Leasing ???
Melting Slicks
Joined: Dec 2005
Posts: 2,956
Likes: 2
From: Ontario
Thought about it but never did it on any vehicle,something about paying for something you own gives me more satisfaction and at the end of 72 months it's ALL mine.And still worth a hell of a lot since Vettes don't depreciate as other vehicles and that goes a long way towards a down payment if I wanted to upgrade to the C7 someday. IMHO buy it,don't rent it.
If you lease for 3 years and then buy it on a note and pay it down for 4 more years you are no different than what you just described.
Technically you could write a lease down to zero if you wanted to (we've done it at work for certain things).
The key to leasing is it's an easier write off (for those that have such a luxury), you only "owe" the lease amount, not the whole car value amount, and you can give it back at a set time, which essentially gives you the peace of mind of a fixed depreciation amount.
It may make you feel better to have a loan, but either way the cost is "similar".
Cheers.
Racer
Joined: Jun 2006
Posts: 410
Likes: 0
From: Berwick Louisiana
I'm not sure why some people are so against leasing. A lease is just an alternative form of financing. Speaking as a former car salesman, the average car, purchased either even or with little down, on a 60 month note will usually break even (balance = trade in) around the 3 year mark. As others have said, if you're going to keep the car for 3 years and trade you wouldn't have any equity anyway. Big advantage for individuals to lease is you can buy a much more expensive car for a lower payment. You could lease a loaded 3 or 4LT GS or even a Z for the payment of a 1LT coupe. Ignore the "if you can't afford the payment" crowd, a lower payment is a lower payment. What kind of moron pays more than he has to. If you do decide to lease, do the best deal you can and do not let the sales people know you're considering a lease until the deal is done and you're in the finance office. I have seen people come into the dealership looking for a montly payment on a lease and watched managers scamble to add stuff to the car because we could lease the car at sticker and still be under thier payment goal. You must also read the lease agreement very carfully. Some require that the car be equiped "as delivered." I've seen people get screwed at turn in because they were charged for every rock chip and smudge on the car and even get hit because they had an aftermarket stereo, even though it was a significant upgrade from the stocker.
Le Mans Master
Joined: Feb 2002
Posts: 5,394
Likes: 281
From: cumming ga
OK. So I have great pricing on a 2011 Grand Sport in cyber gray from a local dealer. Just about to finalize finances and somebody at work says, hey why own a depreciating asset? Lease the thing for 3 years and you will always be in a car less than 3 years old.
Good point. Never leased before and the calculations involve a "secret " formula called money factor.
I am aware of milage restrictions and inability to do mods on a lease vehicle
I would appreciate input from those of you who lease before I purchase a "depreciating asset"
Thanks.
Good point. Never leased before and the calculations involve a "secret " formula called money factor.
I am aware of milage restrictions and inability to do mods on a lease vehicle
I would appreciate input from those of you who lease before I purchase a "depreciating asset"
Thanks.
z51vett
Melting Slicks
Joined: Oct 2010
Posts: 2,314
Likes: 4
From: Cape May, NJ; Guntersville, AL; Orange Beach, AL
Well I wouldn't lease unless I owned a business and got the write off. If I did not leasing is stupid. I also wouldn't have a 72 month lease on a car. Thats a waste of money right there unless the intrest rate is 0 but you would still owe more than the car is worth. Then again I have 180 month loans on my house, RV, and boat. The RV was purchased last summer but will be paid off in 4 or 5 more years. The boat is our only toy payment thats really big but I hope to have it paid off in 10 years but will probably upgrade by then
Racer
Joined: Nov 2001
Posts: 468
Likes: 1
From: Chicago- North burbs IL
what you can do is figure out what the 'sale price, known as the cap cost' of the car would be, the MSRP, the best interest rate you'd expect with your credit score, and the state tax interest rate - then put those numbers into a spreadsheet to get a monthly payment you'd expect.
money factor is a relation to the interest rate
to get the money factor - you take the interest rate and divide by 2400
ex. int rate of 3.48 / 2400 = .00145 money factor
on a monthly basis:
depreciation fee is the (cap cost minus the residual) divided by the monthly term (note here that if you do a 3 year lease, and the 1st month lease fee is paid up front, your term is 35 NOT 36.
finance fee is the (cap cost plus residual) * money factor
tax fee :if you include the tax in the deal, the tax is calced:
(depreciation fee plus finance fee) multiplied by state tax%
add all 3 up and you get the monthly lease amount.
note that some people like to pay the tax in whole up front
depreciation fee is the amount you'll pay on the dollar amount that the car is worth between the selling price and the ending residual value
finance fee - is a fancy way of saying how much the 'loan' will cost you, just like an interest rate on a normal 'purchase'
residual is the value of the car at the end of the term, in dollars - this is a 'difficult' number to pin down, but is negotiable to an extent - for example, I was looking at an Acura MDX, residual sits around 57% of the original MSRP, for a Cadillac SRV - 50%
note also on leases, they typically get you for a bank acquistion fee. also, the motor vehicle fees and doc fees are part of the deal, but I did not include them in this example - you can just add them into the cap cost - or decide to pay them up front.
