Despite good economy, many still in trouble with car loans.
02-26-19, 09:43 AM
#196
Lexus Fanatic
Unless you're paying cars off in 2 -3 years which most people don't, they have 60 month loans and buy a new car in 5-7 year anyways so how is that any different than leasing? You're basically financing a car every 5-7 years most of your life. Nobody keeps cars 20 years anymore. By the time you're done paying off your car your warranty is out and you start going into the high mile area and issues arise and the first thought, I need a new car. I actually think these new cars are meant to be disposed of after 6 years. It's a giant scam, especially with the Germans, all their newer models start self destructing after 4 years.
I just sometimes wonder how these conclusions are drawn, especially when it comes to German cars. Are they from reliable and valid data, or 100% conjecture? Again with the all, like the nobody. My car is 12 y.o. purchased new, and had only one issue in its life. That's 3X the suggested 4 yr. scam/self-destruct interval.
02-26-19, 09:48 AM
#197
Lexus Fanatic
I would say at least 7 years after the initial 36 mo. loan period. Don't borrow for 60 mos. that's not a good idea imho. Once a car is over 120 mos., I think it's gravy, get rid of it or keep driving it, pick your poison. But "kids" today are on to it, they don't want to pay for something that is likely used only 2 hours per day on average--they want to pay for what they use, not for something to sit idle. Technology is what makes that possible.
02-26-19, 09:58 AM
#199
While I’ve never leased a car in my life and our current 4 cars have combined 500k miles on them (and 43 years between them - thank you 2 college age kids), spending some time on the lease hackr forum has definitely warmed me up to leasing. There are certainly deals to be had, where buying the same vehicle would not make any sense whatsoever.
02-26-19, 11:27 AM
#200
Unless you're paying cars off in 2 -3 years which most people don't, they have 60 month loans and buy a new car in 5-7 year anyways so how is that any different than leasing? You're basically financing a car every 5-7 years most of your life. Nobody keeps cars 20 years anymore. By the time you're done paying off your car your warranty is out and you start going into the high mile area and issues arise and the first thought, I need a new car. I actually think these new cars are meant to be disposed of after 6 years. It's a giant scam, especially with the Germans, all their newer models start self destructing after 4 years.
02-26-19, 11:40 AM
#201
drives cars
While I’ve never leased a car in my life and our current 4 cars have combined 500k miles on them (and 43 years between them - thank you 2 college age kids), spending some time on the lease hackr forum has definitely warmed me up to leasing. There are certainly deals to be had, where buying the same vehicle would not make any sense whatsoever.
That being said, this is all theory-speak. I am leasing now and don't plan to for my next car. Sure, it's nice to have had a brand-new car basically worry-free, but it's a Lexus - if I can find one with reasonably low (but not too low...) miles, I'll get a lot more car for my money. I am realizing, too, that having a brand-new car isn't a priority for me anymore. I like new cars, yes, but I am driving a car that's almost three years old, and it doesn't feel old to me yet.
02-26-19, 12:23 PM
#203
I resent you calling me a nobody (j/k). My 1998 Maxima purchased new is still in the driveway, as is a 2006, 2007, and 2011 cars. Only the 2006 was purchased used. I guess the logic is as long as everyone is jumping off a bridge, it's fine to follow them off the cliff.
I just sometimes wonder how these conclusions are drawn, especially when it comes to German cars. Are they from reliable and valid data, or 100% conjecture? Again with the all, like the nobody. My car is 12 y.o. purchased new, and had only one issue in its life. That's 3X the suggested 4 yr. scam/self-destruct interval.
I just sometimes wonder how these conclusions are drawn, especially when it comes to German cars. Are they from reliable and valid data, or 100% conjecture? Again with the all, like the nobody. My car is 12 y.o. purchased new, and had only one issue in its life. That's 3X the suggested 4 yr. scam/self-destruct interval.
02-26-19, 12:23 PM
#204
Lexus Fanatic
Thread Starter
02-26-19, 12:25 PM
#205
I believe you are talking a very small percentage here. Unless you have different statistics these are the ones I pulled. The average new-car loan now is at 65 months, a duration previously unheard of, according to Experian Automotive, an arm of the credit-monitoring and research company. Such loans represented some 17% of new-car loans, up from 11% in 2009.
