Buy now or wait? Need some advice

[MalibuMaxxSS]

Originally Posted by ptviperz

I would never roll $3K into another loan, that's a real bad way to get started.

Cars are the dumbest thing in the world to spend money on, it's a depreciating asset. Buy the car, pay it off in no more than 3 years and then drive it for free while you save the monthly payment towards repairs or another vehicle. Leasing is a great way to never have a thing in YOUR bank account, it's a sucker shell game.

Why would you guys trade cars every 3 years? Buy something you like one time and drive it for 10 years.

like I said leasing is not for everyone, if you keep your cars 10 years leasing is notfor you, SOME people, liea new vehicle every 3-4 years, and dont wnat oneoff warranty, personally neither do I, but each ot their own..

In your case leasing amy not be the best optinon. for other it is. either eway pay for maintence or pay a payment, I will pay a payment, I KNOW what it is every month, blown tranny and no warr and Im out 3-7 Grand, depending on thecar. Then what trade it then, what is it worth, nothing no dealer would take it, so not only buy a new one, have to get rid ofthe old one.

[MrCritical]

When you buy, you own a vehicle that's worth no where near what you paid for it. Depends what you paid for it. Used Toyotas or Hondas in good condition are worth a large percentage of what you paid for it.

You will own a depreciating asset. Agreed.
But you have something to show for your payments.
You have nothing to show for lease payments.

Depending on the state in the U.S. you can have as little as $10k liability. There's a minimum of $100k mandatory with a lease, and I promise there's a great deal of difference in the premium for $10k vs $100k.

A purchased car with a decent down payment financed for the same 3 years you lease will have equity. The purchase problem comes in with no down payment or negative equity in trade.

You are paying wear and tear in a lease for something you don't even own.

You will never be as upside down in a purchase as a lease, if you purchased with a decent down payment and not too long of a term.

We don't have fluctuating MSRP's here either. And nobody pays MSRP. But there's no law that says if I agree to sell you the car for $1000 back of sticker, that if you switch to lease the same car, I have to keep the same deal. I can switch back to MSRP on the lease. And most F and I departments do exactly that.

I realize Canada has a different market. The '08 Equinox that was mentioned earlier as still selling at MSRP there would sell for invoice less holdback less any dealer incentives less customer incentives here. And you'd have your pick of colors and options as well. The dealers here have them coming out their ears, and no place to park them all.

[Rex Raider]

Originally Posted by MrCritical

But you have something to show for your payments. You have nothing to show for lease payments.

You are telling me that a 5 year old Aveo or Cavalier is "something to show"?
So what if you have something to show? How much is that 5, 6, 10 year old Cavalier worth? What are you paying in maintenance? What are you paying for an extended warranty and/or repairs?

Let's say you lease a "cheap" car for $250 per month ($48 months), and then at the end of that lease, you lease another new one for $250 a month.

At the same time, someone else BUYS car for about $360 month for 60 months term.

Lease guy ends up paying $250 x 48 + $250 x 48 = $24000.

Finance guy pays $21600 + extended warranty, plus cost of maintenance (surely the vehicle will need new brakes and tires, as well as other standard maintenance items over an 8 year span.

At the end of 8 years, the lease guy has nothing. (He can start his 3rd lease).
Finance guy owns a 8 year old economy car, that's worth what? Pretty much nothing, expecially if it's a domestic. Even if it's worth $2000, it's not worth very much.

The lease guy got to drive 2 cars. Got to change things up. Got the benefit of new design change, new features that didn't necessarily exist 4 years ago, new build quality (all the manufacturer's get better each year), and obviously the "show off" factor as well.

Depending on the state in the U.S. you can have as little as $10k liability. There's a minimum of $100k mandatory with a lease, and I promise there's a great deal of difference in the premium for $10k vs $100k.

If you could afford the better insurance, wouldn't you want it regardless? In Canada, we have a minimum 1 million liability. Why would anyone get $10k liability? If you can't afford proper insurance, how are you going to afford your dumb mistake that damages someone else's person, property or vehicle?

A purchased car with a decent down payment financed for the same 3 years you lease will have equity. The purchase problem comes in with no down payment or negative equity in trade.

