It’s not the cost of money (aka interest).
It’s the fact that a dollar today is worth more (sometimes by a lot) than a dollar tomorrow.
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I hear what you are saying but the difference will be negligible unless the car was purchased in Cash initially.
For example, I bought the car on a 5 year loan, I did not make any payments over the last 6.5 years, so any inflationary value I lost over 1st five years of payments would have been negated over the next 6.5 years or vice-versa.
It doesn’t prove one way or another, just allows you to compare.
The bigger issue I have with this argument is that it is conflating multiple variables. It’s not just a lease vs finance, but a discussion of how long you hold onto the vehicle.
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I get that, but you still have a car payment either way, only today you’re paying a bit more, so you could save more tomorrow.
Ok, so we can average then and normalize from 2020 dollars to 2012.5 dollars.
The proper way to do this would be to normalize each year’s cashflow to 2020 or 2010 dollars. Need to establish a baseline and base everything off that.
that’s why there can never be an agreement here, since we are comparing two types of people.
No. If we go with his $400/mo lease then it’s $1234/year…but personally, whenever is see round numbers i see approximations.
Im not sure I follow.
He was assuming the timing belt would be $500-600. Not, $1000-1100.
Thats $500-600 over 11 years of ownership.
I’m talking about the buy lease spread for his 11.5 years…but again, he has too many round numbers.
$400x138=55200 against $41,000…$1234 before maintenance. Going by his cost per month it comes out to $720/year.
Other than too many round numbers there is also the huge number of miles that his example has…not your typical ownership.
$500 is only one item, there could be more, but regardless, you’re right, it doesn’t matter. It was paid, therefore added to the spreadsheet. Still, $1000 a year savings and counting. For $70-100k a year income that’s a decent chunk of change on only one household expense.
That isn’t taking into account the time it takes to take the car for maintenance and alternative transportation for those days.
For a 70-100k household $83 per month isn’t going to break any budgets.
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If we are using this recent example, Acura gives you loaners, at least when I had one they did. Like I said, it all adds up. $83 is only one expense, and for me it counts. Obviously we’re not going to be millionaires by buying a car VS leasing it.
I know my purchase price of $41,000 is accurate because i negotiated round prices when I purchased.
Regarding the current lease payments,
I used the Leasehackr Calculater posted by one of the dealer/broker and updated it for TLX Advance MSRP of $45K, current incentives of $9K & higher mileage of $15K and the payment came to $474/month.
Even if you ignored the high mileage, the span of ownership will give you the same monthly cost (including repairs) of $340/month, not counting any residual value left.
The idea of my post was not to prove a point of one is better than the other, it was just simply to point out the variables and how the math works out.
That’s why I said, It all depends.
I love this thread and I love making models.
So, I built a financial model to model the costs of both purchasing and leasing here. Had to go tend to baby so would love a few glances at it to ensure accuracy and capture of the discussed points.
The original question to be debated was whether leasing every 2-3 years was better or worse financially than buying new and holding for 10 years. Based on a variety of spreadsheet maths and anecdotes, we can say there’s probably a premium to leasing (~$1000/yr for a leased car with ~$600/month payment).
To some, this money is significant. If it is, probably best to buy and hold. To others, it’s absolutely worth the cost to drive something new with the latest engine, safety and infotainment features.
Bottom line, you’re either comfortable paying the premium or you’re not.
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Can I like this more than once?
Awesome effort. My productivity just nose-dived for the afternoon . . .
I suspect the $1,500 lease maintenance every third year is probably high.
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That’s why Infiniti q50 is flying off the shelves 
Ha, thanks. My guess is assumptions need some work. Gave everyone comment access.
Assuming it will cost you $19k in repairs is a bit out there, unless you bought an Alfa.
Nailed it. it is all about understanding the variable and $$ attached to those variables to make an informed decision.
No One can make a broad statement saying one is definitely better than the other.
You can also use my model.
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