Would u pay over $700 per month on a new GS350
#47
Without getting into numbers, just think of this logically.
Why would any company let you drive their car for a good amount of miles and buy it back from you at the end of the lease so you can go scott-free, be charging you lower than someone who buys one???
And we are talking about only $30-40k here. Don't give me the crap that you choose to lease and then use the other $20k in hand to "invest and do other things". Unless you are Warren Buffett, $20k is not going to turn into $100k within a standard loan period.
Leasing companies target people who want to enjoy luxury cars yet do not have the means to buy. So for little money, you can drive out a Lexus. That separate luxury car owners into two groups: Wannabes and realtors who lease, and the wealthy who can afford to buy.
Leasing is more expensive than buying, in whatever shape or form. Period.
#48
"As in Stocks/Bonds/cash. When you have a certain percentage of cash in a portfoilo, it's there to draw down in down market years. Instead of stocks in down years. You don't buy Junk with the Cash portion."
Heh heh, I hope you understand that the two I quoted you are senior floating rate Junk bond fund.. If you don't understand what would happen to those bonds when their respective companies go bk, I have sympathy to your 300K... Let's me throw you a couple possibility. First, someone who has other loan that may be higher than 7+% and can use the money to paydown those loan (e.g. credit card loan). Second, Lexus allow you to put multiple deposit to reduce the money factor (each month payment reduce the money factor by 0.0001 up to 9 payments. Payment are fully refunded after lease terminated. Gap insurance will pay for the car in the event of accident and leasee will still get the 9 payment back after handing Lexus the insurance check). I did that with a 2002 SC430 and a 2002 LS430 and reduced the payment including tax by about 110 or so a month... By doing the 9 payments, the 7+% rate all of a sudden get reduced to 5+%..
VR,
"Leasing is more expensive than buying, in whatever shape or form. Period."
In Dec 2003, I leased an 04 Accord EXL-V6 for my kids in California and bought myself an 04 Accord EXL-V6 sedan in Arizona. The only difference is that in California, the sales tax for lease apply only to the lease payment. In Az, I traded in a previous car I owned and the sales tax is the difference between the sales price of the new car and the trade in price of the old car. Leasing and buying sometimes really boil down to the term that you can negotiate.
If you step back and think about it. In both leasing and buying, we pay depreciation, interest and sales tax every year. In buying, one pay more than the yearly usage and build up equity. In leaseing, one only pay for the part that they use. So whether it is better to lease vs buy really boil down to the term that was offered by the bank or manufacturer. Sometime manufacturer would run special for lease but not purchase (and vice versa) and we just need to be aware of it.
However, there are 3 different things that is in favor of leasing. (1) if someone can write off their car, leasing is almost always better deal (especially in the price range of any Lexus). (2) Some manufacturer offer gap insurance on their lease (Lexus, Infiniti, Mercede, Honda do.. those are the one I leased before and know that they offer gap insurace as standard part of their lease). In the event of an accident, all one need to pay the manufacturer is the insurance check. good luck if someone purchase a car and total their car in the first couple year and hoping that they are not upside down.. (3) In a lease manufacturer has to set the residual (essentially the price that they will buy your car back at the end of the lease) to calculate your lease payment. Manufacturer assumpt the risk if the car cannot be sold more than or equal to the residual a few years later when the lease terminated . If the car is worth more than they predict, we can buy the car at the end of the lease.
