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06-04-2009, 11:01 PM
  #1
Mike8
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Buying vs. Leasing a Car

With the economy leading to a whole lot of doom and gloom, I figured it was time for me to get a new car. So I noticed a whole slew of quality cars going up at discount prices on lease transfers as people bid farewell to their money-eating leases, and some of these are amazing deals. Then I thought the same line of thinking ought to apply to used cars: amazing deals should be out there since people in times like these tend to panic.

Now, I'm not big on car-knowledge. I've never liked owning cars since they are money-eaters (though, this last car I owned for 8 years, and it was decent enough value) ... but I was hoping to get some advice here.

I'm looking at buying a used Mercedes S class (2005) versus leasing the same car. Benefits to buying are: holding it as an asset, its potential resale value in 3-4 years will be far more profitable than leasing the same car for that period.

Benefit to leasing is that: not tied to the car, less responsibility to the car, and less potential headaches with ongoing mechanical costs as the warranties tend to cover more with leasing.

My question: is this roughly how I should be looking at it? And, how should I determine its actual residual value in 3-4 years? I'm making that assumption based on some minimal reading and knowing that Mercedes, after an initial sharp drop-off in value from the original purchase, tend to hang in there better than Audis and BMWs for value.

Lastly, is there anything I should be on the lookout for with regards to buying a used car? I'll be getting it checked by a trustworthy mechanic of course, but beyond that.


PS. Apologies if this should have gone in some other thread, but I think this is my first OT thread-created, so I haven't paid much attention to policies on that.


Last edited by Mike8: 06-04-2009 at 11:09 PM.
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06-04-2009, 11:16 PM
  #2
Kafka
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1. A car is not an investment, it`s a money sucking pump.
2. It's always better to own something than to rent it (you lose less money).
3. It's always better to buy a recent car that as already being used than to buy it directly from a seller. The moment you buy a car, you lose at least 10% on it. It's better to be the one getting the benefits from that buy buying a used car than to be the sellers.

Those are only money wise advices. If you live in the city and don't need a car, you are better without. Personaly, I have one, but it is used only for travelling (not for working).

GL.

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06-04-2009, 11:20 PM
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if you can hold off another 4 to 6 month your going to get some darn awesome deals .......

the dock yards and storage facilities are full to capacity they are running out of starage options for all these unsold cars..... and with the car dealers now getting eliminated less places to sell them

So major deals are coming ...if price loook good now you will see even better in my opinion ....


ALSO keep a eye on this , cash for your old car .....the govt around the world are doing this .....like overseas in parts of europe there giving something like 4000 for your old car on trade in ......not bad if you got an old beater kicking around the yard something thats worth only $500



there talking it over in the Usa also ....im sure if the USA does it there a good chance Canada will do something also......


http://money.cnn.com/2009/06/01/news...ion=2009060116

As currently worded, the proposal would offer electronic vouchers that would knock off as much as $4,500 from the price of a new auto purchase or lease of a new car. The government would also offer cash rebates to those who have purchased a qualifying new car since March 30


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06-04-2009, 11:25 PM
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id like to add

http://www.emercedesbenz.com/Jun09/0..._May_2009.html


S-CLASS sold


731- March 2009

vs
1,622 -March 2008


down-54.9%


year to date

2,232 - in 2009

4,796 -in 2008

down 53.5%





overall sales on all models is down over 30%


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Old
06-04-2009, 11:30 PM
  #5
The Gal Pals
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Quote:
Originally Posted by Kafka View Post
1. A car is not an investment, it`s a money sucking pump.2. It's always better to own something than to rent it (you lose less money).
3. It's always better to buy a recent car that as already being used than to buy it directly from a seller. The moment you buy a car, you lose at least 10% on it. It's better to be the one getting the benefits from that buy buying a used car than to be the sellers.

Those are only money wise advices. If you live in the city and don't need a car, you are better without. Personaly, I have one, but it is used only for travelling (not for working).

GL.
Seriously, cars are NOT an investment. They have huge depreciation value. If you want to invest in something tangible buy real estate.

Also, Mercedes is one of the highest gas-guzzling vehicles on the road due to the horsepower so you'll also be paying alot in gas.

