Used car shopping gets you down....

[Gear_Junky]

Sorry Gear Junky, but you are wrong and you have fallen for the industry trick of focusing on payments.

I don't know where I said anything remotely suggesting that I'm focused on payments. The whole point of my Excel analysis is to add up all costs through the term of lease or loan and compare the totals. Payments are meaningless and easily manipulated via other parameters (like down payment, mileage allotment, lease term).

Oh, well, I don't have to prove anything to anyone. Whoever has the best math will enjoy the best savings (and vice versa).

RE: maintenance: no, during 3 years of lease I don't do ANYTHING except maybe change oil if I feel like it, maybe once or twice. I've never purchased new tires, never done any alignment or anything like that and certainly not any of the prescribed stuff in the book. It's not my problem. The dealer will "freshen up" the car after me. I made that pretty clear. Keep that in mind when purchasing "off lease" or used cars in general.

[Chocol8]

Unfortunately, I can’t publish confidential internal data, especially from publicly traded companies, but I can assure you the numbers in your spreadsheet must be wrong. Most likely, you are missing the difference between the residual baked into the lease and the real world value of the cars that get turned in.

I can all but guaranty that with inventories low right now, there are no “good leases” being offered. Why would there be? They are all for profit companies, not charities.

[Gear_Junky]

Unfortunately, I can’t publish confidential internal data, especially from publicly traded companies, but I can assure you the numbers in your spreadsheet must be wrong. Most likely, you are missing the difference between the residual baked into the lease and the real world value of the cars that get turned in.

I can all but guaranty that with inventories low right now, there are no “good leases” being offered. Why would there be? They are all for profit companies, not charities.

My analysis does not depend on internal data, just on the numbers. The whole point of doing it is to determine whether a particular, specific lease offer is worth it. My last experience (with helping my friends) was 2 months ago. The offer on Nissan Rogue was much better, but the car wasn't comfortable for him to drive due to a leg injury, so he needed a larger car. I am talking about specific offers, while you are still only talking in generalities

My analysis also doesn't depend on residuals. The lease offer already has all of that baked in (as you stated), so I take the lease terms and analyze - is it better than buying or not. With the right offer it absolutely is (otherwise - a resounding NO).

My spreadsheet must be wrong... well, ok, I don't have to convince anyone. There's no magic or sorcery about it - just take the ACTUAL offer terms (rather than generalities, assumptions or "let's say" or "easy math" counterparts) and compare alongside a specific car loan. In my analysis I even figured 0% car loans (which do exist), to give a car loan all the benefit.

In all of the arguments against I am mostly hearing emotion, not analysis. Emotion (fear of being taken advantage of) based on lose approximations of what does sometimes occur, but if you are the buyer, you should control the situation and just say no to a bad lease.

[Gear_Junky]

One more comment to highlight just how terrible a bad lease can be.
In 2012 I leased a 2012 Honda Odyssey LX - a "basic" (cheapest) trim. This was their last car of the 2012 model year, they were already selling 2013, this was around September. I got great terms on it, something like $230/mo, zero down, 3 years, 12k miles per year, out the door (all the fees/taxes rolled in).

Another family we know liked it, so they went out and leased an Odyssey too. But they got "taken" - ended up with a touring version with "everything". Their payments were over $550/mo (and I don't even know about their down payment). Now, THAT was dumb. They spent more than twice the money over 3 years on something that is only marginally more useful. I think they ended up buying it out because of being over the mileage allotment, which was perhaps one way to negate the loss (like I said before good lease = bad buyout, bad lease - "good" or rather "less bad" buyout). They probably could've gotten better interest if they bought it from the start (and in their case maybe they shouldn't have leased in the first place).

This is why with leases you have to absolutely say no to any "upgrades" and stick to the offer (assuming you found a good offer, I've stated numerous times that these "good lease" offers are not always available). Exceptions are when the dealer has one last car of a model year, color, trim, etc. that they are eager to unload, in those cases they may give you an upgrade for the same terms or only a few bucks more. I've had that happen.

Bottom line: leasing can be in your favor if you are able to do comparative analysis, stay pragmatic and know how to crunch the numbers. Otherwise it may not be for you.

Even worse, I know someone who leased a car and [stupidly] agreed to an extended warranty. That was unscrupulous on the dealer's part (but not very smart on the buyer's part) and we suggested filing a complaint and I think she got that money back. They can smell unsophisticated customers like sharks smell blood.

[Chocol8]

Unfortunately, I can’t publish confidential internal data, especially from publicly traded companies, but I can assure you the numbers in your spreadsheet must be wrong. Most likely, you are missing the difference between the residual baked into the lease and the real world value of the cars that get turned in.