Having said that I won't pay 700 monthly payment for a GS350 now. I just leased a 07 G35 fully loaded (Prem, Nav, Tech, wheel package) for 2 yr/12K mi with 1300 drive off and 435+ (without tax) per month. The money factor is 0.00112 (2.688%) and I put down 9 payment to reduce the money factor to 0.00022 (0.528%). The interest I paid for the entire 2 year is roughly $350 (but I do have to put down 5500 security deposit to make it happen). I realized that G35 is not in the same league of the GS350. But in my book, G350 is not 50% better car than a G35. However, if the GS460 is available in the low 600 range (with multiple deposit), it would be interesting.. There is a lot of competition out there and some manufacturer is deperate to move their cars..
by the way this is the formular to calculate lease payment. Take a look and see if you can decide if buying different than leasing:
Lease payment = monthly depreciation + rent + tax
Monthly depreciation = (cap cost - residual)/terms in months
rent = (cap cost + resdidual)*money factor
Tax depend on state. Some state demand full tax amount upfront. Other state like California just apply tax to the (monthly depr + rent).
for those who think buying is alway better, can you tell me what would be the monthly cost of owning your car for the first 3 years? I think you will find that you formular is almost identical to the lease one except you use interest rate/2400 instead of money factor and you pay more into the account each month ... hope that help.
Heh heh, I hope you understand that the two I quoted you are senior floating rate Junk bond fund.. If you don't understand what would happen to those bonds when their respective companies go bk, I have sympathy to your 300K... Let's me throw you a couple possibility. First, someone who has other loan that may be higher than 7+% and can use the money to paydown those loan (e.g. credit card loan). Second, Lexus allow you to put multiple deposit to reduce the money factor (each month payment reduce the money factor by 0.0001 up to 9 payments. Payment are fully refunded after lease terminated. Gap insurance will pay for the car in the event of accident and leasee will still get the 9 payment back after handing Lexus the insurance check). I did that with a 2002 SC430 and a 2002 LS430 and reduced the payment including tax by about 110 or so a month... By doing the 9 payments, the 7+% rate all of a sudden get reduced to 5+%..
VR,
"Leasing is more expensive than buying, in whatever shape or form. Period."
In Dec 2003, I leased an 04 Accord EXL-V6 for my kids in California and bought myself an 04 Accord EXL-V6 sedan in Arizona. The only difference is that in California, the sales tax for lease apply only to the lease payment. In Az, I traded in a previous car I owned and the sales tax is the difference between the sales price of the new car and the trade in price of the old car. Leasing and buying sometimes really boil down to the term that you can negotiate.
If you step back and think about it. In both leasing and buying, we pay depreciation, interest and sales tax every year. In buying, one pay more than the yearly usage and build up equity. In leaseing, one only pay for the part that they use. So whether it is better to lease vs buy really boil down to the term that was offered by the bank or manufacturer. Sometime manufacturer would run special for lease but not purchase (and vice versa) and we just need to be aware of it.
However, there are 3 different things that is in favor of leasing. (1) if someone can write off their car, leasing is almost always better deal (especially in the price range of any Lexus). (2) Some manufacturer offer gap insurance on their lease (Lexus, Infiniti, Mercede, Honda do.. those are the one I leased before and know that they offer gap insurace as standard part of their lease). In the event of an accident, all one need to pay the manufacturer is the insurance check. good luck if someone purchase a car and total their car in the first couple year and hoping that they are not upside down.. (3) In a lease manufacturer has to set the residual (essentially the price that they will buy your car back at the end of the lease) to calculate your lease payment. Manufacturer assumpt the risk if the car cannot be sold more than or equal to the residual a few years later when the lease terminated . If the car is worth more than they predict, we can buy the car at the end of the lease.
Having said that I won't pay 700 monthly payment for a GS350 now. I just leased a 07 G35 fully loaded (Prem, Nav, Tech, wheel package) for 2 yr/12K mi with 1300 drive off and 435+ (without tax) per month. The money factor is 0.00112 (2.688%) and I put down 9 payment to reduce the money factor to 0.00022 (0.528%). The interest I paid for the entire 2 year is roughly $350 (but I do have to put down 5500 security deposit to make it happen). I realized that G35 is not in the same league of the GS350. But in my book, G350 is not 50% better car than a G35. However, if the GS460 is available in the low 600 range (with multiple deposit), it would be interesting.. There is a lot of competition out there and some manufacturer is deperate to move their cars..
