Rollin Hand wrote: ↑Sat Oct 03, 2020 4:26 pm
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/