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06-04-2009, 11:33 PM
  #6
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I am currently thinking of getting my new car and have recently asked myself the same question. My friend, who's a huge car lover and analyzes the number on this stuff on a regular basis, has recently told me that due to the huge devaluation of cars, you need to own a purchased vehicle for at least 7 years to make it worth it.
If you plan to change your car before then, leasing is the way to go.

Hope this helps.

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06-04-2009, 11:38 PM
  #7
Mike8
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Interesting Papa Bear, but I figure that's on new cars--not on used ones. See, I'm wanting to buy used just to avoid that depreciation aspect of things.

I came to the same conclusion on leasing vs. buying new, but not on leasing vs. buying used.

Thanks though!

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06-05-2009, 12:03 AM
  #8
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It is NOT always better to own rather the lease.

Example You buy a house today 400K, housing market keeps going down to 300 or 250K... well that is the resale value of your house, while you still owe 400K on your mortgage

In some circumstances the same thing can arise when looking at owning vs. renting a car. Look at how much the car will be worth when your done paying for it. How much money you will HAVE payed for it. If you can lease a car for the same amount of years for less then that difference you should lease the car.

Also since a car is not an investment but a money sucking depreciating asset, it isn't that important for you to actually own it.


Go Fuel Efficient

Someone has stated before about the gas guzzling qualities of Mercedes. I don't know the cars that well myself (having never been in the position to own a car of it's class in my 2x years lol) but I do understand that the price of gas will go up.

The price of commodities will go up all over the world as people are trying to store the value of their earnings/savings in something else the dollar denominated assets (This is why since Obama's bailout packages commodities have been climbing so much). As more individuals clue in to the idea that to protect yourself from a depreciating dollar you must go to something where the fundamentals are sound (the amount of oil available isn't going up it is going down.)

This means that not only does it's value go up because there is less of it, but with Asia - - as China who is trying to get their citizens to spend is willing to pay half of the cost of the vehicles - - entering the world markets as consumers and not savers and lenders the cost of oil will go up because of demand.

In conclusion I highly recommend that you invest (well u can't invest in a car really) in a vehicle that is as fuel efficient as possible.

And no I am not one of those greeners/save the earth people... It's strictly for your financial well being.

Hope that helps.

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06-05-2009, 12:42 AM
  #9
thrillhous
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Leasing is stupid. So is buying, but to a lesser extent

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06-05-2009, 01:08 AM
  #10
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buying is a much better option

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06-05-2009, 06:03 AM
  #11
Ghost of Saku
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Buy, and only settle once you get something at 0% financing

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06-05-2009, 06:31 AM
  #12
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Originally Posted by Komisaurus View Post
Buy, and only settle once you get something at 0% financing
buying USED at 0% is next to impossible.

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06-05-2009, 07:01 AM
  #13
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Buying is definitely not better then leasing(depending on the finance rates for both).
Example: I leased a civic for 5 years at $226 tax in/month. So overall it will cost me $13560 to have a new extremely low maintenance car.
To purchase that same car at the time it was $376/month tax in. Overall cost is $22560.

So after 5 years it would have cost me an extra $9000 to purchase that car rather then lease. I will not keep the car any longer then that, so to sell that car at that point i would only get probably $6500 back for it. So that means it cost me overall $2500 less to lease. And also leasing was the only way for me to be able to get that new car because i would not have been able to afford the higher monthly payment anyways.

So in that case, leasing was the far better option. But it will depend on the individual deal in question what the best route for somebody to go would be.


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06-05-2009, 07:29 AM
  #14
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thanks for the info guys - I'm a similar situation then the OP. I'm debating if I should sell my 2001 Mazda Protege this summer and lease or buy a new car this fall.

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06-05-2009, 08:06 AM
  #15
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Quote:
Originally Posted by Mike8 View Post
With the economy leading to a whole lot of doom and gloom, I figured it was time for me to get a new car. So I noticed a whole slew of quality cars going up at discount prices on lease transfers as people bid farewell to their money-eating leases, and some of these are amazing deals. Then I thought the same line of thinking ought to apply to used cars: amazing deals should be out there since people in times like these tend to panic.

Now, I'm not big on car-knowledge. I've never liked owning cars since they are money-eaters (though, this last car I owned for 8 years, and it was decent enough value) ... but I was hoping to get some advice here.

I'm looking at buying a used Mercedes S class (2005) versus leasing the same car. Benefits to buying are: holding it as an asset, its potential resale value in 3-4 years will be far more profitable than leasing the same car for that period.