by the way this is the formular to calculate lease payment. Take a look and see if you can decide if buying different than leasing:
Lease payment = monthly depreciation + rent + tax
Monthly depreciation = (cap cost - residual)/terms in months
rent = (cap cost + resdidual)*money factor
Tax depend on state. Some state demand full tax amount upfront. Other state like California just apply tax to the (monthly depr + rent).
for those who think buying is alway better, can you tell me what would be the monthly cost of owning your car for the first 3 years? I think you will find that you formular is almost identical to the lease one except you use interest rate/2400 instead of money factor and you pay more into the account each month ... hope that help.
#49
Why would any company let you drive their car for a good amount of miles and buy it back from you at the end of the lease so you can go scott-free, be charging you lower than someone who buys one???
And we are talking about only $30-40k here. Don't give me the crap that you choose to lease and then use the other $20k in hand to "invest and do other things". Unless you are Warren Buffett, $20k is not going to turn into $100k within a standard loan period.
Leasing companies target people who want to enjoy luxury cars yet do not have the means to buy. So for little money, you can drive out a Lexus. That separate luxury car owners into two groups: Wannabes and realtors who lease, and the wealthy who can afford to buy.
Leasing is more expensive than buying, in whatever shape or form. Period.
And we are talking about only $30-40k here. Don't give me the crap that you choose to lease and then use the other $20k in hand to "invest and do other things". Unless you are Warren Buffett, $20k is not going to turn into $100k within a standard loan period.
Leasing companies target people who want to enjoy luxury cars yet do not have the means to buy. So for little money, you can drive out a Lexus. That separate luxury car owners into two groups: Wannabes and realtors who lease, and the wealthy who can afford to buy.
Leasing is more expensive than buying, in whatever shape or form. Period.
I am no expert in this area, but I agree with all of the points you've made here.
#50
And if those markets sour over the next 4 years, the easy 10% that I'm seeing thrown around here will come to haunt those that have taken a 50% hit on those investments. You guys are talking like the tech stock investors of the late 90's. A sure warning sign! Plug that into your lease calculator.
And guys, please, let us not throw around dumb terms and words to make us seem like we are above each other. Even my 15 year old nephew has learned about asset allocation which is really a way of saying I only have X amount of money available on hand. As for the tech market, I feel very, very sad for anybody who invested in the tech market during its boom and made anything close to 7.4% because, well basically they got screwed. During the boom in Asia before the market crashed, you put your money there NOW and didn't wait a single second because you knew that you would prety much double your money in no time, then triple it. Now yes, those people did lose a lot of their money but that is because of the fact that those markets, including the tech market of a decade ago, were all built on inflated numbers and purely non-quantitative figures, nothing more than hopes, dreams, and people who were investing in something that they had never seen before.
Bottom line is that leasing is cheaper than buying however you cut it. No matter what interest rate. If it is 3-4 percent, then it is still cheaper but the spread will be fairly thin and becomes almost a toss-up (a grand or two at most). But if you are not a complete sucker, then the spread really does widen. If ANYBODY wants to prove me wrong, they can run their own numbers or ask me to do calculations on any other car, and the result will be the same 99.9% of the time. Note that if you submit a simple lease calculation based on something you see on one of those smartinvestor sites, you are just not getting the point, in which case, you are a lost cause.
#51
That is by far the dumbest comment i have ever read.
Without getting into numbers, just think of this logically.
Why would any company let you drive their car for a good amount of miles and buy it back from you at the end of the lease so you can go scott-free, be charging you lower than someone who buys one???
And we are talking about only $30-40k here. Don't give me the crap that you choose to lease and then use the other $20k in hand to "invest and do other things". Unless you are Warren Buffett, $20k is not going to turn into $100k within a standard loan period.
