4 ms·

I hear people say leasing is the way to go, but I don't understand the math. Cars easily last 10 years now, and I drove my last car for 18 years. Please explain

I hear people say leasing is the way to go, but I don't understand the math. Cars easily last 10 years now, and I drove my last car for 18 years. Please explain! Is it about always having a newish car at an optimal price?

steveeq1 8y ago
Maybe it's incentive-caused bias from a person who makes more money selling leases?
NeedMoreTea 8y ago
Leasing wins against having a new car every few years. It fails badly if you keep your cars longer or buy when they're a few years into the depreciation curve. Personally I decided buying cars a few years old made far more sense.
- ianai 8y ago
  Leases are literally the option to purchase a car at a much later date at a predetermined price. You’re betting you can keep the value of the car above the price difference of the vehicle at that later date. The manufacturer is just raking it in - they’ll rarely not be able to fix a vehicle up for a great profit. I wouldn’t be surprised to learn the lease contract price (Ie sum total of downpayment and monthly payments) more than covers the manufacturers per vehicle cost.
- ams6110 8y ago
  > Personally I decided buying cars a few years old made far more sense. I think it absolutely does. I actually go for older than that, Typically 6-8 years or even more. Right now my newest car is a 2006 which I bought last year.
- taeric 8y ago
  So leasing wins if you've already decided to pour money out the window? I see that you said buying used and older makes far more sense; which means we are probably on the same page. However, is that really the only selling point for leasing? If so, how in the world do so many folks get suckered into doing it?
  - crysin 8y ago
    Lots of people like new cars and being able to have the latest year's model every 3 or so years is a big bonus for people. Same a majority of people like having the latest iPhone or Android flagship phone. Not everyone places value purely in the monetary realm. Some people view cars as a status symbol. There is also less hassle with leasing.
    - taeric 8y ago
      Saying people don't place the value in the monetary realm is amusing, since money is supposed to be fungible for all value. :) That said, I get it. Some people place a ridiculously high value on having the latest. I think I used to be in that population, to an extent. Nowadays, I confess this mentality leaves me ridiculously confused.
  - NeedMoreTea 8y ago
    Pretty much, along with the fixed and known cost per month with fewer possible surprises. I can understand the appeal of new if you are buying to keep for a long term, or something exotic. Outside of those I don't know why anyone would buy new a thing that loses half its value in the first two or three years. Still it provides plenty of choice in the secondhand market. :)
Spooky23 8y ago
If you are buying fancy cars, it always makes sense, as the emotional buzz from having a fancy car fades with age. The dealers will sell the car for next to nothing because they owe money on the car, and get stuck with inventory they don’t want. Your Toyota dealer doesn’t get his high margin 4Runner unless he takes a view Yarii (or whatever the tiny Toyota is). This is the same reason bars sell well liquor at a loss.
- ec109685 8y ago
  They price all this into the lease payment and down payment. You aren’t getting any sort of deal. All you are doing is saving yourself hassle when you return the car back at the end of the lease instead of selling it yourself at that time.
- handsomechad 8y ago
  Do bars really sell well liquor at a loss? I've never heard that and I can't imagine that being true just from my experience as a customer in bars. Even if a Rum & Coke is 5 dollars (I'm used to it being more around 8-10$ on average, but being conservative), the unit economics still seem extremely profitable to me. I would think the coke from the fountain costs pennies, and the shot of (well) rum would be max one dollar.
  - jmts 8y ago
    The going rate for a cocktail in Sydney Australia is somewhere between $16-20 at the bars I would frequent a few years ago. Take a martini, with 3 shots (total) of gin and vermouth - 35mL shots for the math to work out. 750mL bottles of gin and vermouth will set you back about $30 each (retail), depending on the brand. With 22 shots per bottle it works out at about $1.40 per shot, and therefore $4.20 per drink. You're looking at $100 bottles of spirits before you start reaching the $16 mark for price of spirits alone. For comparison, with beer you're looking at about $2 per beer retail ($50/24 bottles) and likely to pay $8 or more at a pub. This suggests a similar markup on beer to spirits, at least here. Note however that a proper martini (or manhattan, old fashioned, etc) is likely to get you the best bang for buck as a consumer - all the 'fancy' drinks marketed toward women like frozen margaritas etc usually contain less alcohol but retain the same price tag.
chiph 8y ago
For some brands, it's about needing to be under factory warranty coverage for the entire ownership period.
- twothamendment 8y ago
  Nothing wrong with a warrant, but that is a good indication it is time to look at a different brand.
  - nradov 8y ago
    It's less about the brand than the feature set. Any brand that pushes the limits of performance and technology will tend to be less reliable. Toyota is at the top of the ratings partly due to engineering skill, but mostly because their designs are conservative and take few risks. The V6 engine in the Toyota Camry has been in production since 2002 with only minor improvements so they've had plenty of time to work out the bugs.
  - closeparen 8y ago
    If you just need a transportation appliance, you should only even be considering used Honda/Toyota. If you're buying an image or a driving experience, touchy maintenance and expensive repairs tend to come with the territory.
err4nt 8y ago
Leasing is a bad arrangement, if you have a car you get get rid of it, but if you are leasing a car they can make it near impo$$ible for you to get out of it. I know one guy who had his own vehicle. But right before breaking up with his girlfriend she took out a car lease with his name on it. After they broke up he not only never needed the second vehicle, but also couldn't get out of the payment, so he had to get a second job just to cover the payment on a car he didn't need or want.

steveeq1 8y ago

Maybe it's incentive-caused bias from a person who makes more money selling leases?