Exactly my point. Most people don't put down a huge down payment these days. Many people have negative equity rolled in. And Equity isn't based on money down. That's your money already. It's not that the car is worth more. You put money to make it worth more.
I think you're not totally aware of what "equity" means.
Paying cash for a vehicle doesn't give the vehicle instant equity. The car still loses a 3rd as soon as you drive it off the lot.

You are paying wear and tear in a lease for something you don't even own.

Again, a misconception. You OWN a leased vehicle. You are responsible for the vehicle. You need to clean it, and maintain it, and service it, and PAY for it. You don't need to get permission to drive it. You don't have to ask the leasing company if you can borrow the car. You OWN it for 3/4/5 years. Then at the end of your lease, you have the option to return your car. But during that period, you OWN it. Regular Wear & Tear is built into the lease. Do what's expected of you, and there are no surprises at lease end.

You will never be as upside down in a purchase as a lease, if you purchased with a decent down payment and not too long of a term.

Again, that's a big IF. Most people don't do short term financing with big cash payment down. Most people have as small a payment and as long a term as possible.

We don't have fluctuating MSRP's here either. And nobody pays MSRP. But there's no law that says if I agree to sell you the car for $1000 back of sticker, that if you switch to lease the same car, I have to keep the same deal. I can switch back to MSRP on the lease. And most F and I departments do exactly that.

As a customer, you are an idiot if you let that happen to you. No customer at my dealership negotiates based on a finance or cash payment, only to switch to a lease afterwards. When a lease buyer buys, they base their negotiations on the lease payment, not on MSRP. There's no opportunity to pick up extra gross. We negotiate the payment right away. Again, it comes down to being informed. If you do fall for that "scheme", there's no reason that you have to agree to buy at the newly presented lease price either. Get up and walk out if they change the deal on you.

[pontiacjs]

Originally Posted by MrCritical

As an ex-salesperson, my best advice for 90% of the population is to never lease a vehicle.

My second best advice is to never try to get out of a lease early.

That is why you are an ex-salesman. Up untill 3 weeks ago I would reccomend the opposit. leases were good for 90% of my customers. The payments were less, they always drove a car with a full warranty, and were always driving a car with all of the current saftey features. If they were a high milage customer, even better, no one depreciates a car like GMAC - only .10 cents a mile.

Now they changed the game and those g6s that were 200 to 250 are now in the mid 300s to mid 400s. At BPG thats it folks, if you want to lease you only have the G6, everything else is buy only.

[pontiacjs]

Originally Posted by MrCritical

There's no longer any tax advantage to a lease.

You make payments and have nothing to show for it.

You must carry more insurance on a lease.

You never build equity. You're liable for any excess wear and tear.

It's twice as easy to get out from under a purchase than a lease.

If the vehicle is in a serious accident, your insurance company is twice as likely not to total a lease, simply because of what's owed on it.


That would explain why you are stuck in a lease. You don't know what you are doing, which auto salespeople love.

Profit for dealer is usually 50% higher on a lease.

FYI, I was a top ten salesperson in Chevrolet Legion of Leaders, and Buick Salesmaster for 9 years running.

Big deal everyone who sells chevys were in the Legion of liars.

[MrCritical]

5 year old Cavaliers are selling for $6000 and above here in AVERAGE condition.

If I own one, I have only liability insurance, and maintenance is mild, and parts are cheap. I'm banking or investing what I would have paid for lease notes.

"If you can afford the better insurance, wouldn't you want it regardless?" No, I would rather put that money towards something that I won't be making monthy payments on forever, like a home, or being able to pay cash for cars. Besides, if you're sued, they're gonna sue you for how much insurance you carry, whether it be $10k, or 5 million.
That's called not living paycheck to paycheck. You should check it out.

"All manufacturers get better every year". I have to question your experience here. They absolutely do not. According to Consumer Reports, the Toyota Camry V-6 has gone from "recommended" to "not recommended". Hyundai gets a better recommendation. Buick is down from last year, as is GMC.

"Many people have negative equity rolled in". You're exactly right. And leasing another car and adding in your negative equity is stupid, stupid, stupid.

So, If I pay cash for a vehicle and you lease the same vehicle, I don't have equity when I drive it off the lot?
Equity is what the vehicle is worth less what I owe. I owe zero.

