quote:

Originally posted by 220-9er:
What's wrong with the '08 with 57,000 miles that you already own?

Agreed. You have a car with 57k miles you're planning on getting rid of? That's just plain silly unless it's given you nothing but trouble. You have at least 50-100k miles of life left in the car, and probably a lot more. It isn't going to depreciate a whole lot more than it has, meaning you're just paying for fuel, the occasional repair, and insurance. Gas is cheap these days, so it's not like you'll save a whole lot of money getting something more efficient. It's an Expedition, so it's not like you need a bigger vehicle -- you have one that's about as big as they get.

So what's the point of replacing your perfectly good, paid off truck with something else?

I've never leased but I can see op's point. For $8 a day fixed cost he has a warranty vehicle. Just like rent or term life ins. Yes, he's losing a little money but he's gaining fewer headaches. If you can expense it, even better.

I don't mind leasing so much because I'll usually only stick with my daily driver for 3-4 years anyway before I'm bored and want to drive something else. The only cars I've bought have been my Corvettes, because I'll want to hang on to them for a great deal longer.

quote:

Originally posted by IntrepidTraveler:
Don't know if you're a Dave Ramsey fan, but he calls them "fleeces". Basically, you're paying a monthly payment for something you'll never own.

Not true. Why won't you own it?

Lease it for 3 years and then buy it for the predetermined residual amount. This is ownernsip. You would own it.

For those that don't know, the residual value is the estimated value (set by the bank) of the car after 3 years. It's written into the contract. A $30,000 car with a 50% residual would be worth $15,000 after 3 years. So you could buy it for that amount at lease end.

When you're lease comes to an end (or even before -- one, two years into the lease ... whenever you want) you can:

- buy it (just calls the leasing company and ask for payoff amount
- sell it (to anyone you want for however much you want ... just remember what the payoff amount it)
- trade it in on a new car of any type / brand to a dealership (you'll get the short end of the stick on this, generally ... based in payoff amount)

When the lease ENDS you can purchase it or trade it in and walk away.

If you buy it then it looks like this:

- 3 years worth of lease payments you already paid
- take out a loan (or pay cash) for the car to continue paying it off. If it's a 5 year loan you take out then, in total, it would be 8 years of payments.

Either pay 500/mo for 5 years

Or

$350/mo for 8 years

Works out the same -- or generally closely. And those numbers I just provided are just for example -- they're not spot on.

Leasing works for me. I'll probably never buy again.

quote:

Originally posted by Copefree:

quote:

Originally posted by IntrepidTraveler:
Don't know if you're a Dave Ramsey fan, but he calls them "fleeces". Basically, you're paying a monthly payment for something you'll never own.

Not true. Why won't you own it?

Lease it for 3 years and then buy it for the predetermined residual amount. This is ownernsip. You would own it.

For those that don't know, the residual value is the estimated value (set by the bank) of the car after 3 years. It's written into the contract. A $30,000 car with a 50% residual would be worth $15,000 after 3 years. So you could buy it for that amount at lease end.

When you're lease comes to an end (or even before -- one, two years into the lease ... whenever you want) you can:

- buy it (just calls the leasing company and ask for payoff amount
- sell it (to anyone you want for however much you want ... just remember what the payoff amount it)
- trade it in on a new car of any type / brand to a dealership (you'll get the short end of the stick on this, generally ... based in payoff amount)

When the lease ENDS you can purchase it or trade it in and walk away.

If you buy it then it looks like this:

- 3 years worth of lease payments you already paid
- take out a loan (or pay cash) for the car to continue paying it off. If it's a 5 year loan you take out then, in total, it would be 8 years of payments.

Either pay 500/mo for 5 years

Or

$350/mo for 8 years

Works out the same -- or generally closely. And those numbers I just provided are just for example -- they're not spot on.

After leasing 4 expeditions in a row, because they leased out incredibly well. All were leased with just inceptions down, one of them I was paying $358 a month with tax on a 3 year lease with tax included and had a sticker of $39k.

My last one I really liked (still have). A 2008 eddie bauer I was paying $505 with tax on a $39k sticker for 3 years, my buyout was $19650 and I financed it at like 2% interest for 5 years but paid it off 2 years early......all of my payments still netted to less than the sticker price of the vehicle.

quote:

Originally posted by caneau:

quote:

Originally posted by 220-9er:
What's wrong with the '08 with 57,000 miles that you already own?

