Hyundai Equus "at your service" Services

[turnne]

No I do not lease cars, that is wasteful, makes the lessor all the money.
.

no automobile is going to "make money"
its really more about capital and cash flow...since it seems you are using yours for business use

Warren

 

[turnne]

Contrary to popular opinion, there is no tax advantage to leasing. A purchased car can be depreciated to obtain the same (or even faster) expense deductions on a tax return.
.

well...for a business it becomes and cash flow and capital question
if you need a fresh car to carry clients around and also need new equipment of real estate expansion...leasing a makes a lot more sense
Since...the idea that you would always want a fresh car anyway

if the car is going to used ...say in a construction or taxi environment where its not a big issue if the car is pristine

You are better off buying..if you have the capital...and driving the wheels off of it

Warren

 

[turnne]

I know very well how to deal in vehicles, my dad was a new used car
dealer for many years, worked there after school, and again after
graduating. Later got into other business, but still know how to trade
cars. We still have our dealers license, and deal with about 25 to 30
cars per year. My current business we have about 185 vehicles that
hit the road every day. We are getting away from company vehicles,
and providing a car allowance now, so that number will drop down
to about 70 shortly.

We did some leases, while they may work for some, they always
make plenty of money for the lessor, that the lessee has to pay.
This is why I do not like leasing, if one knows how to trade a car,
you will not loose to much.

One thing I can say today, cars do depreciate quickly these days.

interesting
Every company I know of that still has automobile fleets leases them

I work for a Fortune 50 company...and have a company car....as do hundreds of others in my company that have the same type of job across the country
A couple of points here
1. My company outsourced all the fleet operations to GE many years ago
2. All the cars are leased

Warren

 

[Mark_888]

well...for a business it becomes and cash flow and capital question
if you need a fresh car to carry clients around and also need new equipment of real estate expansion...leasing a makes a lot more sense
Since...the idea that you would always want a fresh car anyway

if the car is going to used ...say in a construction or taxi environment where its not a big issue if the car is pristine

You are better off buying..if you have the capital...and driving the wheels off of it

Warren

I have no idea what you are talking about. None.

My point is that, unlike popular conceptions, there is no TAX advantage to leasing. Many people think that one can deduct the entire lease payment even if the car is partly used for personal use, and that is not the case (unless one cheats on taxes). If anything, purchasing has a tax advantage (for reasons I don't want to get into here).

The disadvantages of purchasing is that it adds to accounting costs (slightly) and the cost of disposition of the car.

 

[Mark_888]

My company outsourced all the fleet operations to GE many years ago

Yes, GE buys them, and leases them to your company and makes a profit on the leases, party due to tax benefits they receive by purchasing the vehicles.

 

[turnne]

I have no idea what you are talking about. None.

My point is that, unlike popular conceptions, there is no TAX advantage to leasing. Many people think that one can deduct the entire lease payment even if the car is partly used for personal use, and that is not the case (unless one cheats on taxes). If anything, purchasing has a tax advantage (for reasons I don't want to get into here).

The disadvantages of purchasing is that it adds to accounting costs (slightly) and the cost of disposition of the car.

let me enlighten you
if you have the capital...depending on your intended use and how long you plan to keep the vehicle then it might make more sense to buy it
ie...as a common Taxi

if you dont have the capital in the first place....then leasing allows you to have better cash flow on a monthly basis than buying
Also..leasing is a better deal if your application demands that you need a new or newer low mileage car all the time
ie... as high end corporate limo service

There are also some tax nuances by state and the nature of your business

the example above was somewhat different since the person was actually not disposing of the car when he was finished with it
It was just handed to another person
if he had been trading cars back to a dealer that often that would have been a very expensive proposition

Yes, GE buys them, and leases them to your company and makes a profit on the leases, party due to tax benefits they receive by purchasing the vehicles.

no...wrong again
GE is leasing them
I know that for a fact as I have seen the documentation
My company is paying them a fee each month for car and all maintenance..inclusive of tires, oil changes..etc..etc
GE is no doubt "marking up" their lease payment and adding a fee for the projected maintenance and of the car
Clearly..if you have a car that needs a new engine after the 3 year warranty then GE could end up on the bottom side of the deal
However..I am sure there is some actuary inside GE that projecting risk and they are calculating their fees accordingly


Warren

 

[Mark_888]

let me enlighten you
if you have the capital...depending on your intended use and how long you plan to keep the vehicle then it might make more sense to buy it
ie...as a common Taxi

if you dont have the capital in the first place....then leasing allows you to have better cash flow on a monthly basis than buying
Also..leasing is a better deal if your application demands that you need a new or newer low mileage car all the time
ie... as high end corporate limo service

There are also some tax nuances by state and the nature of your business

A business (or especially a sole proprietor) could get a car loan on the cars if they didn't have the capital to buy them, and it would still be cheaper to buy from a TAX perspective. The kicker is that are costs associated with buying, selling, obtaining loans, doing the tax accounting, doing financial accounting (which may be different than tax accounting), etc, that is usually the reason why companies don't want to own the cars.

