I used to lease because I enjoyed the dealmaking, getting a really nice car for a relatively low payment, enjoyed having a new car every 2-3 years, liked the fixed payments with no repair cost while I was in college and then in my early professional years, and had a second car to soak up extra miles with.
Then I started driving more and more for work…and even worse, it became really variable - I didn’t know if I was going to do 15k in a year or 35k.
Then I had kids. Kids ruin everything!!! Bye bye, second car (S2000) - sold that for $3000 more than I had paid for it, love me an appreciating car. Needed to cut down budget/save for their college and now couldn’t rationalize insuring 2 or 3 vehicles just for myself (In MI, no fault insurance is extremely expensive). Wanted something fun and unique but had to be 4 door and not murder me in repair/maintenance costs. I bought a 2 year old Acura TL SH-AWD 6MT, to try to have someone else eat the bulk of the depreciation as someone above suggested but still enjoy a really nice car. Bought in 2013 for $26k, sold this year almost exactly 5 years later for $8000 and had run it up from 50k miles to 180k miles. So one way to look at that would be $300/mo just for depreciation, another way would be 13.8 cents per mile - basically unicorn dirt cheap for a $45k luxury car. BUT I lost used car repair roulette on that one - I ran over a piece of pipe on the highway at night that punctured my trans case, caused all the fluid to drain out (unbeknownst to me), and my transmission grenaded itself when it ran out of fluid and overheated. My insurance would not cover it. Including total spend on repairs/maintenance on the TL, I would be closer to $400/mo or 20 cents per mile. Not quite as great, and it’s only because I do all the work myself and am generously considering my own time to be totally worthless. So this basically proved to me that this method is probably not cheaper than leasing, for someone like me who is a car enthusiast and would not be happy driving a base model Civic or Camry.
This time to avoid these unexpected repair costs and all my time, I decided to purchase a relatively inexpensive car that I think will have great residual value (Accord Sport 2.0T 6MT), and plan to sell it in ~3 years. According to my calculations, it will be cheaper than anything comparable that I could lease including the potential mileage overages. I recognize that 2 unicorn leases would likely be cheaper, but only certain cars tickle my fancy. I will report back findings
My wife’s Silverado lease is up in June, so that’ll give me some lease hacking to do as she doesn’t have the mileage issue that I do
Disposition fee, acqusition fee are lease specific ( and can cost substantial money on leasing). Interest and depreciation are in both. Tax treatment are state specific ( and can save substantial money on leasing).
I referred to your comment about questioning to own a depreciating asset. Leasing does not change the fact that everybody pays to drive no matter the method and I guess we are on the same page there.
Leasing gives the company another way to gouge the heck out of you. When you return the car, it’s a nightmare and they will charge yoy for every little scratch, however small. This is their chance to make an extra profit at your expense.
That’s a really paranoid way to look at it. Let’s apply common sense - they wouldn’t get any returning lessees if they just went around gouging everyone for no reason. Also, each lease lender has clear rules regarding damages. Follow the rules, no problems…
Have you ever sold a used car private party? It’s not exactly fun. I do it to make the most money, but it’s unbelievably frustrating and time consuming. 95% of people are either idiots or a-holes or both. Damages, depending on what they are, can have a far bigger or smaller impact on a private party sale vs a lease return.
Although charging customers for wear and tear “may” make profit for the banks, I doubt they actually do. Resale values are impacted by all the extra wear and tear. Also a lot of residuals could be too optimistic but that is usually accounting trick.
Yes, been buying and selling used cars for 20 yrs. True, 95% of the buyers on craislist are hucksters trying to swindle a deal. That’s why I discriminate. I hang up on the pros and only show cars to people who are serious.
That is a too much of generalization. Although I agree wealthy people tend to invest on high yielding investment products, they also view cars as “expenses” as it should be. How much its worth to each is different and I know more than one wealthy, successful and financially responsible person who drive a fast depreciating car… . .
I work with millionaires who made $$$ in the dotcom biz. None if them personally lease their cars as they are shrewd businessmen and know leasing is the worst way to go.
While it’s a generalization, yes, there will always be outliers and exceptions.
If I’m personally stupid rich, I would balance my portfolio for high yield investments and also spend some of my liquid assets on something like a McLaren 570s… Not because I’m looking for prestige, but because I love a driver’s car and I love driving fast cars. That would be an expense I would personally make.
I refer to wealthy non-car folks who would rather see their money utilized elsewhere whenever possible.
I too work for millionaires who made their riches through shrewd contract negotiations over construction contracts and they all lease their high-end cars and reinvest their money back into their business for growth.
Guess those guys don’t know how to make their money or where to spend it!
They lease their cars using the business to own it, a no brainer. The IRS is quite generous in allowing construction business owners to take advantage of this loophole because they really do have to drive from site to site. But if you’re in the dot.com internet commerce business, you cannot use the same argument.
When you rent a car for a week you also have nothing to show after you return it. You are also responsible for any damage/wear/tear and you pay some fees at inception. No different from a lease.
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