Agreed. You have a car with 57k miles you're planning on getting rid of? That's just plain silly unless it's given you nothing but trouble. You have at least 50-100k miles of life left in the car, and probably a lot more. It isn't going to depreciate a whole lot more than it has, meaning you're just paying for fuel, the occasional repair, and insurance. Gas is cheap these days, so it's not like you'll save a whole lot of money getting something more efficient. It's an Expedition, so it's not like you need a bigger vehicle -- you have one that's about as big as they get.

So what's the point of replacing your perfectly good, paid off truck with something else?

Fair question. Main reason is safety. 08 lacks blind spot monitoring and lane drift warning. We have the former on our other car and it's a definite plus. Other reason is navigation. Garmin is ok but primitive compared to the new systems. We make trips during summer between VA and our cottage in Canada and the Mazda 3 is too small for the tons of stuff we take up there. So Expedition is perfect for that purpose.

Whoever gets the 08 will be getting a cream puff.

quote:

Originally posted by kz1000:
Leasing works for me. I'll probably never buy again.

Me too.

Unless you're paying all cash for a vehicle, leasing makes sense.

Zero money down and, in the end, there's nothing different in leasing versus financing UNLESS, at the end of the lease, you just hand the car in and walk away ... which I've never done and never plan on doing. This is the only instance that miles on the vehicle would matter.

I'd rather trade it in on a new vehicle (perhaps a different brand)

What I'm understanding is that people who lease have accepted that they will have a car payment for the rest of their lives.

Can one mod a leased vehicle by the way? Just curious.

jimmy123 I would be curious what the specifics were on the two Ford lease examples you brought up. How many miles a year. etc.

quote:

Originally posted by Balzé Halzé:
What I'm understanding is that people who lease have accepted that they will have a car payment for the rest of their lives.

Can one mod a leased vehicle by the way? Just curious.

To your first point -- it depends.

We leased my wife's VW Jetta (36 month lease). When the lease ended, we decided we wanted to keep it so we bought it (for the payoff amount, aka the residual value). We didn't pay cash but rather took out a three year loan to pay it off. We've since paid it off. So in essence, although we made payments for 6 years rather than the standard 5 year financing, in the end we just paid less money each month, but for more months. And we didn't pay a penny as a down payment when the lease started. It came out about even in the end.

My vehicles I always lease and trade in on something else every couple of years -- so yes, I always have car payment -- but I'm okay with that, for now.

And to answer your question .. you can do whatever you want with the car. You can put 250,000 miles on it and modify it so much that it's not even street legal. However, if you do this ... you won't be able to just hand the keys back to the dealer at lease-end. Well, you could -- but it would be a terrible deal. You're gonna want to BUY it. Or trade it in on a new car (unrealistic in this example), or sell it (to a dealer or a private party).

And as always, cash is king. If you can pay cash for a vehicle that makes the most sense. If you're willing to drop $60k cash on a depreciating asset.

Don't down play the interest factor!

I am not a Ramsey disciple. Most of his stuff is just common sense when it comes to finance imho.
But am guessing the comment in this thread is about not paying interest.

quote:

Originally posted by old rugged cross:
jimmy123 I would be curious what the specifics were on the two Ford lease examples you brought up. How many miles a year. etc.

I have the original lease paperwork in a file folder somewhere but I'm going to go off of memory.

Brand new 2008 Ford Expedition Eddie Bauer, sticker was $39,3xx. I put inceptions down, around $1100 if I remember (dealer fee, tags, first months payment etc.) It was a 36 month 12k miles per year lease. Payment was $505.94 I think including 6% FL tax. I had the Ford lease loyalty rebate....which I think took $1k off of sticker price or something......When I financed it with Chase, payment was $353.xx.

My buy out was $19,650 at the end of 3 years (it was worth $26k at the time). I financed all of it because interest rates were so low for 5 years. I ended up financing $21xxx the $19650, a small dealer fee for handling the paperwork (dealership) and 6% sales tax. A new identical vehicle would have been inceptions down and $650 a month for a 3yr/36k mile on a new 2011 eddie bauer but the economy was crap then and nothing leased out well.....which is why I bought.......instead of leasing a new one.

If I have time I'll dig up the folder and find the initial lease and window sticker. Anyways, the truck is still clean, well maintained, and trouble free. But have 96k miles on it and just wanting a new one.....so when the 2018's come out I'll wait a few months till the bugs are worked out and lease or buy a new one.

