[A4] Prospective A4 Buyer

[docwyte at comcast.net]

You're going to lose money period if you get a new car every 3 years, even leasing.  In your example you lose $12k every three years, including (especially including the $3k you blow as your downpayment), whereas if you just took that $12k and bought a car and drove it for those same three years I suspect you could sell the car for around $9k, if you buy right.  So you've lost $1k a year.

Yes, you don't have a shiny, brandy new car, but financially you're FAR ahead of the game.  

If you insist on having a brand new car every three years and having to have the latest and greatest and don't mind throwing away $12-15k in that period of time (just wondering how is that different than suffering with depreciation?  A $35k car brand new generally sells for $20k plus after three years) then leasing is a good option.  It gets you into a car that you generally wouldn't be able to afford.

That last word is the key, affordibility.  If you have to make payments, then you *can't* afford the car!  If you can pay cash for the car, then you can afford it.  If I go out and buy (as in, they give me the title that day) a $35k car, drive it for three years, enjoy it, etc, I bet I can sell it for at least $20k, if not more.  Cost point is the same as leasing, except I haven't lost a downpayment, don't have to watch my mileage and can mod the heck out of it if I choose.

You can't predict what cars will hold their residual values well.  I bet the Mini's dive in value in the next few years, as their newness and cuteness wear a little thin compared to their utility.  

As far as gas powered cars being dinosaurs and the market collapsing in favor of diesel, I very much doubt that will happen in any kind of way that makes a person leasing a car in the financial drivers seat vs someone who owns their vehicle.

If we're looking at this from a purely financial standpoint, it's clear that you need to buy car at the bottom of it's depreciation point.  That means picking something up that's generally 10-15 years old.  If you're unwilling to do this, then you're going to lose money on a car, whether you lease or buy.  I just don't think that leasing is any more superior than buying as far as what you're going to spend.

-------------- Original message -------------- 
From: Rocky Mullin <caliban at sharon.net> 

> At 4:48 AM +0000 7/7/06, docwyte at comcast.net wrote: 

> 
> i believe that is a misinformed perspective. you lose so 
> much value when you drive a car for three years that leasing makes 
> total sense - you're simply paying for the part of the car that you 
> use. you have no equity 
> because you've not wasted your money on equity that is lost as you own the 
> car - thousands of it when you simply drive off the lot. the notion of 
> equity in a vehicle borders on asinine, but the car makers want us to believe 
> in it because they want to sell cars. a $35k car that is only worth $10k 
> in 6 years is a poor definition of equity. 
> 
> i have a $40k car. the day after i bought it it was worth $35k maybe. 
> at the end of the lease it'll be worth $25k, maybe. i will have paid under 
> $12k, including my $3k down. how is that upside down? of course, it's 
> important to understand leases and get a good deal on one, and don't get 
> suckered into buying it out. 
> 
> not only that, but i can choose to drop another $4k and drive it 
> another year, while it depreciates another $2k to $4k. i'm still not 
> upside down. 
> 
> i'm driving a forty thousand dollar car for twelve thousand dollars. 
> and i get to get an awesome new car in two years and start over again. no 
> hassle selling it, never paying a cent for service or repairs, always a chance 
> to drive the newest freshest thing. last thing i want hanging onto my ass 
> is a car that is worth less than i still owe on it in four or five years 
> when there are cars on the road just as good (likely better) that get better 
> MPG, run on diesel, is a hybrid. i plan to laugh at all the suckers who 
> owe $30k on their SUV when gas is $6/gallon and you can't give away those 
> pieces of shit. the auto industry is going to change along with the world. > 
> mileage is the one reason IMO to decide against a lease. a mod 
> freak like yourself can even deal with a lease, if they're willing to do 
> nonpermanent mods and if they have a sympathetic dealer. mine's merely 
> chipped. i mod my bikes. i'd definitely like to be able to afford another 
> URQ to play with, 
> 


> see, that's just not true for the shrewd leaser and the right car. 
> mini coopers are a perfect example. they retain their value, so you can 
> negotiate a high residual, which lowers payments drastically. every thousand 
> bucks you put onto that residual value is a great drop in your monthly 
> payment. subaru for instance has terrible lease programs 
> 
> --