Am I a sucker for leasing all of our family cars?

[Anonymous]

Out Mercedes is 20 years old. I used to want it to die but it keeps on running. We paid it off in 2003.

[Anonymous]

If leasing works for you, then you're not a sucker. I wouldn't do it but I'd rather drive my car till it dies. It's your choice.

[Anonymous]

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Anonymous wrote:We do the same thing. It works for us. I'm always the one giving rides to people who have their cars stuck in the shop for one issue or another. They can sink their money into a depreciating asset if they want. Car payments are a line item in our budget, and we'd rather pay a fixed amount each month than end up with high car repair bills unexpectedly. It may not make sense to others but it makes sense to us.

The implication of this statement is that you will end up better off, financially, with a lease than by purchasing a new car. That is just not true. There are valid reasons to lease a car - you want a new car every year, you can write off the lease and its easier, you temporarily need low payments, etc. - but deluding yourself that it's a savvy financial move is not one of them. It is unequivocally more economical to keep a car for 8-10 years than it is to lease it.

+1. If leasing was such a great deal, why do all the lease people have to constantly insist what a great deal it is? I view leasing as a tool for people who are only capable of managing their money on a month-to-month basis. This describes every single person I know who leases. They can afford X per month and want the nicest, newest possible car for that X per month. That is literally their entire thought process about leasing.

Not necessarily. We are relatively high earners and right now our only fixed expense is our mortgage and basic living expenses like utilities. Obviously we own our car outright but will need a new car soon. We are trying to invest as much as possible. We bring home around 15k a month and are trying to invest a good 5-7k on top of maxing out retirement. It's appealing to me that a low monthly lease is only $300-400. More money I can save or invest. I'm tempted to lease instead of buy because buying is $700-1000 a month for the same car. We are conservative and not sure how long this gravy train is going to run and simply want to invest as much as possible. I'd rather put an extra $300-400 in the market than invest it in a car.

I understand we'd be better off buying and driving the car for 8-10 years. But it's still tempting to have that low monthly payment and not have a lot of expenditure on a car.

If you are rolling in the dough as much as you said, you shouldn't need to finance the cars at all. Cars are not a "monthly" amount for me. Its paid and its done.

I have no interest in selling stock to buy a car. If anything we'd have to pay tax on the stock sale. I'm trying to keep and add as much to my brokerage account as possible the next five years.

But whatever amount you pay to lease the car will be that much less you can invest. You have no non-stock money at all? I find that very hard to believe. We are very very big into investing as well, but when we know we have a car purchase coming up, we plan accordingly. It doesn't happen that often.

We do. It's just that a cheap lease is a drop in the bucket. Seems like a good deal to drive a new car and not deal with maintenance for $300-400 a month. I don't mind essentially renting a car because I don't want to invest in a car anyway. If we are investing at least 100k a year outside of retirement does it matter that we spend $350 a month to lease a jeep Cherokee? Do I really need to get $25k out of savings and write a check for a car?

I think when it comes down to it I find a car to be a horrible purchase no matter how you pay for it. It's a depreciating asset and one that can require expensive maintenance. However you pay for it (cash, financed, leased) doesn't make it any better. They are all horrible options. Which is why we have a ten year old car that we barely drive. Neither of us need a car to commute to work so for now it's fine.

But really if we make 15k a month net and this doesn't include annual bonuses, is it that horrible to spend $400 a month on a lease? Our only other fixed expense is a mortgage of $3,500.

I guess where we disagree is that leasing a car is still a form of financing it. I guarantee the car company is making extra money off of leasing or else they wouldn't do it. I would not finance a car under any circumstances. There is an interest charge associated with your lease even though it is not spelled out the way it is with a car payment. You say that a cheap lease is a "drop in the bucket." Well to me writing a check for a car when needed is a "drop in the bucket." The amount of money I spend on a safe reliable comfortable (but non-luxury brand) car every so often does not in any way negatively impact my aggressive long term savings. I don't want the length of a lease term dictating to me when I get a new car. I decide when I get a new car. And not because some predetermined month of some predetermined year I have to surrender my car to the people who actually own it. I own it.

The car company is also making money when they sell you a car for cash. This goes without saying.

Interesting you'd finance a car under any circumstance. When I receive my bonus this year I would prefer to invest all of it and instead have a low percentage car loan for maybe half of the cost. I can easily pay it off in 2-3 years and this way I'm able to invest more and not tie up too much money at one point in time in a horrible investment.

To each his own. You say you don't want the lease terms dictating when you need a new car. Well I don't want to deal with repairs on a car I own and having to figure out when it makes the most sense to give up on maintaining it and get a new car, which is what I'm having to decide right now.

You do own your car, yes, but you own a horrible investment that wil only cost you more money in the future. It's not really anything to brag about.

Nobody considers a car an "investment", regardless of how it paid for. It is an expense, pure and simple. Here is a simple math example (based on my real experience) of why its cheaper to buy than lease.