Leasing companies target people who want to enjoy luxury cars yet do not have the means to buy. So for little money, you can drive out a Lexus. That separate luxury car owners into two groups: Wannabes and realtors who lease, and the wealthy who can afford to buy.
Leasing is more expensive than buying, in whatever shape or form. Period.
Without getting into numbers, just think of this logically.
Why would any company let you drive their car for a good amount of miles and buy it back from you at the end of the lease so you can go scott-free, be charging you lower than someone who buys one???
And we are talking about only $30-40k here. Don't give me the crap that you choose to lease and then use the other $20k in hand to "invest and do other things". Unless you are Warren Buffett, $20k is not going to turn into $100k within a standard loan period.
Leasing companies target people who want to enjoy luxury cars yet do not have the means to buy. So for little money, you can drive out a Lexus. That separate luxury car owners into two groups: Wannabes and realtors who lease, and the wealthy who can afford to buy.
Leasing is more expensive than buying, in whatever shape or form. Period.
Unfortunately you are wrong. The other 20k is going to be comprised of the difference between the lower lease and the higher finance payments that you would have, future valued until the end of your lease term. And I your investment knowledge is slightly faulty because I can assure you that Buffet makes lets just say more than 7.4% annually on his investments. Again i have shown my facts and they have been checked and verified by a CFA student (Chartered Financial analyst) who happens to be my TA, a friend of the family who was a partner in a leasing company for over 20 years and now runs an investment book over 100Mil, as well as myself who is a 4th year finance and accounting student in a specialized honors program. Now to that, I say if you can prove me wrong, please do so. PERIOD.
#52
Driver School Candidate
Join Date: Mar 2007
Location: Va
Posts: 8
Likes: 0
Received 0 Likes
on
0 Posts
If you step back and think about it. In both leasing and buying, we pay depreciation, interest and sales tax every year. In buying, one pay more than the yearly usage and build up equity. In leaseing, one only pay for the part that they use. So whether it is better to lease vs buy really boil down to the term that was offered by the bank or manufacturer. Sometime manufacturer would run special for lease but not purchase (and vice versa) and we just need to be aware of it.
However, there are 3 different things that is in favor of leasing. (1) if someone can write off their car, leasing is almost always better deal (especially in the price range of any Lexus). (2) Some manufacturer offer gap insurance on their lease (Lexus, Infiniti, Mercede, Honda do.. those are the one I leased before and know that they offer gap insurace as standard part of their lease). In the event of an accident, all one need to pay the manufacturer is the insurance check. good luck if someone purchase a car and total their car in the first couple year and hoping that they are not upside down.. (3) In a lease manufacturer has to set the residual (essentially the price that they will buy your car back at the end of the lease) to calculate your lease payment. Manufacturer assumpt the risk if the car cannot be sold more than or equal to the residual a few years later when the lease terminated . If the car is worth more than they predict, we can buy the car at the end of the lease.
Having said that I won't pay 700 monthly payment for a GS350 now. I just leased a 07 G35 fully loaded (Prem, Nav, Tech, wheel package) for 2 yr/12K mi with 1300 drive off and 435+ (without tax) per month. The money factor is 0.00112 (2.688%) and I put down 9 payment to reduce the money factor to 0.00022 (0.528%). The interest I paid for the entire 2 year is roughly $350 (but I do have to put down 5500 security deposit to make it happen). I realized that G35 is not in the same league of the GS350. But in my book, G350 is not 50% better car than a G35. However, if the GS460 is available in the low 600 range (with multiple deposit), it would be interesting.. There is a lot of competition out there and some manufacturer is deperate to move their cars..
Leasing is more expensive than buying, in whatever shape or form. Period.
Bottom line is that leasing is cheaper than buying however you cut it.
250 and Cut, it's too bad you guys are so intent on proving each other wrong that that there can't be a open discussion.
It would be interesting to people on the board to discuss what factors favor leasing over buying and vice versa so that they can try to apply it their personal circumstances. It's not just a straight NPV calculation(which involves debates on assumptions as we have seen). There are intangibles as well. Some are hard to quantify.
