What are everyone views on
Leasing?
Financing?
Scotiabank/RoyalBank Buy Back lease? (I believe Infiniti goes with ScotiaBank)

What is the difference between a regular lease and the buy back program?

What is most people here doing? and for how long and if you don't mind me asking....how much are your payments?

 

I'm not a fan of leasing and would never do it. In the long run you will be paying a lot more and will never own anything.

 

Honestly, there is not a whole lot of difference between them all. You will end up paying almost an equal amount of money but in different schedules.

It's really dependant on a number of stuff, how long would you keep the car? Would you do any mods? How much money can you put down? How much payments can you afford? How good would you take care of your car? How many miles you put on the car?

Leasing is a way for people to afford a car they normally couldn't and you are basically paying for the interest and the depreciation. If you really want to keep the car more than 4 years it's wiser to buy it if you can afford it.

Bottom line you have to compare all the options and see which one fits your lifestyle the best.

 

Infiniti does not always go with Scotiabank, the business manager told me they would go which ever provides the best rate at the time of purchase.

I traded in my 03 Acura CL-S for 04 G35C, I was gonna finance the difference in 36 mths term with HSBC (Infiniti chose HSBC at that time). But at the end, my girlfriend just convinced to pay it all off at delivery to save $2880 interests. Not much money in the long run, but that amount become my initial investment for car mods. lol

 

My response is if you can afford a lease, you can afford a car. If you get a new lease every 4 years you will always be making payments and will never own anything.

Rather than doing the math over 4 years try the payment over the number of years that you plan to lease and see what you have wasted. If you lease now, there is a good chance you will be leasing 20-30 years from now. Do the math over 300 months and see what you would be spending vs owning. If you think 20-30 years is unrealistic then try the math over two leasing periods (8 yrs).

As mentioned, it comes down to personal choice but I just as soon keep my money and not give it to a leasing company. I really feel leasing is a rip off and it is just another way for banks and leasing companies to make a fortune.

 

I've done the lease thing a few times and I prefer buying. As has been said, If you can afford to lease, you can afford to buy.
I like the idea of owning my own vehicle, too.

<font color=red>GSM</font color=red>
<font color=red>GSM</font color=red>
<font color=black>Silverstone Coupe</font color=black>

 

That said being true, you would still see people calculating their lives on a monthly basis! So they would go and lease a 50'000 dollar car when they could in reality only afford 25000 dollar over 4 years.

So I still stand correctly :-)

Leasing is more expensive than buying at the end but it gives you the option of lower monthly payments. Thats the only attractive point of it I suppose.

I personally agree with you though that buying the car is the best option since you can modify the car and not worry about mileage caps.

 

Personally, I don't like the idea of not owning my car and in reality you are really just renting when leasing. That being said, I never consider a car as an investment so re-sale value is not important to me. This is my 2nd car, but I've had my 1st for 7+ years with no plans of trading/selling. I guess leasing is not an option for me because I like to keep the cars for a long period of time.

Only financial reason I can think of where leasing is more advantageous than financing is if you own your own business there may be better deduction opportunities.

 

Leasing tends to be better for high-end cars. Here are some reasons:

1) As mentioned, you may be able to write off a portion of the lease payment. You can't write off depreciation. The higher the lease payment, the more you can write off (there is a cap on this - anything more than $800/month can't be written off).

2) If you know you will only keep a car for 3-4 years (say you want something new and shiny every few years), leasing is a good way not to pay sales tax on the residual. If you buy a $100K car every 3 years, you will be paying $15K in taxes every 3 years, if you sell privately. If you lease, you're paying $6K in taxes.

3) You don't have to worry about trying to sell your car when you want a new one. The market for a high-end car is smaller than for a Honda Civic. Leasees turn over the keys without having to haggle over price - the residual's already set at lease inception.

4) The biggest argument against leasing has always been owning vs. renting. In reality, ownership is an emotional state of mind. Unless you buy your car out-right with cash, whether you finance it or lease it, if you can't make your payment, either the leasing company or the bank takes your car. There is no difference.

5) Another related argument is that owners have "equity" in their vehicle, while leasees are left with nothing at lease end. For most people in finance, "equity" in a depreciating asset is a poor investment. The money you sink into a car that loses value every day could be better invested in true equities (stocks, bonds, property, etc.) that could actually rise in value. This is the opportunity-cost of money, and is more important to people who use money to make money.

6) For high-end cars, maintenance is often a costly issue. Most leases run out well before the warranty, which means the leasee does not have to worry about paying for a high-cost part or labour, simply because the car was expensive in the first place. Related to #3), trying to sell a high-end car after the warranty has expired will require either persistence, luck, or a coat-hanger to roll back the odometer!

7) Which leads to resale value. Some high-end cars do not do well on the secondary market (Jaguar in particular). However, most manufacturers leasing programs will set the residual remarkably high to attract buyers. This means that a leasee will pay not more than 40% of the cost of a vehicle over 3 years, while someone that sells a car after 3 years, might only recover 50% of it's value. And that's on a private sale! On a dealer trade-in, the dealer has to make his profit, so the trade-in value might be a lot less than 50%.

8) One attraction to leasing is that if your car were ever to be damaged in an accident, you are not left trying to get rid of a vehicle with diminished value. Granted, the cost of the repairs will be the same if you lease or buy, but the residual remains the same after the repair, whereas a damaged car will suffer greatly at resale or trade-in time.

