Ok, you guys want a real life example in favor of the lease? No? Ok, i will still give it to you anyway…Jrouleau426, this is for you, man!
eGolf lease at $105/mo net as detailed in my post (current lease). The previous lease was at $116…so let’s go with the $116. 7500 miler per year, 20k service $200.
Total for 120 mo is $13920+(200x4)= $14720
Buying (numbers from my last lease contract)
MSRP $32800
Sale $25119
Post sale Rebates and credits total: $11000 ($7500 fed, $2500 CVRP, $1000 Edison)
License $169
DMV $157
Doc fee $85
EVR $30
Tire fee 8.75
Doc tax 6.59
Tax 7.75% $1946
Loan interest 4% $2890
20k service $200
TOTAL: $30612-11000= $19612
To this we will have to add the cost of 2 sets of tires and some scheduled maintenance that hits at 30k, 50k and 70k that will count only against buying and are related to braking system (not the pads since these will last a very long time). There may be some value left in selling the car after 10 years but no way it will be over $6k.
Yes, four wheels, same model, same basic shape, same utility for our needs (6 trips a year to Menard’s and 6 monthly commutes to/from work [12 miles] for my spouse) plus an occasional errand when I’m in town AND have the other vehicle (extremely rare).
How much do you think I could save by leasing a new RX instead?
Also, while the styling on the 2008 RX is best described as bland, the new ones are horrific. So we blend in instead of sticking out like a pus-oozing boil.
Never own a depreciating asset. Why? Because you cannot control the depreciation. In 10 years you have no idea whatsoever what a high mileage, used vehicle is worth… if anything.
A lease is nothing more than a buyer pre-selling the car to the finance company. There may be fees… but no matter what… the finance company HAS to take the car back.
When I hear I put too many miles on a car to lease… I just shake my head… that’s exactly why you want to lease! You do not want to own a car out of warranty and if you consider the extra mileage charge on leases to be 20 to 25 cents per mile… that is a gift. Do the numbers, it’s almost impossible to drive a car for that unless you drive it for a very long time.
A car is a financial liability and a huge expense. A lease is a way to tie a knot around your financial exposure.
The car you want to buy, is the car you put very few miles on.
this is a very good point. self-driving features are starting to emerge. there’s a risk that you’re stuck with a car for 10 years after all these new killer features come out.
You realize that you’re telling people to save over $25,000 a year before they can even consider leasing a new car, right?
I wasn’t going to say anything, but this rubbed me the wrong way. Your advice is prescriptive as if it would work for everyone, but even some of your advice is financially irresponsible through almost any lense for the sake of your own peace of mind (e.g. paying off one’s mortgage). Anyone who has owned a car that needed a lot of work to make it roadworthy and hasn’t had the money to pay it knows how overwhelming that can feel. And if someone doesn’t have the money to fix their car, where will they turn? Probably credit cards. Also, can we please get over this the myth that people always have financial struggles because they buy too much stuff that they don’t need? People struggle financially for a lot of reasons.
I agree that it can still be a good option to keep whatever vehicle you have for longer rather than buying a new car. Let’s assume, though, that someone 100% needs to make a vehicle purchase. Even a $250/mo budget would get them into a few lease for a brand new car with a full warranty, tax and title rolled-in, and maybe even maintenance included. If one’s car needs warranty work, they get a loaner so that they can still get to work or be wherever they need to be for the day. No surprises to their budget as far as their car is concerned.
On the buy side, a 6% interest rate loan for 36 months on a used car with that same $250/mo payment would get someone into a loan for about $8200. Hopefully they’d be able to put all that towards the cost of a ‘reliable’ used car, but there’s also tax and fees to consider paying for. Maybe they roll that into the loan? If so we’re looking at a sub $8000 car. Extended warranties add to the cost. And even if someone buys a car with a reputation for reliability, there are always one-offs. What if the car does need work? Maybe your mechanic has a loaner or a shuttle to get you to work, but you’re introducing more variables. When one is struggling financially, removing the variables helps immensely.
Leasing can be a really great tool for people who are struggling financially so that they can help themselves. Let’s not gatekeep it for people who have more excess cashflow than the federal poverty level for a family of four.
Nice post. As I said, his advice was extremely presumptuous and flat out wrong. People that struggle financially need fixed costs so they can budget better. There’s nothing about a $8000 used vehicle that’s a guarantee.
Less fortunate people are constantly coerced into making poor financial decisions which perpetuates their lack of wealth. Mostly through exorbitant interest rates and hidden inflation that our govt denies, at the same time solely causing, through printing more fiat.
We are going around in circles but this is sort of the lynchpin of the debate. If you are willing to lease whatever the bargain is when you need a car, leasing is best. I’m not talking 300 dollar a month BMWs. I’m talking 100 buck a month Egolfs or 125 buck a month encores. Simply no way to beat those costs buying new.
Also, no one has talked about the tax advantage. On killer deals you win and the state loses (except in VA, MD and TX). On the egolf in California you would pay 1.5k-3k in taxes if you purchased new. But on your lease you would pay 360 bucks in taxes. That’s $40+ monthly in savings.
People need fixed costs in order to budget better because they cannot budget a smaller amount of money over a longer period of time.
Same people flock to the dollar store to buy a $1 bottle of shampoo that lasts about a week instead of buying a liter at Target for $6 that will last 20x longer.
Who are these people that you’re constantly stereotyping? I doubt they visit this forum. I’ve spoken to over 300 people just this month and most are very financially savvy