I think you're not totally aware of what "equity" means.

No, you don't own a lease vehicle. GMAC, or whoever the lease company is owns the vehicle. You're basically in a long term rental. Don't believe it? Who gets the vehicle when you pay the last note? Unless you pay the residual, GMAC does. You're not the owner till YOU do.

"As a customer, you're an idiot if you let that happen to you". My point exactly. You go from negotiating on a sale price to negotiating on a monthly payment. And that's what happens when you switch from sale price finance negotiations to payment negotiations on a lease.

I think when some of you were trained as salespeople they taught you only on a need to know basis. Take these posts to your manager and find out the truth. Read a financial counselors book.

I'm an ex salesman because I made enough in my 9 years to pay for a nice home, new vehicles, and do something I love doing for the rest of my life. I'm on holidays and vacations like normal people when you're at a dealership 10-12 hours a day sometimes six days a week.

[Rex Raider]

Originally Posted by MrCritical

5 year old Cavaliers are selling for $6000 and above here in AVERAGE condition.

My scenario asked what an 8 year old Cavalier is worth. Not 5 year old.

That's called not living paycheck to paycheck. You should check it out.

Not sure what that's in reference to. I own my home outright (no mortgage), and I can afford to be unemployed for a little while if necessary).

"All manufacturers get better every year". I have to question your experience here. They absolutely do not. According to Consumer Reports, the Toyota Camry V-6 has gone from "recommended" to "not recommended". Hyundai gets a better recommendation. Buick is down from last year, as is GMC.

For the mostpart, my statement is true. Cars of today are generally better than the cars of 4,5, 10, 15 years ago. Not just in quality, but in terms of technology, safety and gas mileage. The 07 Camry was the V6 that CR had issues with. These issues have since been rectified, and the 08 and 09 models have had none of those issues. CR is not the bible when it comes to vehicles either, but that's a totally seperate thread we don't need to lurch into. Hyundai gets a better recommendation? Exactly my point.

"Many people have negative equity rolled in". You're exactly right. And leasing another car and adding in your negative equity is stupid, stupid, stupid.

I agree it's stupid. But it's more manageable through a lease than through a finance, since your lease payments are generally lower to begin with.

No, you don't own a lease vehicle. GMAC, or whoever the lease company is owns the vehicle. You're basically in a long term rental. Don't believe it? Who gets the vehicle when you pay the last note? Unless you pay the residual, GMAC does. You're not the owner till YOU do.

And if you FINANCE through GMAC or the BANK? Who owns the vehicle? Not YOU. It works both ways. Whether you "own" or are "guardian" of the vehicle, it's still your responsibility to pay the bills and the service and maintenance. Miss a lease payment, and the leasing company will let you know that you owe them. Why would you owe them if it's not your car in the first place?

"As a customer, you're an idiot if you let that happen to you". My point exactly. You go from negotiating on a sale price to negotiating on a monthly payment. And that's what happens when you switch from sale price finance negotiations to payment negotiations on a lease.

But how many people switch in the middle of negotiations? I have had clients ask to see both scenarios (lease & finance), but they always commit to one of them BEFORE the make it to the business office. No opportunity to cswitch numbers. Again though, the purchase experience in Canada is different from the USA. In the US, you do the credit ap before you pick the car....

I think when some of you were trained as salespeople they taught you only on a need to know basis. Take these posts to your manager and find out the truth. Read a financial counselors book.

I don't need to go to my manager, because I am not a car salesman. I am the manager. Leasing Manager to be precise. I know my job. I can find a book on any topic to explain the different sides of every story. Who killed Princess Diana? 3 different stories. Who killed Kennedy? Different stories. Man on the Moon? Different Stories. 9/11? Different stories.
Financial advisors will say lease. Others will say purchase. Others still will only recommend a USED car (read the Millionaire next door).

I'm an ex salesman because I made enough in my 9 years to pay for a nice home, new vehicles, and do something I love doing for the rest of my life. I'm on holidays and vacations like normal people when you're at a dealership 10-12 hours a day sometimes six days a week.

So because I'm in the "9 year process", which you've made it past, you feel that you are above me? And can put me down? If anything, you would think that you would be more sympathetic. You went through it, and it obviously worked for you. Why are you so against the system now?

