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Lease or buy outright #2825176
09/25/20 10:18 PM
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Kippy Offline OP
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I can either lease or buy outright cash for a new vehicle, what I cannot decide is which is better suited for me. My wifes car is a 2005 that while it still runs like a top with 74,000 miles on it, she wants a new car and at this stage of life she deserves what ever she asks for. Im keeping the 2005, removing the collision and using it as a everyday beater.
My thoughts are that I cannot do the repairs and maintenance like ive done on the 05 with a 2021, nor do I want to anymore, so keeping a car as long as I did the last one may not be the best idea.
Still being old school train of thought, I cant get my head wrapped around the idea of a lease and a constant car payment.
Whats worked for you and why...... Thanks for any and all advice and experience

Re: Lease or buy outright [Re: Kippy] #2825178
09/25/20 10:27 PM
09/25/20 10:27 PM
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Originally Posted by Kippy
I can either lease or buy outright cash for a new vehicle, what I cannot decide is which is better suited for me. My wifes car is a 2005 that while it still runs like a top with 74,000 miles on it, she wants a new car and at this stage of life she deserves what ever she asks for. Im keeping the 2005, removing the collision and using it as a everyday beater.
My thoughts are that I cannot do the repairs and maintenance like ive done on the 05 with a 2021, nor do I want to anymore, so keeping a car as long as I did the last one may not be the best idea.
Still being old school train of thought, I cant get my head wrapped around the idea of a lease and a constant car payment.
Whats worked for you and why...... Thanks for any and all advice and experience


IMHO, unless you're in a unique tax or personal position, never lease. Leasing is designed so you never own anything, make perpetual payments and to keep you in more expensive cars than you'd otherwise buy. Buy a leftover or a lease return. 2¢


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Re: Lease or buy outright [Re: Kippy] #2825179
09/25/20 10:28 PM
09/25/20 10:28 PM
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Irving, TX
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Leases are for those who plan on staying in payments, don't run many miles, and prefer a warranty over DIY.

It's not a bad thing but one suited to some people more than others.


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Re: Lease or buy outright [Re: Kippy] #2825199
09/26/20 12:46 AM
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Leasing is a good idea for someone who has plenty of cash flow and changes their mind a lot. If you have the cash flow to cover the payments then you just lease the car for a couple of years and turn it back in and get another one. It can work out okay if you really like the car and you don't get upside down on the buyout. There are of course some ways it can go really wrong.

Leasing also works for people who want to drive a nice car but are too poor to afford what they want to drive. They pay more in the long run but sometimes people can afford a monthly payment even though they can't afford to buy the car. You don't really want to be in that situation but sometimes people end up there. Leasing works pretty well for some business situations where you don't want to own the equipment, you just want to rent it or lease it. That doesn't sound like your situation unless you happen to own your own small business.

Re: Lease or buy outright [Re: AndyF] #2825201
09/26/20 01:06 AM
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Re: Lease or buy outright [Re: AndyF] #2825226
09/26/20 08:55 AM
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Originally Posted by AndyF
Leasing is a good idea for someone who has plenty of cash flow and changes their mind a lot. If you have the cash flow to cover the payments then you just lease the car for a couple of years and turn it back in and get another one. It can work out okay if you really like the car and you don't get upside down on the buyout. There are of course some ways it can go really wrong.

Leasing also works for people who want to drive a nice car but are too poor to afford what they want to drive. They pay more in the long run but sometimes people can afford a monthly payment even though they can't afford to buy the car. You don't really want to be in that situation but sometimes people end up there. Leasing works pretty well for some business situations where you don't want to own the equipment, you just want to rent it or lease it. That doesn't sound like your situation unless you happen to own your own small business.




Not sure i agree with much of what was said above.

