leasing vs. buying

Y'know ... I'm tempted to take that bet. When I bought the van, I bought it off a kid who'd been working at the dealership exactly one week. It was just shy of three years old, and I got the extended warranty for the cost of my trade in. When I went back to have a faulty gas tank sensor replaced, I looked for him, but he wasn't there. Seems that he didn't last very long. Something about a deal he'd made .....

BTW, if I can finance for a cost near what my RRSP interest rate is .... I finance. The money will buy more today than it will in 5 years. Sunk into my RRSP drops my income tax rate. I has actually made money financing this way. It's all about how you view money.
 
SouthernN'Proud said:
Millionaires don't finance cars. They didn't stop when they became rich, they became rich when they stopped living on credit.
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Well thats a load of crap,most millionaires are leveraged to the max and I bet never pay cash for anything and that car they're driving is probably leased by their corporation.You don't get rich by paying cash,you get rich by "using credit effectively"
 
A.B.Normal said:
Well thats a load of crap,most millionaires are leveraged to the max and I bet never pay cash for anything and that car they're driving is probably leased by their corporation.You don't get rich by paying cash,you get rich by "using credit effectively"
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K, splain to me how paying interest puts money in your pocket.
 
I'm paying fixed monthly fee for a period of 3 years for mine, the car costs 14,000 and I'll end up paying 15,000. Not a bad deal IMO. Buying a used one that:
1. Is a few years old,
2. Very limited warranty (if any),
3. Who knows the way the car has been treated and
3. Paying 9000 for it in cash when buying it
just doesn't cut it for me. I'd rather buy peace of mind and a new car. Besides, depending on how good I do in the upcoming years I might give it away and not sell it.
 
SouthernN'Proud said:
K, splain to me how paying interest puts money in your pocket.
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lemme guess, you don't own a bussiness.

Say you have USD$10,000, and you have two options:
1) Give away those 10,000 right now or
2) Give them away slowly, but ending up paying 10,500 (as an example).

Say you take 1, you obviously don't have a capital to do anything else. But if you take 2 you already have the asset and you have the chance to use that money to produce more money, and if you're good enough you might make 11,000 out of your initial 10,000, since you pay 10,500 you got 500 out of it.
 
SouthernN'Proud said:
K, splain to me how paying interest puts money in your pocket.
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I bought my truck 0% for 5years,so financing doesn't have to cost extra. As for wealthy people/businesses they purchase and defer the costs over Xnumbers of years and thus keeping $$s in their account and remain liquid.If they spend cash ,that money isn't making money,and that what its all about.Cash is pretty much throwing your money away as you point out ,depreciation and all that,where is there any benefit to using cash if you know your purchase is going to be worth less $$ as soon as you buy it..
 
SouthernN'Proud said:
K, splain to me how paying interest puts money in your pocket.
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Let me introduce you to the concept of opportunity cost. If financing my car costs 3.9%, and I can make 6.75% by tinvesting that money in my company (those are real numbers by the way), how do you think I'm doin' by financing rather than paying cash?

Two reasons I now buy new. 1) I can get better rates. 3.9% is MUCH harder to get on a used machine, and 0% offers do not exist, period. 2) I drive cars til they are so close to dead that they cost more to maintain than they're worth. At that point, I clean 'em up and trade 'em in. I figure to get 12 years or so out of this one. My last used one went tits up after 7.
 
Luis G said:
I'm paying fixed monthly fee for a period of 3 years for mine, the car costs 14,000 and I'll end up paying 15,000. Not a bad deal IMO. Buying a used one that:
1. Is a few years old,
2. Very limited warranty (if any),
3. Who knows the way the car has been treated and
3. Paying 9000 for it in cash when buying it
just doesn't cut it for me. I'd rather buy peace of mind and a new car. Besides, depending on how good I do in the upcoming years I might give it away and not sell it.
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Using your numbers...

1. I'm $6000 ahead before we even go any further. I won't spend $2000 more PER YEAR on fan belts and thermostats than you will. I win because I have more money in my pocket than you do three years from now.

2. Making a 6000 dollar payment based on "I'd rather" must be a nice luxury. Wish I had it.

3. That peace of mind you get with your new car is not worth the depreciation to me. See, in the three year period you referenced above, your car has gone from $26,000 (new) to around $15,000. My used one has gone from $9000 to $7000. I win again. You lost the 6000 up front you admitted to plus 7000 over time in depreciation. That makes 13,000, which buys my next car. I get a free car every other trade, at your own math.

But I'm naive...
 
HomeLAN said:
Let me introduce you to the concept of opportunity cost. If financing my car costs 3.9%, and I can make 6.75% by tinvesting that money in my company (those are real numbers by the way), how do you think I'm doin' by financing rather than paying cash?

Two reasons I now buy new. 1) I can get better rates. 3.9% is MUCH harder to get on a used machine, and 0% offers do not exist, period. 2) I drive cars til they are so close to dead that they cost more to maintain than they're worth. At that point, I clean 'em up and trade 'em in. I figure to get 12 years or so out of this one. My last used one went tits up after 7.
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*sigh*

And by paying cash for a car, you can invest ALL that money at 6.75%, instead of some of it.

