[Q3User]

We have never leased before but are thinking about it for the Q3 because a new model could be coming in the next 2-3 years.

Some questions if the community please care to provide feedback:

1) Can we trade in a car as part of the down payment/capital reduction to lower the monthly pmts?

2) If yes, does it make sense to trade in a car that we have a sizeable residual equity in for basically a little/no monthly payment?

• if #2 is yes only if we have the discipline to actually sock away the monthly in savings - that would be our thought process.

 

[john]

Howdy,

Yes you can do that if you like. I look at it this way however. If you are leasing, I don't see the value in using equity to drive down the payment. If you sell the vehicle outright, assuming you own it and not lease it, you will make much more by going private party. Then you have this equity in your account. I never give up liquidity on a lease. I would rather have the chunk of change in my account than spend it on something I am renting - as you do when leasing. Others may have a different view on this but the above is my operating model.

Thanks, John

 

[Q3User]

Howdy,

Yes you can do that if you like. I look at it this way however. If you are leasing, I don't see the value in using equity to drive down the payment. If you sell the vehicle outright, assuming you own it and not lease it, you will make much more by going private party. Then you have this equity in your account. I never give up liquidity on a lease. I would rather have the chunk of change in my account than spend it on something I am renting - as you do when leasing. Others may have a different view on this but the above is my operating model.

Thanks, John

John thanks for the feedback.
Yes we own the current car outright (in about 2 months).

If I hear you right:
Cash in hand is better than paying the lease off up front.

Good point.

 

[john]

John thanks for the feedback.
Yes we own the current car outright (in about 2 months).

If I hear you right:
Cash in hand is better than paying the lease off up front.

Good point.

I like to keep the cash on hand for emergencies or whatever. If you sink it into the lease you cannot get at that money. If you need a water tank or something like that, it's nice to have the cash on hand.

 

[rnlabas]

Another simple thing to think about when leasing : somebody is making money on your lease - AND it's NOT you! Lease's make sense for a business deduction when/if possible, but otherwise just COST the buyer more in the long run. They may look attractive cuz of payments to value, but still in the end, that's a COST to the buyer - always go back to my first statement - ALWAYS true...any other paradigm has not followed the money.

 

[john]

Leasing lets me get into new cars frequently which is a cost I accept! Cars are an emotional purchase for me so I plan to spend money on cars and expect I will always have some kind of car payment as a result. However I budget for this and don't spend money on things like golf/tennis/Vegas weekends/etc. I chose to spend it on cars. BUT.. I don't use my liquidity to buy down a lease.

 

[Q3User]

Leasing lets me get into new cars frequently which is a cost I accept! Cars are an emotional purchase for me so I plan to spend money on cars and expect I will always have some kind of car payment as a result. However I budget for this and don't spend money on things like golf/tennis/Vegas weekends/etc. I chose to spend it on cars. BUT.. I don't use my liquidity to buy down a lease.

Mssg loud & clear!

 

[rnlabas]

Leasing lets me get into new cars frequently which is a cost I accept! Cars are an emotional purchase for me so I plan to spend money on cars and expect I will always have some kind of car payment as a result. However I budget for this and don't spend money on things like golf/tennis/Vegas weekends/etc. I chose to spend it on cars. BUT.. I don't use my liquidity to buy down a lease.

I like it : a straight-up aware spender ... I'm similar in emotion, just choose to create a positive NPV for myself -

 

[john]

I like it : a straight-up aware spender ... I'm similar in emotion, just choose to create a positive NPV for myself -

That certainly works if you keep the car! I know I am going to rotate it out after a short period of time. I cannot help myself!!