I can all but guaranty that with inventories low right now, there are no “good leases” being offered. Why would there be? They are all for profit companies, not charities.

My analysis does not depend on internal data, just on the numbers. The whole point of doing it is to determine whether a particular, specific lease offer is worth it. My last experience (with helping my friends) was 2 months ago. The offer on Nissan Rogue was much better, but the car wasn't comfortable for him to drive due to a leg injury, so he needed a larger car. I am talking about specific offers, while you are still only talking in generalities

My analysis also doesn't depend on residuals. The lease offer already has all of that baked in (as you stated), so I take the lease terms and analyze - is it better than buying or not. With the right offer it absolutely is (otherwise - a resounding NO).

My spreadsheet must be wrong... well, ok, I don't have to convince anyone. There's no magic or sorcery about it - just take the ACTUAL offer terms (rather than generalities, assumptions or "let's say" or "easy math" counterparts) and compare alongside a specific car loan. In my analysis I even figured 0% car loans (which do exist), to give a car loan all the benefit.

In all of the arguments against I am mostly hearing emotion, not analysis. Emotion (fear of being taken advantage of) based on lose approximations of what does sometimes occur, but if you are the buyer, you should control the situation and just say no to a bad lease.

If you are not considering what the residual is vs what the real market value is, your analysis is DEEPLY flawed. All I can say is you are VERY WRONG about the advantage of a lease and you are giving VERY BAD advice based on incorrect math.

Pick any car today. At the end of three years with a lease you will have made $X in payments and have no asset. Easy enough to add up. With a purchase you will have spent more in payments and may still owe more, but you have an asset with substantial market value. If your spreadsheet does not account for the value of this asset it is plain and simply wrong. Sorry, but there is no ambiguity or wiggle room here.

How you account for the value of the asset today is difficult because you don’t KNOW what the real value will be in three years. The manufacturer and leasing company don’t “know” either but they have way better data to predict AND they price in a buffer to make sure they come out ahead. Their spreadsheets predict you will pay more with a lease. You shouldn’t bet against them.

What you can do today with a high level of certainty is look at past leases expiring now, last year, the year before, and see what the asset value was of the used car at lease expiration. If you do this with real cars, real lease terms and real used car values, what you will find is that your so called “good lease” is actually very rare. When Ford had the Explorer roll over issue there were good leases. When gas prices shot up after Katrina and SUV’s were sitting, there were good leases. When VW had the diesel scandal, there were good leases. These are all exceptional events that caused a market adjustment. On the average day for the average buyer? Not too many “good leases” will be found in the real world. Certainly not on any popular, desirable car. If you look at real data, you will find well over 95% of leases end up costing the consumer more not less.

If your math says a lease is a good deal, and there is no significant market force or major event to explain it, your math is almost definitely wrong. If you prefer leasing because of the convenience and you don’t mind paying a premium for that convenience, that’s fine. It’s like paying more for food by eating out or getting prepared foods instead of raw ingredients. Almost everyone makes a choice like that from time to time and it often is the right choice to pay more. Just don’t fool yourself into thinking that it is more convenient and cheaper. It’s not!

[Gear_Junky]

If you are not considering what the residual is vs what the real market value is, your analysis is DEEPLY flawed. All I can say is you are VERY WRONG about the advantage of a lease and you are giving VERY BAD advice based on incorrect math.

The only advice I gave was to do one's own homework, count the beans, nothing less, nothing more. I wasn't telling anyone to run out and lease the first four wheels they saw.

I was talking about a leased car's residual value being irrelevant (already priced in). Of course you MUST count the value of a purchased vehicle at any point in time.

One simple way to estimate it is to look at prices of a 3-year old car of the same make/model today. It's not exact, but close enough. So if you purchase a Toyota Camry today, then 3 years later it will be worth roughly what a 3-year old Camry is worth today. Not exact, I know. let's say it one more time, this is not precise.

I wouldn't call a used car that you owe payments on "an asset". It is more of a liability. Sure, there's some value if you sell it. And if you compare to a good lease, you'll usually break even more or less.

It's very simple: after 3 years of paying a 5-year car loan you have 2 more years of payments and a used car.
After 3 years of a GOOD lease you have ALL THAT MONEY you saved - you can either buy a used car with that money or lease again. Incidentally, the used car you can buy with your savings is suspiciously close in value to the car you "own". It's very simple

[Rollin Hand]

Sorry Gear Junky, but until you demonstrate this, all this comes down to is "he said-he said" (I am realistic that we are pretty much all dudes here). You keep saying that if we do the math or make a spreadsheet it works. Without a concrete example, I am not convinced.

