In the end, decided to go another way...

[Big_tugg]

A car without warranty is like going around naked!

I agree!

 

[HughH]

I agree!

Same type of insecure feeling. Kind of like when it's dinner time and your last bottle of wine turns our to be corked...

 

[TJPark01]

Same type of insecure feeling. Kind of like when it's dinner time and your last bottle of wine turns our to be corked...

That's panic time.

 

[PMCErnie]

Leasing is the worst financial way to be in a car unless you can deduct it for business.

Have to agree with you. Leasing is like hydroplaning down a financial rathole. Still, some folks have to have a new car every 2-3 years. Many of these folks are also without long-term savings. Not all, just most of them.

 

[TJPark01]

Have to agree with you. Leasing is like hydroplaning down a financial rathole. Still, some folks have to have a new car every 2-3 years. Many of these folks are also without long-term savings. Not all, just most of them.

The funny thing is that the cars with the highest barriers to entry are the ones that are not leased. When I went buy my 535i, I asked the salesperson what the mix of lease to buy on the 3,5 and 7 series. He said he had been at the same dealer for nearly 15 years and anecdotal evidence suggested the mix was
Lease/Buy ratio:
3 series: 70/30
5 series: 50/50
7 series: 30/70

People like to make the argument that it's a tax deductible business expense, but seriously do you think most people are leasing BMW's as a business decision. I highly doubt that.

 

[Mark_888]

The funny thing is that the cars with the highest barriers to entry are the ones that are not leased.

Same applies to houses. The higher the price, the more likely the buyer paid cash.

People like to make the argument that it's a tax deductible business expense, but seriously do you think most people are leasing BMW's as a business decision. I highly doubt that.

There is absolutely no truth the claim that if you lease you can deduct from taxes, and if you purchase you cannot. You actually get a bigger tax deduction if you purchase and claim the depreciation as tax deduction.

 

[HughH]

Same applies to houses. The higher the price, the more likely the buyer paid cash.


There is absolutely no truth the claim that if you lease you can deduct from taxes, and if you purchase you cannot. You actually get a bigger tax deduction if you purchase and claim the depreciation as tax deduction.

No, no! You can only claim a tax depreciation on vehicles that weight over 5,000 lbs and only if you are self employed. However, the tax gain is fantastic.

I don't know if the program will be resumed this year. A lot of people around here driving Cadillac full sized SUV under this program.

Anyway, it doesn't matter to me who likes to lease and who likes to purchase their cars. To each it's own!

 

[Mark_888]

No, no! You can only claim a tax depreciation on vehicles that weight over 5,000 lbs and only if you are self employed. However, the tax gain is fantastic. I don't know if the program will be resumed this year. A lot of people around here driving Cadillac full sized SUV under this program.

Not true. You are referring to an additional tax break on small trucks (Large SUV's seem to qualify via a loophole) over and above depreciation expense that is allowed. And the weight limit is 6,000 lbs.
http://www.vicioussummer.com/suv-tax-loophole

Any time a business purchases something that is a legitimate business expense, it can either be expensed totally in the year purchased, or capitalized and then depreciated over the tax life (as arbitrarily determined by IRS) of the asset. IRS rules determine when you must capitalize and depreciate the asset over multiple years (cars must be capitalized, but usually most office expenses can be expensed in total the year purchased).

One can also use standard mileage rate for business expenses when the car is only partially used for business (which is almost always the case for self-employed persons).

The mistake that most people make is that they believe that if they lease they do not have to prove it is a legitimate business expense, whereby if they purchase they do have to prove that. This is false. If you declare a lease expense, depreciation expense, or mileage expense deduction on a tax return, you must be able to prove that the vehicle is legitimately used for business. If you use it 50% for business, then only 50% of the expense is allowed.

 

[HughH]

Mark,

You are correct! Even the clergy can deduct car expenses.

I was thinking of my brother and a neighbor. They are both depreciating their gargantuan Cadillac SUV. My nephew missed out, just couldn't get hold of his tax accountant on time to get a truck.

I recall there was a rush around these parts of Texas. People rushing all over the place. From what I heard the BMW X5 did qualify. We have a car radio show every Saturday morning hosted by car guru Ed Wallace. He keeps everyone up-to-date on his 6 hour radio show.