Benefit to leasing is that: not tied to the car, less responsibility to the car, and less potential headaches with ongoing mechanical costs as the warranties tend to cover more with leasing.

My question: is this roughly how I should be looking at it? And, how should I determine its actual residual value in 3-4 years? I'm making that assumption based on some minimal reading and knowing that Mercedes, after an initial sharp drop-off in value from the original purchase, tend to hang in there better than Audis and BMWs for value.

Lastly, is there anything I should be on the lookout for with regards to buying a used car? I'll be getting it checked by a trustworthy mechanic of course, but beyond that.


PS. Apologies if this should have gone in some other thread, but I think this is my first OT thread-created, so I haven't paid much attention to policies on that.
It's a good idea believe me, my mom got a brand new explorer 6 months old fully loaded, didn't have to pay that 2000$ penalty cause it's a gas guzzler, and not only that but the guy paid her 7000$ to takeover the lease LOL.

People will actually pay you to take the lease, because to them its better then owing the entire thing over time for a vehicle they may not even use. The guy who owned it changed jobs and didn't want to drive an explorer an hour to work each way cause it was going to rob him of any $ he'd make via the gas LOL.

I'd say look around and try to low ball somebody, not kidding the people who do those lease transfer things are desperate, they'll even pay you to take it over.

Personally though, I'm just not a big fan of leasing in general.

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06-05-2009, 08:13 AM
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It all depends on your mileage per year and your ease to drive a car that's not really yours. It's not worth leasing a car if you only drive ~10K km per year or if you want to keep the car for 12 years, but if you drive ~20K km a year and can have a lease that allows you that much km and that the dealer is the one paying the depreciation balance at the end of the deal (basically means that the car value after the, say, 4 year loan is decided before signing the contract), then you're much better to lease the car, and lease a new one when your deal is done. This way, you always have a new car in your hands, so you're less likely to have any repairs and stuff. Plus, your montly payment is much less. That's compaired to buying a new car.

The most profitable option is likely to buy a used car. Look for a car that has done a lot of km in few years, so it's more likely that the car spent most of the time on the highway, which isn't hard on mechanics. And the price will be really affordable.

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06-05-2009, 08:51 AM
  #17
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It also depends on the km you expect to do..

When leasing, you have to respect the contract or else you'll pretty much have to buy the car in the end...Leasing contrat often (always ?) limit your allowed km per year (or else you pay a penality).

If you plan on doing a lot of traveling, leasing is "almost" not an option. That was my case when I bought my car.. Other than that, I believe leasing is always the best option. When buying used, think about your garantee.. 3 years from now, if your car needs repair and your not covered, having a used car will not look like a nice option.

And since we all agree car is not an investment, I would go for leasing rather than a used car that might needs repairs..


Last edited by tigidou: 06-05-2009 at 11:43 AM.
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06-05-2009, 11:10 AM
  #18
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Quote:
Originally Posted by Ape Clutch View Post
It is NOT always better to own rather the lease.

Example You buy a house today 400K, housing market keeps going down to 300 or 250K... well that is the resale value of your house, while you still owe 400K on your mortgage

Not a very good comparison, imo.

Housing markets can go up too if your timing is right (good time to buy where I live) and you buy from right location.

And with houses, all it depends on what kind of loan deal you get from the bank.

Unless your're getting some antique car you always lose value. Period.

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06-05-2009, 12:27 PM
  #19
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While a car is a depreciable asset, I've always felt that you still have something to show for your money at the end of the day if you buy.

I've been saving my tax returns for about the past five years and I just bought a new car in April. I bought a Mini Cooper S Clubman. It was the only car I wanted and I feel for the money I got a lot of what I wanted. I did buy because I had no interest in leasing and one of the things I love about the Mini is that it will still look timeless/classic in 8-9 years.

Now the thing with Minis is that they hold their value better than pretty much every other car on the market. Part of the reason for that is that I think they keep supply down, but it's largely down to the fact that they don't negotiate much on them. So I thought now would be a great time to find. Well I've been doing research on them for years and I knew a deal would be tough to find. I looked into some used cars I'd found online. They wouldn't even budge a penny on the prices of the used ones I checked out. Seriously, I found a non-S model (which is cheaper) for the same price I ended up paying for my S and they had almost the same features.