Now, if you could spell out what makes a "good lease" vs. a bad one, your ideas might get some buy in, pardon the expression.

As well, if you don't maintain your car, you could void the warranry.

[Chocol8]

The car is an asset, the remaining loan balance is a liability. This is accounting 101.

If you buy a car with a 5 year loan and sell it or trade it in after 3 years, you will get enough money to pay off the remaining liability and have a chunk left over to reduce the cost of your next car. What you seem unable to grasp is that the amount of this extra value will almost always exceed the “all that money you saved” with your so called “good lease” because you didn’t save money on the lease, you over paid for depreciation that almost never actually happens. There are very smart people who are paid a lot of money to make sure that you over paid. They are extremely good at it and have long proven track records that are indisputable.

As for buying a used car with the money you “saved” by leasing, hmmmm. If by suspiciously close, you mean $2,000 to $4,000 less, you are correct, and it isn’t at all coincidental or suspicious. It is carefully planned that way.

[MichaelR]

I have never purchased or leased a new car, I just have a thing about losing a ton of cash as I drive off the lot. I always look for a good used car or truck and sometimes they have been almost new but I paid al ot less than from the dealer. I do almost all of my own repairs and maintenace except for transmission work although I never have had a trans fail, knock on wood. My dad was a mechanic for most of his working life and he saved me a fortune by teaching me not to fear doing my own repairs. The fact is I don't trust mechanics or even the oil change places as far as I could spit, they have overhead to cover which push's them to make all they can even if you don't need it. My dad worked as a service writer for awhile but gave that up because the dealers he worked for were always pushing him to sell work that was not needed.

[Gear_Junky]

Sorry Gear Junky, but until you demonstrate this...
As well, if you don't maintain your car, you could void the warranry.

Ask and ye shall receive

I realize that due to length of my post the parties involved will not read it attentively and will miss most of the points, like with all previous posts. So I'll stop after this, I do have better things to do

First, about the warranty: within the first 3 years of a new car if I skip on oil changes or something like antifreeze, nothing will happen. I "may" occasionally change oil or rotate the tires, but that's it. I will not be doing "scheduled maintenance". Never have, never will. Not rotating tires may only void the tire warranty, not the car warranty. Nothing else will happen on a new car. If you want to insist that it may, fine. That's a tangent.

Also, I think we already agreed that those who are capable and willing to do their own repairs and maintenance are usually better off not leasing. But it would be fair to price in their own time (labor). If your day job pays $60/hr (extrapolated from salary), that's your opportunity cost of DIY. Because you could be doing other fun things on the weekends No, I didn't include that in calculations, but it's something to consider. Wouldn't you rather work on guitars or play music? Be with family?

Anywho, I went to a local Nissan's adverts and they offer a 2020 Sentra SV (3 year lease, 12k miles per year) offered at $189/mo, $2499 down.
LEASE SCENARIO. That's roughly $259/mo with $0 down and all the costs rolled in (we'll add the taxes later). There's a $395 disposition fee, I'll also add that to the lease total over 3 years. I'll use local tax rate rounded up to 8% sales tax for simplicity, this analysis doesn't change, whatever your local taxes are. So after tax and $395 disp. fee you'll spend $10,217 on the lease within 3 years. (Lately I find the best leases from Nissan but Honda sometimes is also good, it just depends. I prefer Hondas but I prefer cheaper leases over all. This same modeling can be done for any offer. If a lease wins out, then it's a "good lease".

NEW BUY SCENARIO. That same car costs $19,500 (same mfr rebates are applied whether you buy or lease, which actually maximizes the lease value). I'll just use a 3-year 0% $0 down car loan for simplicity, in reality your terms may not be as favorable. Adding in the taxes and repair/maintenance costs of first 3 years (link below), over 3 years you'll spend $25,739 (rounding up to the next dollar). But! You have that valuable used car, "the asset" then, right? Based on what the current 3-year Nissan Sentra SV's are selling for at the dealer, you might think it's worth $15k. If it was, you'd be roughly breaking even (actually losing about $500 vs. lease). In reality you'd be hard pressed to sell it for $14k, most likely $13k. That's the real value of your asset - whatever you can sell it for.

I have to assume selling the purchased car after 3 years so we can compare apples to apples, compare "value". If I was doing this for myself, I might extrapolate to a 5-year car loan. That doesn't change anything, it's just structured differently (or you pay more interest if it's above 0%). If you keep the purchased car, your repair costs will just keep growing as it wears out.