02-26-19, 12:27 PM
#206
Absolutely. The quicker the better. Jill is correct. I know that some on Car Chat have argued for investing the money instead, and let returns from the investment pay off an extended car loan. A hard sell.....but I'm not convinced. In my book, the quicker out of debt, the better.
02-26-19, 12:35 PM
#207
Lexus Fanatic
Thread Starter
Just because you take a 60 month loan doesn't mean you have to pay the car off in 60 month. It just gives you lower payments and more flexibility. You can still pay the car off in 3 if you want but it gives you the flexibility of not using all your disposable cash. One month I may want to only pay 500 a Month vs. 1200 that a short term loan would be.
Yes, I agree. But that doesn't contradict anything I said earlier. Even if one takes out an 84-month (7-year) loan, which some lenders are now offering to get monthly payments as low as possible, it's still the same principle.....the sooner you're out of debt, the better.
Last edited by mmarshall; 02-26-19 at 12:38 PM.
02-26-19, 12:59 PM
#208
Lexus Fanatic
Yes, I agree. But that doesn't contradict anything I said earlier. Even if one takes out an 84-month (7-year) loan, which some lenders are now offering to get monthly payments as low as possible, it's still the same principle.....the sooner you're out of debt, the better.
02-26-19, 01:30 PM
#209
I can walk out right now and get a 0% 36/72m on a truck, which is common during these truck sales months and especially when the model year ends and they want to get rid of last years models. Its your loss if you want to waste what is essentially free money to borrow.
Last edited by 4TehNguyen; 02-26-19 at 01:47 PM.
02-26-19, 01:30 PM
#210
Leasing is an interesting 'trap' game. You have to pay a good chunk up front to get the keys and begin driving. Then you're trapped in it for x number of months or if you can get out of the lease in a swap arrangement. I did some math and compared to current vehicle depreciation. Somehow the dealer comes out head with 10% of the value of the car in their pocket. Eg if value of car is $60k, when lease is over, they are already ahead in the game with a $6k profit. The burden is on the dealer to fix things up for resale. There is no burden on the leasee to 'sell' it other than to turn it in. The leasee also has first dibs to buy it, but it may not reflect the 'market price' for it. (eg car is priced higher than current market value, which makes it stupid to continue ownership unless you're really really like the car and happy with it).
The first 3-4 years are the best years of a car and designed to perform well through any lease arrangement. The dealer will not make much money here. The 2nd half of a car's life is when the dealer recoups $$ through maintenance services at 60/90/120k mile points and of course through any unexpected maint items that could drain your wallet dry.
It was interesting to see the comment about german cars self destructing after year 4. It has a valid point. Dealers are independent franchises of the flagship brand(s). They're there to sell cars and make $$ off the services/maintenance. The maintenance ticket items that may cost $1500 and up are huge profit funnels. At the end of the car's life time, what the car's profit to the OEM can also become the dealer's revenue through lifetime service and maintenance. Eg if the OEM makes $20k profit on a car, it is also a chance for the dealer to earn $20k over 10 years of services. It's on the OEM's shoulders to create exciting cars that the dealers can sell and service.
Tesla has came in as a disruptor to this model. The state to state laws protecting independent franchises enables and coddles the OEM & dealer relationship. Tesla comes up with a 21st century sales model and grass roots referrals. The demand for cars is pre-baked in and manufacturing will have to scale up accordingly. Instead of coming out with futuristic i3 or volt derived fugly designs, Tesla puts in a simplistic, practical, minimalistic, oh boy my gosh it really works 'smart' car experience. The dramatic reduction in parts needing to be replaced due to non-internal combustion engine -- changes the service requirements. How they do service for 21st century smart cars will be closely watched. Will the service 'vehicle' come to you? Will it be a smart service network? How to do this efficiently without a physical dealership presence. The $$ for a dealer to serve Tesla profitably not going to be there. It's certainly an exciting and confusing time while this gets sorted. When enough volume happens, it has a way to resolving small and big bumps in the road. As it stands, Tesla has all the 'experience' from s/3/x issues to ramp up the model Y SUV to the max production capability. Of course it will be S3XY when all is said and done. Buyers are changing their mindset from $20-40k ICE engine options to tesla as a 'forever' car (ownership a lot longer than 6 years). Cheaper per mile to run it, the longer you own it instead of the other way around and fill up the wallets of dealers via services.