A lot of times Ford will offer exceptional lease deals when a new model comes out to get them out there. The other thing is it depends on the month.....when I worked for a Ford Lincoln Mercury dealership.....every other month leases were exceptionally cheap, and opposite months financing was exceptionally cheap. I'd see a $100-150 a month lease payment difference on the same navigator from month to month sometimes. Best is to look at the local dealers ad's and see what they're leasing out at, then check it the following month. Each $1k in options from the base vehicle generally ads $30 a month on a 3 year lease payment. However, the Eddie Bauer would have totally different lease price parameters than the XLT for example.

The other thing I will add, is when I leased the 4 expeditions over a period of 12 years, I never had to do any maintenance to them aside from basic oil changes and tire rotations. Within the first year I bought my 3 year old 08' expedition I had to dump $2500 on tires and brakes......so yes you have a payment, but you have payments on old cars to in repairs, maintenance, time lost from work etc......when the repairs start costing almost as much as a car payment, it's time to replace.....also insurance is cheaper on a new vehicle because of better safety items and they know everything is maintained the first few years (tires, brakes, etc).

Thanks J. All good info. Not in the cards for me but interesting none the less.

The 12k miles has never been adjusted which is crazy since the 12k mileage a year number is outdated by almost two decades now.

quote:

Originally posted by RogB:
Fair question. Main reason is safety. 08 lacks blind spot monitoring and lane drift warning. We have the former on our other car and it's a definite plus. Other reason is navigation. Garmin is ok but primitive compared to the new systems. We make trips during summer between VA and our cottage in Canada and the Mazda 3 is too small for the tons of stuff we take up there. So Expedition is perfect for that purpose.

Whoever gets the 08 will be getting a cream puff.

You're buying a new car because of upgraded navigation and a safety features? Keep the money you would pay for a new car and buy life insurance or pay down any debt you may have. The car who own already is likely just fine.

If you're itching for a new car regardless, then have at it.

quote:

Originally posted by old rugged cross:
Thanks J. All good info. Not in the cards for me but interesting none the less.

The 12k miles has never been adjusted which is crazy since the 12k mileage a year number is outdated by almost two decades now.

You can get any mileage lease you want 15k, 18k, 24k a year it just costs more.

quote:

Originally posted by Rey HRH:

quote:

Originally posted by jhe888:
Leasing doesn't make good sense unless you can expense the lease charges. In other words, if you are operating a business and they will be expenses that reduce your taxable income.

If you don't, buying is better. Unless you absolutely must drive a more expensive car than you could afford note payments on. Lease payments are usually a little lower.

This sums it up nicely.

I bought (almost, 2 more years on 1, and 18 months on the other) my vehicles, and I lease them to my company. I pay income tax on the lease income. My company writes off the lease expense. When I'm done paying for my vehicles, I'll likely continue to lease them to my company. It ends up being cleaner and easier than doing a paycheck every month. I owner withdraw a sum once or twice a year if I need more money for living expenses.

I would entertain a lease of a vehicle from the dealership for my company if I needed something else and didn't have the ability to purchase it myself and lease it to my company directly.

quote:

Originally posted by AKSuperDually:
I bought (almost, 2 more years on 1, and 18 months on the other) my vehicles, and I lease them to my company. I pay income tax on the lease income. My company writes off the lease expense. When I'm done paying for my vehicles, I'll likely continue to lease them to my company. It ends up being cleaner and easier than doing a paycheck every month. I owner withdraw a sum once or twice a year if I need more money for living expenses.

I would entertain a lease of a vehicle from the dealership for my company if I needed something else and didn't have the ability to purchase it myself and lease it to my company directly.

I'm not a Tax Accountant but I've made it a hobby in an effort to lessen my taxes. Something doesn't sit well with me when you pay income tax on the lease money on a car that you bought with post-taxed money. I assume you you've gotten your tax accountant's advice on this?

Are you taking depreciation expenses on the cars you're leasing to your company to offset the leasing income?

I get that you want to avoid the leasing costs to an outside company. But wouldn't it be simpler to "loan" your company the money to buy the car then pay you back each month as a return of capital. Your company can still capture the depreciation expense to offset income and you won't have to pay income tax on the return of capital. And you won't have to do a separate bookkeeping process of capturing the depreciation expense on the vehicles outside of your company.

Hey Rog, I just noticed that you are a resident of the Commonwealth of Virginia. So am I!

I am a retired CPA and financial analyst. I have leased cars in the past, and in a perfect world, the lease could be a better way to drive. Especially if Ford wanted to move an oversupply of a particular model.

BUT, I found out last fall that in Virginia, the leasing company AND the driver BOTH have to pay personal property tax, which is a significant cost as you know. Since the leasing company will pass along their costs to you, when you get specific numbers, the leasing costs will never work out better. Check it out.