patrick.net

Just because you lease doesn't mean you lose the payments, they go toward the principle !

Your car cost you $23k you pay $250 pm you owe $14k, you can a ) buy it B)finance it C) trade it

you trade it and the dealer gives your $21k, they pay Chase 14k, and the residual equity rolls into a new lease!!!!!!!!!

Your next car cost $23k - the equity left in the lease , in my case say $6k = your new cost $17k for a $23k car.

RINSE AND REPEAT!!!

chanakya4773 says

how much does the principle balance reduce by for a 23K car ?

is this the 6K you were talking about ?

It between 6k-9k depends. But yes. Every penny you pay towards the lease reduces the principle. If you buy low , sell high, or just pick a Subaru SUV with the highest residual value in it's class you will profit.

APOCALYPSEFUCK is Shostakovich says

Scarlett Johansson would fuck me in a shopping cart and has on several occasions when I bumped into her in front of the dairy case at the Piggly Wiggly.

I guess in the heat of passion you didn't notice the Adams apple, big hands or deep voice.

"She" goes by "Lola" in case you were wondering. When "she's" not working the local truck stop "she'll" be at the Piggly Wiggly again next week and the week after that.

So the answer to this thread is , people do not understand US tax law and are crap at basic math.

SFace says

Sorry, I'm not buying a 90+% retention ratio for a new car. when even the best cars get 60% regardless of how basic the model is or the circumstance.

You don't know what your talking about. I could not care less if your buying anything. You have never leased and you certainly don't own your own business.

chanakya4773 says

sorry , your cost = (next car cost - equity )+ 36* monthly payments you paid

correct.

but the next 36 mos payment are also principle reduction again adding to the value of my equity which after another 36 leaves me with owing ZERO on my fourth lease at which point the car is mine, and I start again.

So I drive a brand new maintenance free car for 12 years and retained virtually all the value of my investment

So why put down $23k cash, you lose liquidity and the answer is after 12 years your car is old. I drive a new one every 3 and maintain light depreciation, infact I profit under US tax laws.

chanakya4773 says

sorry , your cost = (next car cost - equity )+ 36* monthly payments you paid + 2K you paid for the difference (23K - 21K)

I already included the 2k by rounding down the equity from $9k to $6k

ha ha ha! I win!

edvard2 says

ha ha ha! I win!

You lost big time. You own two beaters ,25 year old cars that will be crushed sooner or later.

Leaving you with the option to drop another $20k down.

You lose ,you drive a 25 year old car! By choice!

You also paid a balloon payment of $21k which you could have invested for a net return like me!

You know how much HP you lose over 25 years?

chanakya4773 says

the equity rollover causes too much confusion :-)

Not for me. I have never been happier owning cars.

Buy low, sell high.

chanakya4773 says

OK then you pay 3K over three years.

The loss is deductible , lol

You guys should understand business finance a little better.

chanakya4773 says

the numbers will be around 6K for a 23K car lost in three years.

Nothing is lost.

chanakya4773 says

if you buy full and sell it at 5K lower ..thats deductible too

Depends. It's not a lease. Leasing has different tax rules.

also if your first year loss is $5k your second year could be even more, third year even more. After 20years it's all gone.

mine is the same year over year.

chanakya4773 says

loss = monthly payments * 36 - money that went to principle + money paid for difference during trade-in

the loss is mitigated, the payments go towards principle + there is no money paid by me during the trade in! NONE! The equity reduces the new principle leaving a lower pay off balance on the new lease

SFace says

The guys basic argument is he buys low and sells high.

Like sign a lease for a basic model Suburu outback for 23K

and sells it three years later to the dealer for 21K.

You decide whether that is real or not. End of story.

You can't get an outback for $23k

chanakya4773 says

THE PROBLEM IS WHAT HAPPENS TO ALL THE LEASE PAYMENTS.

As I explained the lease payment pays down the principle value of the lease.

at the end of the lease you have these options.

A) Give the car back, nothing else owed b) finance c) buy it cash d) trade!!

which one makes you money!!!!!!!! D)

chanakya4773 says

enough of this bull shit...looks like you are a subaru car salesman

No. Lol.

I think I have been called everything in this forum.

I am a Business Consultant, Social Media Scientist, Internet Guru and a Futurist.

My name is also not Hussain, LMFAO

SFace says

Like sign a lease for a basic model Suburu outback new for 23K

and sells it three years later to the dealer for 21K. 3 years 9% depreciation. Edmonds estimated 42% for the 2012 Outback. Almost all cars are around 40% -50%.