When it came to the day I bought the car, the negotiation was quick. I was told going in that they only make 10% on the sale of the cars and that if I got 5-8% I'd do well. Well the manager told me they only make 6% and so I said I wanted 6%. I got it. Then of course I said "Oh, and I do have a trade-in out there." I got a very good price on trade in (higher than blue book value). Since then I've spoken with Mini owners on a forum on Minis and no one has got that deal.

Yesterday I was doing a used car search on Mini Clubmans and I found a great deal on one only 5 miles from my house. I almost wished I'd waited because I'd have saved $3, but I'm thrilled with my car I got and I didn't entirely trust a used one. Actually I just wish I had the money for a second one.

Best thing I would tell you if you're buying is to:

1 Do your research. Plenty you can find out online from reliability to resale value. Also, check out the differences in model years. Minis pre 2007 aren't as good as Minis 2007 or later because they have the old engine.
2 Look around. You never know what you'll find online or at another dealer.
3 Consider buying new. Used cars are all the rage these days and I think the dealers are marking them up. I mean I got my 09 Clubman S brand new for the price of a used 08 they had in the showroom. Only difference was new v old, mileage of course and color difference.
4 IF YOU LIVE IN THE US and you buy new before Dec 31, you can get a tax credit next year for the sales tax on the car. I'm going to get $1600 back next year on top of the deal and trade-in I got.
5 If you're buying new and can't find a deal, try using a broker. I read about a guy who got a Mini through a broker and saved $1000 in doing so over his local dealer.

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06-05-2009, 01:06 PM
  #20
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What you need to calculate is when you put down some cash, you lose some % interest. So buying a car with cash cost you some interest that you do not pay for when leasing. How much, is what you need to know. Sometimes, sure you will have something to show at the end of the day, but it will have cost you more in interest had you invested your money.

Now I know someone will say, but the banks aren't giving any good % right now. I will answer to that, that if you give banks your money, you will never have any anyways. Its called inflation.

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06-05-2009, 07:07 PM
  #21
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[QUOTE=doug mckenzie;19803199]if you can hold off another 4 to 6 month your going to get some darn awesome deals .......

the dock yards and storage facilities are full to capacity they are running out of starage options for all these unsold cars..... and with the car dealers now getting eliminated less places to sell them

So major deals are coming ...if price loook good now you will see even better in my opinion ....


ALSO keep a eye on this , cash for your old car .....the govt around the world are doing this .....like overseas in parts of europe there giving something like 4000 for your old car on trade in ......not bad if you got an old beater kicking around the yard something thats worth only $500



there talking it over in the Usa also ....im sure if the USA does it there a good chance Canada will do something also......

I'd love to know how Obama is going to get the money for this program. There wasn't enough funding to maintain the coupon program for converter boxes for digital TV at $40.00 a pop yet, somehow, the government is going to be able to fund a program that will pay out $4,000.00 (or more) for old cars.

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06-05-2009, 08:04 PM
  #22
NHLcrazy
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With the current economy it's the perfect time to by a slightly used car (2006-2008)...you save the instant depreciation and if you need financing you'll have very good rates.

Leasing is for suckers IMO

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06-05-2009, 10:18 PM
  #23
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I've never leased a vehicle myself but my neighbour has been leasing new vehicles from GM & Chrysler for personal use for him & his wife and he states that he'll never buy a new vehicle again after 10 years of leasing. As always you have to research which option is best for you.

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06-05-2009, 10:22 PM
  #24
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Quote:
Originally Posted by doug mckenzie View Post
if you can hold off another 4 to 6 month your going to get some darn awesome deals .......

ALSO keep a eye on this , cash for your old car .....the govt around the world are doing this .....like overseas in parts of europe there giving something like 4000 for your old car on trade in ......not bad if you got an old beater kicking around the yard something thats worth only $500 As currently worded, the proposal would offer electronic vouchers that would knock off as much as $4,500 from the price of a new auto purchase or lease of a new car. The government would also offer cash rebates to those who have purchased a qualifying new car since March 30
Both my cars are beaters so do I get 9000?

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06-05-2009, 10:54 PM
  #25
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If you want to keep the car then you should buy. I made the mistake of leasing my previous car and wanted to keep it but you end up refinancing at twice the interest. So I just got a new a couple of weeks ago. This time I bought.

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