Do as you will. I plan to. I will finance a home, because it appreciates. Everything else depreciates. Financing a depreciating asset is unsound financial strategy. You can throw all the incentives and gizmos you like, but at the end of the day, consider these things.

1. Your grandparents didn't borrow money. They lived within their means. And they left something for your parents when they died.

2. To quote someone I despise but agree with on this one point, Abe Lincoln..."You cannot establish security on borrowed money."
 
A.B.Normal said:
where is there any benefit to using cash if you know your purchase is going to be worth less $$ as soon as you buy it..
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Because I spent X on it. You spent X plus interest on it. I spent less. I made more money. I win.

Why is that so difficult to grasp?
 
Dude, doing it the way I did on a 35,000 car over 4 years made me $1,900 over the four years. Period, polka-dot.

And by paying cash for a car, you can invest ALL that money at 6.75%, instead of some of it.
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What are you talking about? If I've paid it all out for the car, I can invest exactly zero up front. I make more dropping it all into the account at the start than I can making monthly payments into the investment.

Sorry, I don't know who taught you about money, but you've been sadly misinformed.
 
SouthernN'Proud said:
Because I spent X on it. You spent X plus interest on it. I spent less. I made more money. I win.

Why is that so difficult to grasp?
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Becuase depending on what other ways you have to use the money, it's flat wrong. You haven't won. If you could've made more through investing, you've actually lost.
 
Yes, on a monthly basis. But, you've lost the opportunity to invest the whole lump up front. The latter makes more than the former in most cases. If you wish, I can prove it mathematically for you.
 
SouthernN'Proud said:
Using your numbers...

1. I'm $6000 ahead before we even go any further. I won't spend $2000 more PER YEAR on fan belts and thermostats than you will. I win because I have more money in my pocket than you do three years from now.

2. Making a 6000 dollar payment based on "I'd rather" must be a nice luxury. Wish I had it.

3. That peace of mind you get with your new car is not worth the depreciation to me. See, in the three year period you referenced above, your car has gone from $26,000 (new) to around $15,000. My used one has gone from $9000 to $7000. I win again. You lost the 6000 up front you admitted to plus 7000 over time in depreciation. That makes 13,000, which buys my next car. I get a free car every other trade, at your own math.

But I'm naive...
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So let's say your used car breaks within 2 years and there's no cheap way to repair it...you're better off buying another used car. Since mine has a 2 year warranty, I win.
 
SnP, I'm just gonna tell you once. If you're arguing money against HL, you've already lost. I used to think like you do, until I sat down with a financial adviser (friend of the family) to work out my ballpark for buying a house. I don't mind admitting that she scared the shit outta me. I figure show her my pay stub, and bank balance, and we're good, right? Wrong. She had me borrowing 15% more than my best guess, and making 10% smaller payments. Take this as collaterol for a personal loan. Then dump that loan into your retirement fund. Claim a bonus tax benefit from that, and withdraw the whole thing. Pay back the loan with only one months interest, and pocket $4000 extra for your downpayment. And then it got ugly. Hl's the same.
 
Fine.

As I said before, do as you will. I can operate calculators too. I can make one walk and talk and dance the mashed potato if it fits my purpose.

I'll pay for my stuff as I go, instead of having my soul owned by thirteen banks.

I'll put the interest payments in my pocket, or my 401K, or in the Rebel Roost Building Fund.

I'll sleep peacefully at night knowing that what is in, at, or around my home is truly mine.

I've known for years that my approach to life in general is usually greeted with skepticism. Just because something is new is not reason for me to instantly think "better". I still value the way folks conducted their affairs before banks owned everything. To the limit of my ability, I will follow suit. People seemed a lot less stressed back then, ya know...

Call me what you will. Naive. Luddite. Dreamer. Fool. No problem, and no hard feelings. It's my money, just as it's yours. I know what matters most to me, just as each of you do. To each his own and a little more, I always say.

I choose not to finance anything I don't have to. I like to be in control of where my money goes. I like to pay things off, early if possible, and have that money available for the things I want them for instead of what I owe, or what I wanted four years ago, or whatever. It's a simple philosophy, maybe outdated. But it's sound. People survived using it for hundreds of years. I'll most likely survive using it for the time I'm alotted. I made a series of life decisions about seven or eight years ago. Hard decisions. That was one of them. I don't regret it now, and haven't since I made it.

Bells and whistles and stuff popped out by banks have never once made any of us one penny. Remember, the biggest buildings in every city are either banks or insurance companies. Think they got 'em by saving us money?

As with so many things...Y'all go on ahead...I'm out. Enjoy.
 
Luis G said:
So let's say your used car breaks within 2 years and there's no cheap way to repair it...you're better off buying another used car. Since mine has a 2 year warranty, I win.
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And new cars never break down...

Besides, I got 2000 a year in repair money before you catch me.
 
SouthernN'Proud said:
And new cars never break down...

Besides, I got 2000 a year in repair money before you catch me.
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And he's still got $8000 in the bank that he hasn't paid out yet.
 
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