R
rhenderson
Guest
A little out of date with the interest rate projections for today's economy - But still a great explanation.
Suppose You Had Money Saved
- Thread starter DEEKAYPEE8569
- Start date
A little out of date with the interest rate projections for today's economy - But still a great explanation.
ProfMoneyWise
Member
As for the market's 12% I always say to naysyers . . . ok, use 6% then, still not bad.
I just cannot fathom having a car payment again.
itsbob
I bowl overhand
Not really, a lot of mutual funds still averaging 12 % over the mid and long term.
DEEKAYPEE8569
Well-Known Member
But isn't there something to trading in every year or two; just rolling over the payments. Yeah, you would have seemingly endless car payments; but if/when you trade til you find something you might wanna keep; that might work.
kwillia
n/a
The reality is that no matter what you buy... there will be maintenance requirements, it will get that "lived in" look, the paint will get muffed up or fade, you will find things that annoy you, you will get bedazzled by the newer jazzier cars that pass you along the roads, you will start to watch the mileage and question how long you have until you need to sink some money into fixing something major.
So with that being said, what makes you think you'd ever leave the vicious cycle without forcing yourself to do so?
itsbob
I bowl overhand
Unless you are putting 50 -100k miles a year on your car I would think there is NO advantage.
The only thing to do if you INSIST on a new car every year or two is to lease.
You only pay half the financing you would if you bought, and if you HAVE to have a new care every couple of years, and you KNOW you are never going to be without a payment at least the payment on a lease is substantially lower.
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DEEKAYPEE8569
Well-Known Member
Well, that's where planning ahead comes into play.
Something I am excellent at.
Planning to buy; not lease; a new car every year or two, used to be possible. Buy an 0'12 this year; and 12 months later, buy an 0'13. Or, buy last year's model (new); and next year, buy this year's model.
One of those methods works; without leasing; and you don't wind up with a lump sum payment at the end of a lease. Made sense on scrap paper. :shrug:
Chasey_Lane
Salt Life
Dee Kay Dude --- I think you're putting too much thought and effort into this, with people that really don't care. Buy new. Buy used. Don't buy at all. Consult your financial advisor if it's that overwhelming to you. 
DEEKAYPEE8569
Well-Known Member
Dee Kay Dude --- I think you're putting too much thought and effort into this, with people that really don't care. Buy new. Buy used. Don't buy at all. Consult your financial advisor if it's that overwhelming to you.
You so schmaht......that's why I bring this kinda stuff here.
kwillia
n/a
Oh she sure is... ask her about '5' gum.You so schmaht......that's why I bring this kinda stuff here.
lovinmaryland
Well-Known Member
Dee Kay Dude --- I think you're putting too much thought and effort into this, with people that really don't care. Buy new. Buy used. Don't buy at all. Consult your financial advisor if it's that overwhelming to you.
I get your concern about breaking down on the side of the road. I am the same way.
You might want to check into a Hyundai. They are VERY affordable and have IMO the BEST warranty out there. Sure they arent fancy shcmancy but they get me where I need to be. Plus they get great gas mileage.
ProfMoneyWise
Member
"Fleasing" is the most expensive way to possess a car.
Car Leasing Means Losing
The most expensive way to operate a vehicle
MAY 17, 2010 | WRITTEN BY CHRIS RUSSELL
We all want to own the nice cars. But many of us pay for them in a way that makes the car own us. And the worst way, by far, is car leasing.
There are tons of rumors surrounding a car lease. They range from giving you a tax advantage to being what sophisticated (*COUGH*) people do. But it's a bad deal—no two ways about it. The car companies pitch the "benefits" to you, but in the end, it doesn't work in your favor.
Example time. You lease a $22,000 car for three years, and at the end of the 36 months, you turn it back in for $10,000. The payment that the car dealership charges you is what covers that $12,000 loss. So $12,000 spread over three years equals $333 a month. Sound like a normal car payment? It is, but we aren't done yet.
If you've gone over the mileage limit when you turn the car in, you get charged per mile. On top of that, you'll get charged for excessive wear and tear to the vehicle (we're talking scratches and dirty carpets here, not bumper replacement).
So when it's all said and done, you'll pay $12,000 plus operating expenses like gas and oil, plus mileage, plus wear and tear, and after you've turned the car in, you'll have no car to drive. That can easily cost more than $20,000.
What you could have done was saved up and paid $6,000 cash for a nice three-year-old car that runs fine. Then you would have paid less money and had a vehicle that you owned for several years. Car leasing doesn't sound too hot anymore, does it?
Here is an eye-opening stat: A car dealership makes almost 16 times as much money on a car lease than on a new car sale! Smart Money magazine quotes the National Auto Dealers Association as stating that a new car sale means an $82 profit for the dealer. But when car leasing comes into the picture, things change. If you lease the car, the dealer can sell the contract to a bank or one of the car company credit divisions for about $1,300!