[MrCritical]

Sorry, Rex.

My negative remarks were meant for Maxx, who insinuated that I was no longer in sales because I could not cut it.

There are indeed many differences in the U.S. and Canada markets. No one here pays MSRP on any GM product or Toyota either (except for Prius and Yaris). There's basically no gross profit to be made. It's too competitive and dealer's lots are full to bursting. All the profit comes from the service and parts departments, and some on F and I.

Here you may have agreed to buy a car for $1000 off sticker. Maybe you got payments on it with whatever down payment you might have.

But if you ask for a lease payment on the same car, they automatically go back up to MSRP. It's just the way it's done.

The difference in the 5 (or 8) year old Cavalier is that when I pay it off, I deposit the amount I would be paying in the bank. So I would have 2 or 5 years payments plus interest saved while the lessee would still be making payments. This would allow me to possibly pay cash for the next vehicle, at which time I'd automatically start saving the amount of a payment again, thereby passing by the vicious cycle of making payments forever.

As for who owns the vehicle, If I finance it my name is on the title as owner, and no other. On the lienholder line it may say GMAC, or whoever I financed it with.

On the title of a leased vehicle it clearly says the owner is GMAC, or whoever the lease company is. That's one of the reasons you can't claim it on taxes, in most cases. Because you don't own it, GMAC does. And they write off the depreciation, plus if they sell it for less than the residual.

I'm not against the automobile business at all. Despite what I may have incorrectly inferred, I did everything ethically and legally. And I made good money at it.

But when someone asked me honestly, I could recommend leasing a vehicle only under very specific circumstances, which did not include you being upside down in a trade in.

My only regret as a salesperson were the untold hours it took away from my family. Missing kids ball games and graduations. Working when most people are on holiday.

[MalibuMaxxSS]

Originally Posted by MrCritical

Sorry, Rex.

My negative remarks were meant for Maxx, who insinuated that I was no longer in sales because I could not cut it. .

Im was not hte only one....

Originally Posted by MrCritical

There are indeed many differences in the U.S. and Canada markets. No one here pays MSRP on any GM product or Toyota either (except for Prius and Yaris). There's basically no gross profit to be made. It's too competitive and dealer's lots are full to bursting. All the profit comes from the service and parts departments, and some on F and I.

Here you may have agreed to buy a car for $1000 off sticker. Maybe you got payments on it with whatever down payment you might have.

But if you ask for a lease payment on the same car, they automatically go back up to MSRP. It's just the way it's done. .

different here you can still negotiat your price, and all rebates still apply..

Originally Posted by MrCritical

The difference in the 5 (or 8) year old Cavalier is that when I pay it off, I deposit the amount I would be paying in the bank. So I would have 2 or 5 years payments plus interest saved while the lessee would still be making payments. This would allow me to possibly pay cash for the next vehicle, at which time I'd automatically start saving the amount of a payment again, thereby passing by the vicious cycle of making payments forever. .

Again this only works witha down payment, most people today finance for the full 5 or 6 years, and are paying for that long, and no warranty for tha last 2 or 3, leaseing they get 2 cars for lower payments anddont have to worry about maintence....at the edn of the day it is MONEY OUT OF POCKET... you said yourself to get equity you haveto put money down, that is NOT equity, you are buying equity...

Originally Posted by MrCritical

As for who owns the vehicle, If I finance it my name is on the title as owner, and no other. On the lienholder line it may say GMAC, or whoever I financed it with. .

Miss a payment they will show you WHO owns it, no matter whos one the title, till its paid for, bank can take it as easy as GMAC.

Originally Posted by MrCritical

On the title of a leased vehicle it clearly says the owner is GMAC, or whoever the lease company is. That's one of the reasons you can't claim it on taxes, in most cases. Because you don't own it, GMAC does. And they write off the depreciation, plus if they sell it for less than the residual. .

Good less liability for me really. Like I said miss a payment either way and someone comes gets it.

Originally Posted by MrCritical

I'm not against the automobile business at all. Despite what I may have incorrectly inferred, I did everything ethically and legally. And I made good money at it.

But when someone asked me honestly, I could recommend leasing a vehicle only under very specific circumstances, which did not include you being upside down in a trade in.