Leasing allows a person to drive a car under warranty that makes your monthly outlay known. Regards cashflow, most everyone who has a new car makes payments on it.
With low finance rates and money factors( lease rates) it can, in many cases, be foolish to pay cash. Rates are lower than what an intelligent money manager can make on the money elsewhere.
The average person in the US who BUYS a new car, has it for 40 months. So, they never own it either before trading or selling it. The vast majority of loans are longer than 40 months. Many are 72/ 84 months. So a person can have negative equity( owe more than its worth) in many cases. Such is not the case with a lease.
When leasing, one should be accurate about how many miles you intend to drive, and if necessary, have extra miles factored into the equation, up front.
Regards the comments above about those that lease being poor, couldn't be more wrong. Leasees typically are more intelligent than many others, have eXcellent credit, are responsible, and know what they want, have done due diligence investigating what might be best for them.
People that drive new Mercedes, Lexus, etc, by far and away lease them, not buy them. Not the poor person mentioned. These are often rich people, not poor people at all


There can also be sales tax advantages in leasing. Here in Michigan, sales tax is 6%. You buy a new 30k car, you pay 1800 in sales tax. No matter how long you own( pay on) that vehicle, you are out that 1800 bucks. On a lease, you pay 6% sales tax on the payment. Example, you lease that 30k car for a 30 month lease. Payment is 300 per month.
You pay( including tax) 318 per month, so 6% of 300=18. So what is 18 bucks times 30. Its 540 dollars. So its almost 1300 cheaper than the tax on the buy was... that is a LOT.

Regards buying out your lease at lease end.... generally, if the lease payment was attractive, the buyout wont be. Seldom is it a good deal to buy it out. If the lease wasnt incentivized Looking at buyout figures might be worth looking at.

Last edited by B3422W5; 09/26/20 09:46 AM.

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Re: Lease or buy outright [Re: B3422W5] #2825234
09/26/20 09:43 AM
09/26/20 09:43 AM
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Originally Posted by B3422W5
Originally Posted by AndyF
Leasing is a good idea for someone who has plenty of cash flow and changes their mind a lot. If you have the cash flow to cover the payments then you just lease the car for a couple of years and turn it back in and get another one. It can work out okay if you really like the car and you don't get upside down on the buyout. There are of course some ways it can go really wrong.

Leasing also works for people who want to drive a nice car but are too poor to afford what they want to drive. They pay more in the long run but sometimes people can afford a monthly payment even though they can't afford to buy the car. You don't really want to be in that situation but sometimes people end up there. Leasing works pretty well for some business situations where you don't want to own the equipment, you just want to rent it or lease it. That doesn't sound like your situation unless you happen to own your own small business.




Not sure i agree with much of what was said above.

Leasing allows a person to drive a car under warranty that makes your monthly outlay known. Regards cashflow, most everyone who has a new car makes payments on it.
With low finance rates and money factors( lease rates) it can, in many cases, be foolish to pay cash. Rates are lower than what an intelligent money manager can make on the money elsewhere.
The average person in the US who BUYS a new car, has it for 40 months. So, they never own it either before trading or selling it. The vast majority of loans are longer than 40 months. Many are 72/ 84 months. So a person can have negative equity( owe more than its worth) in many cases. Such is not the case with a lease.
When leasing, one should be accurate about how many miles you intend to drive, and if necessary, have extra miles factored into the equation, up front.
Regards the comments above about those that lease being poor, couldn't be more wrong. Leasees typically are more intelligent than many others, have eXcellent credit, are responsible, and know what they want, have done due diligence investigating what might be best for them.
People that drive new Mercedes, Lexus, etc, by far and away lease them, not buy them. Not the poor person mentioned.
There can also be sales tax advantages in leasing. Here in Michigan, sales tax is 6%. You buy a new 30k car, you pay 1800 in sales tax. No matter how long you own( pay on) that vehicle, you are out that 1800 bucks. On a lease, you pay 6% sales tax on the payment. Example, you lease that 30k car for a 30 month lease. Payment is 300 per month.
You pay( including tax) 318 per month, so 6% of 300=18. So what is 18 bucks times 30. Its 540 dollars. So its almost 1300 cheaper than the tax on the buy was... that is a LOT.

Regards buying out your lease at lease end.... generally, if the lease payment was attractive, the buyout wont be. Seldom is it a good deal to buy it out. If the lease wasnt incentivized Looking at buyout figures might be worth looking at.



"Leasees typically are more intelligent than many others, have eXcellent credit, are responsible, and know what they want, have done due diligence investigating what might be best for them."


Not necessarily true. Looks like a pretty subjective statement. Any facts to back that up? Intelligence, responsibility, knowing what they want, etc; not anymore than someone that does not lease.







