patrick.net

chanakya4773 says

Waitingtobuy says

In other words, you are not spending $27K over 15 years, but $44,500. Meanwhile, Im spending $34K (not considering inflation), driving a new car every 3 years that is safer and more fuel efficient, with the latest gadgetry.

So are you saying adjusting for sales tax and 0% interest , the depreciation curve on a new car over three years is better than a regular buy . looks like the depreciation curve is getting pushed up for leasing because of sales tax and 0% interest and potential technological innovations.

Also you mentioned that your 15K residual was due to some error !

Also how long will 0% interest last ?

There isn't a difference in the depreciation curve for a sold vs leased car. A car is a car and coming off the lease should sell retail for the same amount of money as one bought. I didnt say anything about 0% interest. I said Hyundai's residual calcs were off. If it were on, it would be closer to the current retail price--maybe $17-$18K than $15K. Too bad for them.

There is a bit of an error in my and your calculations. I assumed I would make $5K off the transaction of buying at wholesale residual price and selling at retail. May or may not happen, but I feel confident I could make $3K. The link I included earlier only had one car out of 11 that was listed under $19,900. I followed along with your hypothesis that after selling my car, my payments would be only $190. It's more likely that they would be $245 ($328-$83) ($3K/36 months). I've sold a lease vehicle 4 times out of 5 leases and made a profit. (I sell for a living. Not everyone is good or wants to sell) $245/month * 15 years * 12 months/yr= $44,100. Equal to the 15 yr car.

But I also assumed that gas stays at $4/gallon. Doubt it will be in 2027. More likely $8/gallon. Makes that $7500 now $15K in fuel difference costs. And I didn't include return on investment of $16K. Assuming all of this pans out, your $27K car is now $68K!!!

All of this is a bit of conjecture since we dont know inflation's effects, return on investment, fuel costs, etc.

If the 2015 comes along at 55mpg I will lose on the front end and win on the back end.

Thedaytoday says

If the 2015 comes along at 55mpg I will lose on the front end and win on the back end.

I doubt you will get 55 mpg in 2 years. The Impreza is coming out in a hybrid, and it might get 45-47 mpg, but unless they have a plug in that soon, it's unlikely. Subaru has been slow to the hybrid game.

Did Hyundai offer your anything if you traded into a new Hyundai?

You sell leases for a living did you say?

Waitingtobuy says

Subaru has been slow to the hybrid game.

I don't think hybrid is the only answer and neither do they otherwise it would have happened.

Subaru seem smart they waited and played the long game.

They get 24mpg and the bigger newer 2014 model will do the same.

The 2015 would not be exempt! I guess they would go 2.0 or 1.6l?

Maybe turbo diesel!!

or something hybrid+++kinetic boost or a combo who knows.

Good article on your favorite car brand here:
http://management.fortune.cnn.com/2012/11/19/subaru-best-cars/

I am in the Internet business (actually have two companies)

I haven't gone back to Hyundai although I am pleased with my car...it's been my favorite. Never thought I would say that about Hyundai, but they are killing it. The Outback I am looking at is for my wife. I like switching brands. Thinking of a hybrid. Either Kia Optima (like my Sonata), but more likely the Ford Fusion. Drove it last week and I like it.

Yeah, their turbo diesels overseas get good mpg. Wonder if they will pass California emissions.

Waitingtobuy says

But I also assumed that gas stays at $4/gallon. Doubt it will be in 2027. More likely $8/gallon. Makes that $7500 now $15K in fuel difference costs. And I didn't include return on investment of $16K. Assuming all of this pans out, your $27K car is now $68K!!!

All of this is a bit of conjecture since we dont know inflation's effects, return on investment, fuel costs, etc.

Anything could happen, it could as easily right now goto under $3 and much lower perhaps $2.5.

USA will be a net exporter of oil and gas in less than 2yrs! Perhaps sooner!

A major pipeline has been upgraded from 150k barrels pumped accros per day to 250k per day and is going online soon.

Energy is changing and so is the value of the $$$$$ ++ POLITICS+ ECONOMICS!

It is an amazing fact that nobody sees that the US is going to be bigger than SAUDI ARABIA in oil and gas production!

USA will be NO.1 energy producer in 2015/2016

Net exports are coming and so is the slow devaluation of the $$$$, 33% over 20 years.

