I just can't with these Facebook people (warning math inside)

"If only EssExTee could be so grossly incandescent" (essextee) 07/31/2019 at 22:29 • Filed to: Rant

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Someone in a car group I’m in posted asking about the benefits of leasing. The thread is now hundreds of comments long, and naturally there’s a lunatic ranting at everyone about how leasing is the better fiscal decision. He responded to a comment of mine, and I clapped back with a sack of math. Haven’t gotten a response yet but here’s what I hit him with:

I bought my car for $2,500. Since then, I’ve spent about $800/yr on it between insurance and maintenance. I’ve had this car for six years so I’m in it for $7,300.

Let’s say someone has a modest lease, maybe an a$300/mo with insurance and maintenance included. Over six years they’ve spent $21,600 for the privilege of driving.

I’m so far ahead of the leaser that my car could break tomorrow, and I could go finance and eventually pay off a relatively new CPO car and still have spent less money than someone who has been leasing for the same six year period.  

My take on leasing is, the only people who do it either have enough money that they can burn it like that and have a new car every few years, or people who are so broke that they can’t buy a car. Leasing can get you into a car with little to no down payment. Someone who could otherwise never scrape together a few grand at once to buy/finance might still be able to swing a couple hundred a month for a lease. So, they get trapped in a vicious cycle and long term they’ve spent wayyyy more money than they should have.

EDIT: Okay some of y’all are saying comparing my $2.5k beater to a new car is unfair, and I get that, so here’s some more math:  

Let’s say I finance a new Accord. I pay 6k down, then $300/mo for 60 months. This puts me at slightly more than the Accord’s starting price. Google says the average interest on that loan is 4.21%, so I’ve spent about $24.5k on this car in five years.

The CHEAPEST lease on an Accord is $1,500 at signing and $250/mo for 36 months. The leaser has to get a new lease, so in the time it took me to pay off my Accord they’ve spent about $18 k on leases.

So over a five year period the leaser comes out ahead, BUT I now own my car and within two years after paying it off, the other person who is now on their third lease has spent more money.

I own dead car brands only > If only EssExTee could be so grossly incandescent 07/31/2019 at 22:55

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I agree with you fully. I drive 40k a year so leasing is automatically out of the question for me. I could have bought a beater reliable car and save a ton of money but I bought a nice car and put tons of miles on it. I want to be in a nice car if I’m going to drive that much. If I drove less, I would have bought a cheaper car or leased a new car if I wanted that new car feel.

My point is: I agree with you, leasing is not the best financial decision

BrianGriffin thinks “reliable” is just a state of mind > If only EssExTee could be so grossly incandescent 07/31/2019 at 22:57

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Leasing makes sense for a) adults who don’t drive that much and always want a brand new car without putting any work into it and b) senior citizens if the numbers work. Oh, and businesses or course. Otherwise you’re 100% right, though maybe I wouldn’t  use a $2500 car as a counter- example

WilliamsSW > If only EssExTee could be so grossly incandescent 07/31/2019 at 22:58

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People who give you absolute answers to questions like that are always wrong

MUSASHI66 > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:00

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No one compares buying a $2500 used car with a new car lease. Math will obviously always work in your favor that way. 

gmporschenut also a fan of hondas > BrianGriffin thinks “reliable” is just a state of mind 07/31/2019 at 23:03

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yeah at that price point, there is a reason its 2.5k. My co worker goes on how he won’t spend mroe than 4k for car, yet has 3 of them because at least one is down for   repair

If only EssExTee could be so grossly incandescent > BrianGriffin thinks “reliable” is just a state of mind 07/31/2019 at 23:05

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I could still finance a brand new accord and once it’s paid off, I own it and I only pay for insurance and maintenance from that point on. I’ve still paid significantly less than someone that’s leased for the ten years I might have that car. This dude was trying to convince everyone that leasing even makes sense long term.

Leasing makes sense for a) adults who don’t drive that much and always want a brand new car without putting any work into it and b) senior citizens if the numbers work

It might make sense for some people but “making sense” is not the same as “being cheaper” It’s still always less money long term to own.

