Does buying a car ever make sense?

werent you the one who started best sports cars under 50k thread??

If you have cash, which it sounds like you do... then buy... Dont lease

Why would you ever not want to own Something you are paying on?
If u don't buy it, it can never be an asset.

LeasIng does make sense given the right circumstances.

There can be certain tax advantages.

Cars depreciate at alarming rates, and in this economy it is hard to go out and get points on your money without particular risk. It's kind of like a wash at the current moment.

 

Originally Posted by SlapNPickle

Why would you ever not want to own Something you are paying on?
If u don't buy it, it can never be an asset.

Because sometimes it's cheaper to not own it? Just like sometimes it makes more sense to rent than buy. It all just depends on the numbers, there are phenomenal lease deals out there sometimes. I remember a few years ago there was some car that was pretty decent (I think like a Honda Civic) and the lease was like $175 per month with like < $1,000 upfront for 3 years. If I wasn't determined to drive my current Jeep into the ground I was gonna jump at that.

It's all about cash flow vs. denting net worth. Starting a business you may very well be MUCH better off keeping the cash and using it as a safety net/cash reserve for the business and taking on a payment instead.

The concept of leasing makes sense when you want more car for less money, drive under 12K miles a year, don't park in the city, and are not concerned with having any equity in the car at the term of the lease. So, basically at the term of the lease you give the car back and have nothing to show for the money you spent on the vehicle. The dealership always offers a buy-out, but it is not very close to fair market value.

The problems with closed end leasing is that if you run over the mileage you owe penalties. You effectively transfer the risk of the value of the car over to the dealership as opposed to assuming the risk yourself and having to sell the car when you are done with it. You also get hit with any dings or dents on the vehicle or damage to the vehicle in general which can end up costing you at the end.

Where dealerships fuck you in a lease are in the three different areas: front, middle, back.

Front refers to the negotiated purchase price of the vehicle. To every vehicle there are two different invoices. There is the sticker invoice and then there is the dealer invoice. When you are looking at a dealer invoice there are a number of profit centers built into the invoice. Incentives / cash back, advertising expenses, and dealer holdback are the main ones. The public never gets to see the dealer invoice (or true cost of the car). I am not sure if you asked to see it whether or not a dealer would show it to you.

Middle refers to the financing portion of the lease which is primarily justified from the dealer off of your shitty credit score. Even if you have the best of credit they are still going to get you on this portion. Typically, you have to go in to meet with the "finance manager" who proceeds to give you the bad news as to where you lie in the deal with regards to your financed portion of the deal. Most people don't know or don't realize that this portion is as everything negotiable. So a lot of people get bent over in this part of the transaction because they aren't paying much attention to it, they are just concerned with "what's my payment, what's my payment?" Which is the green light for the finance manager to string out your payments over a longer period of time (thus generating more revenue in the deal for the finance company) and give the appearance that they are actually helping you out.

Back refers to the expected resale price of the vehicle at the term of the lease. You always want to make sure that you are watching this part out for any hidden charges or turn in / clean up fees. Negotiate to get those removed. Know that the higher the expected resale value that the dealership assigns to your lease, the more profit they are going to make when you go to turn it in.

Bottom line is that if you have the money to pay cash or have good credit, then I think buying is the right way to go.

If you like a new vehicle every four years, and don't want to deal with the hassle of having to sell your car, drive low miles, and garage your ride, then you might want to consider looking at the lease. Just make sure to negotiate all three parts of the transaction.

Wow, I am bored.

 

Originally Posted by dolphin13

Well, here's the thing. The option of driving a new car for three years and then go and lease a different car is appealing. For example

Just for example (not saying i would get it)I can lease a 40kish Cadillac CTS for 299 a month for 36 months (10.8k total). then I could lease/buy a new car.

The part I have to research is that I was told I could deduct all of now that I have my own business and still deduct gas and maintenance/repairs. But that it gets more tricky if you buys a new car that you'll use exclusively for business

Edit: the company I was working at went busto and I was on unemployment for a couple weeks (I hid this from OT cuz I was embarassed, lol) but after a couple weeks on unemployment the company that laid me off a four years ago had me come back as a freelancer/independant contractor. So theoretically I'm a business owner now. Thankfully I'm making way more than I did from the place that went busto, which didn't even have any benefits

That actually changes things. How many vehicles do you have for your business? Are you a one-man show?

only makes sense if you talk to your acct and figure out how to writeoff a good portion of that lease as a business expense.

works only for self contractors or self-employed as far as i know.

There is such a thing as open-end leasing, but I think you have to have a fleet of vehicles to qualify for it.

 

Originally Posted by FortuneMeyers

I have been in the car business for 11 years. There is some good advice in this thread and some really horrible advice. If you would like some questions answered feel free to send me a PM.

Let's go bitch. Start calling shit out, so we can make an e-fight out of this thread. Much better than talking about leasing.

Leasing is often the best option for an individual that is self-employed. You will be able to write-off the full amount of the lease payment as a business expense, up to a allowable amount. I think it used to be $600 per month but may very well now be higher.

If you buy or finance your vehicle, you are allowed to write-off a portion of the depreciation of the vehicle as dictated by your applicable tax laws. The problem is that as your vehicle ages the amount you can write off decreases. For example, If you car cost 30K you may be able to write off 30% in the first year. In the second year your percentage is based on the remaining value of 21K. Therefore in a short period of time you will only be allowed to write off a small amount.

Therefore, businesses and self-employed individuals often prefer to lease to keep an even amount of available vehicle expense. Self-employed people who buy and keep a vehicle for a long period of time will have no allowable write-off and therefore pay higher business taxes. Many companies and self-employed people will buy out a lease at the end of the term for their personal use and re-lease a car to maintain a business expense.

Your accountant can tell you which options will be most advantageous to you depending on the type of business you are in.