My bank's customer service sucks, so I need ftf help again.

[m78]

I would think the bank has a way to transfer that title to the buyer when he pays of your loan. You would have to be present to sign when they get the title.
Think of the title as a stock certificate. Ask the bank for a bank transfer certificate.

 

[O'Rattlecan]

Borrowing never makes sense. Ask all your broke friends, they love financing. Ask all your rich friends, they never financed a car, or maybe they financed one when they were young and dumb.

It can be convenient, but it's the most expensive way to operate a vehicle. Except leasing. That's more expensive-er. It's like borrowing except at the end you turn it in instead of having an asset.

Ryan

 

[1970Custom]

I would alter that slightly, borrowing usually never makes sense on vehicles. I've never seen a vehicle as a growing asset, sans something in the collector's market but that's a different topic.

Saving to pay cash for a house, in this day and age it's not feasible for 99% of people out there.

 

[O'Rattlecan]

I would alter that slightly, borrowing usually never makes sense on vehicles. I've never seen a vehicle as a growing asset, sans something in the collector's market but that's a different topic.

Saving to pay cash for a house, in this day and age it's not feasible for 99% of people out there.

That's probably true. It still injects a great deal of risk into your life, but at least it usually goes up in value, and at some point you have to pay someone to live somewhere.

Ryan

 

[polarbear]

Still not buying it....not even in this example.....stretch it out to 10 years or 15 years.....plus, I didn't see that you'd factor in the resale of the Taurus or Impala.....you also didn't factor in the increased cost of insurance on the newer vehicle versus owning one which can be several thousands of dollars per year depending on your driving record, type of car, etc.

The math still doesn't work out......but I do get the leasing part for certain types of consumers and/or businesses, but my math still says it costs more in the end.

1. I had a couple of grand depreciation built into the older vehicles. That's conservative. The math DOES work- IF you trade every 3-4 years.

2. Know what the spread is between a '03 Sable and a '14 Jeep Patriot 4X4 on my insurance policy? Less than $200/yr (same coverage). All of that is because of the 4X4 part- a 2wd would have actually been slightly cheaper (It's a lower insurance class than the Sable). The type of vehicle has more influence than the model year.

Now- all that being said. If you routinely keep your vehicle 10-15 years, leasing is NOT for you. I'd also argue new looks more attractive than used at that point. Why? I'm currently looking at Ford Fusions. A SE with the Sport Pkg can be had for about $22K, brand new, in my area. A used '14 with 20-30K miles is running $18-$19K. That few thousand $$$'s isn't worth losing that much warranty and a model year in my book. Spread that out over a longer term, and it's of no consequence at all.

Bottom line here- each deal stands on it's own merits.

Other bottom line- we ALL make a car payment either directly or indirectly. It all boils down to cost/mile driven.

 

[taxreliever]

I would alter that slightly, borrowing usually never makes sense on vehicles. I've never seen a vehicle as a growing asset, sans something in the collector's market but that's a different topic.

Saving to pay cash for a house, in this day and age it's not feasible for 99% of people out there.

BUT people do do it....so it's not impossible....however the endless argument of temporarily renting prior to and versus buying, like Ryan said, you have to live somewhere.

That's probably true. It still injects a great deal of risk into your life, but at least it usually goes up in value, and at some point you have to pay someone to live somewhere.

Ryan

 

[taxreliever]

1. I had a couple of grand depreciation built into the older vehicles. That's conservative. The math DOES work- IF you trade every 3-4 years.

2. Know what the spread is between a '03 Sable and a '14 Jeep Patriot 4X4 on my insurance policy? Less than $200/yr (same coverage). All of that is because of the 4X4 part- a 2wd would have actually been slightly cheaper (It's a lower insurance class than the Sable). The type of vehicle has more influence than the model year.

Now- all that being said. If you routinely keep your vehicle 10-15 years, leasing is NOT for you. I'd also argue new looks more attractive than used at that point. Why? I'm currently looking at Ford Fusions. A SE with the Sport Pkg can be had for about $22K, brand new, in my area. A used '14 with 20-30K miles is running $18-$19K. That few thousand $$$'s isn't worth losing that much warranty and a model year in my book. Spread that out over a longer term, and it's of no consequence at all.

Bottom line here- each deal stands on it's own merits.

Other bottom line- we ALL make a car payment either directly or indirectly. It all boils down to cost/mile driven.