Last edited by GMP440; 09/26/20 09:44 AM.
Re: Lease or buy outright [Re: GMP440] #2825241
09/26/20 09:54 AM
09/26/20 09:54 AM
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Portage,michigan
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Originally Posted by GMP440
Originally Posted by B3422W5
Originally Posted by AndyF
Leasing is a good idea for someone who has plenty of cash flow and changes their mind a lot. If you have the cash flow to cover the payments then you just lease the car for a couple of years and turn it back in and get another one. It can work out okay if you really like the car and you don't get upside down on the buyout. There are of course some ways it can go really wrong.

Leasing also works for people who want to drive a nice car but are too poor to afford what they want to drive. They pay more in the long run but sometimes people can afford a monthly payment even though they can't afford to buy the car. You don't really want to be in that situation but sometimes people end up there. Leasing works pretty well for some business situations where you don't want to own the equipment, you just want to rent it or lease it. That doesn't sound like your situation unless you happen to own your own small business.




Not sure i agree with much of what was said above.

Leasing allows a person to drive a car under warranty that makes your monthly outlay known. Regards cashflow, most everyone who has a new car makes payments on it.
With low finance rates and money factors( lease rates) it can, in many cases, be foolish to pay cash. Rates are lower than what an intelligent money manager can make on the money elsewhere.
The average person in the US who BUYS a new car, has it for 40 months. So, they never own it either before trading or selling it. The vast majority of loans are longer than 40 months. Many are 72/ 84 months. So a person can have negative equity( owe more than its worth) in many cases. Such is not the case with a lease.
When leasing, one should be accurate about how many miles you intend to drive, and if necessary, have extra miles factored into the equation, up front.
Regards the comments above about those that lease being poor, couldn't be more wrong. Leasees typically are more intelligent than many others, have eXcellent credit, are responsible, and know what they want, have done due diligence investigating what might be best for them.
People that drive new Mercedes, Lexus, etc, by far and away lease them, not buy them. Not the poor person mentioned.
There can also be sales tax advantages in leasing. Here in Michigan, sales tax is 6%. You buy a new 30k car, you pay 1800 in sales tax. No matter how long you own( pay on) that vehicle, you are out that 1800 bucks. On a lease, you pay 6% sales tax on the payment. Example, you lease that 30k car for a 30 month lease. Payment is 300 per month.
You pay( including tax) 318 per month, so 6% of 300=18. So what is 18 bucks times 30. Its 540 dollars. So its almost 1300 cheaper than the tax on the buy was... that is a LOT.

Regards buying out your lease at lease end.... generally, if the lease payment was attractive, the buyout wont be. Seldom is it a good deal to buy it out. If the lease wasnt incentivized Looking at buyout figures might be worth looking at.



"Leasees typically are more intelligent than many others, have eXcellent credit, are responsible, and know what they want, have done due diligence investigating what might be best for them."


Not necessarily true. Looks like a pretty subjective statement. Any facts to back that up? Intelligence, responsibility, knowing what they want, etc; not anymore than someone that does not lease.








Not subjective at all. Based on 31 years in the car business. 15 as a general manager, 10 as a dealer principle.
For one thing, those who lease have good credit, that shows responsibility. Some who buy have bad credit, do buy here, pay here, high interest loans, etc. Its not true 100% of the time, but it is way more often than not. I would say those intent on leasing who walk into a dealership by and large have better credit scores than others.
When you have pulled thousands of credit bureau’s over the years you see this is true. In other words, lesees generally are more qualified buyers than others.
Walk into a new Lexus showroom, probably 75-80% of those customers lease. Most of those people are extremely qualified and can pay for a car however they want to.

Last edited by B3422W5; 09/26/20 09:59 AM.

69 Dart GTS A4 Silver All steel, flat factory hood, 3360race weight
418 BPE factory replacement headed stroker, 565 lift solid cam
Best so far, 10.40 @127 1/4
1.41 best 60 foot
6.60 at 103.90 1/8

Re: Lease or buy outright [Re: B3422W5] #2825256
09/26/20 10:38 AM
09/26/20 10:38 AM
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As a dealer, perhaps you can tell us something, on average does a dealership make a bigger profit on a customer who leases, or one who purchases a car with a loan?
I remember once some years ago I was trying to buy an Audi, and the salesman was pushing leasing pretty hard. In his pitch he asked if I had a business of some sort, as if I did I could write off the lease payments. This was over 15 years ago, I don’t know if tax laws are different now, but if that is the case, that might explain why high end car buyers often lease, many are lawyers, business owners, sales reps etc who use their cars for business and can write off the leasing, not because they are smarter or have higher credit ratings than the average guy.

