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  #13  
Old 12-06-2015, 10:49 AM
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Re: Jeep Grand Cherokee HA Lease?

I've never seen any (non-exotic) cars that have positive equity after 36 months.

Anyone who is financially smart will know the following....

- lease if you want to drive a new car every 2-3 years
- never buy a car that is not a Japanese brand
- lease if you own a business because it's 100% tax write off
- never buy anything that depreciates in value
- only buy if you have FU money and you're going to mod da hell out of the car only to end up selling it a year later with all of the mods.

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  #14  
Old 12-06-2015, 10:51 AM
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Re: Jeep Grand Cherokee HA Lease?

Quote:
Originally Posted by JTS97Z28 View Post
I wish I understood the pros and cons of leasing more. I have always purchased my vehicles, but I have a hard time grasping how spending 600-700 hundred a month for 3 years then having to return the vehicle can be beneficial. I'm not knocking leasing, but just trying to understand it better.
It would seem that to me you could purchase the vehicle, and even with no money down, if you spent that much money each month that you would be gaining equity and have a decent amount of it when time to sell. For example, $650x36 is $23,400. Even with depreciation surely over 20 grand would get you some pretty nice equity when it comes time to sell. In a lease wouldn't that be money you will essentially never see again?
leasing works for me because i like to move into new cars pretty quickly (usually before the 3 years is even up) and the depreciation hit and hassle of selling the car off after such short time, plus the bigger payments doesnt seem worth the effort to me. Its not for everyone but i dont mind paying a bit more for the ease of getting out of one car and into another easily. I accept that ill probably have a car payment every month for the foreseeable future but as long as im happy with what im looking at in the driveway it seems worth it.
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  #15  
Old 12-06-2015, 01:30 PM
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Re: Jeep Grand Cherokee HA Lease?

It's just a different business decision, JT'. Folks who lease are paying for the use of the vehicle, rather than for the asset. For some folks, that makes sense...to them...financially. And quite often, they are able to be in a nicer vehicle than they are able to buy outright, even with financing. And equity isn't what they are shooting for, outside of the effect of a good residual (depreciated value at the end of the lease) which lowers the cost basis that the lease payment is calculated on.

Leases are not a good idea for lower trim level vehicles, folks who drive a lot of miles (unless there is a business write-off involved), folks who want to own the asset both short term and long term, etc. That first one is what truly drives me nuts in all of the advertising that dealers do these days, emphasizing monthly lease prices on vehicles that really are not the best idea to lease to begin with.
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  #16  
Old 12-06-2015, 03:10 PM
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Re: Jeep Grand Cherokee HA Lease?

Quote:
Originally Posted by JTS97Z28 View Post
I wish I understood the pros and cons of leasing more. I have always purchased my vehicles, but I have a hard time grasping how spending 600-700 hundred a month for 3 years then having to return the vehicle can be beneficial. I'm not knocking leasing, but just trying to understand it better.
It would seem that to me you could purchase the vehicle, and even with no money down, if you spent that much money each month that you would be gaining equity and have a decent amount of it when time to sell. For example, $650x36 is $23,400. Even with depreciation surely over 20 grand would get you some pretty nice equity when it comes time to sell. In a lease wouldn't that be money you will essentially never see again?
As stated earlier in this post, I've leased my current JGC. My last one (2011 Overland) was financed. In general, I will go with the option that best fits my goal. Though my preference is to lease.

With one exception, I have never kept a vehicle more than 3-years. Why, I get bored of it and want to drive the next model or same with the mid-cycle improvements. Most vehicles depreciate in value (some quicker than others). I don't want to invest my capital in a depreciating asset. Rather I would rather invest in something that could net a return. In your example of paying $23.4k over three years, you are assuming there would be a return. In my opinion, there are too many variables that go against your assumption including the economy, diminished value based on vehicle repair, consumer preference for a newer model or market change to smaller vehicle with a higher MPG.

My last two BMW's were leased. Those included a 435i Gran Coupe and M3. The benefit, BMW Financial allows a transfer to a new owner including all fiscal (i.e. credit) responsibility. It easier for a lot of people to assume a monthly payment vs. taking a new loan for a $60k vehicle. I am looking ahead to ordering an M3, M4 or M2 and most likely will lease it. This will give me financial flexibility should I decide that having a nice car is no longer a priority.

For those would keep their vehicles over 6 years or drive a lot of miles per year, leasing may not be practical. This would in-part depend on the m.f. and terms of the lease. For example, when I leased my JGC Summit, Chrysler had a program with a 0% m.f., lower residual and no fees. This would be paying cash for the vehicle though it would be leased. If I planned to keep my Jeep beyond the 3 year lease, I would've gone this route. Instead I opted for Ally who had a higher m.f. and residual resulting in a lower monthly payment. Add to this that my vehicle is a tax write-off.

