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Why do people waste so much money on cars?
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2013 Jan 25, 12:10am 56,003 views 312 comments
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Thedaytoday
2013 Jan 25, 10:39am
$166 = Residual value / 36 months = 6000 / 36 = $ 166
so effectively you are only paying = $monthly lease amount - $166
You also forget a percentage is deductible business taxes.
My residual goes up again. You also get 0.55c per mile.
Thedaytoday
2013 Jan 25, 10:42am
you need the right car.
For example?
One with an industry leading residual, which I have pointed out numerous times is a Subaru. Lowest finance costs, low to zero down payment and highest trade in value.
Leased $23k 36 mos traded value $21k
by the 3rd time around I got $2k off the sticker and ended up paying about $9k for a $23k car (LEASED)
12k or 14,000 (36mos) x 0.55c business miles tax deductible.
Thedaytoday
2013 Jan 25, 10:45am
compare that to full payment $Y distributed over 20 years.
whats so hard about the math.
over 20yrs the same car devalues to ZERO
while the value in a short term leased vehicle is retained.
you also get to drive a new car every 36 mos and you are not stuck with a pile of shit in 20 years.
ASK YOUR WIVES WHICH THEY PREFER? 20 yr old car worth $2500 or a brand new car!
Peter P
2013 Jan 25, 10:48am
I have been eyeing an Outback. Perhaps I should start running the numbers.
Car GPS is useful though. It is not as safe to rely on the smartphone while driving.
zzyzzx
2013 Jan 25, 10:48am
Personally I'd never buy a Subaru. You are still wasting a lot of money on gas for the 4WD gas mileage penalty. Plus Subaru still makes cars where the engine explodes if the timing belt breaks (almost nobody else does that). That last part probably is irrelevant if you only keep it 3 years though.
Thedaytoday is right about the residual value on these things, people wildly overpay for used Subarus.
Thedaytoday
2013 Jan 25, 10:50am
Thedaytoday is right about the residual value on these things, people wildly overpay for used Subarus.
Go fuck yourself you racist bigot. Who the fuck asked you?
Piss off.
Thedaytoday
2013 Jan 25, 10:50am
I have been eyeing an Outback. Perhaps I should start running the numbers.
Car GPS is useful though. It is not as safe to rely on the smartphone while driving.
Forget the extras if you want residual. Do your homework first.
The 2014 Outback has been refreshed as well.
Subarus are all AWD. Compare to Toyota,Ford, Mitsubishi, Honda 4x4 or AWD is $10k extra.
it seems many are terribly concerned about having whatever happens to be the newest model.
they are not from the SFBA... more likely from Boston...
Charlie (from Boston) dont Surf...
A real Californian would rather drive a 30 year old slug. They are much more fun
to own and drive...
Peter P
2013 Jan 25, 10:51am
Personally I'd never buy a Subaru. You are still wasting a lot of money on gas for the 4WD gas mileage penalty. Plus Subaru still makes cars where the engine explodes if the timing belt breaks (almost nobody else does that). That last part probably is irrelevant if you only keep it 3 years though.
Thedaytoday is right about the residual value on these things, people wildly overpay for used Subarus.
Can you elaborate on the engine issue?
Peter P
2013 Jan 25, 10:53am
I have been eyeing an Outback. Perhaps I should start running the numbers.
Car GPS is useful though. It is not as safe to rely on the smartphone while driving.
Forget the extras if you want residual. Do your homework first.
The 2014 Outback has been refreshed as well.
Yeah, even going up the trim level is better than adding options.
Thedaytoday
2013 Jan 25, 10:53am
I can tell you that not one of the 20 leased Subarus I have has had any mechanical, engine issues ever! They run like new everyday.
Thedaytoday
2013 Jan 25, 10:55am
Yeah, even going up the trim level is better than adding options.
If you want to do what I am you will need to do a lot of homework. You may find the car you want but will not have the residual you want!
Buy a car with RESIDUAL IN MIND ONLY!!!!
Ask the dealer what he would trade for, ask him which lease on book has the best residual, they will tell you, the finance companies all know ahead of time.
Now comes the hardest part, not trashing it over 36 mos.!!! Buy car seat coves and wash it every Saturday!
Thedaytoday
2013 Jan 25, 10:58am
Plus Subaru still makes cars where the engine explodes
Shut the fuck up moron.
If your engine blows up under lease and it's a design fault you get a new fucking car. I have not heard one story of this every happening, LINK PLEASE BIGOT?
Thedaytoday
2013 Jan 25, 11:01am
Thedaytoday is right about the residual value on these things, people wildly overpay for used Subarus.
You know nothing about cars. There is actually a shortage! Trade in's are fought over.
So the next time you type something you know nothing about, think twice, fucking repuke.
Thedaytoday
2013 Jan 25, 11:02am
If you keep repeating this. you will be paying $305 per month for 20 years. of course you are driving new cars.
Stop using 20yrs as a multiplier.
Thedaytoday
2013 Jan 25, 11:03am
lets please ignore the tax deduction part for a while because its making things complicated and not everybody runs a bussiness.
everyone should, especially when leasing!
Individuals are slaves under US tax law, US Businessmen get 1000's more deductions. It cost $80 to form a DBA.