Back to the original question... No I would not ease for $700 per month. I would however check that G35 for $435 or an M or BMW 5 series (only because they have better lease deals).
#53
Forum Administrator
iTrader: (2)
Guys,
If you cannot discuss this topic without the personal comments it will be closed. Let's keep on topic without the overwhelming modest sidebar regarding personal portfolios and investment prowess please.
If you cannot discuss this topic without the personal comments it will be closed. Let's keep on topic without the overwhelming modest sidebar regarding personal portfolios and investment prowess please.
#54
this is the best post on this threat so far! I don't think you can really say either lease or buying is a better option without taking personal situation into consideration. What makes sense for one does not make sense for someone else. In the end what really matter is what method makes you happy and not the actual cash cost of buying or leasing a car.
This is a good summary. It really depends on individual factors. I would not lease a GS either at $700. Have not looked int it, but Mercedes, BMW and Infiniti generally have more attractive leases. An E550 has a promo lease of $699 per month. Sure, I think there is more upfront involved, but the E550 is in a different class from the GS350.
These kinds of comments are always wrong.
250 and Cut, it's too bad you guys are so intent on proving each other wrong that that there can't be a open discussion.
It would be interesting to people on the board to discuss what factors favor leasing over buying and vice versa so that they can try to apply it their personal circumstances. It's not just a straight NPV calculation(which involves debates on assumptions as we have seen). There are intangibles as well. Some are hard to quantify.
Back to the original question... No I would not ease for $700 per month. I would however check that G35 for $435 or an M or BMW 5 series (only because they have better lease deals).
These kinds of comments are always wrong.
250 and Cut, it's too bad you guys are so intent on proving each other wrong that that there can't be a open discussion.
It would be interesting to people on the board to discuss what factors favor leasing over buying and vice versa so that they can try to apply it their personal circumstances. It's not just a straight NPV calculation(which involves debates on assumptions as we have seen). There are intangibles as well. Some are hard to quantify.
Back to the original question... No I would not ease for $700 per month. I would however check that G35 for $435 or an M or BMW 5 series (only because they have better lease deals).
#55
"What makes sense for one does not make sense for someone else"
I agreed with the quote 100%. For those who said lease is always better, I would say the same thing as I said to those who said buying is always better, it is not true. It all depend on the terms that we can negotiate. Whether we lease or buy, we have to pay for the depreciation on the car (purchase price - selling price), financial cost (the cost of the money to finance your purchase or lease), and tax (either 100% of sales tax for purchase, tax on leasae payment only in some states, or 100% sales tax for lease in some states) either way.
The key to figure out whether buying or leasing is to figure out whether you get better terms when all 3 of the cost combined in one vs the other. It is not uncommon for manufacturer to offer rebate on purchase only and at the same time only offer reduce money factor or high residual value on lease program. Other time they may offer 0% finance on purchase only and no incentive for lease. I have yet to see a case without involving tax write off that a lease can beat 0% financed purchase (without the corresponding low money factor).
The point is that we need to educate ourselves on what is available out in the market and how to figure the real cost of owning or leasing a car. Hopefully we can find the best deal base on our own situation. There are way too many cars out there that manufacturer need to move and they are offering incentives all the time for our taking. Don't be blind to one side and forget to look across the lawn for the gold nugget that the manufacturer leave us.
I agreed with the quote 100%. For those who said lease is always better, I would say the same thing as I said to those who said buying is always better, it is not true. It all depend on the terms that we can negotiate. Whether we lease or buy, we have to pay for the depreciation on the car (purchase price - selling price), financial cost (the cost of the money to finance your purchase or lease), and tax (either 100% of sales tax for purchase, tax on leasae payment only in some states, or 100% sales tax for lease in some states) either way.