If only EssExTee could be so grossly incandescent > WilliamsSW 07/31/2019 at 23:08

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Leasing might make sense for some people but even if it makes sense it’s still more money than owning, and that is absolute.

facw > BrianGriffin thinks “reliable” is just a state of mind 07/31/2019 at 23:14

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Not a great deal if you drive too little either though. Need to get somewhere near the mileage allowance, and that usually you can’t get that super low.

That said buying new isn’t a great choice for that person either, though they can buy a used car that’s fairly recent with higher than normal mileage knowing that they aren’t going to kick the mileage up to anything obscene.

facw > MUSASHI66 07/31/2019 at 23:15

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True, though probably a good number of people who are leasing should be making that comparison.

Fuckkinja > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:19

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I lease a f150. Since 2006. Change the oil 3 times and get a new truck. No maintenance. My other paid for Chevy work  truck doesn’t leave the state. 

facw > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:22

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A friend of mine leases his Audi, but that was mostly because he wasn’t sure he really wanted to buy (he really wanted an AWD version of the A3 e- tron, but since that doesn’t exist he was out of luck). Leasing gives him the chance to walk away from this car for something he likes better with little hassle, for not much, if any, more than the hit he’d take in depreciation if he had bought it outright. I don’t think that’s a terrible option, though overall it probably costs him a bit more.

Buying used could obviously have saved him a bunch of money, but there is something to be said for a reliable car that isn’t always in the shop, and has a full set of modern toys, even if it is more expensive to own (and that’s a judgement that applies whether you are buying or leasing).

If only EssExTee could be so grossly incandescent > MUSASHI66 07/31/2019 at 23:25

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Okay. I’ll do the math with a new car. I finance a new Accord. We’ll say I pay 6k down, then 300/mo for 60 months. This puts me at slightly more than the Accord’s starting price. Google says the average interest on that loan is 4.21%, so I’ve spent about 24.5k on this car in five years.

The CHEAPEST lease on an Accord is $1500 at signing and $250/mo for 36 months. The leaser has to get a new lease, so in the time it took me to pay off my Accord they’ve spent about $21k on leases.

So over a six year period the leaser comes out ahead, BUT I now own my car and within ONE year after paying it off, the other person who is now on their third lease has spent more money.

subexpression > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:25

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Generally agree , but it also depends some on what you lease because some companies subsidize leases and some people would buy a car every three years anyway . It’s the same as the new vs used debate, depending on what you buy sometimes new is a better deal than used because new has incentives and they' re laughably expensive on the used market .

nermal > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:28

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The benefit of leasing is that you’re getting an upfront guaranteed value of the car 2 - 4 years in the future. That’s it.

Whether or not it’s a better financial or otherwise decision depends on a lot of things. THE CHEAPEST OPTION ISN’T ALWAYS THE BEST OPTION FOR EVERYBODY.

People don’t buy things based only on price, they buy on value. A lower price is a value, but not the only value of something. 

If only EssExTee could be so grossly incandescent > MUSASHI66 07/31/2019 at 23:32

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Okay I made a math mistake but I put a corrected one in the original post.

MUSASHI66 > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:32

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Yes, but the person leasing always has a new car, and your warranty expired after 3 years. You have to include all the running costs of a car after the initial warranty has ended, while the lease guy has a car under warranty perpetually. Once you have a paid of car, you are one large breakdown from thousands in expenses.

Buying a $30k car with zero down is also over $500 per month. Leasing a $30k car is often under $300 per month on many models with good residuals.

Leases make sense for people that get bored with cars easily, that want latest tech, that want the latest looks, latest safety tech, that want to be covered by warranty, that want headache free experience... yes, you can save some money buying, if everything works well and you have zero big expenses after the warranty is gone. 

MUSASHI66 > facw 07/31/2019 at 23:35

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I am at a financial situation where I’d never look at a $2500 car as a daily driver. As a fun project on the side, maybe. I can afford to pay more for the peace of mind of a new car, warranty and latest safety tech. I value my life and my family’s life and I’ve seen what happens when older cars get into accidents. 