1. Most of those that buy cash don't trade every few years, so we can at least agree that the math can work on trading that often.....again, not a trait for someone who pays cash for a vehicle......next, I think the depreciation hit is a little more, depending on the type of vehicle and original cost....cheaper vehicles, not so much.

2. Your insurance example is NOT going to be the norm.....insuring a vehicle for basic liability versus comp/collision is not going to be close......unless you're close to 100 years old with a perfect driving record and even then, it's still considerably more. For younger whipper snappers, the difference between liability and full coverage is going to be a CAR PAYMENT in itself and represent thousands of dollars annually.

My almost 10 year old King Ranch looks better than most 1 and 2 year old vehicles in my neighborhood.

My wife's almost 9 year old Expedition looks like most 1 and 2 year old vehicles in my neighborhood.

And both of my vehicles have always been the norm for our family. We'll buy 5-8 year old vehicles and keep them for 5-10 years before mechanically, it makes sense to purchase a new one.

Each deal will stand on it's own merits, but you'd have to be extremely creative math wise to come up with a real life example of where it ever makes sense to finance/lease versus paying with cash.

 

[1970Custom]

...2. Your insurance example is NOT going to be the norm.....insuring a vehicle for basic liability versus comp/collision is not going to be close......unless you're close to 100 years old with a perfect driving record and even then, it's still considerably more. For younger whipper snappers, the difference between liability and full coverage is going to be a CAR PAYMENT in itself and represent thousands of dollars annually....

FWIW, I've never made a full coverage insurance payment that equals anything significant, IMHO, even when I was younger... Around $600 annually for multiple rigs, bike included.

 

[taxreliever]

FWIW, I've never made a full coverage insurance payment that equals anything significant, IMHO, even when I was younger... Around $600 annually for multiple rigs, bike included.

In my practice and tenants I've rented to, I've seen insurance payments for liability only in the range of $2400 a year for unmarried kids under 24. Full coverage for the same individual (without accidents) goes over $5000....same with adding a kid on a parents policy.

When I first got my driver's license when I was 16 years old in California (no accidents, no tickets obviously) in the year 1990 (25 YEARS AGO) LIABILITY coverage ONLY was $120/month (OR $1440 A YEAR) for my $600 1969 Ford Falcon.

I think marriage brings the price down a lot, then other factors as well.

 

[taxreliever]

FWIW, I've never made a full coverage insurance payment that equals anything significant, IMHO, even when I was younger... Around $600 annually for multiple rigs, bike included.

I can't tell if the $600 was for full coverage or not?

Today, we insure my KR (full coverage), Expedition (full coverage), POS plow truck (liability only) for $1200 a year and both my wife and I have no tickets or accidents on our record.

Of course our two dents have classic insurance, but that's separate.

 

[taxreliever]

^^^and I shop and get quotes at least every other year from multiple companies directly as well as with local agencies, which is what I recommend my clients do as well.

 

[1970Custom]

My Vic and bike are just over $600 full coverage annually.

That's a crotch rocket with the owner under 30....

I think it also varies state to state. My old F100 was $96 full coverage when I was 16.

 

[polarbear]

1. Most of those that buy cash don't trade every few years, so we can at least agree that the math can work on trading that often.....again, not a trait for someone who pays cash for a vehicle......next, I think the depreciation hit is a little more, depending on the type of vehicle and original cost....cheaper vehicles, not so much.

2. Your insurance example is NOT going to be the norm.....insuring a vehicle for basic liability versus comp/collision is not going to be close......unless you're close to 100 years old with a perfect driving record and even then, it's still considerably more. For younger whipper snappers, the difference between liability and full coverage is going to be a CAR PAYMENT in itself and represent thousands of dollars annually.

My almost 10 year old King Ranch looks better than most 1 and 2 year old vehicles in my neighborhood.

My wife's almost 9 year old Expedition looks like most 1 and 2 year old vehicles in my neighborhood.

And both of my vehicles have always been the norm for our family. We'll buy 5-8 year old vehicles and keep them for 5-10 years before mechanically, it makes sense to purchase a new one.

Each deal will stand on it's own merits, but you'd have to be extremely creative math wise to come up with a real life example of where it ever makes sense to finance/lease versus paying with cash.

First, I've never had a car with liability-only insurance. Even Jenny's 20 yr old Camry pd. out $3500 in the total. Too much of a risk.

