I've picked the body style, transmition, colors, fabrics, etc. Now for the tough part...The money!

Here's my situation. I'm in medical sales and my company requires us to drive vehicles that are no more than 3 years old. That sounds harsh, but keep in mind that they kick in $500/mo for car payments PLUS .19c per business mile driven. That comes to roughly $650/month. Not bad at all. Since I'll be driving up to 18-20K miles/year, leasing isn't normally an option. Correction...Infinity offers an 18K mile/year lease option! It's a no brainer, right? Put little money down, drive off with a 2005 G35 sedan, and have my company cover the costs. Hell, my payment will only be around $350/mo. In 3 years, turn in the car and get something else. Tough to go wrong with that option.

On the other hand....Infinity is offering 2.9% financing currently. I'll negotiate a price of around $33,500, put $4-5K down, and drive off with a G35 sedan and a payment of around $530/month. That sounds a lot higher than the first option, but consider that in 3 years I'll only owe $12,348 for a still smokin' hot G35 with around 50-60K miles on her. I could then hand the keys over to my wife, trade in her Maxima, and do it all over again. Make sense? The risk here is that if my job situation changes, I'll be leveraged with a big car payment.

Normally, the first lease situation makes more sense for a sales guy who changes cars every 3 years. The thing is, with Infinity's low 2.9% APR right now, it's very intriguing to buy the car and only have a residual at 3 years of $12,500 or so. Surely a 3 year old, VERY well maintained G35 will be worth more than $13,000 in 3 years.

Thoughts???

 

Will your company lease the car for you? I would pursue that option first because then if you decide to change jobs they will dispose of the car for you.

If I had to drive 18-20k miles/year, primarily for work, I'd lease it. Nothing make a car depreciate fast like high mileage. A 12k/year lease at $500/month (a reasonable figure for 3yrs) with 8k additional miles/year @ $.20/mile works out to $1,600/year or $133/month. Your firm will reimburse you for business miles at $.19/mile. If you figure business mileage at a conservative 8k then your net out of pocket expense for this car is $.01 x 8,000 = $80 per year.

So the question really is, why wouldn't you lease the car? Do you think the sales job will last less than 3 years? If so, make them lease the car for you. Most medical sales reps I've know have their company cars provided to them at no out of pocket cost.

The bottom line is no deal is better than a free car and $80/year is very close to free. In 3 years, you can make another decision as to whether you want to buy a car. You will be looking at 2008 models (more power, sophistication, etc.) and you'll have had 3 years to sock away $100 month or more. That will take care of the downpayment. If you saved $500/month you could pay cash for a used G35 with fewer miles than your leased car and have no monthly payments moving forward.

Finally, you've got to spell the company name Infiniti. That's important.

Good luck!

Cale

 

Thanks Cale,

Your points are greatly appreciated. My company is headquartered in Europe and they will NOT lease the car for me. Still, your logic applies to this scenario as well. I can work out an 18K mile/year lease with Infiniti and will be looking at roughly $399/mo. If I were to purchase the vehicle, I'd be looking at a purchase price of $33,500, $5000 down, and a payment of $530/mo with 2.9%.

The question is, what would be better at the end of the lease? The purchase option may allow me to gain some additional equity down the road, but that's probably a wash when you factor in the extra cash that I'd have to pay up front. The thing I need to confirm with Infiniti is how much (or little) of a down payment will be required at signing. If they ask for $4000, then the Hell with it. I'll just buy the damn thing and turn it over to my wife in 3 years with 50K miles on it and only oweing $13000.

You see what I mean?

 

What's the residual of the car after the lease? You may want to find that out as you can lease the car and then decide to buy or return the car after three years. This way, you don't have to make the decision now, no up front down payment and the payments for the next three years is relatively smaller than what a purchase would equal.

I personally like to modify my cars, not have the hassle of mileage restrictions and not worry about dents and dings at time of return, so a purchase would work out better for me. However, if you are one who likes trade up for a new car every couple of years, the lease option isn't a bad deal. With a lease, you don't have to worry about depreciation so much at the end of your term.

 

you are not "required" to have that big of a downpayment. I bought mine right as I was graduating from college, so I only put $1500 down on my car.

 

My point is it is always better to preserve cash. I purchased with the 2.9% financing with $0 down. I will own this car for 10 years or longer. And 2.9% looked like a great rate to me. Purchasing works out in my example.

But for you, I would get a lease. Do not put cash down. Shop the lease around. If Infiniti wont give you a lease with $0 down (I understand you may need to pay a last payment up front) then shop around until you find that deal from a leasing company. You are not limited to the dealership for leases on 2005 Infiniti G35s.

My point is that you can make your cash work for you in a productive way. Spending any of it on automotive expenses is counterproductive to your ultimate goal of capital preservation. You might even come out of this with some additional money from your employer that you can save or invest. If there is an economic advantage from the deal your employer is offering you, you can convert that advantage to cash today and save every penny of it. You'll earn any interest or realize any capital gain from an investment made with that money. Under your "buy it now" scenario you will pay Infiniti or someone else interest on that money.

