It really must vary state to state. I called my State Farm agent, and asked (out of curiosity) if I would save much if I dropped full coverage and went down to liability + comprehensive. It would have saved me something like $12 a month, and the bulk of my costs were liability oriented. It's weird either way.

Ryan

I"m lazy and didn't read all the posts.

1) have him go online and make the payoff payment using his credit card/bank account.
2) pay you the difference in the purchase price.

P.S. I hate Wells Fargo Dealer Services.

taxreliever said:

I truly live for discussions like these.......I don't have a ton of time to dedicate right now, but would like to spend some time (over time) on it for sure......

New 2015 Expedition: $63980

Cash purchase: Based on current depreciation tables, after 36 months, the vehicle is worth $23033, which shows it actually costs the owner $40947 if he sells the vehicle for FMV.

Lease purchase: I assumed no interest on both cash and lease for purposes of this example assuming those (and sales tax) are equal for both. The lease payments, according to current dealership lease rates for this vehicle come out to $40891 for 36 months (based on Ford.com and Motortrend.com again assuming 0% interest and $0 sales tax).

Cash purchase after 108 months: actually cost the owner $63980.

Lease purchase after 108 months (three 36 month leases assuming the prices of expeditions don't go up in 9 years): actually cost the owner $122,673.

So, unless I'm missing something, the cash purchase owner above has approximately $60k to spend on maintenance and upkeep over the years as now the vehicle is getting older and up there in mileage. That would be roughly $8500 a year or $715 a month in costs for both of these scenarios to come out the same fiscally, except the lease owner has something new and shiny for the previous 6 years and the cash owner's vehicle is starting to look more and more used. I also didn't figure in the additional insurance as some believe the cost of full coverage isn't much different than liability, which as I've said has not been my experience.

So, is it safe to say that if the cash owner had to put in a new transmission every single year (from year 4-9) he's owned the vehicle at $4250 (half of the $8500 just for illustration purposes) he'd save $30k over the leased owner? And if NO maintenance, he'd save $60k?

Click to expand...

The Expedition is probably a poor example for purposes of this discussion, because it's depreciation curve most closely resembles that of a stock market crash. Ford also does not support the leases of Expy's, and it makes sense- this bodystyle is in it's 13th year of production (No R&D, plant/equipmnt costs to amortize out). The Expedition is a poster child for buying late model used. We've owned three of them- all bought at about a yr old, all with under 20K miles, and all for 50% of new MSRP or less. FWIW, actually made money on two of them when we sold them. Like I said- not my first rodeo.

Not sure where the $40891 lease payment total came from. That's about $1100/mo.... which leases you a new Mercedes S550 or a Jaguar XJ. Ford will lease you a new Expedition for about $439/mo with $5,000 cash down (!). That really isn't a deal, but totals up around $15,000. Which would still be cheaper than buying it, because $15K won't even touch the first year's depreciation on that truck.

A more sensible deal would be a new Escape SE 4WD @ $209/mo for 24 mo, with $2800/down, or a Fusion for $189/mo with $2500/down. Those aren't the best lease deals out there, but about as good as it gets as far as Ford is concerned.

***************

So let's talk about aggressive lease deals.

New '15 Chevy Equinox. MSRP $25765. $2500 down, 36 month lease @ $154/mo. Residual value $15027 (but it really won't be worth that. GM subsidizes that part). Total of payments- $8044 (plus the down). Of note, sales tax is paid on the lease payment, NOT the selling price of the vehicle.

That's one example- Toyota, Nissan, GM, Hyundai, KIA, and Chrysler are the most aggressive on their leases at the moment, but this is a moving target. Nissan Altima, $111/mo w/$2900 down, and Cadillac SRX for $339/mo with $2500 down would be another. From a manufacturers point of view, leasing provides:

1. A ready supple of late model used vehicles to their dealer body.
2. Customer retention- customer must always return the leased vehicle to the selling dealer. Dealer always gets another shot at them when they're ready to move on.
3. Service retention. Self explanatory.

polarbear said:

The Expedition is probably a poor example for purposes of this discussion, because it's depreciation curve most closely resembles that of a stock market crash. Ford also does not support the leases of Expy's, and it makes sense- this bodystyle is in it's 13th year of production (No R&D, plant/equipmnt costs to amortize out). The Expedition is a poster child for buying late model used. We've owned three of them- all bought at about a yr old, all with under 20K miles, and all for 50% of new MSRP or less. FWIW, actually made money on two of them when we sold them. Like I said- not my first rodeo.