My friend and I each bought a new Honda Odyssey in 2011, same package and everything. I wrote a $33k check for mine. She traded in her old car as her down payment and got a 3 year lease for about $400/month. Fast forward 6 years. My car is still worth $20k, so to own it for 6 years cost me $13,100. (The only thing I've done other than oil changes is buy a new battery that cost $100.) My friend has paid $400/month for the last 72 months. 72*400 = 28,800. So in the same period of time that my car cost me $13,100, hers cost her $28,800. She did have to re-lease a 2014 Odyssey when her first lease finished up, but the car hasn't even changed models.

So it cost her $15,700 more than me to lease instead of buy.

[Anonymous]

My parents leased cars when we were kids (there were 4 of us) and we needed to size up every couple years. Once the youngest got to be about 6 and the oldest was off to college, they bought one car and one SUV. I think it makes sense when your family is growing and shrinking over a couple lease periods.

[Anonymous]

Unless you can write off the payments for taxes there is NEVER an prudent financial reason to lease versus buy. The other reasons - wanting a new car every 3 years, feeling the need to resize as kids grow, not being able to plan a budget well enough to purchase - are all valid reasons, they're just not reasons that make pure financial sense.

[Anonymous]

Leasing is more of a lifestyle luxury for people who can afford it and want to trade cars up every few years. It's not cheaper outside a narrow set of circumstance, and most people I know who lease are either better-off financially or not good at math.

I wouldn't call someone who leases a sucker if they are leasing because they prioritize having a newer, fancier car. I would if they think they're somehow getting a better deal.

We're more of the drive it 'til it's not worth it any more types. One car has been paid off for more than five years, and the other has a $200/month payment that will be done within the next two years. My hope is to buy the next one outright and be done with payments, but, unless both cars were totaled for some reason and we had to start from scratch, we won't carry more than one payment at a time.

[Anonymous]

We own one car outright... A very basic station wagon that is 4 years old, and we lease a Jeep Grand Cherokee with all the bells and whistles... The lease is up next February and I don't know what we will do. We might buy a Tahoe or a minivan or we might just lease another Cherokee and wait for the third kid. For our unsure lifestyle, it works.

[Anonymous]

Anonymous wrote:you never have to pay for maintenance?

No, never. Everything including oil changes is included.

[Anonymous]

Anonymous wrote:Don't you still have to pay for tires and brake jobs on leased cars? Those are the two decent-sized maintenance costs associated with owning a car.

If you add up the amount you're paying per car per month for the lease it's significantly higher than what you'd pay to buy the car even including repair costs.

Our leases have never required tires or brakes. And brakes would be covered under warranty, I think. But never had an issue. Brakes and tires last longer than 24,000-36,000 anyways.

[Anonymous]

Anonymous wrote:"Only" $600/mo? For American-made junk? Am I the only that caught that?

It's nice & cozy. Fits the entire family.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Don't you still have to pay for tires and brake jobs on leased cars? Those are the two decent-sized maintenance costs associated with owning a car.

If you add up the amount you're paying per car per month for the lease it's significantly higher than what you'd pay to buy the car even including repair costs.

Our leases have never required tires or brakes. And brakes would be covered under warranty, I think. But never had an issue. Brakes and tires last longer than 24,000-36,000 anyways.

wrong, luxury cars w/ sports packages tires and brakes can wear out at 30k miles. You are on the hook for that or have to pay a fee when you turn in the lease. Whatever is covered under your normal warranty is also covered until your lease, the lease doesn't give you anything additional in terms of warranty coverage.

[Anonymous]

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Anonymous wrote:leasing is stupid. Also the idiots who lease forget they had to put money down in the thousands on a lease that you never get back and you also usually end up paying at the end of the lease for tires, brakes and mileage overage.

That's actually not true. We lease our cars and never put money down. We tell them an amount for the monthly payment we're willing to pay (usually a little lower than the truth) and it's pretty much take it or leave it. They somehow always find a way to make the deal work. We also never pay at the end of the lease. My DH drives more miles than I do so we just switch cars for a bit to even it out. We've never paid at the end of the lease.

You do realize they just put that on your payments? Are you dense, "They somehow always find a way to make the deal work." You are the perfect person for getting ripped off for leases and probably timeshares.

[Anonymous]

Yes, you are. But I also think anyone who buys a new car versus lightly used is a sucker.

[Anonymous]

Anonymous wrote:
Nobody considers a car an "investment", regardless of how it paid for. It is an expense, pure and simple. Here is a simple math example (based on my real experience) of why its cheaper to buy than lease.

Not an "investment" per se, but it certainly is an asset. If you own a car and can sell it, trade it in, whatever, it has some value. A leased car has no value (actually, it can have negative value if you owe something upon return.)

But back to OPs point - yeah, kind of a sucker. Not the worst though!

[Anonymous]

Anonymous wrote:

Anonymous wrote:"Only" $600/mo? For American-made junk? Am I the only that caught that?

It's nice & cozy. Fits the entire family.

awful, Volvo xc90 looks so much better and get better fuel millage.

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