My only regret as a salesperson were the untold hours it took away from my family. Missing kids ball games and graduations. Working when most people are on holiday.

It sounds to me like you hada bad go at the auto bus, I do quite well and only work 5 daysa week, dont miss games and things, ther are people who do 'well' andwork 80 hours a week, well thats not for me...

Final note, leasing almost guarantees repeats......

[tom3]

Originally Posted by Rex Raider

So because I'm in the "9 year process", which you've made it past, you feel that you are above me? And can put me down? If anything, you would think that you would be more sympathetic. You went through it, and it obviously worked for you. Why are you so against the system now?

Well, his user name is MrCritical after all, LOL.

[RobSEMI]

I think I'm going to hold off until Wednesday of this week. Rumor has it that GM is going to not only offer Employee pricing but also the best incentives in 100 years.

I am reading from several sites where people have posted emails they have received from their local dealerships regarding the hype.

http://messages.finance.yahoo.com/St...13&tof=6&frt=2

I know its all a rumor and no, I don't believe everything I read, but we shall see what happens. Rumors are a dime a dozen online so it might not even be credible. Maybe someone here knows..and will divulge...

[johnnyl321]

Originally Posted by MrCritical

As an ex-salesperson, my best advice for 90% of the population is to never lease a vehicle.

My second best advice is to never try to get out of a lease early.

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» Read more Autos Articles Should You Lease a Car or Buy New?By Sean Tucker, U.S. News provided by: Shhhh. Don't tell anyone where you heard this.



Automotive journalists aren't ever supposed to say something like this, so lean in close: maybe you shouldn't buy a new car right now.



What? With gas prices spiking, shouldn't you be looking to trade down for something more fuel-efficient? Shouldn't you consider that $2.99 gas guarantee Chrysler keeps advertising? We've all seen the stories about record low auto sales this year. Isn't this a buyer's market?


More from U.S. News & World Report

» Best and Worst Budget Cars

» Cars That Save You at the Pump


Well, yes. Those are all reasonable arguments. But you still might not want to buy a new car. Hold onto what you have for as long as possible -- and if you absolutely must replace your daily driver, lease a new car while you still can. It could make a lot more sense to buy in a few years than to buy now, and a good lease on a 2009 could give you the freedom to do that.



Why Leasing Makes Sense
#1: You don't want to be stuck with a 2009 car in 2014
Because the design process for a new car takes about two to three years, the new 2009 model-year cars reaching dealership lots this fall were conceived on drawing boards in 2005 or 2006, when gas prices were just over two dollars a gallon. These cars weren't designed for a world of four-dollars-a-gallon gas. Cars that fit today's reality are still in the design stages and coming to dealerships in 2010 or later.



The smallest car Ford could sell you today (a 2008 Focus) would net an EPA-estimated combined fuel economy rating of 28 mpg. The most fuel-efficient mass-produced car on the road today, the 2008 Toyota Prius, is rated for 46.



But in just a year or two, you'll see a much more impressive set of stickers on new car windows. Ford could sell you a Fiesta, a subcompact that wowed the automotive press at the Geneva Motor Show last spring and reportedly gets almost 40 mpg. According to Toyota engineers, the next generation of the Prius could win an EPA rating of 94 mpg.



2009 Ford Fiesta RSAccording to the U.S. Department of Transportation, the average new car buyer will hold onto their purchase for eight years. Edmunds estimates that the term of the average new car loan has stretched to over 62 months. So if you were to buy a 2009 model-year car, you'd probably be paying for it until 2014 and driving it until 2016 -- when automakers will have had years to improve on the already-impressive fuel economy numbers of 2010 models.



Oh, and when you decide to get rid of that 2009 car at last, you'll be left trying to sell an old car with poor fuel economy in a market that long ago passed it by. Most leases, on the other hand, last three years. Lease a 2009 today, and in late 2011 you'll be able to give it back to the dealer and get one of those post-2010 cars.



#2: Leasing protects you from unexpected depreciation
Millions of drivers who bought SUVs in the world of cheaper gas have learned a harsh truth this year: depreciation is a big risk. SUVs have lost value much quicker than anyone predicted, thanks to soaring gas prices. Some dealerships won't even accept SUVs as trade-ins anymore, and owners hoping to sell them on the private market are forced to accept offers thousands of dollars below what they thought the car would be worth.



