of tools in their lives.
So over the past few years, the millennial couple rented a wet tile saw, a jackhammer and an angle grinder to fix their wooden stairs. They also rented a garden tiller for about $100 for two days to loosen the soil before planting. Sure, they could have bought a cheap one for about the same price, but they didn’t see the point of cluttering up their garage with something they only need once.
Still, they have also been adding to the collection of tools they own, including a snowblower they inherited from Melanie’s parents, and embracing more of an “ownership mindset” for tools they plan to use regularly.
They currently rent a gas chain saw twice a year to clean up their shrubs and trees. That, Melanie said, is something they will buy next time they need one.
very orwellian
Just keeping this thread from being auto-locked since reports come out every 90 days… Experian’s Q3 report shows leasing continues to grow- of course with EV leading the way.
Can you imagine paying over $1,000 monthlies on a Kia just because you want to try and build positive equity in a EV9? Sucks for them. Leasing FTW.
4 Likes
I can’t imagine the higher end on those payments for it to average out at $1000 
1 Like
Would be more interesting to see this data excluding EVs. Decent percent of this is combo of a) folks flipping and abusing EV credits
b) higher income folks who only can receive the EV credits through leasing
It will be interesting the next few months if IRA is reversed and how the automakers respond with their own incentives san govt cheese on leases.
Interesting data from Edmund’s showing how many new car buyers are just getting absolutely killed by negative equity.
You want to know who has no negative equity? People who lease a vehicle on smart terms and take the lease to maturity.
2 Likes
Bad decisions cant be made on leases?
“People who lease a vehicle on smart terms and take the lease to maturity.”
2 Likes
I wonder what the data is strictly for cases where the purchased vehicle was already 3-4 years old rather than new. I imagine most of these heavy underwater scenarios are people who finance a new car for like 60-72 months and look to trade it in in a couple of years or right around the term end for something new (i.e., people who should have been leasing the first place).
High interest on massively depreciating EVs
Yeah one of the interesting tidbits that this forum never discusses is that many new car buyers cycle into new/replacement vehicles ever 3/4 years. Especially in the luxury segment for passenger vehicles (not light duty trucks).
A large cohort of folks literally try to replicate the operating benefits of a lease (freshest vehicle under new car warranty), but pay out the nose in the form of propping up their own residuals and then getting hosed on the used car trade-in process.
The concept of “buy a new X5 to own for 6 years then sell it after 6 years” is BS for many customers of X5’s since BMW’s new vehicle customers are often folks that want to constantly be in a new X5.
3 Likes
Those folks need to run not walk into a toyota dealership and educate themselves on owning a product for life.
But i appreciate their cyclical poor decision making, as it makes LHer deals possible.
1 Like
lol if they’d debase themselves into a Highlander, then they aren’t the target demographic for BMW X5.
3 Likes
Lexus TX: did someone say highlander, luxury and buy it for life?
1 Like
I’ve been educated in the other TX thread about how dump the TX transmission is. And ToMoCo V6 has not had a good run of late; hardly the bastion of reliability and awesomeness some people are attaching to the Lexus and Toyota nameplates.
If a customer prioritizes luxury over frugality, their our best bet is still to just buy very gently used and then sell themselves in ~5 years. But such a hassle may mean leasing is the next best thing.
Cycling a RX 450 L or a TX isn’t materially cheaper than just cycling X5s IMO.
2 Likes
The 500h is not the volume unit but its got the worst issues. The 350/h is the buy it for life luxury edition brand ambassador, more so if they offer a huge discount or captive offers. Gently used on Lexus is also pretty bad since they sell close to new minus factory/dealer incentives.
That being said if keeping something new and fresh on a short cyclical ownership cycle is the name of the game, leasing a Lexus probably isnt smart, but the majority of customers primarily lease Lexus sadly.
1 Like