9) And finally, the biggest misconception about leasing is that it is much more expensive than buying the car. In reality, for high-end cars, it is cheaper to lease a car than to buy (finance) it and sell it after 3 years. Again, we are assuming you are not buying the car outright with cash. So, if the downpayment is the same (yes, you can put a downpayment on a lease!), you'll find most manufacturer's offer a subvented lease rate which is lower than most finance rates. The residual is also set higher than the secondary market resale value. For most high-end cars, there is a cut-off point somewhere around the 5 year mark where it finally becomes cheaper to finance (buy) rather than lease.

The really critical factor is how long you keep your car. I know people that say, "I'm gonna keep this car forever", and end up taking a hit when they sell the car 3 years later either because of financial/life circumstances, or the advertising campaign for the next new shiny toy is just too irresistable. Most folks can't predict the future and the attraction to leasing is that you can always choose to buy the car out at lease end, and pay a bit more (because the residual is high) for that option. I've heard stock traders call leasing an implicit "put option", that you may choose to either exercise or walk away from in 36 months.

If you've read this far (I don't know if I would have, the above is kind of dry), then maybe some of this applies to you, and maybe leasing is right for you... I've done both, and I've been happy with the way things have turned out. Just wanted to provide a different point of view.

 

Well said!

This article and many more like this on MSN Auto's are great reads for this subject: http://autos.msn.com/advice/article....22023&src=News

 

Good arguments but in my mind you are wasting your money. Without a doubt a car is a poor investment.

Let's say you have 2 leases and each lease is 4 years long. On a $50K car you would probaly spend $50K at the end of 8 years and have zero equity. If you bought a $50K car at the end of 8 years you would probaly have a car worth $20K.

This is for only two leases, try 3, 4,5......

The best investement from a bankers perspective is someone that leases. It sure beats the stock market.

You can try justifying a lease but it comes down to math.

Next time you want to lease, please don't call the banker or the dealer, give me a call - I would love to have leasing company.

 

I knew this would happen. You didn't read my post properly. I explicitly stated that leasing is good for high-end cars and if you trade in every 3-4 years. A good case in point:

My friend bought a 1998 750iL for $150K. He paid $175K tax-in out the door. Last month he tried to trade it in for an M5, the dealer offered him $20K wholesale. He tried selling it private-sale, but since the market for a 6-year old V12 Bimmer is small, the dealer's offer was the best he could do. He's out $155K over 6 years. This is not counting the cost of financing.

If he had leased that 750iL in 1998 for 3 years, with a residual of 54%, he would have paid $69K in principal, $80K tax-in. Then if he leased another brand-new 750iL in 2001, he would have paid another $80K. This brings the total to $160K for 6 years, $5K more than if had bought it outright. Factor in the fact that if he got a subvented lease rate 2 points below a finance rate, this translates to roughly $2K/year difference, so over 6 years, he would have saved $12K in interest payments.

So Net-net, my friend would have saved $7K if had leased. On top of it, he would have been driving a brand new vehicle after 3 years. If he scraped up the car after a couple of years, no problem, he's not going to suffer diminished value on resale. There was no haggling with the dealer on trade-in, he didn't have to suffer fools who wanted to test-drive a 750iL with no intention of buying, and he doesn't have to worry about out-of-warranty issues on a $150K car, with BMW billing at $80-90/hour.

I'll tell you how the story ends though: he ended up keeping the 750iL as a beater *and* is now leasing the M5.

My point is that leasing does have it's benefits. On a G35 with a large enough secondary market and a healthy residual, the benefits are diminished, but if I'm the kind of guy that wants a new car every 3 years, and I get to write off a portion of my lease payment, it is still cheaper to lease.

P.S. Your comparison of car ownership to someone who leases 3, 4 or 5 times is a bit misleading considering Canadians tend to keep their cars an average of 7 years. That's less than two 4-year lease terms in your example. Keep in mind this is the average, which applies to all cars. I'm willing to bet that the demographic that buys hot sports coupes and sedans keep their toys for less than 7 years.

 

lee_996

Point taken about expensive car. I was thinking of an expensive car in the $50k range. I appricate what you are saying about your friend.

 

True, it all does come down to math but in the end it's how much cash you spent on the car after you no longer own or lease it.

Take a typical example, all numbers are approx.

A) 4 year LEASE
Downpayment .... $2500
Lease pymt $800 x 48 months (15% tax-in, 8% interest)
Total Cash outlay $40,900
($2500 + $800x48)

B) 4 year purchase
Purchase Price 48,000+15% tax = $55, 200
Downpayment .... $10,000
Monthly payments ... $1100 (8%)
Resale value (~40%) .. $22,000
Total Cash Outlay after selling the car = $40,800
($10,000 + $1100x48 - $22,000)

Not a huge diff between option A and B, and with the lease, you can use that $10,000 for investments or anything else you want. In option B, you tie up the cash and get it all back in the end, but net effect is minimal.

Change the # of years around, shorter is better for lease, longer is better for purchasing.

 

I think your lease calculations are wrong. You need to have a Risidual Value and a Money Factor to calculate the lease and it's more complicated than just add the interest to the portion of car you drive.

Cars come with different Risiduals, and without it it's just impossible to calculate lease payments.