New Car Deal

[cabinetman]

LOML is a very impetuous woman. Once she makes up her mind, it's now or never. Over the past several years she has had 4 new car leases. Each and every one, she got the bug for a new car, and cut her lease short. The result was that the balance of the lease got tacked on to the new one.

Yesterday she wanted to go back to the dealer that leased her last one, and wanted a new car...13 payments left on the lease. Well, I gotta give a thumbs up to the dealer. He let her out of the lease, and bought out the lease. She leased a new car with no carry over balance. She is tickled pink.

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[jdon]

Better cars than husbands, I suppose

[charliex]

I can relate to the "Once she makes up her mind". LOML has been talking about a new vehicle for several years. First a Prius then a Camry then 2 weeks ago Sunday she took a Suzuki Kazashi for a test drive. Monday at 4:30 PM she put Gilbert (Purple grape color, Neon) on C-list. Tuesday at 4:00 PM Gilbert was sold, and we had a new Suzuki. It was "Sweet sorrow". Nice new car but parting with a 12 year companion was tough.

[Bruce Cohen]

Hey Cab,
My lease is up next April, can I borrow her to "do the deal"
Bruce

[jimmy0x52]

Why leasing and not buying?

[jackellis]

Around here we pay cash and drive vehicles until their wheels fall off. New cars are great fun, but I'd rather spend my money seeing the world. Avoiding the sales and negotiating process is a bonus.

[Bruce Cohen]

Jimmy & Jackellis,
You're both right,
I find that giving the bank a big chunk of cash up front and having five years of high payments sucks, because most affordable cars have a crappy resale value.
Also, stuff always breaks after the warranty is over.
Its a lot easier, at least for me, to give the dealer a minimal amount of money and get a new car in three years.
Yeah, I know its not to financially sane, but it works for me.

Bruce

[cabinetman]

Jimmy & Jackellis,
You're both right,
I find that giving the bank a big chunk of cash up front and having five years of high payments sucks, because most affordable cars have a crappy resale value.
Also, stuff always breaks after the warranty is over.
Its a lot easier, at least for me, to give the dealer a minimal amount of money and get a new car in three years.
Yeah, I know its not to financially sane, but it works for me.

Bruce

Actually in some cases it makes more sense. If you pay for a car to own over 3-5 years, it's paid for, but it's value has depreciated. That's the time that repairs can break the bank. Our reasoning is that since there will be payments anyway for that period of time, why not get a new car every 3 years.

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[jimmy0x52]

fair enough. wasn't trying to start a fight, just wondering why.

[tommyt654]

Our experience is we trade her's in every 3 yrs ,she is a Publix employee and we get substantially lower payments thru her C.U, than any lease , we usually have no problems as most cars now carry 5 yr. transferable warrantys and we have only traded outside the brand 2 times in 8 yrs, on both occasions the new dealer payed off the loan and we negotiated thru Publix for 0 down almost exactly like a lease option,but I have found on the average we save about $1800 a yr vs the lease programs by purchasing and trading up in every case so far.Plus I had worked for dealerships several times in my life so I can barter with the best of them.Time will come tho we'll quit driving entirely I think as the vision starts to go as well as the proper mental capacity to operate a vehicle safely on the streets, Lookin towards a retirement community with a woodshop and bus in another 30 yrs or so

[Mildoc]

Around here we pay cash and drive vehicles until their wheels fall off. New cars are great fun, but I'd rather spend my money seeing the world. Avoiding the sales and negotiating process is a bonus.

I'm with you. I have been getting a new car about every 9-10 years, just as the old one starts having "too many" (ie, too costly) problems. I save enough each month (like a car payment to myself) to pay cash each time, keep the maintenance up to date, and keep my cars clean and shiny.

"New" just doesn't do it for me. No interest to the bank does.

[vaking]

I'm with you. I have been getting a new car about every 9-10 years, just as the old one starts having "too many" (ie, too costly) problems. I save enough each month (like a car payment to myself) to pay cash each time, keep the maintenance up to date, and keep my cars clean and shiny.

"New" just doesn't do it for me. No interest to the bank does.

So far I have also been the same type. I buy a car and drive it till it starts falling apart, then replace it with another new car. However, I do see advantages to leasing now. In the current economy higher-end cars are hard to sell. Manufacturers are resorting to unusual tactics to move those vehicles off the dealer lots. Examples of tactics - they offer lease terms that are favorable to people. For instance - cars that would be $500-$600 a month for 5 years to buy are offered for $300-$350 a month for a 3-year lease. During the lease you will pay about 1/3 of price of a new car. Presuming I can use the car for 10 years before it falls apart if I buy it - paying 1/3 of a price for 3 years looks attractive to me.
The way manufacturer thinks - let's move the car now and get 1/3 of a car price in the next 3 years. After the car comes back from the lease - let's have it inspected and sell the car as "certified pre-owned". If you compare prices of new vs certified-preowned - difference is usually less than 30%. So overall manufacturers expect to make more by leasing first and selling after than by selling ourtight.
Another consideration is efficiency. Cars are getting more fuel efficient. I expect that five years from now the car that I buy today will not be as efficient as cars that shall be available then. That means I will save money by replacing the car every 3 years with more efficient model.
The important part - for me lease vs buy is a financial decision, not emotionally driven. I have no emotions about cars, new or used. Calculations depend on specifics which car and at what time you need.
As for "no interest to the bank" - this is another emotion I don't have. Money is a tool and like all tools it has a price. Today interest rates are artificially kept low. If you have a good credit rating - you can get a new car loan at interest rate around 2% annually, may be even less. It means money now is cheap and I am sure it will not last long. If somebody offers me a loan at an interest that is less than inflation rate - I will take this loan even if I don't really need it and could pay cash.

[LCHIEN]

I'm with you. I have been getting a new car about every 9-10 years, just as the old one starts having "too many" (ie, too costly) problems. I save enough each month (like a car payment to myself) to pay cash each time, keep the maintenance up to date, and keep my cars clean and shiny.

"New" just doesn't do it for me. No interest to the bank does.

that's the way I operate, too. interest may be low now, but it's more than the .25% or less The bank is offering me for savings and checking accounts.

[jziegler]

that's the way I operate, too. interest may be low now, but it's more than the .25% or less The bank is offering me for savings and checking accounts.

Not always true. I drove off the lot with a brand new Prius (left over 2011) with 0% interest last weekend. There can be good specials offered sometimes.

[jimmy0x52]

For instance - cars that would be $500-$600 a month for 5 years to buy are offered for $300-$350 a month for a 3-year lease.

I just can't imagine making that high of a car payment indefinitely. If cars aren't emotional you really should be getting into something that's far less expensive even on lease terms.