Petrocelli

I have leased 8 Mercedes in 202 years. I get 3 year, 45,000 miles leases. When they get to 44,000 miles, I take the car back and get another one.

I have done some analysis of the cost of leasing versus owning. Right now, I have a C300 coupe that I got for about $46,000. I lease it for $615 a month. The first three services are includes, and I have to pay for the last, which is $440. Everything else is covered under warranty (except, of course, tires).. So the cost of two three years leases (assuming the price stays the same) is $45,160.

Now assume that I bought that car at 3.99% interest and sold it with 90,000 miles at the end of the lease for $12,000. I would have higher regular maintenance (because I'd have to cover 5 regularly scheduled maintenances instead of 1). I also run the risk that I could need a non warranty repair. But, assuming no unexpected maintenance, the cost of the car would be $43,528.

Bottom line, using these stats, I'd save about $22 a month leasing rather than owning.

Isn't it a no-brainer to lease? You always drive a new car, and it's always under warranty. $22 seems like a small price to pay for that.

Thoughts?

Plutoe

Wadabout your upfront down payment cash cost and why lease the same car for six years

ygmn

how long do you own it for?
I average over well over 10 years.

You are also forgetting:
insurance costs reduce as car ages heck there is point where you can gamble and not have comp.
Local taxes reduce every year (may not apply to all)
Loan details (rates terms etc) between buying and leasing can vary so much hard to compare costs)
Price is more negotiable I find when buying versus leasing since you are not "CARLESS" and in a jamb to get a new one.
YOu can buy a 1 year old CPO car real cheap versus new MSRP since some leasor pays the deprecation hit.
After car is paid off you can take that payment money and invest it to make more money and have cash for next car.
When you modify a purchased car you do not have to remove all that stuff and convert back to stock when you trade her in.
You can do to car what ever you want.
When you turn lease in may need to buy all sorts of things to comply (tires windshield etc)

Too many variables for one way to be better then an other


many many things to look at

Now if you like to change cars every 3 years and pay the man every year LEASE
if you can hang on and drive the same car for long periods then buy..

Too much math involved to make it a simple LEASE versus BUY.

Petrocelli

I put about 16,000 miles a year on a car, and don't like taking a Mercedes over 100k miles.

If I drove less, I would probably buy.

How many miles do you drive a year?

ygmn

I put 1-2k on my truck and 8-10K on my MB per year
I am not afraid of having over 100k miles on anything if I was I would not buy it.
Truck has 165K today and in great shape - I just have to keep battery tender on it since I drive it only 1-2 times a month.

Car has 31K today but 10k of that is on long road trips to visit family which is what I wanted car for.
Working at home has its benefits.

Plus I got a hell of a deal.
Bought CPO used with under 400 miles for under 60% of MSRP
CPO gets me extra year warranty and for unlimited miles.
Since Initial in service date was about 4 weeks before I purchased - so the 5 years of warranty I get goes out until end of 2021.
MB finance also offered 2 years free maintenance if you financed thru them. No brainer here.
Well car is paid for I used my service already and will continue to drive and evaulate for the next 2 years....

I prefer to buy as a car is a tool and keep them a long time as long as they are not junk.

I look at NEW, CPO or USED cars - NEW only when I have to as the depreciation hit for the first year is just crazy and I do not need all them first year gadgets that fail.

superswiss

If you change into a brand new car every 3 years, then yes leasing can be less expensive, especially in states where you don't have to pay the sales tax upfront and only pay it on the depreciation. However, in general, leasing is much more expensive. Reason for that is the non-linear depreciation curve of cars. The first 2-3 years is when cars depreciate the fastest, so getting a new car every three years constantly puts you in the fast depreciation bracket. Buying a car and keeping it longer is ultimately cheaper, depending on how long you keep it because after about 3 years, the depreciation curve slows down. Ultimately the cheapest is to buy used, because somebody else already took the big depreciation hit.

Leasing makes the most sense if you can run it through a business and deduct it. With leasing you don't own the car, you are just renting it, so the lease payment can be expensed. By buying the car you actually own an asset that you can trade in or sell at your convenience. There's no specific contract term to adhere, too. If you have a life changing event for example, getting rid of a leased car is not that easy w/o spending money. Some leasing companies for example don't release the original lessee of any liability during a lease swap, so you have to buy, pay taxes on it and then sell it. Some states allow a buy/sale transaction during a very small window so only the buyer will pay the taxes. If you miss the window, both the lessee and the buyer end up paying sales taxes.