Not sure where the $40891 lease payment total came from. That's about $1100/mo.... which leases you a new Mercedes S550 or a Jaguar XJ. Ford will lease you a new Expedition for about $439/mo with $5,000 cash down (!). That really isn't a deal, but totals up around $15,000. Which would still be cheaper than buying it, because $15K won't even touch the first year's depreciation on that truck.

A more sensible deal would be a new Escape SE 4WD @ $209/mo for 24 mo, with $2800/down, or a Fusion for $189/mo with $2500/down. Those aren't the best lease deals out there, but about as good as it gets as far as Ford is concerned.

***************

So let's talk about aggressive lease deals.

New '15 Chevy Equinox. MSRP $25765. $2500 down, 36 month lease @ $154/mo. Residual value $15027 (but it really won't be worth that. GM subsidizes that part). Total of payments- $8044 (plus the down). Of note, sales tax is paid on the lease payment, NOT the selling price of the vehicle.

That's one example- Toyota, Nissan, GM, Hyundai, KIA, and Chrysler are the most aggressive on their leases at the moment, but this is a moving target. Nissan Altima, $111/mo w/$2900 down, and Cadillac SRX for $339/mo with $2500 down would be another. From a manufacturers point of view, leasing provides:

1. A ready supple of late model used vehicles to their dealer body.
2. Customer retention- customer must always return the leased vehicle to the selling dealer. Dealer always gets another shot at them when they're ready to move on.
3. Service retention. Self explanatory.

Click to expand...

From a manufacturing standpoint, leasing and purchasing new is good for business....that we can agree on. The points on this thread about smart buying are from a consumer stand point.....leasing and purchasing, not so great a deal no matter how you do the math....there are better ways to purchase cars and save money is my point.

I only used the expy example because you mentioned large SUV's in your first few responses.

Using your aggressive lease deals:

Lease 3 new cars for 3 years:
$2500 down x3 = $7500
$5544 lease payments x3 = $16,632
Total money out of pocket - 24,132 + add any excessive penalty charges of excessive wear/damage and over the limit mileage as well as the increase in insurance say in the latter years of ownership.

Purchase 1 new car, kept for 9 years:
$25765 - less depreciation of $23000 = total out of pocket $23000 + any possible repairs and maintenance.

Even your SUPER AGGRESSIVE deal doesn't add up and for what? Something that smells new every few years and has a fewer more scratches?



The example above doesn't work in reality because a smart buyer will buy a 1-5 year old vehicle with 10-30k miles on it where approximately 50% of the depreciation hit was taken by the previous owner.....a more realistic example of a consumer leaser and a smart consumer buyer is this:

Lease 3 new cars for 3 years:
$2500 down x3 = $7500
$5544 lease payments x3 = $16,632
Total money out of pocket - 24,132 + add any excessive penalty charges of excessive wear/damage and over the limit mileage as well as the increase in insurance say in the latter years of ownership.

Purchase the same car but 3 years old with 20k miles on it for $9k, instead of paying a monthly payment for something he'll never own, he puts it in the bank for repairs/maintenance/new cash purchase in the future.
After 9 years Total money out of pocket is $9k for the vehicle, $9k for $1000/year repairs and maintenance (high, but good for this example) plus $7,632 cash in the bank for his next cash purchase.

The person leasing the new car 3 times over that period (with your aggressive deal example) paid $13,764 more than the person that bought the 3 year old car over a 9 year period.

The bottom line for me, based on how I purchase vehicles and based on your examples above of how one could purchase a vehicle, I would spend less (FAR LESS ACTUALLY) over time for vehicles than the people in your examples.

The money I save:
1) doesn't lessen the quality of the vehicles I drive
2) allows me to invest in businesses that produce income for my family
3) allows me to build wealth faster than if I didn't save

I don't condemn/judge those that finance new or lease....people can do what they want and it doesn't bother me.....I just say, there's a better/smarter way to do it.

My BIL bought a Focus brand new (financed for 7 years) and paid more for it than I did my King Ranch.....quite a difference in vehicles......the difference? He didn't have the cash. If he tried to finance anything close to the kind of vehicle my King Ranch is, he'd have paid more than double what I paid for it.