Leasing???

Leasing in today's market makes no sense. The dealers know they are going to get hosed when the lease is up so they add fees upon fees when your lease is up to recover the lost income. There are also small print regulations that limit who you can borrow from. If you lease, which you shouldn't because you can always sell your truck later for little to no loss, you must make sure you read every line of your lease agreement. Leases these days even include early buyout penalties. They are crazy!

 

For me, I try to make it as simple as possible and cost/yr makes it easy to understand. Completely agree there are situations for individuals with business taxes advantages and a few other specifics where lease adds additional value.

This is a calculator I put together showing cost over 6 years (2-3yr leases) as I typically keeps vehicles about that long. The values are based off of actual tundra new/lease/buy used options quotes about 3 years ago and resell also quoted off of NADA using low market resale as I find selling used myself I can easily get that and typically a little higher. I’m not worried about the maintenance cost on oil changes and such as they are negligible for me. That’s why we buy Toyota in the first place.



Even if you invest the difference in an account getting a 10% return you can see it won’t offset the higher costs, it’s already factored in the total cost of lease. You guys are correct these are depreciating assets. The issue is if you follow the depreciation curve you will find the steepest losses in the first few years. I have bought the last two pickups 3 years old for ~50% of MSRP.

Also, since 68% of Americans have NO 401K I’d venture to guess investing the difference isn’t the strategy. Leasing is, often not always, a way for people to drive cars they can’t actually afford with good financial sense. If you have to have the shiny new thing that’s fine but don’t trick yourself into believing it’s the best financial option.

 

This is my perspective on it. I have my truck paid off (bought cash, I am a little old school - but the cash was from a very good investment I had sold to rebalance my exposure, having already made close to 1000% on the original investment). Also, having one paid off vehicle has always been a rule in my family, think of it as a form of insurance against an economic black swan, although my career is very stable and well insulated, it never hurts to have an essential item such as a vehicle owned free and clear... I want to keep my wife's car payment very low, so that it doesn't eat into my general budget, which leans heavily towards weekly investing in a diverse portfolio, over-paying my mortgage and general expenses... She works very part time, in a business she owns, while being a stay at home mom, so the lease payment would be funneled through her business account, and use would be at least 50-75% for her business to capture the tax write off. I want her to have a new car with modern safety features for tooling the kids around, so to me it makes at least some sense, and would fit into a balanced use of funds, by minimizing the monthly output on her vehicle, to keep the remaining $300+ difference between buying and leasing flowing into investments. I will be running numbers carefully before we eventually pull the trigger, as the alternative option is 3 year old certified used vehicle. The big factor for her is that we are essentially killing time until we see a 4runner hybrid come out... So in the end we may nurse a few more years out of her paid off, mostly reliable Lexus...

 

I personally prefer to own my vehicles outright, and I tend to buy 3-4 year old vehicles with cash. However, I recently financed a new car (21 Sienna). I went back and forth on leasing it vs buying, but since my wife tends to keep vehicles 10 years the leasing route didn't make as much sense. A few months into it, I couldn't sleep well at night with all of that automotive debt so I changed course and refinanced to have it paid off by the end of the year. I know I'll be eating depreciation and some of the interest (thank a local credit union). But I also don't have any anxiety about going over mileage, buyback, etc. So for us, buying just worked better.

On the other hand, after my siblings and I all went off to college, my mom wanted new fancy cars but didn't want to deal with the buying/selling. She leased 4 different cars before she passed away, and it made a lot of sense for her. Got to drive Jag and an Audi for a few years without having to worry about all the BS that goes with owning those vehicles long term. She deserved it after a lifetime of driving minivans and suburbans that her kids tore to crap.

Also, like with any car deal, it depends a lot on the terms. Dealers can make a killing on financing or on leasing. Just depends on the particular situation and what you plan to do.

 

I have a 2017 Limited. My plan was to wait until 2023 to buy a new Tundra. My guess is I’ll still be looking at a minimum of 35-40 for my paid for 2017.
I’m starting to think that taking that money, investing it for 4-5 years and leasing my next Tundra would make a lot of sense. Then take out what’s needed to pay off the leased Tundra and hopefully pocket a chunk that way made by investing. This assuming I want to keep the leased Tundra.
For you financially savvy members. Does this make sense? Guide me please.

 

6,000 sqft house for 800k? Shit, I need to move.

 

Still a bargain sadly. At least around here.

 

In lower NY (about hour north of NYC or east of NYC) a 3000 square foot house is about 600k or more…

 

House near me was just listed yesterday, 700k for 2,000sqft.