The key to figure out whether buying or leasing is to figure out whether you get better terms when all 3 of the cost combined in one vs the other. It is not uncommon for manufacturer to offer rebate on purchase only and at the same time only offer reduce money factor or high residual value on lease program. Other time they may offer 0% finance on purchase only and no incentive for lease. I have yet to see a case without involving tax write off that a lease can beat 0% financed purchase (without the corresponding low money factor).
The point is that we need to educate ourselves on what is available out in the market and how to figure the real cost of owning or leasing a car. Hopefully we can find the best deal base on our own situation. There are way too many cars out there that manufacturer need to move and they are offering incentives all the time for our taking. Don't be blind to one side and forget to look across the lawn for the gold nugget that the manufacturer leave us.
#56
You are making this too hard
Like I said previously:
Leasing = buying with a big loan and a guaranteed trade-in value
For those of you goofing around with npv calcs here are some tips:
PV =negotiated price on the car
fv = residual
interest rate = money factor x 2400
term = for comparison is the same for both
Still don't believe me? Those are the identical inputs to a loan payment calc (except for tax issues).
The issues that you are arguing about have to do with how long you own a car and how much cash you put down, not leasing vs buying.
The reason most people get screwed on leases is that like the first poster, too many people lease to get a payment that they can afford and don't understand them well enough to negotiate the deal points. For the same holding period and same out-of-pockets, leasing will be identical to buying unless: 1) you don't negotiate the price, 2) you don't pay attention to the interest rate, 3) the residual is unreasonable, or 4) you pay too many garbage fees.
Leasing = buying with a big loan and a guaranteed trade-in value
For those of you goofing around with npv calcs here are some tips:
PV =negotiated price on the car
fv = residual
interest rate = money factor x 2400
term = for comparison is the same for both
Still don't believe me? Those are the identical inputs to a loan payment calc (except for tax issues).
The issues that you are arguing about have to do with how long you own a car and how much cash you put down, not leasing vs buying.
The reason most people get screwed on leases is that like the first poster, too many people lease to get a payment that they can afford and don't understand them well enough to negotiate the deal points. For the same holding period and same out-of-pockets, leasing will be identical to buying unless: 1) you don't negotiate the price, 2) you don't pay attention to the interest rate, 3) the residual is unreasonable, or 4) you pay too many garbage fees.
Last edited by gstois; 06-26-07 at 07:31 AM.
#57
Driver School Candidate
Join Date: Jun 2007
Location: va
Posts: 27
Likes: 0
Received 0 Likes
on
0 Posts
heyy heyy all of you try to argue about paying cash is stupid,so do i?i pay cash for my and what else better than dive the car with out any payments?we worked hard for it,to invest or finan in these day?please do me a favor take the hike buy the car pay them cash ,dive with a peace of mind.
#59
heyy heyy all of you try to argue about paying cash is stupid,so do i?i pay cash for my and what else better than dive the car with out any payments?we worked hard for it,to invest or finan in these day?please do me a favor take the hike buy the car pay them cash ,dive with a peace of mind.
Last edited by topgun04; 06-27-07 at 11:03 PM. Reason: spelling mistake
#60
Like I said previously:
Leasing = buying with a big loan and a guaranteed trade-in value
For those of you goofing around with npv calcs here are some tips:
PV =negotiated price on the car
fv = residual
interest rate = money factor x 2400
term = for comparison is the same for both
Still don't believe me? Those are the identical inputs to a loan payment calc (except for tax issues).
The issues that you are arguing about have to do with how long you own a car and how much cash you put down, not leasing vs buying.
Leasing = buying with a big loan and a guaranteed trade-in value
For those of you goofing around with npv calcs here are some tips:
PV =negotiated price on the car
fv = residual
interest rate = money factor x 2400
term = for comparison is the same for both
Still don't believe me? Those are the identical inputs to a loan payment calc (except for tax issues).
The issues that you are arguing about have to do with how long you own a car and how much cash you put down, not leasing vs buying.