Second- cash purchases comprise less than 10% of the new car/truck business. Of that 10%, a good percentage aren't really cash- HELOC's, lines of credit, etc that show as cash to the dealer, but aren't really cash. In the higher end brands, leasing makes up a lions share of the business. BMW/Mercedes report over 80% of their total new car biz is actually leases. Don't forget that depreciation is built into a lease- not so a purchase... and it's a BIG expense.

Third- I've done all three, depending on the situation. I'm not creative, but I'm not your typical consumer either (30+ years in the biz will do that to you). Two examples- in '98 and '00 we leased Suburbans. In both cases, after employee and retail rebates, we had to bump the sales price around $100 because the selling price was lower than the residual. What's GMAC supposed to do, pay me to drive them? All of which is a not so subtle way of saying, when it comes to my personal vehicles, I'm a really big mooch, and it ain't my first rodeo either.

I defy you to crunch numbers on a purchase for those two vehicles vs. the lease. Just one example- but it all goes back to the "each deal stands on it's own merit."

Finally, I've never seen a situation where it made sense to finance as opposed to paying cash or leasing. But one thing has changed- 2-4% APR's aren't uncommon anymore for car finance contracts. As Ryan said with a house payment, you have to live somewhere. I'd also argue that, for working Americans, we need a reliable way to get to the workplace. In that context, financing a car (if all else is sensible about the deal) isn't the worst idea in the world.

 

[Fellro]

Only one thing I want to put out there... If everybody followed the path of least cost, there would be no used for any of us. I too prefer to not buy new or even newer as I don't want to pay all that, but if there were a low number of people buying new, then the companies would fail and then there would be none for anyone. Obviously that will not happen, so we have plenty of older used to choose from. I understand the financial sense of it all, but the plain hard truth is that someone has to be the fool and pay the higher numbers, or we all suffer. It also makes no sense to always berate someone for their choices, it is their issue, so let them live it. I do truly understand the fiscal sense of it, but it is their choice to spend the money as they choose. Jeb never said he was wanting to buy new, or complaining about the payments, so why must it turn into a lecture? For some people, it makes sense because they can't afford to hire work done, as they have no idea what to do with it themselves. For those of us that can do all the work ourselves, it doesn't make a lot of sense to do it. I can run a vehicle to 300,000 miles and not be bothered by it, because I can deal with most anything they throw at me. Someone that has to hire every bit done, it is not as financially sound to run an older vehicle because they have to hire every bit of their maintenance done, as well as any repairs that come along. It is a risk for those people to run outside of warranties. The next issue they see is shops that either just have no clue or are setting them up to rip them off. I just did a job for a co-worker that the trans shop had to know was the problem, the front pinion bearing was totally hosed, yet they charged them $900 for a tranny job and clutch but apparently couldn't tell the pinion bearing was gone. This went through 2-3 different places before coming to me. I didn't even have the first drive shaft bolt out and already figured out the problem. These kinds of things is why some people are better served by spending the money and keeping it under warranty. There are good arguments for both view points, and the numbers can be compared ten ways to Sunday, but in the end, it is the individual's choice to spend the money as they see fit. The OEM's depend on new sales, because without them, they will wither and die.

 

[1970Custom]

Holy crap Roger...

 

[taxreliever]

First, I've never had a car with liability-only insurance. Even Jenny's 20 yr old Camry pd. out $3500 in the total. Too much of a risk.

Second- cash purchases comprise less than 10% of the new car/truck business. Of that 10%, a good percentage aren't really cash- HELOC's, lines of credit, etc that show as cash to the dealer, but aren't really cash. In the higher end brands, leasing makes up a lions share of the business. BMW/Mercedes report over 80% of their total new car biz is actually leases. Don't forget that depreciation is built into a lease- not so a purchase... and it's a BIG expense.

Third- I've done all three, depending on the situation. I'm not creative, but I'm not your typical consumer either (30+ years in the biz will do that to you). Two examples- in '98 and '00 we leased Suburbans. In both cases, after employee and retail rebates, we had to bump the sales price around $100 because the selling price was lower than the residual. What's GMAC supposed to do, pay me to drive them? All of which is a not so subtle way of saying, when it comes to my personal vehicles, I'm a really big mooch, and it ain't my first rodeo either.