In summary, leasing is not for everybody. Some will lease to obtain more of vehicle than otherwise could be afforded. One should look at all finance options before moving ahead. I often hear that because I leased a vehicle that I'm renting it or that I don't have true ownership. Well this is true but that same can be said for anybody that otherwise doesn't pay cash.
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Old 12-06-2015, 05:51 PM
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Re: Jeep Grand Cherokee HA Lease?

Quote:
Originally Posted by NHman View Post
As stated earlier in this post, I've leased my current JGC. My last one (2011 Overland) was financed. In general, I will go with the option that best fits my goal. Though my preference is to lease.



With one exception, I have never kept a vehicle more than 3-years. Why, I get bored of it and want to drive the next model or same with the mid-cycle improvements. Most vehicles depreciate in value (some quicker than others). I don't want to invest my capital in a depreciating asset. Rather I would rather invest in something that could net a return. In your example of paying $23.4k over three years, you are assuming there would be a return. In my opinion, there are too many variables that go against your assumption including the economy, diminished value based on vehicle repair, consumer preference for a newer model or market change to smaller vehicle with a higher MPG.



My last two BMW's were leased. Those included a 435i Gran Coupe and M3. The benefit, BMW Financial allows a transfer to a new owner including all fiscal (i.e. credit) responsibility. It easier for a lot of people to assume a monthly payment vs. taking a new loan for a $60k vehicle. I am looking ahead to ordering an M3, M4 or M2 and most likely will lease it. This will give me financial flexibility should I decide that having a nice car is no longer a priority.



For those would keep their vehicles over 6 years or drive a lot of miles per year, leasing may not be practical. This would in-part depend on the m.f. and terms of the lease. For example, when I leased my JGC Summit, Chrysler had a program with a 0% m.f., lower residual and no fees. This would be paying cash for the vehicle though it would be leased. If I planned to keep my Jeep beyond the 3 year lease, I would've gone this route. Instead I opted for Ally who had a higher m.f. and residual resulting in a lower monthly payment. Add to this that my vehicle is a tax write-off.



In summary, leasing is not for everybody. Some will lease to obtain more of vehicle than otherwise could be afforded. One should look at all finance options before moving ahead. I often hear that because I leased a vehicle that I'm renting it or that I don't have true ownership. Well this is true but that same can be said for anybody that otherwise doesn't pay cash.

I posted this in the other thread so I've just copied it here to explain another way, financially to look at leasing. I've always leased. And had equity when I wanted out of 3/5 leases. I recently leased a 2015 Altitude.

Well, at my credit union (assuming the rates don't drastically change in the next 3 years) a "new car loan" is considered any loan on a vehicle less than 3 years old. The current rates are 1.79% all the way to 72 months. So if I would have financed up front, my payment would have been approximately $606.21 per month with zero down. This is with a negotiated sale price of $500 below invoice, plus incentives ($2000). And assuming roughly 10% for drive off (taxes, initial registration, etc.). MSRP $41,625. Negotiated sale of $39,194.



Total out of pocket payment for the car in that scenario is $606.21 x 72 = $43,647.12



With the route that I took, same negotiated sale price. Same MSRP. The interest on the lease was essentially 0% at a MF of 0.00002. The residual is 49%, so a little more than half of the sticker price will be paid for through the lease.



Negotiated sale price less incentives ($3500 for the lease), plus fees (first month, sales tax, doc fee, registration, etc.) comes out to an adjusted cap cost of $36,922.46 with zero out of pocket. Monthly payment is $460.21 plus tax of 8.225% in Fresno CA, so $498.06 total payment including tax. I will have to make 35 monthly payments because the first was taken care of with the rebates. 35 x 498.06 = $17,432.10



Residual is $20,396.25. Assuming the rates don't change, and the same 10% for taxes and fees on that loan with zero down, plus the $350 purchase option fee, the new 3 year loan in 2018 will be for $22,785.88. That's a monthly payment of $650.53. For a total cost of 650.53 x 36 = $23,419.08



$17,432.10 + $23,419.08 = $40,851.18 for the Lease for 3, finance for 3.





$43,647.12 - $40,851.18 = $2,795.94 better. So, unless there's something that I did WAYYYY wrong, I think this was the better move. Sorry for the long explanation but hopefully it helps others. And if I'm wrong about something, let me know so I can edit the numbers on here


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  #18  
Old 12-07-2015, 07:00 PM
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Re: Jeep Grand Cherokee HA Lease?

^^ absolutely right.

It's almost always cheaper to lease for 3 years and then purchase the car at lease-end and continue paying it off.
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