USED CAR SCENARIO: And finally, a 3rd scenario: if you were to purchase a 2017 used Sentra or comparable car instead of buying or leasing new, your loan is likely to be 5% interest and you'll spend even more over 3 years and at the end you'll have a 6-7 year old car, er, I mean "asset". I figured $15k to buy (from a dealership) and 5% and same repair costs (which may be higher in reality, it's an older car). You'll spend $22,158 in 3 years on this asset. That's $11,941 more than lease. Will that 6+ yr old car be worth $12k at the end? (No).

Yeah, so maybe you'll buy privately for $13k, right? You'll still spend $9,610 more than leasing (it's those pesky repair costs). Even if you were to get ahead of the lease model, it would not be by much. But price back in all the hassle of used cars, if you can. I've had my share of them. I have one now - it was given to me free and it still sucks money (but is worth it).

THE RUB. The only scenario where you'll be better off is if you pay cash for that used car. Not everyone has so much cash to spend at once. If you do, by all means... unless you can keep that cash invested... if it makes more than a couple of % in earnings (I'm thinking conservative investment, not savings account or risky stocks) you are still better off with a good lease. Are we forgetting that cash, money is also an asset? In fact, the most liquid asset of them all (let's not belabor this with rants about inflation, gold, etc., we can do it in a separate topic. In the short term cash is king and is quite the asset).

Link to maintenance and repair projected costs. Yes, I realize it may not exactly play out that way, but if you keep the car 5 years or more, all these costs will catch up with you.
https://www.edmunds.com/nissan/sentra/2017/cost-to-own/

[Gear_Junky]

*also the $395 disposition fee is waived if you lease or buy another car from them, this is just about standard. No biggie, but worth mentioning.

[Blackened]

I just bought a car on Wednesday.

Back in 2017 I wanted to get a current bodied mustang (2015+) but the cash it was going to take at the time was more than I wanted to spend. After talking to a good buddy (He has uncanny luck with cars) I found a 2013 GT premium that was in fantastic condition and LOADED for a ridiculously low price. So, I bought it.

That same buddy reached out to me last week. Three and a half years later using the equity I had in the 13 I bought the car I had actually wanted in the first place:

I'm excessively happy with it. The dealership was super easy to work with, got me an amazing rate and I once again scored it at a ridiculously low price.

Zero complaints.


EDIT:
If anyone is interested in an awesome car, my 2013 is for sale at the same dealership. Hilariously, I paid 20K for it with 45K on this clock. Ask for Sander. he's a new guy there and really great.

https://www.koonsclarksvillechevybuickg ... f9662d.htm

[uwmcscott]

Once I paid for a car in full by painting the entire interior of a house, how would that compare? I had a lot of residual, especially on my shoes.

[Rollin Hand]

Ok, Gear Junky, I have your analysis. Here's what I have to say:

1) The comparison is flawed because you don't factor in maintenance costs for the lease. Most people do the maintenance. To not do so could have you violating the lease terms, which could cost you a lot (don't lease a Hyundai with the 2.4 if you aren't going to change the oil). It also skews the numbers.

2) if someone is financing that new car, they aren't doing it over 3 years without a substantial downpayment. If they have that cash, they could buy a used car and have no payments.

3) It's a 2020 Sentra SV. At least you wouldn't be stuck with it.

[Gear_Junky]

1) The comparison is flawed because you don't factor in maintenance costs for the lease. Most people do the maintenance. To not do so could have you violating the lease terms, which could cost you a lot (don't lease a Hyundai with the 2.4 if you aren't going to change the oil). It also skews the numbers.

I'm ok with you disagreeing. I've had 6 leases in my life and nobody ever asks or checks for maintenance. They don't care - these cars are sold off to the third world. "Most people" do many things, like take their car to the dealership for oil changes or buy an extended warranty on everything. An analysis is not concerned with what "most people" do, only what one is considering doing.

2) if someone is financing that new car, they aren't doing it over 3 years without a substantial downpayment. If they have that cash, they could buy a used car and have no payments.

Having "no payments" is a comfort blankie. You spend all that cash and then you'll have mechanic payments. It's possible to prepay a lease and "have no payments" - it doesn't change the financials of it. This is a cognitive bias, not financial analysis. But yes, the big corps love using people's cognitive biases against them. They pay people to study these things.