NeedMoreTea 8y ago

Leasing wins against having a new car every few years. It fails badly if you keep your cars longer or buy when they're a few years into the depreciation curve. Personally I decided buying cars a few years old made far more sense.

ianai 8y ago
Leases are literally the option to purchase a car at a much later date at a predetermined price. You’re betting you can keep the value of the car above the price difference of the vehicle at that later date. The manufacturer is just raking it in - they’ll rarely not be able to fix a vehicle up for a great profit. I wouldn’t be surprised to learn the lease contract price (Ie sum total of downpayment and monthly payments) more than covers the manufacturers per vehicle cost.
ams6110 8y ago
> Personally I decided buying cars a few years old made far more sense. I think it absolutely does. I actually go for older than that, Typically 6-8 years or even more. Right now my newest car is a 2006 which I bought last year.
taeric 8y ago
So leasing wins if you've already decided to pour money out the window? I see that you said buying used and older makes far more sense; which means we are probably on the same page. However, is that really the only selling point for leasing? If so, how in the world do so many folks get suckered into doing it?
- crysin 8y ago
  Lots of people like new cars and being able to have the latest year's model every 3 or so years is a big bonus for people. Same a majority of people like having the latest iPhone or Android flagship phone. Not everyone places value purely in the monetary realm. Some people view cars as a status symbol. There is also less hassle with leasing.
  - taeric 8y ago
    Saying people don't place the value in the monetary realm is amusing, since money is supposed to be fungible for all value. :) That said, I get it. Some people place a ridiculously high value on having the latest. I think I used to be in that population, to an extent. Nowadays, I confess this mentality leaves me ridiculously confused.
- NeedMoreTea 8y ago
  Pretty much, along with the fixed and known cost per month with fewer possible surprises. I can understand the appeal of new if you are buying to keep for a long term, or something exotic. Outside of those I don't know why anyone would buy new a thing that loses half its value in the first two or three years. Still it provides plenty of choice in the secondhand market. :)

Spooky23 8y ago

If you are buying fancy cars, it always makes sense, as the emotional buzz from having a fancy car fades with age. The dealers will sell the car for next to nothing because they owe money on the car, and get stuck with inventory they don’t want. Your Toyota dealer doesn’t get his high margin 4Runner unless he takes a view Yarii (or whatever the tiny Toyota is). This is the same reason bars sell well liquor at a loss.

ec109685 8y ago
They price all this into the lease payment and down payment. You aren’t getting any sort of deal. All you are doing is saving yourself hassle when you return the car back at the end of the lease instead of selling it yourself at that time.
handsomechad 8y ago
Do bars really sell well liquor at a loss? I've never heard that and I can't imagine that being true just from my experience as a customer in bars. Even if a Rum & Coke is 5 dollars (I'm used to it being more around 8-10$ on average, but being conservative), the unit economics still seem extremely profitable to me. I would think the coke from the fountain costs pennies, and the shot of (well) rum would be max one dollar.
- jmts 8y ago
  The going rate for a cocktail in Sydney Australia is somewhere between $16-20 at the bars I would frequent a few years ago. Take a martini, with 3 shots (total) of gin and vermouth - 35mL shots for the math to work out. 750mL bottles of gin and vermouth will set you back about $30 each (retail), depending on the brand. With 22 shots per bottle it works out at about $1.40 per shot, and therefore $4.20 per drink. You're looking at $100 bottles of spirits before you start reaching the $16 mark for price of spirits alone. For comparison, with beer you're looking at about $2 per beer retail ($50/24 bottles) and likely to pay $8 or more at a pub. This suggests a similar markup on beer to spirits, at least here. Note however that a proper martini (or manhattan, old fashioned, etc) is likely to get you the best bang for buck as a consumer - all the 'fancy' drinks marketed toward women like frozen margaritas etc usually contain less alcohol but retain the same price tag.

chiph 8y ago

For some brands, it's about needing to be under factory warranty coverage for the entire ownership period.

twothamendment 8y ago
Nothing wrong with a warrant, but that is a good indication it is time to look at a different brand.
- nradov 8y ago
  It's less about the brand than the feature set. Any brand that pushes the limits of performance and technology will tend to be less reliable. Toyota is at the top of the ratings partly due to engineering skill, but mostly because their designs are conservative and take few risks. The V6 engine in the Toyota Camry has been in production since 2002 with only minor improvements so they've had plenty of time to work out the bugs.
- closeparen 8y ago
  If you just need a transportation appliance, you should only even be considering used Honda/Toyota. If you're buying an image or a driving experience, touchy maintenance and expensive repairs tend to come with the territory.

err4nt 8y ago

Leasing is a bad arrangement, if you have a car you get get rid of it, but if you are leasing a car they can make it near impo$$ible for you to get out of it. I know one guy who had his own vehicle. But right before breaking up with his girlfriend she took out a car lease with his name on it. After they broke up he not only never needed the second vehicle, but also couldn't get out of the payment, so he had to get a second job just to cover the payment on a car he didn't need or want.