A car lease is the auto industry's game. Don't play it. Keep your car purchases simple and affordable and you'll get ahead.
Car Leasing Means Losing
The most expensive way to operate a vehicle
MAY 17, 2010 | WRITTEN BY CHRIS RUSSELL
We all want to own the nice cars. But many of us pay for them in a way that makes the car own us. And the worst way, by far, is car leasing.
There are tons of rumors surrounding a car lease. They range from giving you a tax advantage to being what sophisticated (*COUGH*) people do. But it's a bad deal—no two ways about it. The car companies pitch the "benefits" to you, but in the end, it doesn't work in your favor.
Example time. You lease a $22,000 car for three years, and at the end of the 36 months, you turn it back in for $10,000. The payment that the car dealership charges you is what covers that $12,000 loss. So $12,000 spread over three years equals $333 a month. Sound like a normal car payment? It is, but we aren't done yet.
If you've gone over the mileage limit when you turn the car in, you get charged per mile. On top of that, you'll get charged for excessive wear and tear to the vehicle (we're talking scratches and dirty carpets here, not bumper replacement).
So when it's all said and done, you'll pay $12,000 plus operating expenses like gas and oil, plus mileage, plus wear and tear, and after you've turned the car in, you'll have no car to drive. That can easily cost more than $20,000.
What you could have done was saved up and paid $6,000 cash for a nice three-year-old car that runs fine. Then you would have paid less money and had a vehicle that you owned for several years. Car leasing doesn't sound too hot anymore, does it?
Here is an eye-opening stat: A car dealership makes almost 16 times as much money on a car lease than on a new car sale! Smart Money magazine quotes the National Auto Dealers Association as stating that a new car sale means an $82 profit for the dealer. But when car leasing comes into the picture, things change. If you lease the car, the dealer can sell the contract to a bank or one of the car company credit divisions for about $1,300!
A car lease is the auto industry's game. Don't play it. Keep your car purchases simple and affordable and you'll get ahead.
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itsbob
I bowl overhand
The only thing that is partially true in that entire sentence is better to buy used than lease.
I used to lease and did it for years when I had two cars in my driveway and EVERY year got one of them replaced.
When you factor in the cost of a new car and the now 72 month NORMAL financing and the total cost of the car minus the trade in value.. then do the math considering a 3 year lease, than purchasing the lease and financing the remainder you come out way ahead (you never finance more than 50% of the car value).
I've never paid for "more than fair wear and tear" and luckily never paid for going ove miles (alotted 15,000 miles a year).
If I had bought a new car at the end of 24 or 36 months I'd be so upside down in the car there would be now way to trade it in without significant cash down.. a lease you just trade keys and drive off with your new car.
The amount of money a dealership makes is irrelevant, why should I care how much they make as long as we both do well?
But again the ONLY benefit to leasing is if you are one of those people that HAVE to have a new car sitting in your driveway every couple of years.
Consumers need to do their research as there are a LOT of tricks as to the cost of a lease.. Dodge/Chrysler residual value it about 30 35% after 3 years, so you have to finance 65-70% of the cars value to lease, where as a Honda or Nissan or Toyota are just the opposite.. There residual value is about 60 -65% so you only have to finance 35 -40% of the cars value over 3 years.
Value packages on a car can add up.. For example a "comfort package" may give you $3500 of equipment upgrades for $1000.. For the purpose of figuring out the residual value they can add the entire $3500 to the price of the car to figure out the residual value, than subtract THAT value from the current sticker price.
For example.. Nissan Sentra sticker is 15,000 but it includes a comfort and performance package that gives you $4000 in extras for $2,000.. so the actual value of the car at the end of 3 years would be 60% of $17,000. or $10,200. 15,000 - 10,200 = 4,800.
Your payment would be about $150 a month..
itsbob
I bowl overhand
To BUY the same car would be about $275 a month for 6 years.. 0r
20,000 and at the end of 6 years the car is worth about 25 - 30% of it's original price.. or $3750..
You spent 20,000 on a 15,000 car to make it your own, and now the car is worth 3750.. You're in the hole (lose) $1250 after 6 years of payments, where in the lease you break even after 3..
Personally I won't do it again.. I have a 12 year old truck that's been paid for for several years, but once you get into the new car cycle and hype it's REALLY hard to break out.
20,000 and at the end of 6 years the car is worth about 25 - 30% of it's original price.. or $3750..
You spent 20,000 on a 15,000 car to make it your own, and now the car is worth 3750.. You're in the hole (lose) $1250 after 6 years of payments, where in the lease you break even after 3..
Personally I won't do it again.. I have a 12 year old truck that's been paid for for several years, but once you get into the new car cycle and hype it's REALLY hard to break out.
kwillia
n/a
*fixed*