I defy you to crunch numbers on a purchase for those two vehicles vs. the lease. Just one example- but it all goes back to the "each deal stands on it's own merit."

Finally, I've never seen a situation where it made sense to finance as opposed to paying cash or leasing. But one thing has changed- 2-4% APR's aren't uncommon anymore for car finance contracts. As Ryan said with a house payment, you have to live somewhere. I'd also argue that, for working Americans, we need a reliable way to get to the workplace. In that context, financing a car (if all else is sensible about the deal) isn't the worst idea in the world.

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?

 

[taxreliever]

The reliability argument is another story because in reality, the majority of the "only cash" buyers in America will not buy brand new....they'll buy used (save 10's of thousands of dollars in the process), have a maintenance budget, maybe even a second used vehicle for when the other one is being fixed and will always get to and from work regardless of how many miles on their car or how old their car is.

 

[taxreliever]

Only one thing I want to put out there... If everybody followed the path of least cost, there would be no used for any of us. I too prefer to not buy new or even newer as I don't want to pay all that, but if there were a low number of people buying new, then the companies would fail and then there would be none for anyone. Obviously that will not happen, so we have plenty of older used to choose from. I understand the financial sense of it all, but the plain hard truth is that someone has to be the fool and pay the higher numbers, or we all suffer. It also makes no sense to always berate someone for their choices, it is their issue, so let them live it. I do truly understand the fiscal sense of it, but it is their choice to spend the money as they choose. Jeb never said he was wanting to buy new, or complaining about the payments, so why must it turn into a lecture? For some people, it makes sense because they can't afford to hire work done, as they have no idea what to do with it themselves. For those of us that can do all the work ourselves, it doesn't make a lot of sense to do it. I can run a vehicle to 300,000 miles and not be bothered by it, because I can deal with most anything they throw at me. Someone that has to hire every bit done, it is not as financially sound to run an older vehicle because they have to hire every bit of their maintenance done, as well as any repairs that come along. It is a risk for those people to run outside of warranties. The next issue they see is shops that either just have no clue or are setting them up to rip them off. I just did a job for a co-worker that the trans shop had to know was the problem, the front pinion bearing was totally hosed, yet they charged them $900 for a tranny job and clutch but apparently couldn't tell the pinion bearing was gone. This went through 2-3 different places before coming to me. I didn't even have the first drive shaft bolt out and already figured out the problem. These kinds of things is why some people are better served by spending the money and keeping it under warranty. There are good arguments for both view points, and the numbers can be compared ten ways to Sunday, but in the end, it is the individual's choice to spend the money as they see fit. The OEM's depend on new sales, because without them, they will wither and die.

I agree on most fronts of this post......the economic flow in America is dependent on foolish spending, ie: the recent housing market debacle that made millionaires out of hundreds of thousands of entrepreneurs as well as bankrupted hundreds of thousands of homeowners......the money spent and lost by the bankrupted basically flowed to the millionaires taking advantage.

Someone has to work at McD's/walmart/7 eleven for minimum wage for the economy to work.....someone has to overpay for vehicles. In economics, there are winners and losers and in most cases, the winners benefit from losers choices. The guy that initially bought my KR basically gave me a check for $25k for the depreciation on it over 6 years.

I would never intentionally berate someone for making a bad fiscal decision as it's their life, however, you can help/educate someone without denigrating them, which is always my motive.

Part of being fiscally prudent is surrounding yourself with good honest people in different areas of your life that you are not an expert at......as you fellas know, I am not great and tinkering on my vehicles, but after much research, asking around for many years, I have multiple options of mechanics that I would trust and never think anything after getting a bill from them.

 

[taxreliever]

My Vic and bike are just over $600 full coverage annually.

That's a crotch rocket with the owner under 30....

I think it also varies state to state. My old F100 was $96 full coverage when I was 16.

I lived in CA when I was in HS, so yeah, I'm sure states vary.

But, going off a current real life example, I just checked with my insurance provider and my $1200 annual policy for 3 vehicles goes down to $100 for the ENTIRE year for just liability (medical and uninsured motorists) for 3 vehicles; $8.33/month. I would say that's quite the difference.

 

[taxreliever]

Found this on my interweb search, pretty cool lease vs buy calculator (but that is assuming the buyers are buying and selling as often as the lessee is):

http://www.dinkytown.net/java/BuyvsLease.html