Re: Lease or buy outright [Re: Mastershake340] #2825260
09/26/20 10:50 AM
09/26/20 10:50 AM
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that might explain why high end car buyers often lease, many are lawyers, business owners, sales reps etc who use their cars for business

If they were leasing, wouldn't they hit the mileage cap pretty quick? Or are there different standards if its being used for business?


popcorn


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The dream is dead, long live the dream.......😥
Re: Lease or buy outright [Re: Kippy] #2825265
09/26/20 11:03 AM
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Just buy it, BUT:

Have your wife test drive it for more than a few miles. Maybe even rent whatever her choice of car is over a weekend to make darn sure that's really what she wants.

I was in the same boat as you a couple years ago. It was time for a new ride, and I was prepared to pay cash. Wait to talk to the dealership before you tell them you're gonna pay cash. They offered me a 4 year, 0% loan, which (for me) was a no-brainer. Interest rates are almost nothing...just something to consider.

Re: Lease or buy outright [Re: SattyNoCar] #2825266
09/26/20 11:03 AM
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Originally Posted by Satilite73

that might explain why high end car buyers often lease, many are lawyers, business owners, sales reps etc who use their cars for business

If they were leasing, wouldn't they hit the mileage cap pretty quick? Or are there different standards if its being used for business? popcorn


You can have higher mileage limits written into your lease, up front. I think the extra cost would wipe out the "monthly savings" pretty quickly.


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Re: Lease or buy outright [Re: SattyNoCar] #2825267
09/26/20 11:05 AM
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Originally Posted by Satilite73

that might explain why high end car buyers often lease, many are lawyers, business owners, sales reps etc who use their cars for business

If they were leasing, wouldn't they hit the mileage cap pretty quick? Or are there different standards if its being used for business?


popcorn


Just depends. I own my own business and I rarely put more than 5,000 miles a year on my business vehicle. Just because you own a business doesn't mean you drive a lot.

Re: Lease or buy outright [Re: Kippy] #2825270
09/26/20 11:37 AM
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Lease or buy? That's certainly up to you. But, it's not a great time to spend your cash on a car. If you choose to buy........ keep your cash invested and get a low/no interest loan. You can likely borrow for less than 3%. My last truck loan was 0% for 60 months. I now lease a new truck every 3 years. I like having the warranty, a new reliable ride and the change of pace associated with having something different every 3 years. 3 years works perfect for me....all I have to do is change oil and rotate tires. Good luck whatever your choice.


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Re: Lease or buy outright [Re: AndyF] #2825279
09/26/20 12:05 PM
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Originally Posted by AndyF
Originally Posted by Satilite73

that might explain why high end car buyers often lease, many are lawyers, business owners, sales reps etc who use their cars for business

If they were leasing, wouldn't they hit the mileage cap pretty quick? Or are there different standards if its being used for business?


popcorn


Just depends. I own my own business and I rarely put more than 5,000 miles a year on my business vehicle. Just because you own a business doesn't mean you drive a lot.


Fair enough. I guess I was thinking of Houston where you can drive almost 100 miles and still be in Houston............. shock bawling


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Re: Lease or buy outright [Re: 70gtx440dana] #2825280
09/26/20 12:07 PM
09/26/20 12:07 PM
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My first lease was in 2006 - a 2006 Ram Quad Cab 4x4 Hemi - the sticker was around $36,000 as I recall. I put a total of $600.00 down, & my monthly payment was $162.00/mo. This was for 27 months. That's $4974.00. I probably could have bought the same truck new for $32,000 + tax - add on another $1920.00 for the tax, plus with other dealer doc fees & such, I'd be at $34,000. $34,000 financed at 5 years at 0% interest, would cost $567.00/month. Do the math. After 7 years, I'd be ready for another truck, & in Michigan, my 7 year old truck would be getting rusty most likely, & I might be able to sell it for $12,000. Then, I'd want another new one, but by 2013 that same truck new would be a $42,000 truck.

