REVscene - Vancouver Automotive Forum


Welcome to the REVscene Automotive Forum forums.

Registration is Free!You are currently viewing our boards as a guest which gives you limited access to view most discussions and access our other features. By joining our free community you will have access to post topics, communicate privately with other members (PM), respond to polls, upload content and access many other special features. Registration is fast, simple and absolutely free so please, join our community today! The banners on the left side and below do not show for registered users!

If you have any problems with the registration process or your account login, please contact contact us.


Go Back   REVscene Automotive Forum > Automotive Chat > Vancouver Auto Chat

Vancouver Auto Chat 2016 VAC Community Head Moderator: Raid3n

Reply
 
Thread Tools
Old 04-17-2010, 12:05 AM   #1
I wish I was where I was when I wished I was here
 
hchang's Avatar
 
Join Date: Feb 2010
Location: West Coast
Posts: 4,854
Thanked 3,044 Times in 713 Posts
Buying vs. Leasing Guide for Dummies

Just thought I'd explain a bit and break down leasing vs buying out a car, maybe to help out some new and old revsceners as at first I was completely confused about the concept.

So, when is it best to buy out a car?
1. When you are literally buying out the car, and not borrowing money.
2. When you will drive over the allotted kms from leases
3. You rarely trade in your cars.

When is it best to lease?
Pretty much all the time, unless the previous 3 apply. Unless you own your own company.

So what is a lease?
Consider a lease as going to your local Budget, Dollar or Thrifty car rental dealership, and renting it for 3 or 4 years. That's pretty much leasing, minus the oil changes, maintenance and etc in between that is your responsibility, unless all that is covered under your warranty.

A predetermined percentage of the car is rented to you for a certain amount of years, which is usually 3 to 4. If you are pretty expereicned with this car buying gig you'd probably know that it usually ends up "upside down", meaning that you owe more on the car than it is worth.

If you are one that "needs" to always be driving the newest cars, or just "wants" to be always driving the newest cars on the market, then this negative amount of money would have to be dealt with. Cars depreciate faster than they get paid off

Let's say you are $3000 upside down. You are looking at a $15000 car. Well now you have to pay $18000 for it.

But wait, hchang, the dealership I went to showed me that they were paying it off and it's all good.

In reality, there isn't usually $3000 markup on new cars unless it's something $40,000 or more. There are many numbers the dealer can show you as a trade allowance of your pay off. Take a look at how much you are financing, subtract the interest, and do the math. You paid for it and it was hidden in your payments. While

With that being said, its just illusionary that the dealer is esperate to sell a car. But obviously, they aren't. It'd be like them losing roughly $3000 just to sell a car. Dealers don't "pay" somebody to take a car off their hands, or how else do they make money? Most numbers they present to you are fake.

Now, lets say I go into a dealership to lease a car. I turn in my lease, and looks at a new $15000 car. I start out on an even keel, and leases a car again and only pays the 50% of the car I am using.

Difference in payment:
Buyer - Financing $18000 - Monthly payment: $360
Leasee - Financing $8000 - Monthly payment: $160

Difference in amount financed/ car value as soon as you drive off the lot:
Buyer - Financing $18000. Drives off the lot in a car worth $12000 - Equity situation after 30 seconds of ownership: Negative $6000
Leasee - Financing $8000. Drives off in a car worth $12000

So what can I do with my lease after the term expires?
1. Trade it in and get a new car to lease.
2. If it is worth more than what the buyout is they can use it as money down when trading.
3. Sell it outright and make a profit.
4. Buy the buyout amount and keep the car. Spending less money than the example we used as the original buyer.

If the car depreciates in value, lease it.
But if the car will appreciate in value, then buy it.

Hope this is helpful and useful.
Advertisement
hchang is offline   Reply With Quote
This post thanked by:
Old 04-17-2010, 12:51 AM   #2
Need to Seek Professional Help
 
Join Date: Jun 2006
Location: 604
Posts: 1,049
Thanked 160 Times in 80 Posts
I failed you because you say it's "almost always best to lease". And what you say is straight out of a dealer's sales handbook.

Quote:
Originally Posted by hchang View Post
3. You rarely trade in your cars.
Problem no. 1. Cars = flushing money down the toilet.
More new cars, more often = financial diarrhea.

First thing is to get off the want or need to always have the latest and greatest.


Quote:
A predetermined percentage of the car is rented to you for a certain amount of years, which is usually 3 to 4. If you are pretty expereicned with this car buying gig you'd probably know that it usually ends up "upside down", meaning that you owe more on the car than it is worth.

If you are one that "needs" to always be driving the newest cars, or just "wants" to be always driving the newest cars on the market, then this negative amount of money would have to be dealt with. Cars depreciate faster than they get paid off
You're actually paying off the depreciation... and you're only "upside down" if you're financially retarTed. In other words, you've bitten off more than you can handle financially.