If only EssExTee could be so grossly incandescent > MUSASHI66 07/31/2019 at 23:39

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So leasing makes sense if you can afford it . That’s my point. For those that have t o actually worry about their finances leasing isn’t the best fiscal decision.

If only EssExTee could be so grossly incandescent > MUSASHI66 07/31/2019 at 23:40

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I’m not too concerned about what happens in an accident with my older car.

wafflesnfalafel > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:42

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L easing can work well for folks that routinely want new vehicles, especially if those vehicles depreciate quickly, or for organizations where there is value in freeing up capital, (like a business.) That said, I have never leased a vehicle. But in the future, I might want say, a Cadillac or Lincoln Navigator for a couple years just for kicks before I leave this earth and I’d consider it.

Chuckles > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:44

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In your new car example, you put down 6k at signing versus only 1.5k down on the lease. For some people, that $4,500 difference is huge. I get your point, but you had to put down 4 times as much money up front. Not everybody can do that.

For what it's worth, I've never leased or bought new, and my most expensive car was $7,500 when I bought it. But I get why some people lease. Your math makes sense, but only if putting down an extra $4,500 up front is no big deal.

promoted by the color red > If only EssExTee could be so grossly incandescent 07/31/2019 at 23:55

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But n ot everyone wants to own an Accord . You and I aren’t that kind of person, but some people are willing to roll with the financial punches to enjoy something new.

WilliamsSW > If only EssExTee could be so grossly incandescent 08/01/2019 at 00:00

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I was joking, but I don’t agree with your statement. In certain situations, people who insist on getting a new car every 2-3 years, and drive under 15k miles per year, can save money leasing certain cars - especially luxury cars like the 3 series etc.

Is leasing a new luxury car every 2-3 years smart financially? No. Is it better than buying a new luxury car every 2-3 years? In some cases, yes - generally when manufacturers prop up residuals artificially. And at a bare minimum, you’re eliminating the risk of trading the car in for less than expected.

The thing is, is that’s a very small subset of car buyers. It’s the people who have lousy credit and/ or use leasing to   get more car than t hey could afford otherwise who are killing themselves.

I would also add that there’s a perception that it’s easier to deduct lease payments on   your   taxes if the vehicle is used for business, rather than deducting costs of a purchase.  

Bylan - Hoarder of LS400's > If only EssExTee could be so grossly incandescent 08/01/2019 at 00:35

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1 positive to leasing ive learned at work is that after lets say 3 years of leasing a $40k car, you know exactly what the car is “worth” when you turn it in. If the car becomes an un-s ellable lemon, with an awful color and horrible reliability and barely any resale value, you dont have to deal with selling it. The dealership has already agreed to take it back at a value of lets say $23k. Youve spent $14,400 to have it for 3 years.

Leasing is still stupid as hell and a waste of $ but for people who just want a brand new car every few years and ONLY care about how much it costs per month, it works. They also dont ever have to deal with maintenance stuff like paying for new tires or brake pads. These people exist all over. These people are NOT oppo’s.

Spanfeller is a twat > If only EssExTee could be so grossly incandescent 08/01/2019 at 01:21

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I guess it depends on how much money you’re wanting to spend, and how lazy you are.

Most lease agreements let you buy the car in the end. So to me loan vs lease have many things in common.

The real benefit of leasing is that you don’t need to deal with selling a car in the end and of course the warranty. If you know the car you’re leasing is very reliable and cheap to run maybe financing is better. If it has very good residuals, then leasing isn’t very bad. Its also worth pointing out that leasing makes more sense the more expensive you go.   

But it depends on a series of things, too. Ed Bolian always underlines that buying a car outright is not a good financial move; financing is always best because well managed money can outperform the loan or lease terms. However in countries like Mexico where APRs are in double digits leasing or financing is not a great idea

DipodomysDeserti > If only EssExTee could be so grossly incandescent 08/01/2019 at 01:42

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Leasing is for people who are smart enough not to buy a new BMW, but also can’t risk being stranded by an old BMW.

Cheap cars become a lot more expensive when they get you fired.

