Car - buy vs lease?
Hi monkeys,
Looking for some advice on what I should do in terms of getting a car for an incoming IBD analyst. I think I have the car picked out. Here are the details of my situation:
-office outside of NYC = I need a car
-car value approximately $30,000 (will be getting a new car, never drove one and it's only for two years. I understand that buying used is often the financially soundest bet)
-will likely move away from my current city after 2 year analyst stint is done
-FICO score 728
-never owned a car before, bought insurance, etc.
-income 85k+bonus
I'm looking for the bottom line best choice financially. The payments on a 24 month financing term for a $30k car would be pretty steep and I'd be eating a ton of depreciation for the first and only 2 years I own the car. I'd be paying the depreciation too on a lease but less than the amount I would pay for financing. Plus I expect a new generation of this car will be released within 3 years which may drive down the resale value of the one I'm getting, so I'm not sure how much equity I should tie up in it.
Thanks for any help.
Do you guys lease or buy cars? (Originally Posted: 08/03/2007)
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Getting a new car: Finance vs. Lease (Originally Posted: 09/21/2011)
I'm planning on getting a new car in the next few months and am trying to decide whether or not I should buy or lease the vehicle.
Wanted to get some opinions of everyone out there.
Assume:
Whether I buy or lease the price of the car will be 45-50k.
With either payment I will be cash flow positive every month including all of my other obligations, savings, etc.
I am not in NYC nor will I be.
Single, probably going to buy a home in the next five or so years.
Marriage is a possibility in the next five also.
Four year lease or four year financing.
Opinions?
.
Why would you buy when some dealers offer you 3% loans?
I want to work now! No, really. I want those 100+ hours/week.
contrary to your logic, buying a brand new car as a fresh college grad is financially unsound
"I understand that buying used is often the financially soundest bet"
Ah, well I'm retarded for not being able to read properly. But anyway -- if you plan to only own the car for 2 years it just seems silly to buy new. And how often do you plan on driving anyways? I honestly don't know jack shit about cars, but I know enough to tell you car salesmen are slimey mofos.
a 24 month lease from any dealership is going to be astronomical. Most dealerships steer away from a 24 months in fear you will run once you see the numbers. They place the best residuals, money factors, etc. on the 36-month leases. When I stopped in a VW/Audi, I believe that 24-month leases were standard rates -- you would be paying about 6 or 7% interest on the lease instead of 1 or 2 if you went for the 36-month lease.
**considering your situation you may be better off buying a used/ inexpensive car and selling it in a years time***
Good luck
Same situation. Interested as well.
i own
What kind of car are you looking for?
Nothing classy or grown up or anything. Looking at the new Subaru STi (not the wagon version) and the Evo X.
A new car might sound sexy now, but as an IB Analyst busting your ass 80+ hours per week, you won't have the time to enjoy it as a pleasure vehicle.
As mentioned above, consider viewing your first car as a tool. Find a used, reliable car with low miles, and take the money that you would have spent on new car payments (plus increased insurance) and sock it away as seed capital for your Evil Empire.
While your fresh-faced colleagues are living the good life early on, money will be tight for them at the end of their analyst stint. Better to build a small pool of capital to make that right move (e.g. start a business, invest, or not be at the mercy of your finances to find a job right away in case you get axed).
Do you have a car ownership strategy? How long are you willing to/planning on keeping the car? Answer is highly dependent on how quickly you will be cycling through vehicles.
i prefer to ditch a car after 3-years because i do not want the hassle of dealing with maintenance. with that said, leases are perfect for me.
my first car was a used nissan maxima. it had so many fucking problems that i vowed to never keep a car long enough for it to need major work.
The dealership offered me what I think was a very good deal on a lease, but it was never going to make sense financially, so I didn't trade in my car. When I built out the schedule of what my principal balance would be for the life of my loan and compared it to KBB's middle of the road resale values, the depreciation rate significantly slows after year 2 (where I currently sit). As a result, my ~$2,500 loss would turn to about neutral in year 3 and start to get pretty positive thereafter. All-in, switching to a lease from ownership after 2 years would be about a $11,000 loss over the next 3 years (ignoring TVM because over 3 years it wasn't going to move the needle meaningfully).
My advice after somewhat living through your scenario: don't buy new or lease for 2 years because most of the depreciation happens at the front end of the life of the car and it is unlikely you will come out positive. Buy a higher quality used car that is a few years old that you won't have to worry about for 2 years and then get rid of it when you move.
I have always leased my cars. More car per dollar, don't have to put a ridiculous amount down.
On a lease, you basically are paying the depreciation of the vehicle without having to tie up a ton of capital into the vehicle. You'll always have a car under warranty as well.
I lease a pony from the local stable. it's much more fuel efficient (doesn't comsume any at all, can swueeze through traffic jams, and you don't need a parking permit. Also, riding a pony into town means you don't have to cough up the cash for the central London congestion charge.
"LIVING THE DREAM 24/7 ON http://THEALLNIGHTER.BLOGSPOT.COM"
I am selling a high-quality used car in NYC. PM me.
Get a certified pre-owned 3 series, A4, etc. or Civic, Camry, etc. if you are looking to go a cheaper route. Leasing doesn't make sense in your case and buying new for a car you may not keep is stupid given the depreciation off the lot.