Depreciation is always highest in newest cars, so the more often you turn over cars on lease, the more you actually end up paying.

I'm quoting the stuff below for the WTF factor. Half of it makes no sense!

Quote:
Difference in payment:
Buyer - Financing $18000 - Monthly payment: $360
Leasee - Financing $8000 - Monthly payment: $160

Difference in amount financed/ car value as soon as you drive off the lot:
Buyer - Financing $18000. Drives off the lot in a car worth $12000 - Equity situation after 30 seconds of ownership: Negative $6000
Leasee - Financing $8000. Drives off in a car worth $12000

So what can I do with my lease after the term expires?
1. Trade it in and get a new car to lease.
2. If it is worth more than what the buyout is they can use it as money down when trading.
3. Sell it outright and make a profit.
4. Buy the buyout amount and keep the car. Spending less money than the example we used as the original buyer.
Re no 1 and 2, no. If the car is worth more than the buyout, the lessor will have to purchase the car and resell it to realize the profit (as per No. 3). The lessor cannot trade a leased car as it is not theirs to trade.

If the car is returned, one walks away (after paying possible charges such as excess milage or wear 'n tear).

Re No. 4... um, WTF. You generally will end up spending more money on lease + buyout than on financing a car from the get-go:
- lease rates are usually higher
- the buyout, if financed, stretches out the payments beyond the period if the car was financed initially


If the car depreciates in value, lease it.
But if the car will appreciate in value, then buy it.

Hope this is helpful and useful.[/QUOTE]
Blinky is offline   Reply With Quote
This post thanked by:
Old 04-17-2010, 12:58 AM   #3
Where's my RS Christmas Lobster?!
 
Join Date: Jan 2010
Location: rawr
Posts: 852
Thanked 1,207 Times in 225 Posts
thanks for taking your time to write that. a quick lil search on google gives me all the information i need.
rawr is offline   Reply With Quote
This post thanked by:
Old 04-17-2010, 01:09 AM   #4
My dinner reheated before my turbo spooled
 
Join Date: Jun 2008
Location: Vancouver
Posts: 5,944
Thanked 13,521 Times in 1,745 Posts
"I want lease superman car lol"


"lol now I have superman car I drive fast. Mexicano wash for me before I drive"


"... i fucked up lol"
__________________
PHOTOGRAPHY / FLICKR
1exotic is offline   Reply With Quote
Old 04-17-2010, 01:54 AM   #5
Banned (ABWS)
 
Join Date: Oct 2009
Location: BC
Posts: 306
Thanked 147 Times in 68 Posts
Quote:
Originally Posted by 1exotic View Post
"I want lease superman car lol"


"lol now I have superman car I drive fast. Mexicano wash for me before I drive"


"... i fucked up lol"
JiggaZed is offline   Reply With Quote
This post thanked by:
Old 04-17-2010, 03:45 AM   #6
Need my Daily Fix of RS
 
sleazyho's Avatar
 
Join Date: Mar 2010
Location: home
Posts: 273
Thanked 13 Times in 11 Posts
I thought most of us would buy used cars anyways
sleazyho is offline   Reply With Quote
Old 04-17-2010, 07:17 AM   #7
.
 
Domani's Avatar
 
Join Date: Aug 2001
Location: Richmond
Posts: 8,221
Thanked 83 Times in 59 Posts
good intention... thanks anyways.
__________________
NeoChaser.com
Domani is offline   Reply With Quote
This post thanked by:
Old 04-17-2010, 07:43 AM   #8
Banned (ABWS)
 
Join Date: Oct 2005
Location: BC
Posts: 741
Thanked 54 Times in 41 Posts
i got a better idea. do not finance cars and do not lease cars

buy a car that's between 2005-2007 and resell it after 2-3yrs because the depreciation in that time frame would be around 1000-5000$ dollars which is much less than leasing or financing a new car
fishing666 is offline   Reply With Quote
Old 04-17-2010, 08:06 AM   #9
Banned (ABWS)
 
Join Date: Jan 2010
Location: burnaby
Posts: 444
Thanked 32 Times in 22 Posts
DuhDang is offline   Reply With Quote
This post FAILED by:
Old 04-17-2010, 10:49 AM   #10
RS.net, where our google ads make absolutely no sense!
 
gearshifter's Avatar
 
Join Date: Sep 2008
Location: Vancouver
Posts: 933
Thanked 288 Times in 152 Posts
I didn't fail you for being a nice guy,

but...

If the car depreciates in value, lease it.
But if the car will appreciate in value, then buy it.