EDIT: Ed Wallace has car reviews every Friday on a local Fox TV station. Last year's best cars were the VW Passat TDI and the Genesis. Can't remember which engine size for the Genesis. With the Passat, he drove all over the Metroplex during the week he had the car. He did his best NOT to break the speed limit and he averaged 56mpg on a manual stick car.

 

[Mark_888]

Mark,

You are correct! Even the clergy can deduct car expenses.

The point is that one can deduct car expenses 3 different ways:

• Purchase (or finance) - depreciation expense over fixed number of years per IRS rules (based on percent used for business)
• Lease - lease payment (based on percent used for business)
• Mileage expense - 55.5 cents per mile for business miles driven

There is no relationship between which method is chosen, and whether it is a legitimate business expense that can be claimed on your tax return. In all cases, one must be able to prove that the vehicle is used for business, at least for the percent of time claimed (which determines the percent of deduction allowed). If you own only one vehicle (they ask you that on your tax return if you claim a deduction for vehicle expense) and you claim 100% business expense on your only vehicle, your chances of being audited go way up.

In addition, if you purchase or lease a qualifying truck (some SUV's qualify) and it is used for business purposes, there is an additional tax break (50% bonus depreciation), called the Section 179 Deduction. It also applies to business equipment other than vehicles, but here is some info on its use for vehicles:
http://www.section179.org/section_179_vehicle_deductions.html

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[HughH]

Mark - Great info. I hope it will be of help to some members.

 

[sooththetruth]

A car without warranty is like going around naked!

I am fascinated by the subtext of warranty on this thread.

My experience with owning German cars without a warranty has been nightmarish: 1995 Mercedes E320 would cost me more than $2000 a year to maintain after it had 50,000 miles. I WISH I were exaggerating. A short time with a VW Phaeton WITH a warranty so wore me out taking it to the dealer 70 miles away I traded it in on my Genesis.

But I have had Asian Cars for 150,000 to 250,000 miles that were worth owning without a warranty. The warranty extension costs on those cars would have cost far more than the repairs they needed.

So, it's been mentioned before, but I absolutely agree that any high end German vehicle has to have a warranty. But I would argue not to buy a warranty on a high end Asian car. In this subtext thread, for example, someone mentions owning an ES350. I suspect that car would be good for 250,000 miles before you would spend what it would cost you to extend the warranty to 100,000 miles.

Seems it would better to self insure on the high end Asian car.

American cars? I would say that's a toss up, but I would risk not having the extended warranty on the MID RANGE CARs, like a Malibu, Fusion, But I would have one for the Big SUV's and Cadillacs.

I did not buy the offered bumper to bumper warranty to 100,000 miles on the Genny. I told the salesman that if he recommended this warranty, that I didn't want the car, and he backed off.

 

[Big_tugg]

The reason I mainly lease... I created a budget...within that budget there is a car payment. I like the fact that I can go to dealer every three years and sign and drive. No worries about down payment, negative equity and three years with warranty. By doing this I save a bunch more than buying. If there was a vehicle I wanted to keep I would buy it but I haven't been in that situation yet besides my toys. Plus I do stock trading...for example a 10k down payment is a huge lost to me because I can take that 10k make trades throughout the year and gains will pay lease payment and most likely will have more than what I started with ie 10k. The only reason I leased Genesis was because wife wouldn't let me do a M5 because she only has a 3 series...she wants a 5 series next then I can get my M5...

 

[HughH]

The reason I mainly lease... I created a budget...within that budget there is a car payment. I like the fact that I can go to dealer every three years and sign and drive. No worries about down payment, negative equity and three years with warranty. By doing this I save a bunch more than buying. If there was a vehicle I wanted to keep I would buy it but I haven't been in that situation yet besides my toys. Plus I do stock trading...for example a 10k down payment is a huge lost to me because I can take that 10k make trades throughout the year and gains will pay lease payment and most likely will have more than what I started with ie 10k. The only reason I leased Genesis was because wife wouldn't let me do a M5 because she only has a 3 series...she wants a 5 series next then I can get my M5...

I hear you! Many of the same reasons I lease, just like you. Here in TX there is a "gimmick" where you pay full sales taxes on leases but after so many months, the dealer gets sales tax refund. If you are close to leasing, you ask the leasing retention mgr to give you a call when "tax money" is available. You can save a whole bunch this way! Also, people don't seem to realize that you can haggle the final price of the car before signing the lease papers. Anyway, I get bored as all hell, driving the same car for more than two-three years.