I was leasing at 10,000 mile/yr. as I don't drive it that much. Leasing worked beautifully for me - I drove a new truck every 2 years or so. I leased a 2006, 2008 & bought the 2008 off lease for a GREAT residual, then leased a 2012, 2014, 2016, & just a couple years ago bought a 2017 for a great price. The most I ever put down at lease inception was $600.00, & my highest payment was $272.00/mo. It all boils down to this: if you are going to drive anything, it is not going to be for free. If you buy a used beater, you are going to be paying someone to repair it, or you are going to be wrenching on it. Two years ago, I bought my wife a nice 2013 Edge while on a business trip in Vegas - it was mint & only had 63,000 miles on it. Paid $13,000 for it. Almost as soon as I got it home, it started "eating." Needed better tires for our winters here, then things started going wrong mechanically (probably because it is a Ford product - never again!), some things fairly major. Anyway, this turned out to be a bad deal for us! We are now looking at getting either a brand new Durango, or a lower mileage nice 2017+ used or certified one.

Leasing would be great for her if she does not drive many miles (under 10k a year), IF the lease deals are good! Personally, I would never pay over $275.00/mo. for any lease, & I would never put down more than around $600.00 at inception. Those were just my thresholds. Either way, none of us will never drive for free.


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Re: Lease or buy outright [Re: Mastershake340] #2825331
09/26/20 02:06 PM
09/26/20 02:06 PM
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Originally Posted by Mastershake340
As a dealer, perhaps you can tell us something, on average does a dealership make a bigger profit on a customer who leases, or one who purchases a car with a loan?


laugh2 devil Go git 'em, MasterShake!!!! up

Don't believe any of the nonsense, credit rating, tax advantage, warranty, the ever-caring dealership, blah, blah, blah. They spout those lies because it benefits THEM, not you.

At the end of the day, all you have to do is take the best cash price on a vehicle and compare it to the all-in numbers of leasing or should I say renting tonguue Use the standard rule of depreciation of 30% when you drive it off the lot, 20% the second year, and 10% every year after that to compare to the same time period of renting.

And when you do, you'll realize the only people who rent are people who can't afford a new vehicle but don't mind throwing money away.

The only time I wished I leased was when I got a new truck that was a POS within the first 6 months. The dealer refused to do warranty work on it, because, they didn't care: they had my check. I could have drove to their front window, threw the keys on their desk and walked away from it if it was rented.

I couldn't give that glorious Blunder Motors product away: my Dodge dealer had to send it to auction





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Re: Lease or buy outright [Re: SattyNoCar] #2825356
09/26/20 04:11 PM
09/26/20 04:11 PM
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Originally Posted by Satilite73
Originally Posted by AndyF
Originally Posted by Satilite73

that might explain why high end car buyers often lease, many are lawyers, business owners, sales reps etc who use their cars for business

If they were leasing, wouldn't they hit the mileage cap pretty quick? Or are there different standards if its being used for business?


popcorn


Just depends. I own my own business and I rarely put more than 5,000 miles a year on my business vehicle. Just because you own a business doesn't mean you drive a lot.


Fair enough. I guess I was thinking of Houston where you can drive almost 100 miles and still be in Houston............. shock bawling



Yeah that would be different. In my situation almost all of my local suppliers are within 10 miles of my shop so I can pick up parts from the laser cutter and take them to the plater without driving more than a few miles. I drive 40 miles a couple of times a month to the dyno shop and that is the longest trip I take for business. Of course there are traveling salesmen who drive 30,000+ miles a year but that isn't me.

Re: Lease or buy outright [Re: Sunroofcuda] #2825357
09/26/20 04:16 PM
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Originally Posted by Sunroofcuda
My first lease was in 2006 - a 2006 Ram Quad Cab 4x4 Hemi - the sticker was around $36,000 as I recall. I put a total of $600.00 down, & my monthly payment was $162.00/mo. This was for 27 months. That's $4974.00. I probably could have bought the same truck new for $32,000 + tax - add on another $1920.00 for the tax, plus with other dealer doc fees & such, I'd be at $34,000. $34,000 financed at 5 years at 0% interest, would cost $567.00/month. Do the math. After 7 years, I'd be ready for another truck, & in Michigan, my 7 year old truck would be getting rusty most likely, & I might be able to sell it for $12,000. Then, I'd want another new one, but by 2013 that same truck new would be a $42,000 truck.