So the advice is to pretty much NEVER buy a car huh?
gearshifter is offline   Reply With Quote
This post thanked by:
Old 04-17-2010, 11:42 AM   #11
I *heart* Revscene.net very Muchie
 
Join Date: Jul 2007
Location: BC
Posts: 3,557
Thanked 3,813 Times in 957 Posts
Buy an F40.
flagella is offline   Reply With Quote
Old 04-17-2010, 06:09 PM   #12
Everyone wants a piece of R S...
 
no_clue's Avatar
 
Join Date: Jun 2006
Location: vancouver
Posts: 351
Thanked 45 Times in 30 Posts
Quote:
Originally Posted by gearshifter View Post
I didn't fail you for being a nice guy,

but...

If the car depreciates in value, lease it.
But if the car will appreciate in value, then buy it.

So the advice is to pretty much NEVER buy a car huh?
lol there are almost NO cars that appreciates in value. The only car I can buy following his advice is a lamborghini reventon.

Oh and the best reason to lease a car is when you have a business. Leasing is better than financing in the event that you lost your job and have to downsize, but I can't think of why leasing is better, having an asset is always #1
no_clue is offline   Reply With Quote
Old 04-17-2010, 07:08 PM   #13
Even when im right, revscene.net is still right!
 
Amaru's Avatar
 
Join Date: Feb 2004
Location: Victoria
Posts: 1,301
Thanked 649 Times in 133 Posts
Quote:
Originally Posted by hchang View Post
When is it best to lease?
Pretty much all the time, unless the previous 3 apply. Unless you own your own company.
You have this completely backwards. If you own a small business, leasing makes more sense, because you can write off the majority of car cost as a business expense, and thus decrease your taxable income.

Your comments about only buying a car that appreciates in value indicate that your general ignorance on the topic, imo... the only cars that actively appreciate are rare collector's cars, ie. McLaren F1, etc. No new car worth less than $100k that you can drive off a dealer's lot will appreciate. Ever.
Amaru is offline   Reply With Quote
This post thanked by:
Old 04-17-2010, 09:17 PM   #14
I contribute to threads in the offtopic forum
 
EmperorIS's Avatar
 
Join Date: Oct 2009
Location: home
Posts: 2,723
Thanked 3,743 Times in 823 Posts
EmperorIS is online now   Reply With Quote
This post thanked by:
Old 04-18-2010, 02:39 AM   #15
RS controls my life!
 
jackal's Avatar
 
Join Date: Oct 2005
Location: Burnaby
Posts: 746
Thanked 303 Times in 85 Posts
leasing makes no sense to me??? why would anyone want to pay out their ass for 4-5 years only to be right back where they started in the end? leasing works as mentioned for fleets and businesses and for people who want to drive a car that would otherwise be out of their price range. but for anyone else buying outright or financing is the best way to go. or in a perfect world if you were to buy a 60k car and had the cash up front and the car was offered at 0-0.9% financing then i would finance and throw the rest of the cash in a savings acount earning like 2% or more and make money off the interest in the end bringing the total price of the car much lower then any of the other options.
jackal is offline   Reply With Quote
Old 04-18-2010, 10:26 AM   #16
Rs has made me the woman i am today!
 
Qmx323's Avatar
 
Join Date: Dec 2008
Location: Richmond
Posts: 4,367
Thanked 2,058 Times in 672 Posts
Yeah I always thought leasing was bad?

Pay money for a car that you don't even keep after?
Qmx323 is offline   Reply With Quote
Old 04-18-2010, 11:09 AM   #17
Need to Seek Professional Help
 
Join Date: Jun 2006
Location: 604
Posts: 1,049
Thanked 160 Times in 80 Posts
Quote:
Originally Posted by Qmx323 View Post
Yeah I always thought leasing was bad?

Pay money for a car that you don't even keep after?
Saying that leasing is always bad is as wrong as saying that one should "always lease". That said, for the demographic of this board, leasing a car is usually a bad thing: there are people who are probably playing the "how low can I get the monthly payment game". In other words, living nearer the margins of their means.

Nothing really wrong with that, but it's often the same crowd that ends up having to sell a bunch of toys at loss to cover an unexpected emergency.