 

[sandy]

I've found lots of good reasons to lease, and sales tax is a key one. While it may vary from state to state, here in Connecticut when you lease you pay sales tax each month only on the monthly payment. When you buy, you pay the total sales tax on the selling price up front. For example, purchase car for $40k and pay 6% tax ($2400) up front. Lease car for $500/month and pay $30 tax each month for 36 months for total of $1080

 

[QuantumRift]

I am not a fan of leasing. I buy or own a car to drive it, not to keep it in the driveway, so when it comes to those extra charges for going over the mileage cap, forget it. It's like having a data plan with a smartphone and constantly watching data consumption so as not to run over the limit and get charged more. We got our Genny because of it's comfortable ride, especially on long trips. So we'll drive it. Neither purchasing nor leasing is the best for everybody, and the bottom line are the numbers. And "bang for the buck". I have a short commute as well (8 miles to work, 8 miles from work), but I choose to ride a motorcycle instead....LoL...but if you found a solution that works for you, good!!

 

[HughH]

I am not a fan of leasing. I buy or own a car to drive it, not to keep it in the driveway, so when it comes to those extra charges for going over the mileage cap, forget it. It's like having a data plan with a smartphone and constantly watching data consumption so as not to run over the limit and get charged more. We got our Genny because of it's comfortable ride, especially on long trips. So we'll drive it. Neither purchasing nor leasing is the best for everybody, and the bottom line are the numbers. And "bang for the buck". I have a short commute as well (8 miles to work, 8 miles from work), but I choose to ride a motorcycle instead....LoL...but if you found a solution that works for you, good!!

You are correct, leasing is NOT for everyone. We've been retired now for a while. I can't handle the congestion and constant construction in our highways anymore. If we take any vacation trip, we fly...ugh! So, we usually average around 5,000 miles a year on our car. We got rid of the other car because we could not get enough use of it. We have also cut down flying because it's such a hassle. Used to be fairly easy flying military stand-by (retired USAF) but now things are much harder due to constant troop deployments, etc.

 

[Glashub]

Pros & Cons of Leasing a Car vs. Buying a Car
by Heather Levin

You’ve probably heard more than once that car leasing is a bad deal. And in many cases, it definitely makes more sense to buy a car outright. But this doesn’t mean leasing a car is a bad move for everyone. Like any issue, there are pros and cons to leasing a car.

Around 20% of all new car transactions are leases, so it’s clear that there are definitely people out there who love the thought of always driving around in a new car.

But what’s the best decision for you? Well, whether or not to lease a car depends on a lot of factors including how much money you have (both up front, as well as for a monthly payment), how much you drive, and how much time you want to spend on your car.

Let’s take a look at the pros and cons of leasing so you can make the best decision for your situation and circumstances.

Pros of Leasing a Car

1.New car, all the time. Leasing a car means you always get to drive around in a sweet new ride. For many people, this is an emotional boost that can’t be ignored. If you love cars and driving, this is a big perk.

2.Less maintenance issues. Because you’re always driving a newer car, you usually don’t have to deal with the regular maintenance issues that car owners face as their vehicles age. You turn in your car before all those problems start showing up (e.g. bad brakes or shot transmission). If you lead a very busy life, or you’re on the road a lot, this is one less stress you have to deal with.

3.Leases are tax deductible for small businesses. If you’re self-employed or you own a business, you can write off your lease as a business expense.

4.“Afford” a nicer car. If you’ve ever wondered how it is that so many people can afford to drive BMWs and Range Rovers, then wonder no more. According to LeaseGuide.com, around 75% of all luxury cars are leased. The reason is because banks don’t like to loan out more than $30,000 for a car loan. If you want a car that’s worth more than that and you don’t have the money to make up the difference, leasing is your only option. On the upside, your monthly payment will be lower than if you actually bought a car. Leasing allows you to “afford” a nicer car than you’d get if you had to buy it.

5.Few upfront costs. Speaking of costs, leasing allows you to get into a car with very few “upfront” costs. You often don’t need a down payment (or if you do, it’s fairly low), your monthly payments are lower, and your sales tax is going to be a lot lower since you only have to pay tax on the value of the car you actually used. According to Edmunds.com, this means that during the life of your lease, you’re going to pay roughly half the sales tax you would if you bought the car.