I'm sure someone in SF would come in here and call that a bargain though.

 

That’s insane…but at the same time people are paying.

 

My house is about 3250sqft and it goes for about $675k Cdn.

We aren't much cheaper up here.

 

In white salmon Washington a 1000 sq ft house with no property is 500k+.

 

That would be so cheap down here

 

That's $533k USD. Still not really cheap but your dollar conversion does make it cheaper.

 

My mom sold. 1000 sqft house (yes, that is one thousand) for $1.5 million. Originally purchased for $76K. Insane

 

You win sir, your place sucks the most.

 

Postage stamp house in CA. I just remember how bad the termites were, had to get the house fumigated (completely tented) multiple times when growing up. It does suck...can't believe what people are willing to pay.

 

I'm a CPA, and about to go get my CFP. I've owned most of my vehicles but leased one.

Just my opinion, but I approach buying a vehicle with the following thought: I'm going to get screwed. Picking your method of paying for the vehicle is just picking the least painful way to get screwed. I would stop going into this process thinking that there's a good way to buy a car. There's not.

Everyone is different and arguing about the best way to buy a car assumes that everyone's in the same boat financially. I can make a case for leasing. I can make a case for financing. I can make a case for paying cash. It depends on the person and the situation.

 

A house over 3k sq ft around here is over a million dollars. With no view. I would love to have your home prices.

 

Completely agree

Only caveat I have found is when you find a parent or relative that gets different vehicles every couple of years, and have them give you first choice (dealer trade in value or less). They buy high and sell low.....

 

personally I want to own this truck outright as quickly as possible as I plan to keep it for at least 15 years. Then I can focus on my next big purchase without annoying payments. Truck, then new home, and boat. I find having a couple year old truck with under 30k miles completely paid off a valuable asset to me. Renting vehicles seems pretty crazy in my head but to each there own.

 

Come to Calgary, Canada, the land of the beautiful!

 

If you're a 17 year old kid and buy your grandmas cadillac for next to nothing, you got a good deal, but you need to realize it was really a gift from Nana. I'm mostly talking about buying from dealerships.

There are fringe ways to buy cars, but I'm really talking about buying new from dealerships. I share an office with a bunch of estate lawyers. I see cars coming out of estates all the time. There's a practically new Lincoln Nautilus in the parking lot now that came out of an estate. Been telling people in my office to go buy it. Probably spent most of it's life in a nursing home parking lot.

 

Statement - Pro-Lease folks should consider that MSRP (traditionally) has not been what gets paid for a vehicle (see "invoice"). My 2018 SR5 Crewmax had MSRP of 43 and i paid 37.

Question - does "invoice" price get you any leverage when negotiating a lease (in a traditional market i mean...not the current state of insanity where my SR5 is allegedly worth 7k more than i paid on trade in after 3.5 years and 32k miles)

I was always under the impression that your LEASE cost was based on the depreciation of the vehicle. Looked less like "avoiding" the depreciation so much as paying for it outright, then given the option to purchase your used vehicle that has depreciated. I have not leased, but would consider it if it actually made sense to me financially or i just accepted the fact that i would live with $300-$600 payment forever and just wanted a new vehicle every couple years.

 

Depends on your perception, and how you want to justify your decision. This is a good example.

I could make the argument you're going about this backwards. I would rather be trying to invest in assets that don't depreciate over vehicles that do depreciate. I would look at the lending rates for real estate and cars. I recently bought a house, my rate is 2.25. I just called USAA and they'll loan to me at 1.5% for cars. If I had to choose between paying down the mortgage or paying cash for the car, wouldn't paying down the mortgage long term make more sense? Why have all that money wrapped up in a truck when you're trying to buy a house? Should you be trying to drive as cheaply as possible so you can put the money into a house? If you could lease a truck for $200 bucks less a month, and stockpile that cash for a house, wouldn't that appeal to you?

This is all white noise. At the end of the day, the mental benefit you get from owning the truck makes it worth it for you. The people who are the most successful financially are the ones that make a plan and stick to it. Pay off the truck, go buy a house and boat my friend.

 

TIL 68% of Americans dont have a 401k. That is terrifying.

 

Technically I don't have one.
Pension, Roth IRA, crypto, other investments, etc.

Remember what they say about statistics.

 

Valid point, but I see that many don’t really have anything like you mentioned above which is very smart to be diversified.

I would much rather over estimate what I will need for retirement than underestimate…which many people look at me like I am crazy when I discuss this topic.