Thedaytoday
2013 Jan 25, 11:05am
OK now,
At the end of the year you paid = monthly lease amount * 36 + 23K - 21 K = 9K + 2K = 11K
$305 per month.
If you keep repeating this. you will be paying $305 per month for 20 years. of course you are driving new cars.
compare that to 23 K spread over 20 years = $93 / month.
payment is $250 pm MAX! first off.
cost 23k
$250 pm
trade in value $21k
repeat and get a better deal.
stop using a 20yr multiplier, it's not the same car.
Thedaytoday
2013 Jan 25, 11:06am
ok lets use 7 years then :
Nope, 36 Mos at a time.
I am also liquid the entire time of the lease.
Hence why business lease everything unless a purchase can be written of as a capital write down.
Thedaytoday
2013 Jan 25, 11:10am
Car A
Cost $23k
$250 pm
Sold $21k
Residual $6k
Car B
Cost $23 - 6K residual
250pm
Sold $21k
Residual $12k
Car C
Cost $21k - 12k residual
250pm
Sold ?
residual ? =
these are rounded down estimates
A $23k toyota,honda,ford is way more than $250 per month with zero down ask them
you will also not get AWD at 24MPG
Thedaytoday
2013 Jan 25, 11:14am
Paying 11k for using a new car worth 23K for three years is lot of money.
come on now!!!!!!!!!! I keep the 11k!!!!! It's mine!!!!!! Use your brain. on top of the that government pays me to drive it.
You are losing 5k, I am losing ZERO!!!!
I'm being paid 0.55c per mile to drive it and deduct a lot of the lease payment too, all go in my pocket.
Thedaytoday
2013 Jan 25, 11:16am
so who paid the 9K + 2K ?? did you not pay it ?
If I paid it, I KEEP IT!!!
I also remain liquid!
Thedaytoday
2013 Jan 25, 11:16am
so who paid the 9K + 2K ?? did you not pay it ?
If I paid it, I KEEP IT!!!
I am also not depreciating as fast as you!
Thedaytoday
2013 Jan 25, 11:18am
so who paid the 9K + 2K ?? did you not pay it ?
did you not pay 250* 36 = 9K ?
and I still have that money in equity in the vehicle
Thedaytoday
2013 Jan 25, 11:22am
DUDE how are you keeping it ? after three years, you have paid 11K to the dealer and now you have a new car with a new lease !!
The lease payments go towards the cost of the vehicle reducing the principle balance ok.
You trade your current vehicle which you paid for 36 mos for a new one.
The dealer gives you 21k you owe $14k to chase. GET IT?
You then put the residual into the new trade
Thedaytoday
2013 Jan 25, 11:23am
The dealer gives you 21k for your trade you owe $14k to chase. GET IT?
Thedaytoday
2013 Jan 25, 11:26am
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!!!
Thedaytoday
2013 Jan 25, 11:27am
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.
New Renter
2013 Jan 25, 11:28am
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.
Thedaytoday
2013 Jan 25, 11:31am
So the answer to this thread is , people do not understand US tax law and are crap at basic math.
Thedaytoday
2013 Jan 25, 11:33am
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.
Thedaytoday
2013 Jan 25, 11:34am
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.
Thedaytoday
2013 Jan 25, 11:40am
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
Thedaytoday
2013 Jan 25, 11:42am
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?
Thedaytoday
2013 Jan 25, 11:44am
the equity rollover causes too much confusion :-)
Not for me. I have never been happier owning cars.
Buy low, sell high.
Thedaytoday
2013 Jan 25, 11:46am
OK then you pay 3K over three years.
The loss is deductible , lol
You guys should understand business finance a little better.
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As someone who lives in the Bay Area, its clear that many people here just love their Bimmers, sports cars, and large luxury SUVs. What's more, it seems many are terribly concerned about having whatever happens to be the newest model.
On each and every day of the week I am surrounded on the freeways by cars that cost 60k,80k, or even 100k+. So much so that many might as well be Camrys and Accords. Oh- another 7 series? Yawn. There's another 50 I'll see on the way home. No, granted these are unquestionably nice cars. But then again, to me its a big waste of money.
I drive two beater Toyotas, one that I've actually had since high school. Both went past 250,000 miles years ago. Neither have any problems. I've always taken good care of them give them a nice wax job every few months, change the oil every 3,000 miles and keep them looking nice. Doesn't matter to me that they're almost 20 years old now. They still run, drive, and look like perfectly fine cars. I make a pretty good income and could quite easily go purchase the luxury car of my choice if I so chose. Its not that I can't afford a 90k car, but more that I'd rather not spend almost 100k on something that's going to depreciate massively as it ages.
If you think about it from a purely financial perspective, let's say that the average luxury car buyer buys the latest-greatest car every 6-7 years. Let's say the average price is around 60k. That equals close to 120k every decade or several million over the course of a lifetime. Had that money been invested in a 401k or stocks, that same person could have literally retired decades sooner.
Lastly, if your car goes 0-60 in 4 seconds and has a top speed of 200MPH, well who cares? The US has speed limits and thus you can't actually really use the car for what it was designed to do. Sort of like buying a blender and only ever being able to use the slowest setting.