It's been touched on in different posts above, but the answer depends on your preferences:
If you will want a new car every 3-4 years and won't put exorbitant miles on the car, then lease.
If you're likely to hold onto the car for a while, put excess miles on it and/or don't mind not being under warranty you will likely save money if you purchase.
Probably going to go with a lease. Won't put a lot of miles on, want a warranty just because I don't want to have to even think about repairs, etc.
How can someone here never have owned a car or paid insurance? Generally most often leasing is not a good deal, exception being high end cars or business use.
No idea why you would buy a new car when you already know that you'll only have it for two years.
Add to that - what are you even getting at $30,000? A new Accord or Ford Fusion or something? You can get a really solid one used for like $16,000-$18,000 and then sell it in two years for $14,000-$16,000.
delete
buy a 3 year old car that's a CPO with under 40k miles, it likely came off a 3y lease and should be in good shape. finance it and then sell it when you want. the body style will be close to the new one and you can put as many miles as you need on it.
what kind of car are you looking at?
Don't buy a new car. Don't even lease it. As others have said, buy a used car and then resell it in two years. I'm also not in NY and bought a great car but rarely drive it other than to/from work. I've made good use of its performance capabilities only a handful of times and I'm a car junkie. $30k for a new car you probably won't use, and will soon think of as just any ol' car, isn't worthwhile.
Don't know why everyone hates on leasing. It will get you a very reliable nice new car with low payments for a few years. You can get a three year lease BTW. Whatever you do after being an analyst you will still probably need a car and you don't need to turn it in to the exact same dealership at the end of the lease.
Of course used is cheaper but if you feel a new car will add materially to your quality of life then get one.
I was sick of unreliable used cars and getting nervous every time the engine sounded a little weird or whether a shaky ride was the road or my car. Now I have a rock solid car with satellite radio, nav, Bluetooth, backup cam, and remote start. I love it and am happy I went this route.
I live in the Midwest (extreme weather) in a fairly sprawling city and don't work banking hours. For me, in my situation, it made sense. Don't do it on a whim but you can definitely afford it with your job so don't be racked with guilt if you want to get a new car.
Seeing as how you've never owned a car before, or ever had insurance, you are a brand new driver...
Once you see your insurance quote, you'll likely want to get a used car instead. Also, you're likely to bump it up quite a bit due to it also being your first car. This leans even heavier on getting a used car.
At 30k, there's nothing that you can buy that will give you any sort of 'status' so it realllllllly doesn't matter if you buy new, or even one year old that was turned in and you're buying used.
So the consensus: Buy used.
I'm a huge car guy, if you need any advice, feel free to ask.
If money is a primary driver of your decision, just get a quote on a 2 year lease, then find a car that's off of a lease (most likely a 3 yr old car but they tend to be in ok shape because a reputable dealer will certify it) and figure out what the monthly finance payments are. Measure the money down you need on both, get insurance quotes and figure out your total cost on each over two years and pull the trigger.
I'd say get an older beater and just drive it into the ground but I think they're tougher to get financing (could be wrong) so you'd have to come out of pocket. I'd be careful going out more than 2 years on a lease if you really think you'll be gone because, and I'm assuming if you're making $85k and really need a car you're in Houston or LA (if you think you need a car in SF or Chicago, don't buy one and just move in town), if you move to NYC or somewhere you not only don't need but don't want a car, you don't want to get stuck with an albatross like lease, insurance and monthly parking payments for something you don't need at all. I did that when I was younger and was only saved because my brother was graduating from college and needed a car so he took over the payments. Otherwise it's an expensive bitch to get out of a car lease.
In any case, I wouldn't spend a lot of money on cars when you're younger. It's probably the worst use of money possible. If you start making coin and cars are something you enjoy, go for it then. But driving even a 3 Series at 22 just isn't worth it. No offense to those who do, I did it, but it's just a waste.
Used car pricing on the kind of stuff you would (I assume entry level luxury sports sedan car or non-luxury SUV/car with options) isn't great either, especially if you get "certified pre-owned" vehicles for peace of mind. Unless you can find a 5+ year old car with low mileage, which is hard.
Look into US manufacturers - you won't have to deal with the long term quality issues on lease. GM routinely gives away the farm on the Cadillac ATS (poor man's 3 series) and Buick Regal (which is a great car that often can be had
Buy a motorcycle
Lane splitting means you are over Brooklyn Bridge or thru Holland Tunnel in 5 minutes rather than 45.
Lots of fun riding on highway 9-W on the west side of the Hudson river.
If you plan on living in NYC, this sounds really really dumb. Parking is going to run $600/month in Manhattan and insurance is going to run $2000-3000/year. Maybe $4000-5000 if you are under 25 and have no driving history.
There's really no point in getting a car and parking it in NYC unless you have the budget to pay > $50,000 for it for it anyways. Unless it's a high-end BMW or Porsche or Ferrari, it doesn't belong parked in Manhattan. I say this as someone who would never drive one of those cars.
Back to my rusty Honda parked in in NJ.
This is a terrible idea. Commuting on a bike in a major city, especially while tired, is a death wish.
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