Out of curiosity, how much did you put down on the finance of the X5? I'm guessing you rolled equity into the deal where a lease would be close to $0 down, since you've brought up equity a few times. If anybody wants to compare finance to lease then they need to be similar down payments. So if it's greater than 0$ this makes a difference.

If you're saying you owed $16k after 3 years then you did not finance the full amount of an X5. You'd owe twice that and be upside down where somebody who leased could walk away.

 

Read my post just above yours. Yes, there was equity in the purchase which is only natural. You NEVER put money down into a lease so your point is mute. 60 months from Nov 2012 to Nov 2017 is all laid out clearly in that post showing initial costs, early payoffs (something NOT possible with a lease), etc. why are you so concerned about "walking away"? Have you been upside down in a lot of cars? I haven't ever. There is ZERO monetary value in "walking away" from anything IMHO

 

This is apples to apples in regards to finances which is what we are talking about here. I have no interest in "emotional" things such as a "DESIRE" to be in a new car. Doing so would be comparing Apples (financials) to Oranges (emotion of having NEW stuff). Besides, I work from home & have a heated garage so may 3 year old car is probably as nice as any "new" car.

Actually, it's pretty easy & assuming the same early payoff the financing cost for the 12 additional months @ 1.89% is just slightly over $1K so all we need is the original lease costs over that first 30 month term added to the $1K so total cost would be $7170 + $1K or ~$8,170 to lease then buy at month #42

PS - I don't think you REALLY want me to run the lease, then purchase numbers because the residuals will KILL you at the end of the term. Probably at LEAST a $5K higher costs for this type of approach vs. the nearly $15K difference for the 2 leases.

 

Yes it would be interesting to see the delta in numbers. Buy new via loan agreement (don't include rolling in the $9k positive equity so as to not skew things) over a 60 month term versus lease for 3 years, buyout then loan agreement for 2.

 

Owning an F-Type is all about emotion/desire. Totally impossible to financially/rationally justify the purchase of one. Similarly, all the reasons for leasing, financing, or paying cash for any car is driven by personal desire/perception/risk tolerance of each individual. No one right decision for everyone. That's why they offer menus in restaurants.

 

Actually, the comparison is pretty easy. Using the same 42 month payoff results in an additional $1K in interest of a $39,400 loan (58% residual) at month #30 with an interest rate of 1.89% (PenFed) so assuming the pay it off is at the EXACT same 42 month mark using my $15K bonus + original $9K down payment = $24K and still leaves you $15K short at the 30 month mark so it's actually closer than you may realize.

Making certain to also subtract the $686/month purchase payments for those same 12 months (because I included that in the prior example) and you get to reduce the $15K figure down to only a $6,768 deficit to original purchase. Better but still cost more & you don't get a "new car" 1/2 way through so still a bad financial deal

NOTE: Since I included the $9K down in the original I could not "remove" it and keep it balanced for your lease-then-purchase scenario so it's included to ensure I don't short any equation.

 

Agreed. This has turned into a "lease vs. purchase" debate thread. Let's return this thread back to fun. Where are those $88K SVRs?

 

Yeah, I totally missed the post with the numbers. I wouldn't say my point is moot about zero down. It's totally relevant when trying to "compare" the lease to finance deal. I bring this up because you said you owed $16k and people were "begging" you to sell it for $25k. The fact is that loan would have been upside down had you made the regular payments and you were saying financing your car made this possible. I could do the exact same with the lease by making extra payments and paying down beyond the residual. I would also say that 58% at 30 months is not a good lease and the residual is not strong on that X5 and the finance payment would be near identical.

By the way, I wasn't "concerned" about walking away. I have never lost money on a lease whether it was a trade or a private sell. It was simply a counter to your points. Still, apples to candles comparison.

 

No worries here, I'm not actually debating to take fun away. Just throwing in my $.02 and you know I'm here to help too since we've chatted offline before.

 

As long as we keep talking about it, it's certainly not mute. But it may well be moot.

 

Haha, good call. Didn't even notice I did that.

