Anyone here know about LEASING or LEASE TRADING?
10-26-2004, 11:28 AM
#16
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Join Date: Nov 2002
Location: Bay Area
Posts: 735
Car Info: 2002 MBP WRX, 2012 OBP STi wagon
Actually, if you own a house, leasing is STILL a lousy decision.
Owning a house means you can take out a home equity loan to buy the car. This hase a lot of advantages. First, you pay what you can, as long as you meet the minimum each month. For example, you buy a 35k car, your miminum monthly payment is .. 100 bucks. Seriously. You can always pay more (and I would advise this, as the longer you keep the equity loan balance, the more you pay in interest over the life of the loan). Second, you own the car, the bank does not. Third, and this is the big one, you can write off the interest from the home equity loan on taxes. HUGE plus. If you are a home owner, you can write off the interest you pay on any mortgages/equity loans you owe. Come tax time, this can add up to a LOT Of change. Basically, you leverage the equity you gain from the house into paying for other purchases, AS LONG AS you don't go gonzo and take out more than .. say.. 50% of the equity in the house. For some houses, that's anywhere from 50-100K of equity to use for your needs (college costs, home improvements, vacation, CAR, etc.).
There are far better options for an individual than leasing. The only advantages I can see to leasing are: 1) Lower up front cost, 2) lower monthly payments, and 3) you can change cars more often. However, you are, in effect, renting a car for a long term. You are paying for the upkeep, maintenance, fuel, and fluids for a car that isn't yours. http://www.automotive.com/Finance/Fi...sing-faqs.aspx and http://www.carbuyingtips.com/lease.htm have more info.
Now, as for lease trading, I suggest reading up on it at Edmunds.com. http://www.edmunds.com/advice/leasin...1/article.html . It's still relatively new (2001 or so) but I haven't seen a lot of disadvantages to it yet. Essentially, you are taking over someone's leasing mistake
. S/He's already paid the up front costs. You get to take advantage of it.
shadowcat
Owning a house means you can take out a home equity loan to buy the car. This hase a lot of advantages. First, you pay what you can, as long as you meet the minimum each month. For example, you buy a 35k car, your miminum monthly payment is .. 100 bucks. Seriously. You can always pay more (and I would advise this, as the longer you keep the equity loan balance, the more you pay in interest over the life of the loan). Second, you own the car, the bank does not. Third, and this is the big one, you can write off the interest from the home equity loan on taxes. HUGE plus. If you are a home owner, you can write off the interest you pay on any mortgages/equity loans you owe. Come tax time, this can add up to a LOT Of change. Basically, you leverage the equity you gain from the house into paying for other purchases, AS LONG AS you don't go gonzo and take out more than .. say.. 50% of the equity in the house. For some houses, that's anywhere from 50-100K of equity to use for your needs (college costs, home improvements, vacation, CAR, etc.).
There are far better options for an individual than leasing. The only advantages I can see to leasing are: 1) Lower up front cost, 2) lower monthly payments, and 3) you can change cars more often. However, you are, in effect, renting a car for a long term. You are paying for the upkeep, maintenance, fuel, and fluids for a car that isn't yours. http://www.automotive.com/Finance/Fi...sing-faqs.aspx and http://www.carbuyingtips.com/lease.htm have more info.
Now, as for lease trading, I suggest reading up on it at Edmunds.com. http://www.edmunds.com/advice/leasin...1/article.html . It's still relatively new (2001 or so) but I haven't seen a lot of disadvantages to it yet. Essentially, you are taking over someone's leasing mistake
. S/He's already paid the up front costs. You get to take advantage of it.shadowcat
10-26-2004, 04:37 PM
#17
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Originally Posted by shadowcat
It's still relatively new (2001 or so) but I haven't seen a lot of disadvantages to it yet. Essentially, you are taking over someone's leasing mistake . S/He's already paid the up front costs. You get to take advantage of it.
shadowcat
. S/He's already paid the up front costs. You get to take advantage of it.shadowcat
This is exactly what I was actually talking about in the original post lol. Leasing is indeed a crap option. I put up a spreadsheet comparing leasing a WRX for 36 months, and buying a WRX and selling it after 36 months. I did the same for an S2000 The buying option surprisingly came out cheaper even after I factored in a range of depreciation values!
I've seen the article on Edmunds you just posted. Basically I was searched on google for "Lease trading bad" and "lease trading pitfalls" and couldn't find any negative comments about lease trading, none so ever. Which is why again I state that it would be cool if I could find an '02 Z06 that someone took out a 48, 60 month lease on and put 10,000 down or something like that, and just happens to have to get out of it because he lost a job or something. Of course, I realize that the described situation would be quite rare!
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