There are many situations, particularly business situations, where leasing makes the most sense due to capital, cash flow and tax implications.
Blinky is offline   Reply With Quote
Old 04-18-2010, 11:17 AM   #18
I STILL don't get it
 
Join Date: Aug 2008
Location: van
Posts: 452
Thanked 20 Times in 13 Posts
no matter what you do, financing, leasing or buying, you always get rip off by stealerships. we make up the name "stealership" for a reason
benwang is offline   Reply With Quote
Old 04-18-2010, 11:37 AM   #19
I STILL don't get it
 
Join Date: Aug 2008
Location: van
Posts: 452
Thanked 20 Times in 13 Posts
Quote:
Originally Posted by 1exotic View Post
"I want lease superman car lol"


"lol now I have superman car I drive fast. Mexicano wash for me before I drive"


"... i fucked up lol"
looks like its different cars to me
benwang is offline   Reply With Quote
Old 04-18-2010, 11:45 AM   #20
I STILL don't get it
 
Join Date: Aug 2008
Location: van
Posts: 452
Thanked 20 Times in 13 Posts
btw leasing cost more than financing
benwang is offline   Reply With Quote
Old 04-19-2010, 03:58 AM   #21
No Duplicate Accounts Allowed
 
Join Date: Apr 2007
Location: BC
Posts: 818
Thanked 70 Times in 28 Posts
Quote:
Originally Posted by jackal View Post
leasing makes no sense to me??? why would anyone want to pay out their ass for 4-5 years only to be right back where they started in the end? leasing works as mentioned for fleets and businesses and for people who want to drive a car that would otherwise be out of their price range. but for anyone else buying outright or financing is the best way to go. or in a perfect world if you were to buy a 60k car and had the cash up front and the car was offered at 0-0.9% financing then i would finance and throw the rest of the cash in a savings acount earning like 2% or more and make money off the interest in the end bringing the total price of the car much lower then any of the other options.

with lease, after 4 years if the car has depreciated alot, u have the choice not to buy it.

ex. 2008 g35x
finance. = spend 45k.
lease = spend total of 33k to lease for 4 years.
4 years later.
Assuming that the car is only worth 25k
finance = you lost "20k" to have the car for 4 years
lease = you lost 33k$ to use the car for 4 years. IF i return.
buyout turns out to be 17k. making money spent on the car 50k$.
so if i
buy out the car, then i spent total of 50k to have a 25k value car. i spent 5k more than financing.
if i dont buy out the car ive lost 13k compared to finance.

However, some factors compensate for the potential loss.
1. After 4 years, I will know the true market value of the car before i purchase it. .
2. I will have the choice of buying it based on 1.
3. Other factors such as ICBC claims, known car problems, can be taken into factor before i buy the car.
4. no hassle of selling the car if i need the money. mind you selling cars cost more now with HST.

but i guess it really depends on potential and type of car.
luxury cars depreciate alot more then eco cars, certain brands, etc.

Last edited by simsimi1004; 04-19-2010 at 04:05 AM.
simsimi1004 is offline   Reply With Quote
Old 04-21-2010, 12:49 PM   #22
Banned (ABWS)
 
Join Date: Aug 2009
Location: Vancouver
Posts: 190
Thanked 23 Times in 11 Posts
Pt20 is offline   Reply With Quote
This post thanked by:
This post FAILED by:
Old 04-21-2010, 01:08 PM   #23
Banned (BBM)
 
Join Date: Jul 2004
Location: Vancouver
Posts: 16,146
Thanked 627 Times in 368 Posts
^

you just saved the thread
Mugen EvOlutioN is offline   Reply With Quote
Old 04-21-2010, 01:35 PM   #24
RabidMod
 
RabidRat's Avatar
 
Join Date: Aug 2003
Location: SF Bay Area, CA
Posts: 5,680
Thanked 568 Times in 200 Posts
I do appreciate the effort hchang. And even if you're off on a couple things I think it's a great topic to bring up.

So I had a question for those of you who've had some experience in writing off lease payments. If I've purchased my vehicle outright, is there a provision for me to write off *depreciation* of the vehicle as a business expense? How about the interest on financing - could this be written off as a business expense?

Does the CRA care what kind of vehicle you're claiming for business use (within reason) as long as you have a good explanation, or are they very strict about it?
__________________
03 S2K | 07 R6 | 13 FJ TT
RabidRat is offline   Reply With Quote
Old 04-21-2010, 03:33 PM   #25
I answer every Emotion with an emoticon
 
q0192837465's Avatar
 
Join Date: Apr 2005
Location: Vancouver
Posts: 7,762
Thanked 375 Times in 181 Posts
Apart from business owners, commission based employees can also write off leases. That's why real estate agents generally lease cars.

If u'r not a business owner or a commission based employee, leasing car does not make financial sense. The predominant reason to lease is to get something that u can't otherwise afford. The interest rate on the lease is generally higher than the rate of return of the money u "saved" by not financing. So at the end u lose out both ways, higher interest charges & negative return. Don't get suckered by the sales guy into getting a higher end car with lower payment.
__________________
Ignorance is bliss

How I wish I can remain ignorant, why do I know so much?
q0192837465 is offline   Reply With Quote
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off



All times are GMT -8. The time now is 01:26 PM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
SEO by vBSEO ©2011, Crawlability, Inc.
Revscene.net cannot be held accountable for the actions of its members nor does the opinions of the members represent that of Revscene.net