Oppenheimer - not missing my shitboxes anymore > If only EssExTee could be so grossly incandescent 08/01/2019 at 05:32

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My personal experience, therefore biased by personal history and view of the world:

I had a £750 320d E46. In 6 month of ownership I spent £250 on tyres, £100 on tax, and £660 on Insurance (very expensive in UK, and as an Immigrant with no bonus it was even worse), and roughly £20 0 on maintenance.

We had an emergency, and as the spare cash I h ad wasn’t enough. So managed to sell the E46 for £1100 quid and make good use of the money, but I didn’t had a car, nor money/credit score for buying another used car.

I have a scheme at the company to get a car with a salary sacrifice, insurance, tax & maintenante included. So a was lured by the “new cars are great” tale and bought a Honda Jazz CVT, paying £295/mo all included.

Maths apart, I am hating to have a monthly expense that high. I’d feel so much better having occasional maintenance expenses, like I had on the BMW. Not to say that I am not liking the Jazz a lot. I have to pay a fine to return the car before the end of contract, and in the ned of 1st year of contract the cost of the fine + buying a new car will give me a break even in 8 month, for a contract that will still last 24 month then. And I’ll get 1year of insurance bonuts

To resume, I can’t way to return the Jazz and get a random £750 used car.

And I’ve written somewhere else (Jalopnik I guess) why I don’t really liked the Jazz, and what I don’t really like owning a new car.

If only EssExTee could be so grossly incandescent > Chuckles 08/01/2019 at 05:50

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If you remember my original argument though it’s that some schmuck is trying to tell me leasing is ALWAYS the better option, and that is wrongetty wrong wrong

BrianGriffin thinks “reliable” is just a state of mind > facw 08/01/2019 at 07:35

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I actually didn’t realize leases had a mileage minimum. TIL.

It’s easy to monetize actual out of pocket costs every month, but much harder to monetize feelings since they’re different to everyone. For some people, the pride or excitement of a brand new car is worth, say, $100 per month. The carefree reliability and warranty might be worth $120 per month. Having the latest tech or safety features might be worth $50 per month.

Rainbow > If only EssExTee could be so grossly incandescent 08/01/2019 at 07:38

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I guess it depends on other factors, mainly. I got my car when it was, I think, 3- 4 years old? I forgot what year I bought it.... but anyway, it was $10k flat and I took out a small-ish loan for it. I needed a relatively new car, but I also took into consideration the fact that this used one has everything I wanted from a brand new car, with some warranty left, and for half the price of an equivalent new one. Used is nearly always the way to go, for sure, but I always have to remind myself that if nobody buys cars new, then they’ll never be available used. So I don’t really care what others do with their money if they can afford it. Your $30k mistake is my $15k treasure in just a matter of  years.

OPPOsaurus WRX > If only EssExTee could be so grossly incandescent 08/01/2019 at 07:43

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I paid $3000 and probably spent about another $1k and then it died 8 months later. I’m not advocating for leases but the $2500 beater doesn’t always make it to the end of a hypothetical lease period.

I then paid $10k for a used commuter so over the period of 4 yrs I guess i’m still ahead of the leaser.

The Ghost of Oppo > If only EssExTee could be so grossly incandescent 08/01/2019 at 08:45

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Chuckles > If only EssExTee could be so grossly incandescent 08/01/2019 at 08:50

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The person saying that leasing is always better is wrong, but anybody saying that buying a car is always better is also wrong. It's not that cut and dry.

merged-5876237249235911857-hrw8uc > If only EssExTee could be so grossly incandescent 08/01/2019 at 09:10

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Leasing vs buying new is a little closer argument. I had done the math when we purchased our Pacifica and figured we’d need to keep the Pacifica for 10 years to break even over a cheap $250-300 lease for that same period. But then at the end you have no assets worth anything and the leasing deals change over time, and now actually, it’s hard to find a Pacifica lease for less than $400 a month, so that makes the payoff even quicker with the lease vs new argument.

Then when you look at a purchase of a CPO vs a lease, there’s no comparison, I’ll by used any chance I can. We would have bought used with the pacifica, but they were just released when we were needing the extra room.