Cons of Leasing a Car

1.Lease contract amount doesn’t change, even after an accident. If you get into a car accident and the vehicle is totaled, you’ll still be responsible to pay back the full lease contract amount. Even if the insurance company gives you back less than what you owe to the dealership, you’ll be responsible for the full amount. If you do go with a lease, at least be smart enough to buy gap insurance which covers you for that difference that you would owe to the dealership.

2.Limits on time and distance. Many times, the lease agreement will be for 5 years/60,000 miles. So, if you go over that 60,000 miles and keep it until the 5 years is up, you’ll pay a penalty for every mile over 60,000. Think about how many miles you put on a car each year. Most people use well over 12,000 per year. Leasing a car means you have to really “budget” your miles, which can add stress and frustration to your life. Of course, you can negotiate your mileage, and you should, but budgeting miles is a major drawback for many people. On the flip side, if you do a good job budgeting your miles, and stay under your yearly allotment, you don’t get any credit for the miles you didn’t put on the car.

3.Liability for payments. If you lose a job or experience a heavy time of financial hardship and cannot afford the payment anymore, the dealership will recover the car and sell it on auction. If they sell it for less than you owe for the lease agreement, you will be legally responsible to pay the difference.

4.No ownership, but still responsible for repairs. Leasing a car means it’s not yours; any repairs that aren’t covered by the warranty are your responsibility. But when you turn in the car, you don’t benefit from the investment you made into that car. Leasing a car also means that you can’t modify it like you’d be able to if you’d bought it (e.g. adding a custom paint job or spoiler). And if your kids spill paint on the backseat, or your dog nibbles a bit of the upholstery, you’re going to have to pay extra for “wear and tear” when you turn the car in. Not fun.

5.Can’t claim vehicle as an asset. Again, you can’t claim the car as an asset. It is technically still an asset of the dealership that leased it to you.

6.Steep car payments and opportunity cost. A lease starts a trend of perpetually paying a car payment. If you never paid a car payment and the average car payment in the U.S. was $350 a month, putting that $350 a month in a mutual fund that made 10% would become $791,171 in 30 years.

7.More expensive to buy after lease. If you decide to take the option to buy the car at the end of the lease term, you’ll have paid much more than the cost of the car even if you had financed it.

8.Stuck in lease after signing. Another common complaint with leasing is that once you sign a contract, you’re “stuck” in that lease until your term expires. However, sites like Swapalease and LeaseTrader allow you to “sublet” your lease to someone else, just like you’d do with an apartment.


Final Word
Most of the time, wealthy people pour money into assets and investments that go up in value, not down like cars do. Warren Buffet, for example, drives around a used pick-up truck during much of his personal time. He has lived in the same house that he bought about 30 years ago. He’s wealthy because he knows that possessions are a horrible investment and they rarely buy the happiness that they promise. Similarly, leasing a car doesn’t build any kind of financial value.

On the other hand, to some people, their car is an important part of their life. They love the feel of driving around a new car, and they love not having to worry about maintaining an older vehicle. Sure, leasing a car is akin to renting a house; you’re paying money out each month, none of which builds equity for you. But this might not be as important as the feeling you get every day from a new car. And that’s fine too. Sometimes, the joy of leasing a new car every few years is worth the extra expense.

Whether you buy or lease a car is a highly personal decision. Like every issue, there are pros and cons. So, think about your passion, your finances, and your personal situation carefully before making a final decision.

 

[HughH]

Sure, leasing a car is akin to renting a house; you’re paying money out each month, none of which builds equity for you.>>>

Sure, most cars build equity, just like most houses...NOT! We all know a car starts to depreciate the moment you sign the dotted line. Who knows by how much and for what you will be able to sell it. There are times a person pays too much and finds himself upside down. At least with a lease, there is a set amount you can purchase the car if you want to. No stress, no fuzz, no m...

Most houses are purchased with the idea of keeping them for a long time. We're now on our 35 year in this house. It's ridiculous to compare the purchase and ownership of a house vs. a car!

 

[marty5marty]

I always wanted a german...like a BMW, Benz...of course those were out of my range...so i almost got a VW GTI but I heard so many nightmares about it that i just kept my Honda element until i payed it off....and to be honest I didn't get the warranty on that car ( back then being younger and naive and probably dumb ) but I am glad i didn't get it because that car never broke down in my life...all i did is replace the brake pads twice in 5 years and oil change.

It was amazing and finally traded that car to the Genny that i currently own....of course i got the warranty on this car but i doubt it will cause me much trouble....at least i know it won't be as bad as owning a german car and leaving me penniless...