Gas could dip below $2....It depends on the economy. A slow economy under GOP tactics would get us there with no jobs being created. However if they get the fuck out the way, we could have more jobs but higher gas prices!

Late 2016 early 2017 is the year the property market will take off if this energy trend continues.

I dont see $2 gas. I see more likelihood of $2 for natural gas than petrol.

Housing market has already taken off near me. No inventory in my area and my house I bought mid 2011 is now 5-7% higher.

Waitingtobuy says

I dont see $2 gas. I see more likelihood of $2 for natural gas than petrol.

It's possible.

investing $245 over 15 years or 180 trades in the stock market would be stupid and wouldn't get shit from a to b

Investing $23k would be greater over 15 years.

and I get from a to b

See I have $23k to invest, while you pay cash and drive off the lot with a brand new car!

fuel costs are the same as tax deductions in this game, you never know what is gonna change

Ok so you are paying $245/ month for 15 years.
and i pay full 27k + sales tax (2430) + repairs $300 per year on average ( initial years are less ..etc)

lets say the average fuel cost goes up by inflation ( long term fuel cost always track inflation ). So it offsets your monthly lease payment increase due to inflation.
_________________________________________________
I dont think fuel tracks inflation. I remember paying $.85/gallon in 1996 for gas in Georgia. I now pay $3.65/gallon in CA. That's an increase of 8.5%/yr. Inflation is more like 2-3%. Also, yes, you are right in that we have very low interest rates. My scenario assumes low inflation. I will say I am paying less per month now in my $27K car than I was in 1989 in a $15K car. Some of that is residual difference.

You are calculating opportunity cost incorrectly. For the whole $29K, fine. For the lease, the 6% ROI is on the $245/month, not the entire amount. I forgot how to calculate, but it isnt as much as 6% annually on $29K compounded.

Waitingtobuy says

That's an increase of 8.5%/yr

shit wages didn't come close to going up that fast!

I tell you if they dare index wage inflation to gas prices things would change in Washington. FAST!

Things would be much fairer.

chanakya4773 says

for the $245/month

use this caculator :

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

put current principal = 0

annual addition = $245 * 12 = 2940

put interest at 6% and years to grow as 15 years

you will get the results.

Thanks. I got $28K.

Waitingtobuy says

You dont include the principal/lease payment.

mate i have told him, it feels like 1000x over!

Thanks for the graph, but it ignores peak oil, China, and India consuming more too. Oil demand is surging worldwide, and it will accelerate over the next 15 years.

chanakya4773 says

Waitingtobuy says

To get opportunity cost, you are calculating what you would make in interest/return if you put the money elsewhere. You dont include the principal/lease payment.

thats not principal . thats what you will be paying per month after all is said and done. you yourself came with that number.

thats the money due to depreciation you had to cover from your pocket !

I spoke too soon. Didn't read your suggestion carefully.

Still, it is $28K vs $40K at 6% ROI for the entire salesprice and taxes.

$72K-$44K of payments ($245 x 12 months x 15 yrs)=$28K. Im just calculating interest lost. $72K total leasing vs $86K buying outright

Waitingtobuy says

Thanks for the graph, but it ignores peak oil, China, and India consuming more too. Oil demand is surging worldwide, and it will accelerate over the next 15 years.

True. But it's not certain what cars will run on by then. A mix of different fuels would be better. 55mpg will help and who knows we may find a solution.

Going to sleep. Good thread. Good night.

chanakya4773 says

for the $245/month

use this caculator :

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

put current principal = 0

annual addition = $245 * 12 = 2940

put interest at 6% and years to grow as 15 years

you will get the results.

regarding fuel costs... don't just look at 10 years .

is this uk , us or worldwide?

Peter P says

zzyzzx says

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, an "interference" engine is one that if the timing belt snaps, the pistons continue to go up and down in their bores while the cam stops activating the valves. That means that the piston contacts the open valves leading to complete destruction of the engine.

I can't comment on whether of not Subaru is the only car manufacturer that still makes interference engines. But snapped timing belts are rare.

Interference engines are quite common and not a problem, with timing belts lasting 100k miles these days. I think subarus are dumb because they have horizontally opposed engines which all seem to have leaking head gaskets after 10 years. Subarus are also butt ugly, I think hippys feel so guilty about owning a car they buy ugly ones as some sort of twisted form of penance. Impreza wagon it's 1994 calling, it wants it's everything back.