Also, these days most corporations give employees a car allowance instead of leasing or purchasing, but obviously that might not work for all companies where they want you to have a specific type of car and not just pocket the car allowance money.

no...wrong again
GE is leasing them
I know that for a fact as I have seen the documentation
My company is paying them a fee each month for car and all maintenance..inclusive of tires, oil changes..etc..etc
GE is no doubt "marking up" their lease payment and adding a fee for the projected maintenance and of the car
Clearly..if you have a car that needs a new engine after the 3 year warranty then GE could end up on the bottom side of the deal
However..I am sure there is some actuary inside GE that projecting risk and they are calculating their fees accordingly

Maybe I am wrong, but I would bet that anther part of GE is buying them and leasing them to the part of GE you are talking about. Leasing is a business that GE Finance has been in for a long time, but they are getting out the financial services business.

 

[turnne]

A business (or especially a sole proprietor) could get a car loan on the cars if they didn't have the capital to buy them, and it would still be cheaper to buy from a TAX perspective. The kicker is that are costs associated with buying, selling, obtaining loans, doing the tax accounting, doing financial accounting (which may be different than tax accounting), etc, that is usually the reason why companies don't want to own the cars.

Also, these days most corporations give employees a car allowance instead of leasing or purchasing, but obviously that might not work for all companies where they want you to have a specific type of car and not just pocket the car allowance money.

I am talking from a cash flow perspective...leasing is going to be cheaper than buying
If you save 30-40% a month by leasing and the terms of the lease can work in your business...then its a good reason to do so

I am not sure where you are getting your data on car allowance vs company car?
I can name you several Fortune 50 companies that still use company car fleets...especially for the sales organization
Check out ANY pharmaceutical company as an example

Maybe I am wrong, but I would bet that anther part of GE is buying them and leasing them to the part of GE you are talking about. Leasing is a business that GE Finance has been in for a long time, but they are getting out the financial services business.

seriously?

what would you bet?..

What I will say is that companies..including mine, and at least 5 other Fortune 50 companies I could name where I have friends....do not manage their own fleets anymore
They would rather pay an outside company to provide the service and pay an all inclusive fee...excluding gasoline
One would think this would be more expensive than managing your own...but never the less I can testify that this has been what I have seen in my experience

Warren

 

[Mark_888]

I am talking from a cash flow perspective...leasing is going to be cheaper than buying
If you save 30-40% a month by leasing and the terms of the lease can work in your business...then its a good reason to do so

I am not sure where you are getting your data on car allowance vs company car?
I can name you several Fortune 50 companies that still use company car fleets...especially for the sales organization
Check out ANY pharmaceutical company as an example.

I disagree in the cash flow aspect. If cash flow is a problem, get a car loan. But obviously leasing is a lot more convenient then getting a loan, keeping track of depreciation expense (for both financial accounting and tax accounting) and in disposing of the car. All of these things take people, which can be expensive for more than few cars.

As far as car allowance, I was not talking about sales people who are virtually 100% on the road. I was talking about others who drive only some of the time for company business. Also, when I had to drive my car for company business (at several large companies) I just charged the mileage allowance on my expense report (current IRS rate is $0.575 per mile). In addition, many executives get a car allowance, and they don't drive any more than regular employees who commute back and forth the work each day.

seriously?

what would you bet?..

What I will say is that companies..including mine, and at least 5 other Fortune 50 companies I could name where I have friends....do not manage their own fleets anymore
They would rather pay an outside company to provide the service and pay an all inclusive fee...excluding gasoline
One would think this would be more expensive than managing your own...but never the less I can testify that this has been what I have seen in my experience

Warren

Since I admitted right off the bat that I may be wrong, I would not bet much.

But maybe you didn't understand what I said. I never said that companies manage their own fleets. I said that probably, if you are sure GE is leasing the cars from someone, and then leasing to you, then they may be leasing from another division in GE that does leasing, since leasing has been one of their businesses for a long time. However, recently GE is getting out of that business so maybe the leasing is not in GE anymore.

The bottom line is that there are companies that make money by purchasing assets and leasing them. In most cases, the company has to borrow money to purchase the asset before leasing them, so it is not a question of cash flow. They make a profit doing that. It is not just a question of "marking up" the payments, rather purchasing assets and then depreciation has certain tax benefits over leasing. Examples, of such companies are REIT's (real estate investment trusts, cargo shipping container companies, jet aircraft leased to major airlines, etc). GE was in the leasing business, but is getting out (not sure if they are already completely out).

This whole discussion started as question about tax benefits of leasing. My point is that it is folklore that leasing has tax benefits over purchasing. I was a licensed CPA for over 20 years, so I know a little about this.

Saying that there are other non-tax benefits may be true in some respects (we outsource a lot of things to experts or those who have economy of scale), but is misleading, because the leasing companies are making money or they would not be in business.

 

[edward301]

Many companies lease their vehicles because it saves them a big headache.
They do not have to worry about maintenance, also do not have to worry
about capital outlay. Many companies have to watch their balance sheet,
and leasing preserves their capital.