I was leasing at 10,000 mile/yr. as I don't drive it that much. Leasing worked beautifully for me - I drove a new truck every 2 years or so. I leased a 2006, 2008 & bought the 2008 off lease for a GREAT residual, then leased a 2012, 2014, 2016, & just a couple years ago bought a 2017 for a great price. The most I ever put down at lease inception was $600.00, & my highest payment was $272.00/mo. It all boils down to this: if you are going to drive anything, it is not going to be for free. If you buy a used beater, you are going to be paying someone to repair it, or you are going to be wrenching on it. Two years ago, I bought my wife a nice 2013 Edge while on a business trip in Vegas - it was mint & only had 63,000 miles on it. Paid $13,000 for it. Almost as soon as I got it home, it started "eating." Needed better tires for our winters here, then things started going wrong mechanically (probably because it is a Ford product - never again!), some things fairly major. Anyway, this turned out to be a bad deal for us! We are now looking at getting either a brand new Durango, or a lower mileage nice 2017+ used or certified one.

Leasing would be great for her if she does not drive many miles (under 10k a year), IF the lease deals are good! Personally, I would never pay over $275.00/mo. for any lease, & I would never put down more than around $600.00 at inception. Those were just my thresholds. Either way, none of us will never drive for free.


Those are all good points. Driving a car costs money. Sometimes it is pay me now or pay me later. If you get lucky you get to drive cheap while the next guy (or the previous guy) paid more than their share. I bought a lease return car for my daughter and it has been fantastic. The car was super inexpensive and it has had zero problems. The worst case is buying a new car that turns out to be a lemon. In that case it would be great to have a lease since you can just dump the lemon and move on. Leasing a car does increase the cost a bit but it gives you a "try before you buy" option. I wouldn't recommend leasing for most people but there are some people that it works for. Which is probably why it exists. If it didn't make sense for at least a few people then it wouldn't exist.

Re: Lease or buy outright [Re: Mastershake340] #2825505
09/27/20 12:29 AM
09/27/20 12:29 AM
Joined: Jan 2003
Posts: 11,701
Portage,michigan
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B3422W5 Offline
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B3422W5  Offline
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Joined: Jan 2003
Posts: 11,701
Portage,michigan
Originally Posted by Mastershake340
As a dealer, perhaps you can tell us something, on average does a dealership make a bigger profit on a customer who leases, or one who purchases a car with a loan?
I remember once some years ago I was trying to buy an Audi, and the salesman was pushing leasing pretty hard. In his pitch he asked if I had a business of some sort, as if I did I could write off the lease payments. This was over 15 years ago, I don’t know if tax laws are different now, but if that is the case, that might explain why high end car buyers often lease, many are lawyers, business owners, sales reps etc who use their cars for business and can write off the leasing, not because they are smarter or have higher credit ratings than the average guy.


If your car is used for business, why would how you pay for it matter regards using it for a write off?
Regards making more or less money on a car..... the majority of new car sales i have been involved with here in Michigan are either employee pricing or supplier/ family member pricing.
In all those cases the lease and buy price use the same figure to work from.
Typically, these days, buyers shop a lease payment on a given car at several dealerships, if they dont have Employee/ supplier/ family discount.
In most cases, one or more dealers pull their pants down and [censored] the car. The salesman makes what is called a “flat” on such deals. Typically a flat at many stores is 100-150 bucks on the sale. Obviously, even a guy selling 20 cars a month, 2 or 3 grand making flats isnt gonna pay the bills working 50-70 hours a week in a store.
Mixing in a few used car deals helps the wallet. Sometimes the manufacturer offers bonus money on certain models. Salesman might get a “ spiff” on extended warranties, etc the finance guys sells on his deals. Little here, little there.
BTW... we own all our cars, and cars i drive for business( out of state auctions, etc) we get tax advantages from for putting miles on them

Last edited by B3422W5; 09/27/20 12:33 AM.

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