I just don't see any scenario where buying this car makes sense for you. It sounds as though you're mixing your desire to replace your wife's car with the decision to purchase or lease this car. I would want the greatest flexibility in making a decision regarding an automobile for someone else to drive in 3 year’s time. Leasing the car gives you this flexibility and it maximizes the amount of cash you can save or invest today for this future.

 

I just leased a 2005 6MT with Prem, Nav, Aero (the $550 one), splash guards, and trunk mat.

I'm getting the car with wheel locks also and getting the car for $600 over invoice. For 36 months/15k miles, the residual is 60%. I know for 12k miles, the residual is 61%, so I'd expect for 18k to be 59%, maybe 58%. My money factor is .00194. I have read that it is supposed to be as low as .00179. The change doesn't affect my payment that much but I am going to try it get it to the lower number.

Also in the lease, is obviously the destination charge of $610, the bank fee of $550, and the 3 year registration of $222. I'm putting nothing down. The only thing I will pay when I receive the car is my first month's payment. My payment is $512.43.

For leases, you should never put money down, IMO. The reason is because you do not own the car. If the car gets totaled, you lose the money you put down. There will be no check coming your way to recoup that down payment and buy another car.

I should get the car by the end of the month and will post pics once I do. Very excited!!

ERIK

 

I just got off the phone with Infiniti, and here's the "standard" lease deal.

Neg. Price of Car ($33,500)
10% down payment ($3,350)
Approx. payment ($450 depending on credit score)
36 mo residual around $18,000

With the 2.9% APR Infiniti is offering, here's the same purchase scenario

Price of Car ($36,500 incl. tax & lic)
$5000 down = finance amount of $31,500
Monthly payment around $530
Total owed on car after 36 mo = $12,965 approx.

I guess the bottom line here is that the dealership was being straight with me. They flat out said that normally the lease would be better for my situation, but with the low APR right now, that might make a difference. The purchase scenario above would cost me more initial downpayment, but save over $5000 in 36 months. On the flip side, the lease would save approx. $2000 in downpayment AND almost $100/mo. That monthly savings would come to $3600 in 3 years.

The bottom line? It looks to be a wash. Like someone else mentioned, the fact that there is a strong possibility that I'll be needing another car in 3 years probably makes leasing a better option in this case.

 

Bobby,
Erik7 is completely right, do not put any money down on a lease. You are essentially only prepaying the monthly payments. The dealers always want you to put a lot down, don't listen to their advice on the standard options. They are only standard for people that don't understand the process. You have GAP insurance on all leases now. If your car is totalled, insurance company will pay the value of the car, if your lease payoff is higher than that, the GAP insurance covers the difference. If you put any money down, that is all lost. Check out carbuyingtips.com for some help on leasing. To be able to get rid of a car every 3 years and not worry about being upside down or losing all the money you sink into it with big down payments or high monthly payments is a big benefit.
Good luck.

 

I leased a 2004 G35 Sedan Desert Platinum from Bradshaw Infiniti of Greenville SC. No money down $399.00 a month for 39 months 12,000 a year. Such a bargain. I've had this car for around 7 months and it only has 4,000 miles on it.

 

I ended up purchasing my infiniti, but only because of the low APR. I had $5K to put down, and with my company paying $500/mo + .19c/mile it makes sense for my situation. In three years, the car will be 60% payed off with less than 60K miles on it. At that time, I can opt to hand it over to my wife and purchase another car or sell it myself and get a nice $7-8K in profit.

If I wasn't in a situation to put money down, I would have gone the route of the lease. Either way, with 2.9% financing for 60mo, Infiniti is making it fairly affordable to get behind the wheel.

 

Nothing ruins your day like an "unexpected " job change. Can't tell ya how many times a week some poor guy came into the dealership with an "over mileage" lease car that he had to get out of because his "situation" (read:job) changed "unexpectedly. So not only did the unfortunate recipient of bad news have ta pay off his lease outta pocket, he also had to pay off his mileage difference. BIG BUCKS....ouch! But then, that'll never happen to anybody here......right? GOOD MOVE, BobbyG ! JBX

 

I don't really have a hard numbers financial analysis but rather a general comment on leases. Leases were originally developed for company fleet vehicles as the last thing a GE, Phizer or other such entity wants to do is bother with having to turn over a bunch of sales cars every three years. Leases provided a tangible financial benefit to the leasee as said leasee could justify the time savings of having to unload a bunch of used cars. Leases migrated into the private sector as it allowed the people to drive more with less money. Just in general terms, I believe this is always a danger; i.e., a low/no equity position, if the only gain is a cooler car.

 

But when you do have your own business, leases are great for tax purposes!