my opinion is: leases are good if you like to stay in a new car every few years, and like the gent above said - you don't have equity. also, you are responsible for excess mileage and excess wear and tear.
anyways, hope this helps.
money factor is a relation to the interest rate
to get the money factor - you take the interest rate and divide by 2400
ex. int rate of 3.48 / 2400 = .00145 money factor
on a monthly basis:
depreciation fee is the (cap cost minus the residual) divided by the monthly term (note here that if you do a 3 year lease, and the 1st month lease fee is paid up front, your term is 35 NOT 36.
finance fee is the (cap cost plus residual) * money factor
tax fee :if you include the tax in the deal, the tax is calced:
(depreciation fee plus finance fee) multiplied by state tax%
add all 3 up and you get the monthly lease amount.
note that some people like to pay the tax in whole up front
depreciation fee is the amount you'll pay on the dollar amount that the car is worth between the selling price and the ending residual value
finance fee - is a fancy way of saying how much the 'loan' will cost you, just like an interest rate on a normal 'purchase'
residual is the value of the car at the end of the term, in dollars - this is a 'difficult' number to pin down, but is negotiable to an extent - for example, I was looking at an Acura MDX, residual sits around 57% of the original MSRP, for a Cadillac SRV - 50%
note also on leases, they typically get you for a bank acquistion fee. also, the motor vehicle fees and doc fees are part of the deal, but I did not include them in this example - you can just add them into the cap cost - or decide to pay them up front.
my opinion is: leases are good if you like to stay in a new car every few years, and like the gent above said - you don't have equity. also, you are responsible for excess mileage and excess wear and tear.
anyways, hope this helps.
Corvette Stories
The Best of Corvette for Corvette Enthusiasts
Top 10 Most Explosive Corvettes Ever Made: Power-to-Weight Ratio Ranked!
Joe Kucinski
150 hp to 1,250 hp: Every Corvette Generation Compared by the Specs That Matter
Joe Kucinski
8 Coolest Corvette Pace Cars (and Replicas) of All Time
Verdad Gallardo
Top 10 Corvette Engines RANKED by Peak Torque (70+ Years of Muscle!)
Joe Kucinski
Corvette ZR1X Will Be Pacing the Indy 500, And Could Probably Race, Too!
Verdad Gallardo
Top 10 Corvettes Coming to Mecum Indy 2026!
Brett Foote
Top 10 C9 Corvette MUST-HAVES to Fix These C8 Generation Flaws!
Michael S. Palmer
10 Revolutionary 'Corvette Firsts' Most People Don't Know
Joe Kucinski
5 Reasons to Upgrade to an LS6-Powered Corvette; 5 Reasons to Stay LT2
Michael S. Palmer
Le Mans Master
Joined: Jan 2001
Posts: 6,446
Likes: 371
From: Maryville TN
St. Jude Donor '06-13,'16-'17, '19
Race Director
Joined: Jun 2004
Posts: 19,459
Likes: 48
From: Schaumburg IL
CI 7-8-9-11 Veteran
St. Jude Donor '06-'10, '13
DT, this is not directed at you, but just a comment in general...
This thread like a majority on here.. it's all mere opinion. There is no right or wrong answer. Each persons situation is different, and people prefer different things. Some people like to preach like their opinion is the right one, and everyone else is wrong.
Race Director
Joined: Jan 2011
Posts: 11,973
Likes: 463
From: Tonawanda New York
I respect everyone's opinion,and am the first one to agree to disagree.This is why I'm here,to learn about Corvettes (First time owner),to listen to others opinions and to voice my own all in the fun under the guidelines of the forum. After all we are all car guys and gals here. Sometimes my Sicilian comes on a little too opinionated I must admit.
Don
Don
Race Director
Joined: Apr 2007
Posts: 16,052
Likes: 253
The real issue
OK. So I have great pricing on a 2011 Grand Sport in cyber gray from a local dealer. Just about to finalize finances and somebody at work says, hey why own a depreciating asset? Lease the thing for 3 years and you will always be in a car less than 3 years old.
Good point. Never leased before and the calculations involve a "secret " formula called money factor.
I am aware of milage restrictions and inability to do mods on a lease vehicle
I would appreciate input from those of you who lease before I purchase a "depreciating asset"
Thanks.
Good point. Never leased before and the calculations involve a "secret " formula called money factor.
I am aware of milage restrictions and inability to do mods on a lease vehicle
I would appreciate input from those of you who lease before I purchase a "depreciating asset"
Thanks.
if you want a corvette for awhile, but don't want to pay the going price for a new one then a lease will do, and you'll be turning it in about about the time the C7 arrives.
Melting Slicks
Joined: Oct 2004
Posts: 2,989
Likes: 57
From: Peoples Republik of MD & Sarasota FL
It is generally best to purchase a car outright and then sell it after 3-years to a private party, compared to leasing. It will save quite a bit of money over a lease, depending upon the cost of the car originally and the economy.
BTW, a car is a liability, not a depreciating asset.
An asset should be generating positive cash flow - like a certificate of deposit.
Unless your car is used as a taxi, it probably isn't going to be generating any cash flow.