Leasing is for folks that don’t mind a payment for ever and don’t want to deal with repairs.  And they pay more accordingly.    

merged-5876237249235911857-hrw8uc > If only EssExTee could be so grossly incandescent 08/01/2019 at 09:16

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Do the math with the same down payment and see how it shakes out. Instead of 6k down, try it with $1500 down. It should make it come out closer.  

Buying a new car is a fools errand. No one needs to buy a new car. But people want to. We bought new only because they didn’t have used versions out there when we upsized to minivan life. But we could have went and got a CPO caravan instead, but we opted to get the Pacifica instead. It was still foolish to do. But we figured we will drive it into the ground anyway, so it will work out long term.

I hate leasing. BTW.

merged-5876237249235911857-hrw8uc > MUSASHI66 08/01/2019 at 09:21

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Then again, I can cover a lot of expenses with the money not spent on a payment, but your take on this is valid. And that’s the argument I get from folks most is the new car and no worry of big repair costs. Then I hear people who put big chunks of money down on a lease and I just laugh.  Good residuals is key.  That’s what’s happened to the Pacifica leases now, the residuals are likely coming in shittier than expected and now you can’t get a lease for less than $400 a month.  No thanks.  Unless you get employee discounts, but that’s a whole other story.

merged-5876237249235911857-hrw8uc > MUSASHI66 08/01/2019 at 09:22

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But a two year old vehicle bought CPO is normally a very decent deal.  Similar safety and tech, but someone else took the depreciation hit already.  

Snooder87 > If only EssExTee could be so grossly incandescent 08/01/2019 at 09:40

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Not always.

It’s cheaper for your Accord to own it long term because it’s an Accord. It’ll run for decades and not cost much to maintain.

On the other hand if you have a finicky BMW that disintegrates 2 seconds after the warranty period and ends up costing more than the car is worth to repair over time...

Take me as an example. I bought a used Infiniti Q60 last year after leasing a Cadillac ATS. Similar vehicles, about the same purchase price. Lease was 420 a month for 39 months. The finance on the Q60 is 650. Same down payment. But a month after I bought it, I found out the headlight on the Q60 was broken and I had to pay $2,300 to fix it. Plus I paid an extra $2000 for a CPO warranty, and the yearly service ain’t cheap, while it was free on the Caddy within the lease period. So let’s say another 150 a year for service.

So, by the time I pay off the Infiniti in 6 years, I’ll have paid 650×72 + 2300 + 2000 + 150×6= 52000.

Versus back to back leases of 420×72 = 30240.

How much do you think a 7 year old Infiniti Q60 is worth? It’ll have to be more than 21760 for buying to have been cheaper than leasing at that point. And let me tell you, 7 year old Q60s are NOT worth that much.

And that math doesn’t include anything else breaking that isn’t covered by the CPO warranty.

MUSASHI66 > merged-5876237249235911857-hrw8uc 08/01/2019 at 10:51

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All that is true, but the only way to compare lease vs. buy is on same models with same MSRP (or similar enough). It is a no brainer that a purchase of a cheaper car is a better deal than lease of a more expensive car. usually not even worth discussing.

Also, people like to compare only the first 3- 6 years and say “buy is better”. How about 30 years? How about a $300 lease for 30 years, but no maintenance involved? That is $108000. If you bought a $30k car and drove it for 10 years and sold it for $10k, bought another $30k car and put the $10k as deposit, and repeated that again in 10 years, you’d spend $70k in 30 years, plus all the repairs and maintenance involved because you’d spend 21 years out of warranty, while the lease guy would be under warranty 100% of the time. And yes, you would have a $10k car in the end, with 120k+ miles on it.

While it might be cheaper, it doesn’t necessary mean it will be cheaper - it all depends on how lucky you are and what will break. Lease is $108K TCO, buy is $7 0k purchase price + 21 years of maintenance minus $ 10k in equity .

I am not saying lease is better - all I am saying is it is grey zone, and for many, lease just makes sense - especially when we start talking business leases and tax write offs .