You decide whether that is real or not. End of story

Not an outback. Your estimates are meaningless. Edmonds is pointless. There is a shortage of new and used Suabrus. Is Edmonds going to tell you that?

Thedaytoday says

dmonds estimated 42% for the 2012 Outback. Almost all cars are around 40% -50%.

LMFAO

It's not an Outback. Those figures are silly.

Have you ever bought and sold cars? You see when I was younger I enjoyed buying and selling sports cars, I would buy them at auction, drive them for 6 months and profit of every single car I bought. I would usually have 20 or around, Porsche's, Ferrari's, Maserati's, Aston Martins the usual ans Roll Royce and a Bentley or two.

I think I may be able to solve this riddle. Thedaytoday is correct, if you lease, SOMETIMES the residual is so low that you can buy the car from the leasing company and sell it retail. The reason is that the residual is usually what the leasing company estimates it will get when they wholesale the car at auction. I have done this a couple of times and made about $2K or so per car.

Where his model fails is the $6K spread. It is rare that the dealer/leasing company will get the residual so wrong that there is a $6K spread. It's more likely the $23K car's residual after 3 years is $12-$14K, not $21K. This is true even if it is a Subaru.

There is one exception...entirely new models. I have a 2011 Hyundai Sonata whose three year lease is over this spring. Been paying $328/month. It is a car whose value has held up likely due to it being a hot car with rave reviews. The car new was $27K, the residual is $15K, but the retail on it now is about $20K. I plan on negotiating the residual rate down (done this before so they dont have to spend money getting rid of the car), and selling it on Craiglist, Cars.com, or somewhere else.

SFace says

There may be a shortage of Subaru's but it is still not selling at 90% after 3 years it came off the lot. I get your strategy, just don't buy the fact it is essentially free.

Your wrong.

Waitingtobuy says

I think I may be able to solve this riddle. Thedaytoday is correct, if you lease, SOMETIMES the residual is so low that you can buy the car from the leasing company and sell it retail.

At the end of every lease you are offered the car for the value of the what is left on the lease. Everyone gets that choice.

I do not do this.

I TRADE!!!

and make more.

Waitingtobuy says

The reason is that the residual is usually what the leasing company estimates it will get when they wholesale the car at auction. I have done this a couple of times and made about $2K or so per car.

Wholesale auction has nothing to do with what I am discussing.
At the end of every car lease you have the option of paying the remainder of the lease to take the car.

Nope. I win because I don't have any car payments. You do. Too bad.

edvard2 says

Nope. I win because I don't have any car payments. You do. Too bad.

or any value in your cars

, too bad

it's like your driving around in two wheel barrows.

Your cars are 25 years old !!! You win nothing.

Your so proud of losing all your money, I'm so happy for you Edvard.

Waitingtobuy says

There is one exception...entirely new models. I have a 2011 Hyundai Sonata whose three year lease is over this spring. Been paying $328/month. It is a car whose value has held up likely due to it being a hot car with rave reviews. The car new was $27K, the residual is $15K, but the retail on it now is about $20K. I plan on negotiating the residual rate down (done this before so they dont have to spend money getting rid of the car), and selling it on Craiglist, Cars.com, or somewhere else.

I only buy BRAND NEW CARS. Is that not obvious by now.

If you listen to me you will do better in the future and find a car with a better ratio of residual . Subaru has the best residual in SUV CLASS!

SFace says

There may be a shortage of Subaru's but it is still not selling at 90% after 3 years it came off the lot. I get your strategy, just don't buy the fact it is essentially free.

Mainly because of the awesome tax tax code

zzyzzx says

I still drive my 1995 Ford Escort that I bought new in October 1995.

The last car I bought 3-4 years ago is a 1999 Oldsmobile that I paid $500 for, and only had 19K miles on it at the time and still is essentially a new car.

Explains everything.

edvard2 says

Why do people waste so much money on cars?

I think we all know why and we all grapple with the issue all the time.

Lust for material things or whatever you want to call it. Don't most of us struggle with this ? "You only live once" - or something to that effect.

On the one hand, my 10 year old honda is fine, the miles aren't that high, no car or lease payment,...it's economical.

On the other hand, I'm so tired of it. I want this feature or that. Or, "I work so hard - I'm ready for a much nicer car,...pamper myself for a few years, ...you only live once."

I understand it, this argument with myself, and understand it must be somewhat universal.

