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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]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.  [/quote]

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.  [/quote]

+1. If leasing was such a great deal, why do all the lease people have to constantly insist what a great deal it is? [b]I view leasing as a tool for people who are only capable of managing their money on a month-to-month basis. [/b]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. [/quote]

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.  [/quote]

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. [/quote]

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.  [/quote] But whatever amount you pay to lease the car will be that much less you can invest. [b]You have no non-stock money at all? [/b]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. 
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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.  [/quote]

I guess where we disagree is that leasing a car is still a form of financing it. [b]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[/b]. 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. [b]I don't want the length of a lease term dictating to me when I get a new car.[/b] 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.[/quote]

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.

[/quote]

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. [/quote]

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