BTW, a car is a liability, not a depreciating asset.
An asset should be generating positive cash flow - like a certificate of deposit.
Unless your car is used as a taxi, it probably isn't going to be generating any cash flow.
An asset is not always something that generates positive cash flow. Are you telling me a non income producing piece of real estate (i.e. your personal residence) is not an asset? It generates zero income but it is indeed an asset.
Thread Starter
Advanced
Joined: Feb 2011
Posts: 68
Likes: 0
Still, Im not comfortable with this. I'm buying!!
Drifting
Joined: Jan 2006
Posts: 1,372
Likes: 2
From: Ramona CA
Money Factor = Interest
Get the residual value at end of lease also which will be based on miles/year. Higher the res value, the cheaper the payments.
It's not a bad way to go really. I do it for company vehicles as it's a direct write off without having to figure depreciation.
Usually, the payment is lower but you build zero equity.
Get the residual value at end of lease also which will be based on miles/year. Higher the res value, the cheaper the payments.
It's not a bad way to go really. I do it for company vehicles as it's a direct write off without having to figure depreciation.
Usually, the payment is lower but you build zero equity.
Instructor
Joined: Nov 2008
Posts: 186
Likes: 2
From: Huntington Beach CA
St. Jude Donor '09
I'm not sure why some people are so against leasing. A lease is just an alternative form of financing. Speaking as a former car salesman, the average car, purchased either even or with little down, on a 60 month note will usually break even (balance = trade in) around the 3 year mark. As others have said, if you're going to keep the car for 3 years and trade you wouldn't have any equity anyway. Big advantage for individuals to lease is you can buy a much more expensive car for a lower payment. You could lease a loaded 3 or 4LT GS or even a Z for the payment of a 1LT coupe. Ignore the "if you can't afford the payment" crowd, a lower payment is a lower payment. What kind of moron pays more than he has to. If you do decide to lease, do the best deal you can and do not let the sales people know you're considering a lease until the deal is done and you're in the finance office. I have seen people come into the dealership looking for a montly payment on a lease and watched managers scamble to add stuff to the car because we could lease the car at sticker and still be under thier payment goal. You must also read the lease agreement very carfully. Some require that the car be equiped "as delivered." I've seen people get screwed at turn in because they were charged for every rock chip and smudge on the car and even get hit because they had an aftermarket stereo, even though it was a significant upgrade from the stocker.
There are smart people out there, who pay more each month, but will pay that larger amount for a shorter length of time...which equates to "paying more than you need to", but makes perfect sense to ME.
Last edited by Vetaholic; Mar 16, 2011 at 06:58 PM.
Melting Slicks
Joined: Dec 2005
Posts: 2,956
Likes: 2
From: Ontario
Your loan payment will be at least twice what the lease payment is so you've PAID much more than I have but the car itself is worth no different at the 3 year mark whether loaned or leased, only the amount owing is different.
At the 3 year mark I can choose to buy the car or go get a new one without the hassle of selling my used car because it's really the leasing companies used car.
This is an arithmetic question, not an emotional one.
And by the way, you could structure a lease to zero out at the 3 year mark if you wanted to so that technically the loan/lease end result is the same..........
Do the math, and figure out which costs more.
Le Mans Master
Joined: Apr 2002
Posts: 5,726
Likes: 46
From: Waukesha WI
St. Jude Donor '15
Just my opinion but leasing is a great option if a buyer has no intention of keeping the car past 3-5 years (warranty period) or has no plans to modify it during the same period. I know a lot of people like this - their tastes in cars change often and they get tired of the "same-old". Most of those people also wouldn't own any car outside of the B2B warranty period. There is nothing wrong with this philosophy.
I've never seen a lease and buyout work out better than a decently negotiated straight finance and purchase but I'll admit I don't have much experience with leasing.
My car buying philosophy leans more towards buying a decent used car at a good price and keeping/repairing it until it can't (reasonably) be repaired anymore then donate it or scrap it. I wouldn't ever buy a car I didn't like or thought I'd get bored with in a short time.
I've never seen a lease and buyout work out better than a decently negotiated straight finance and purchase but I'll admit I don't have much experience with leasing.
My car buying philosophy leans more towards buying a decent used car at a good price and keeping/repairing it until it can't (reasonably) be repaired anymore then donate it or scrap it. I wouldn't ever buy a car I didn't like or thought I'd get bored with in a short time.
Pro
Joined: May 2010
Posts: 624
Likes: 1
From: Northern NJ
Money Factor = Interest
Get the residual value at end of lease also which will be based on miles/year. Higher the res value, the cheaper the payments.
It's not a bad way to go really. I do it for company vehicles as it's a direct write off without having to figure depreciation.
Usually, the payment is lower but you build zero equity.
Get the residual value at end of lease also which will be based on miles/year. Higher the res value, the cheaper the payments.
It's not a bad way to go really. I do it for company vehicles as it's a direct write off without having to figure depreciation.
Usually, the payment is lower but you build zero equity.
Leasing never pays. If one buys a new car every three years or less as a matter of practice, then they may be better off with leasing, otherwise, never.