THen there are those with a high enough income, that the extra few hundred a month, really makes it seem like too good a deal to pass up
(that is cars that lease for about 400 - 500/month), not to do it.

(But that's not the 60 to 90K cars you were talking about.)

I'm not in that category, but if I were making say 2 or 3 times what I make as a teacher, I could see that the quality of life benefit, I would get from spending say $500/month on a car might seem very much worth it, regardless of the future value of doing without for the next 20 years.

You're right though.

And I wonder how many of the boomers that are so far from having enough saved for retirement, are living way beyond their means.

marcus says

On the one, hand my 10 year old honda is fine, the miles aren't that high, no car or lease payment,...it's economical.

On the other hand, I'm so tired of it. I want this feature or that. Or, "I work so hard - I'm ready for a much nicer car,...pamper myself for a few years, ...you only live once."

bet you would love bluetooth hands free!

Thedaytoday says

Waitingtobuy says

There is one exception...entirely new models. I have a 2011 Hyundai Sonata whose three year lease is over this spring. Been paying $328/month. It is a car whose value has held up likely due to it being a hot car with rave reviews. The car new was $27K, the residual is $15K, but the retail on it now is about $20K. I plan on negotiating the residual rate down (done this before so they dont have to spend money getting rid of the car), and selling it on Craiglist, Cars.com, or somewhere else.

I only buy BRAND NEW CARS. Is that not obvious by now.

If you listen to me you will do better in the future and find a car with a better ratio of residual . Subaru has the best residual in SUV CLASS!

I know you buy new cars. Sure, you could hand it back to the dealer, but they have to do something with it for them to hand you a check $6K. I've never seen a dealership give anyone the retail price for a car. After all, it is not their car, but the leasing company's. And again, it is highly unlikely the car, no matter what the make, has depreciated only $2K in $36 months. The car depreciates 10% the minute to drive it off the lot.

Either all of us, including me who has been leasing cars for 20 years, don't get this, or it is way above our heads and you haven't explained it well enough. I don't get how you get a check for $6K.

marcus says

On the one, hand my 10 year old honda is fine, the miles aren't that high, no car or lease payment,...it's economical.

How much do you think you car cost you in maintenance and devaluation per month over 10 years? would you say about $250 per month?

I like my completely depreciated reliable toyotas.

Since they are old and depreciated, there is no need for collision, so insurance is low. Since they are old and depreciated, California annual registration fee is (relatively, - this is California) is low. Since they are old and depreciated, there is no interest payment.

Those are my fixed costs and they are all low. Yes I have had some repair costs but they are manageable.

Thedaytoday says

every penny I put into the lease I GET BACK!

Please explain this. I don't understand it. If it's possible I would like to do it.

chanakya4773 says

You guys are ignoring the payments that you have already made to the car company.

You don't make any payments to the car company. It's is a lease, financed by the bank. The bank "OWNS" the car until you payoff the remaining balance. The payments like any other loan goes towards principle and interest (zero in my case)

swebb says

Thedaytoday says

every penny I put into the lease I GET BACK!

Please explain this. I don't understand it. If it's possible I would like to do it.

Do you have a business?

EBGuy says

think we need to take a step back and look at where Thedaytoday is coming from. Early on he said:

For every penny I invest the government deducts it off my tax bill

Do you use this car for business purposes?

I can't believe that you guys got in such a long argument with someone who doesn't even know what a tax deduction is.

He or she maybe needs to do some really stupid rationalization about what he spends on his car. Appropo for this thread.

Either that or he is just trolling you.

chanakya4773 says

Ok good. so you are saying the car company then says that the residual value of your car is 90% of the original value after 3 years ?

When you trade into a brand new car and a new lease with a dealer who has maintained and knows the vehicle your trading, it gives you leverage on what you can get for your car.

I went to multiple dealers before going to my own dealer and got written quotes to show them the quotes ranged from 17-20k

I got $21k due to the following

A) The dealer is making money selling you the new car(if you time this correctly you will do it when they want to hit quota or have shortage of used inventory) YOU NEED A MAIN DEALER!

and

B) The dealer makes money on the lease

and

C) The dealer profits from selling your trade

and

D) Timed correctly dealers are offered rebates from manufacturers I was offered $500 to get into the same vehicle.

marcus says

For every penny I invest the government deducts it off my tax bill

I was generalizing, not 100% , but enough combined a lease and with 0.55 per mile for business use to make it cost efficient