Quote:
Originally Posted by DSK
I disagree about it being the least expensive 98% of the time.
He also nails you if you exceed the mileage. You nail yourself if you don't use all the miles you have coming. You only win in a lease if you use all the miles and the car is worth less at the end of the lease than stipulated in the contract.
The cheapest way to own a car is to buy one that is 2 years old and gently drive it 10 years. The true cost of a car is the cumulative cost of interest, depreciation, maintenance, repairs, fuel, etc. I like the poster's choice of a car, though - if she buys the SRT!!
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the CHEAPEST way to buy a car is the way that delivers the least total cost for the person buying the car --- a car is an expense. 98% of the population will want a new car in 2-5 years Ford Motor Study.
Assuming you pay cash and don't get a lemon you MIGHT be right, BUT without a warranty all repairs are yours (and that means added expenses). And, if you expect it to go for 10 years you better make all your service intervals as well (most expenses). And, even your scenario depends on how many miles you drive, because if you drive 20,000 per year if you want to get 10years out of the car - firstly, you will be driving a 10 to 12 years old car (only2% of the popular will do that - hence my 98%) - secondly, you will have put 200,000 miles on a car that already has 24,000 to 36,000 miles for a total of 224,000 to 236,000 miles from your imaginary car. if you're a grandma and put 10,000 miles on your car a year you are at a more reasonable 124,000 to 136,000.
Curiously, the drop off in value between 124,000 miles and 236,000 miles is about $1500-2500 dollars in value so the cheapest way to buy a car is actually to buy a car at 100,000 miles and drive it to 200,000 miles you buy it at $6000 and sell it at $4000 as long as you can keep it running.
ALSO, in your scenario you have to pay cash because as you begin to calculate interest the comparison gets very lop sided toward leasing ... Why? because the rate for used cars so much higher than the subsidized rates for new cars.
HE NAILS YOU ...
I guess you are an idiot that got NAILED by excessive mileage on a lease. Look ... a lease is something into which only an intelligent person should enter. You say the value isn't "guaranteed" well it really is. On the contract is says if you return the vehicle with normal wear and tear, in good repair and at or below the contract mileage that the manufacturer will pay $XXXXX.XX dollars for it. The 2 biggest determiners of a vehicles value are Mileage and Age ... well we know the age (3 years form the lease date) and we "impute" the mileage by setting up an estimated number of miles. Now here is where the intelligence comes in YOU get to determine the miles you drive. Now the idiot signs a lease for 10,000 miles per year knowing they actually travel 20,000 or worse without knowing what their average mileage is ... because THAT gives them the payments they want. I can drive a 2015 Acura ILX for $209 a month with 30,000 miles or $365 per month with 60,000 miles - which did you take? the $199 right ... and when you turned it in with 60500 miles instead of 30,500 miles the bastards wanted $6000 dollars --- basically that is the valuation difference between a 3 year old car with 30,500 miles and a 3 years old car with 60,500 miles. (30,000 x .20) <<<< you NAILED yourself. (you will notice my original post spent a great deal of time and effort on that point for exactly that reason AGE & MILES - VALUE)[other facts: initial down $2399 due at signing and guarantee buy back of $19,000]
Now let's talk about nailing yourself by "buying too many miles" - this is a danger only if you have no idea what your vehicle is worth. find six cars just like yours on a dealers lot and figure yours in worth $2,000 to $3,000 less at trade in value. If you are one of these people that think they should pay the actual value (or the retail you just researched) of your car - don't do a lease your an idiot! SO ... you bring your car in with low miles and it is worth $18,000 to $20,000 and your buy back is $19,000 above. When he appraises it if he thinks it is worth $18,000 he will turn it in ... if it is worth $19,000 to $20,000 and he wants it he will buy it and you get the "equity" just as if you owned it, so you really don't get nailed here either.
BOTTOM LINE:
1) the cheapest way to own a car is to buy a car with 100,000 miles and drive it as long as you can.
BUT most people won't drive a beater ...
2) the next cheapest way is to buy a car, pay cash and drive it until the wheels fall off which is 6+ years for most of us. (and pray you don't have a lot of repairs)
BUT good intentions a side only 2% will ever do this and most of those do it because they have to do it.
The rest of us (98%) will trade every 3-5 years:
so
3) a lease can work well (know your mileage)
if the miles wont work for you
4) bankers will typically finance for 3 to 4 years and trade when the warranty is expired and they will know what the trade in value is from their finance department ( another good way for you to know) and that way all repairs expense is the dealers.
5) buy it and make payments, but pay it off before it hits 100,000 miles - because all cars are virtually worthless at 100,000 miles.
on average having sold 10,000+ cars ... 3 is usually the cheapest and the safest ... bottom line everything is cheaper with good credit. 2 is potentially the right answer, but it is unrealistic because it asks to drive an old car (even a 5 year old Mercedes gets old), it can not or does not take into account the expense of potential repairs
Pre paid lease
assume