Lease or buy, it comes down to cost to operate it per mile. Most buyers do not look at a vehicle purchase from this perspective. A real simple example is buying an 8 pack of AA batteries for $6.00 It may cost .75 cents per battery individually. That's as much the buyer is willing to spend at the time. Not too far from this 'bin' of batteries in smaller quantity, is a 60 pack for $22.00 bringing cost per battery down to .37 cents each. Your better deal long term is the larger quantity. It's far easier to justify spending $6 than an additional $16 on top of it. Leases are a sneaky way to make car seem more affordable than purchasing outright over 4-7 years. Those who lease successfully probably don't care if there's a sucking sound out of their wallet at a tune of $1k per month when earning more than $20k per month. If that's how they want to enjoy life, so be it. The smart car buyers will turn time and depreciation into their friend, find low mileage deals during the low maintenance periods (years 2-5), and avoid being cornered into a high maintenance trap.
The first 3-4 years are the best years of a car and designed to perform well through any lease arrangement. The dealer will not make much money here. The 2nd half of a car's life is when the dealer recoups $$ through maintenance services at 60/90/120k mile points and of course through any unexpected maint items that could drain your wallet dry.
It was interesting to see the comment about german cars self destructing after year 4. It has a valid point. Dealers are independent franchises of the flagship brand(s). They're there to sell cars and make $$ off the services/maintenance. The maintenance ticket items that may cost $1500 and up are huge profit funnels. At the end of the car's life time, what the car's profit to the OEM can also become the dealer's revenue through lifetime service and maintenance. Eg if the OEM makes $20k profit on a car, it is also a chance for the dealer to earn $20k over 10 years of services. It's on the OEM's shoulders to create exciting cars that the dealers can sell and service.
Tesla has came in as a disruptor to this model. The state to state laws protecting independent franchises enables and coddles the OEM & dealer relationship. Tesla comes up with a 21st century sales model and grass roots referrals. The demand for cars is pre-baked in and manufacturing will have to scale up accordingly. Instead of coming out with futuristic i3 or volt derived fugly designs, Tesla puts in a simplistic, practical, minimalistic, oh boy my gosh it really works 'smart' car experience. The dramatic reduction in parts needing to be replaced due to non-internal combustion engine -- changes the service requirements. How they do service for 21st century smart cars will be closely watched. Will the service 'vehicle' come to you? Will it be a smart service network? How to do this efficiently without a physical dealership presence. The $$ for a dealer to serve Tesla profitably not going to be there. It's certainly an exciting and confusing time while this gets sorted. When enough volume happens, it has a way to resolving small and big bumps in the road. As it stands, Tesla has all the 'experience' from s/3/x issues to ramp up the model Y SUV to the max production capability. Of course it will be S3XY when all is said and done. Buyers are changing their mindset from $20-40k ICE engine options to tesla as a 'forever' car (ownership a lot longer than 6 years). Cheaper per mile to run it, the longer you own it instead of the other way around and fill up the wallets of dealers via services.
Lease or buy, it comes down to cost to operate it per mile. Most buyers do not look at a vehicle purchase from this perspective. A real simple example is buying an 8 pack of AA batteries for $6.00 It may cost .75 cents per battery individually. That's as much the buyer is willing to spend at the time. Not too far from this 'bin' of batteries in smaller quantity, is a 60 pack for $22.00 bringing cost per battery down to .37 cents each. Your better deal long term is the larger quantity. It's far easier to justify spending $6 than an additional $16 on top of it. Leases are a sneaky way to make car seem more affordable than purchasing outright over 4-7 years. Those who lease successfully probably don't care if there's a sucking sound out of their wallet at a tune of $1k per month when earning more than $20k per month. If that's how they want to enjoy life, so be it. The smart car buyers will turn time and depreciation into their friend, find low mileage deals during the low maintenance periods (years 2-5), and avoid being cornered into a high maintenance trap.