Sometimes I intentionally get a store card or a new credit card with 12 or 18 months of 0% and put things on "payments" even though I can afford them. Because 0% is negative interest in the real world. And the cash I have could come in handy in other ways or emergency situations. And even a lousy savings account interest is more than 0%. What is this fear of "payments"? We all have monthly payments - mortgage/rent, utilities, insurance. I totally understand interest avoidance, I'm 200% for that, but other than that there's no point.

3) It's a 2020 Sentra SV. At least you wouldn't be stuck with it.

I agree, that was just an example. The method works on any vehicle (just not always in favor of the lease). I don't like the Sentra, I'd never buy it. I'd rather have a Civic in the same class. I happen to have a leased Sentra now (a 2019, I think). We downsized from a Rogue and it's an auxiliary vehicle for us. There's nothing special or great about it, but guess what, it's just fine. That's the thing - when your goal is to be frugal and economical (in favor of other things), you don't really care. It's a 3-year rental. I hope you don't worry too much about brand on a rental car

Anyway, I give up. Enjoy the savings. I am not trying to tell anyone what to do.

[Rollin Hand]

Well, one always has to do what is right for them. I used to buy cheap cars that were in good shape drive them for two years, and sell them for approximately what I paid. I had a friend with a newer car give me a hard time during this period, until I pointed out that his payments for the year were more than I paid for the car. And he had four years to go.

I drove that car for two years, had one major repair (clutch hydraulics rusted out - yay Ottawa winters) and sold it for $50 more than I paid.

Now, with two kids, safety and reliability mean more to me than cool or cheap.

I came close to leasing when my 2009 Mazda6's subframe rotted out. In the days before I found out about the coming recall, I thought I was going to have to get a car that weekend. Then Mazda paid for a rental for a month and a half while fixing my car, and it was all good.

[Chocol8]

Your numbers work out because you assume you would sell the used car for a substantial amount below what it will most likely be worth. That’s not what normal people would do, so the numbers will work out very differently.

Also, the maintenance thing is going to burn you one day. So many used car buyers value seeing the dealer maintenance history (car fax) so it makes a difference on whether the car becomes a CPO, or a dump at auction car. Everyone is getting wise to that so read your lease contract carefully.

[Chocol8]

Also, are those Edmunds numbers really correct for a Nissan? Over $1800 a year in maintenance and repairs in years 2 and 3 is a solid three times what it costs for my 5 and 6 year old German imports with a much higher sticker price, and my cars chew up expensive tires and require $100 oil changes with special certified oil.

What kind of maintenance does a new Sentra need? Are these things falling apart the minute you drive them off the lot?

[Gear_Junky]

I think we started out with assertions that my math didn't work. I believe I have shown that leases are not as expensive as the emotional argument purports. Beyond that one can pick out the details to infinity. And one should, if considering this route. Some of your points, gentlemen (dudes, guys, etc.) are valid and should not be excluded from analysis - I was just trying to say that sometimes lease is a frugal option. For me it has been "the" frugal option.

Some guys would rather change their oil and radiator fluid, work on brakes, etc., spend their time privately buying/selling used cars. Me, I'd rather spend a few hours working out Excel scenarios and get a hassle-free vehicle for 3 years.

I do read the lease contract every time. There is never verbiage that says you must prove maintenance with paperwork. Therefore I don't care what used car buyers care about. And again, most of these off-lease cars don't end up at US dealer lots, they bulk-sell them off to third world countries. They mostly care about exterior condition.

[PoodlesAgain]

.... And again, most of these off-lease cars don't end up at US dealer lots, they bulk-sell them off to third world countries. They mostly care about exterior condition.

Well, the Odyssey we bought came off a 3-year lease, with 8700 mi. and still with new-car smell! It now has 102,000 mi. I am totally convinced that this Ody was the 'beach' car for an out-of-state family.
In my neck of the woods. lots of out-of-towers with 2nd homes, or old folks not driving much, dropping out low-mile former leases.

[Chocol8]

I think we started out with assertions that my math didn't work.

Nothing has changed. You are still not using accurate comparable numbers. Believe whatever you want, the industry loves you for it.

[Blackened]

Oops!

[fatjack]

Well if you're too cheap to do maintenance on a lease, why would you do it on a car you're buying. fair comps would have you include or exclude on both.

[PoodlesAgain]

Wow, I learnt a lot about leases!

Update: souse has decided, it will be an Acura RDX!
Has the be BLUE though, not that many available used in that shade.

She can afford to go new, but we, older folks, do not drive enough to justify that.
The Bavarian X3 was the best ride experience though, and if I was her, I would take a chance.

[fatjack]

Poodles if it has to be the blue rdx and new is not going to hurt you financially go for it. Think of it as the last car she'll buy.