So, it really all depends on how you use the car and for how long you hang on to it. The financing method should be selected based on how the car is used and for how long, and your current financial situation. Just leasing for the sake of leasing by itself is not a smart decision as it forces you into a perpetual cycle of having to get a new car every 3 years or so. I have leased in the past, but one reason I stopped is because there wasn't always a car I'd rather have at the time my lease was up and I ended buying out my leased car, which often is at a higher cost than what the car is worth in the market. I've paid cash instead for my last two cars, partly because I did European Delivery and wanted to own it outright. That can ultimately be the cheapest as there is no interest to pay. It does tie up cash, though that could be invested, but if the money comes from cash that one has sitting in the bank anyway as part of a rainy day fund for example, then there isn't much of a lost opportunity cost. I certainly wouldn't sell off appreciating assets in order to free up cash to buy a depreciating car. In that case both leasing or borrowing money makes sense.

chassis

Is a 100% cash purchase an option? This avoids renting someone else's money (loan, lease). You pay for depreciation in all scenarios, no free lunch there.

superswiss

Is this a serious question? Of course is 100% cash an option. Cash is king as the saying goes. What did you think? You can walk in with a suitcase of cash and pay for the car in full. Not really what one does unless you are a drug dealer, though Most common is writing a personal check or a cashier's check. The latter avoids the dealer running a credit check and impact your credit score. Yes, you pay for depreciation, either way. Most cars depreciate, but by paying cash as you say you don't pay interest to a third-party making the car more expensive than it really is. Borrowing money (lease or loan) makes financial sense if you can invest the cash for a higher gain than the interest you pay to the lender. That way you make your money work and it pays for the interest and earn you more money. Otherwise, you are just paying somebody to spend money that you don't have. Other good reasons for leasing or financing a car is if your employer pays you a car allowance or you can write off your car payment somehow. Buying a car is technically not a smart financial decision, but one buys a car for convenience, enjoyment or whatever else your reason is. The smart way to do it is to only buy as much car as you could afford paying cash for. Then finance or lease instead of paying cash if you are going to invest the cash instead and make a higher return than it costs you to borrow the money. Don't spend money you don't have by borrowing it. That's how people get in financial trouble.

Petrocelli

As I was researching this question, I found a great article on the internet that examined this question. This article examines a lease vs. buy scenario for a C Class over 3, 6, and 9 years.

https://www.cartelligent.com/blog/bu...s-benz-c-class

Applying this to the scenario I ran above, it looks like there is about $90 a month. So, for $90 a month, I get (1) all repairs under warranty; (2) a new car every 45,000 miles, with the latest technological advancements; and (3) the option of buying a car at lease end.

MercAMGgts2016

The fact that you consistently drive so much makes leasing like you do a viable option imo

ygmn

What happens if you have to drive more say 20,000 -25,000 miles a year and around where I live that is a reality due to some long commutes.

MTrauman

I hope I am still alive in 200 years—or maybe not!

Petrocelli

You should not lease.

If you drive around 16,000 - 17,000 miles a year, you can return the car at 44,000 miles, and Mercedes will write off the last few payments if you lease another Mercedes.

Petrocelli

That's about 25 years per car. I bought the first one from Abe Lincoln's uncle.

SyedMoon

It's interesting to see your analysis on the cost of leasing versus owning a car. Leasing definitely has its perks, like driving a new car and having it covered under warranty. Saving around $22 a month by leasing seems like a reasonable trade-off. Plus, it eliminates the hassle of selling the car at the end of the lease.
If you're looking for more insights and information, I suggest reaching out to Mortgage Broker in Bridgend. While they specialize in mortgages, they might have helpful advice on car leasing too. It's always great to weigh your options and make an informed decision.

EWL5

This thread was started before barely anyone knew what a coronavirus was. A lot has changed since then and some of the rules don't apply (at least not until the market stabilizes). I broke my cycle of leasing because it made more sense to finance than to lease (the usual incentives were non-existent).

It was also very difficult to find a well-optioned used car because folks coming off leases made the smart move to buy out their cheaper car w/features that became rare because of supply chain issues. "Unicorn" cars definitely became more of a thing these past few years!