 

Yep, it's all good. You came into this thread a bit after others had been trying to promote leasing over purchases. As you know, I have no issue with leasing in certain conditions. One of those conditions is when a SVR that has an MSRP of $130K and is selling at ~ $40K discount. Since the residual doesn't move, these can be some KILLER deals worthy of leasing as a 58% residual is $75K which would mean that the lease only has to make up for the ~$20K difference over that 33 month period. Pairing that with the near-zero money factors (if possible) and you have a SVR monthly lease payment of less than $850/month which is ... phenomenal and you can then walk away at the end of the lease if the market value is lower than the residual and have enjoyed those 33 months of ear-shattering fun!

Finding those deals is the challenge. If that R vert you directed me too would have had the vision package I would have leased it back then.

 

I kind of wished I would have waited another couple months because the deals are getting insane. I would have picked up an SVR for what I got the R for. Noted for when this lease is up.

I just sent you a PM.

 

Jeez, I'm so jealous.
You Yanks were already getting the FTR at close to 1/3 of what they cost here in Oz (they go for between $270k and $320k new here), and now you are getting huge discounts to boot!
No hint of any F-Type discounts ever in Oz, and especially not on the R or SVR.
The only good news here is that 2 and 3 year old used ones can be had for a little bit more than 1/2 the price of a brand spanker.

 

I just want to clarify that I wasn’t trying to advocate leasing over buying or vice versa. I was just pointing out that in certain cases leases can be a better deal. In addition to the SVR lease, in California some people have gotten free leases on electric vehicles after all the rebates.

In other cases leases aren’t a good deal. $926 a month for a $68k X5 is a horrible lease deal. No arguments from me for not taking it.

 

I have never been able to negotiate the buyout at the end of a lease, even with offering the current auction price. I had an experience with ending an Audi lease. I got a new Audi and went over the car with the dealer and agreed to $400 to bring the car up to snuff after 4 years. The dealer decline to keep the car and Audi billed me $900 in bills. I asked to see the repair bills and they informed me they didn't actually have to repair the car, I produced my repair bill from the dealer which they ignored. I turned it over to the GM at the dealer and never heard back agian.

 

As it happens, my master's thesis was on lease-buy decisions - albeit based on gas turbine generators (car leasing was not much of an item back in the 70's).

Sparing you the long(er) narrative and formulas, you can start with the base scenario where the two are financially neutral. Both sides have do deal with the cost of capital and depreciation. In theory, those might be equal in either case, but you might have different access to financing and/or a different outlook on depreciation. Variation in financing cost can get complicated, but is probably to the purchase advantage - especially on a 3rd party lease. Manufacturing financing & incentives is where it get really tricky. Check the money factor in the lease, but it's probably higher than the 1.9% from your friendly local Credit Union.

Meanwhile, depreciation is the real betting man's game. Whatever the leasing company assumes for the future is baked into your contract. If you're already in a lease, always check the residual buyout. If is seems low, consider taking it when the time comes - whether to keep the car or sell it. If it seems high, rejoice that the leasing company mispriced the lease. You got a bargain.

Beyond those factors, there is some inherent advantage on the leasing side if there is tax code incentive. That can take a couple of forms, but generally only applies if the lease was through the manufacturer. There is also a lease benefit if there is a restrictive resale market and the leasing company has a more efficient secondary market. That's probably more true on capital equipment than cars. A 3rd party lease is probably assuming to wholesale the car. If you're willing to manage the sale yourself, you're bound to come out ahead.

Overall, I view the decision as mostly one of personal preference. If you're committed to changing cars every 2-3 years, leasing is the easier and more predictable path. In practice, it probably carries a bit higher cost, but usually not a lot higher - unless you compare it to owning over a longer term.

 

Before I bought my F Type this year I roughly compared cost of leasing for three years to the cost of owning (paying cash - no financing) three years and in my case it was pretty close to even by the time you figure depreciation of owning and up front costs of lease and monthly payments . One can argue (and have) if you pay cash you have lost opportunity costs on the capital depending how you invest. But if possible, a home equity line is logical as it allows for added leverage on the capital sitting in a property, tax deductibility of interest and likely a return on retained capital higher than the interest rate on equity line.

If I could write off the cost of the car for business then leasing would be much more attractive... but I can't. If I wanted new cars every three years then leasing is again attractive. But I tend to choose carefully and keep my cars for 10+ years. I actually traded in a 15 year old Acura RSX (I bought new with cash) with the jaguar dealer and got exactly what I wanted for the trade in with no haggling - probably because it wasn't worth much at that point, but that's a beauty of an older car - lowered expectations of residual value