Those who leased an SUV, however, are just handing their headaches back to dealers and walking away scot-free. In fact, Ford -- one of the most successful SUV manufacturers in recent years -- has lost $2.1 billion on returned trucks and SUVs in the first half of 2008 alone. When customers turn in the vehicles, their residual value is much lower than the company had expected -- and Ford Credit eats the difference.



#3: This may be your last chance to lease
In 2004, GM made more money leasing cars than selling them. But today those numbers have completely flip-flopped. Leases are proving to be a huge risk for automakers -- a risk they may not take much longer.



On July 27, Chrysler Financial announced it would stop offering leases altogether. Two days after Chrysler's decision, GMAC, North America's biggest auto lender, announced an end to lease incentives in Canada. GM hasn't followed suit in the U.S. yet. All the General will tell its dealers, so far, is that it won't stop offering leases in August. After that, they make no promises.



Ford, after announcing that jaw-dropping loss on leased vehicles, didn't stop offering leases. They simply raised the payments on many leases so that they make little sense for buyers.



But some automakers -- particularly the imports -- still offer favorable lease deals. And if you need a new car this year, it might make sense to get into one of those leases now, return the car in three years and then think about buying.



Why You Might Buy Now Anyway
Leasing has two major drawbacks. The first is mileage limits. If you're going to exceed them, a lease won't make sense for you. But with Americans driving fewer miles than ever before as we look to save on gas, agreeing to a mileage limit would make sense for many of us. At $4 a gallon, we're not going to drive more than we have to, anyway.



The second drawback is that the payments never end. Provided they hold onto it long enough, a buyer will eventually own a car without making payments on it. A lessee never will. In the long run, it often makes more sense to buy and hold onto a vehicle for as long as possible.



But as rapidly as car technology will advance over the next several years, many buyers will soon be dissatisfied with something on lots today. If you're always on the lookout for the next big thing, avoid buying a new car -- and if you find yourself needing one this year, consider leasing it while you still can.

[MalibuMaxxSS]

kinda sums it up pretty good, like I said leasing is NOT for everyone, but for hte majority it does work better....OMG, like the article says, we have been EATING returned SUV the last few months....well GMAC has but whatever....

On the plus side, I had a customer the other day WANTING a nice used suburban, I kinda look and hes like we always wanted one and now I can get a 1 year old for 50% of MSRP, made sense to me I guess, gas milage was not an issue for them, it was always an afforadability thing.

[johnnyl321]

Originally Posted by MalibuMaxxSS

kinda sums it up pretty good, like I said leasing is NOT for everyone, but for hte majority it does work better....OMG, like the article says, we have been EATING returned SUV the last few months....well GMAC has but whatever....

On the plus side, I had a customer the other day WANTING a nice used suburban, I kinda look and hes like we always wanted one and now I can get a 1 year old for 50% of MSRP, made sense to me I guess, gas milage was not an issue for them, it was always an afforadability thing.

I liked leasing. I used to buy a year or two old trade ins and finance them. Problem was I'd wind up trading them back in too soon and have inequity. I liked leasing because I got a new vehicle in a similar payment range every 2-3 years. I never put a dime down, not even taxes or tags. I knew it was a long term rental, and I didn't care!! After seeing how many people put down 2-3 grand on a car, drive it for 3 years, have a 5-6 year note on it and come in being 5 grand flipped!!! Needless to say, they were irked. I explained leasing is simply a long term rental with one good thing....GM assumes the loss, not the customer. Like if a customer bought a Denali XL for 50k 3 years ago, the vehicle would now be worth about 15k. Big problem if they owe about 20-30k on it, don't ya think? GM assumed all that headache...problem is not that is coming home to roost and its biting them on the butt!!
Oh well. It was a good run while it lasted. I'll be buying a good used vehicle when this lease is up. Let someone else take the depreciation.

[ptviperz]

Originally Posted by johnnyl321

Let someone else take the depreciation.

That's the ticket! You can look around to find a nice low mileage car that's 2-3 years old and get fantastic value for your money. New cars are a terrible thing to spend money on.