Our cars are driven about 150k miles in 5 years, all city miles, after 5 years
they are very tired. You can not lease a car under these conditions. It is
getting more difficult to hire good mechanics, one of the reasons we are
giving many of our staff car allowances, and doing away with vehicles.
We are keeping about 25 cars for management, and our trucks which total
about 70 vehicles. We have looked into GE leasing program, and Hertz
leasing program, not leasing saves a bundle.

Leasing has tax advantages, but owning has more advantages.

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[Mark_888]

Many companies lease their vehicles because it saves them a big headache.
They do not have to worry about maintenance, also do not have to worry
about capital outlay. Many companies have to watch their balance sheet,
and leasing preserves their capital.

Our cars are driven about 150k miles in 5 years, all city miles, after 5 years
they are very tired. You can not lease a car under these conditions. It is
getting more difficult to hire good mechanics, one of the reasons we are
giving many of our staff car allowances, and doing away with vehicles.
We are keeping about 25 cars for management, and our trucks which total
about 70 vehicles. We have looked into GE leasing program, and Hertz
leasing program, not leasing saves a bundle.

Leasing has tax advantages, but owning has more advantages.

Edward, I agree with most every thing you said, but what tax advantages are there for leasing? I don't believe that is correct. The point about leasing relieving a lot hassles is usually the case, but I don't think there are tax advantages to leasing.

 

[turnne]

I disagree in the cash flow aspect. If cash flow is a problem, get a car loan. But obviously leasing is a lot more convenient then getting a loan, keeping track of depreciation expense (for both financial accounting and tax accounting) and in disposing of the car. All of these things take people, which can be expensive for more than few cars.

As far as car allowance, I was not talking about sales people who are virtually 100% on the road. I was talking about others who drive only some of the time for company business. Also, when I had to drive my car for company business (at several large companies) I just charged the mileage allowance on my expense report (current IRS rate is $0.575 per mile). In addition, many executives get a car allowance, and they don't drive any more than regular employees who commute back and forth the work each day.


Since I admitted right off the bat that I may be wrong, I would not bet much.

But maybe you didn't understand what I said. I never said that companies manage their own fleets. I said that probably, if you are sure GE is leasing the cars from someone, and then leasing to you, then they may be leasing from another division in GE that does leasing, since leasing has been one of their businesses for a long time. However, recently GE is getting out of that business so maybe the leasing is not in GE anymore.

The bottom line is that there are companies that make money by purchasing assets and leasing them. In most cases, the company has to borrow money to purchase the asset before leasing them, so it is not a question of cash flow. They make a profit doing that. It is not just a question of "marking up" the payments, rather purchasing assets and then depreciation has certain tax benefits over leasing. Examples, of such companies are REIT's (real estate investment trusts, cargo shipping container companies, jet aircraft leased to major airlines, etc). GE was in the leasing business, but is getting out (not sure if they are already completely out).

This whole discussion started as question about tax benefits of leasing. My point is that it is folklore that leasing has tax benefits over purchasing. I was a licensed CPA for over 20 years, so I know a little about this.

Saying that there are other non-tax benefits may be true in some respects (we outsource a lot of things to experts or those who have economy of scale), but is misleading, because the leasing companies are making money or they would not be in business.

lol..how could you disagree on the cash flow?

Perhaps you didnt understand what I said

Check out a current offer on an Equus lease....I have seen offers from $669 to $699 for 36 months with about $2500-3000 due at signing
I think the mileage is somewhere in the 12-15K a year range
The same car in retail purchase...for an even longer term would be at least $250 more per month
So..if you were running a business where you needed several cars and they always needed to be new or newer
Are you saying that $250 savings per month times 3-5 units is not a cash flow savings ?
As far as tax advantages...that was really not my point
It was really about per month savings( cash flow)

I am well aware that companies buy capital and lease it to end users
Not sure what your point is there

I did state that GE is leasing the vehicles that my company uses and my company pays them a fee per month for the vehicle and all maintenance

Warren

 

[turnne]

Many companies lease their vehicles because it saves them a big headache.
They do not have to worry about maintenance, also do not have to worry
about capital outlay. Many companies have to watch their balance sheet,
and leasing preserves their capital.

Our cars are driven about 150k miles in 5 years, all city miles, after 5 years
they are very tired. You can not lease a car under these conditions. It is
getting more difficult to hire good mechanics, one of the reasons we are
giving many of our staff car allowances, and doing away with vehicles.
We are keeping about 25 cars for management, and our trucks which total
about 70 vehicles. We have looked into GE leasing program, and Hertz
leasing program, not leasing saves a bundle.

Leasing has tax advantages, but owning has more advantages.

your first paragraph explains what I cant seem to convey to Mark 888

Cash flow savings and preservation of capital

In your situation I agree...you could not lease a car under those conditions with those type of miles

GE typically dictates that we turn our cars in at about 40-50K miles for a new car...

No doubt if you can drive a car with the type of miles that you mention..owning is definitely providing you a cost savings

Warren

 

[shortspark]

Lots of opinions on lease/buy - some of you guys sound like experts. I have been toying with the idea recently of leasing for the first time in my life. What are the opinions in my case as I'm looking for advice. I am 68 years old and put no more than 9000 miles a year on my car. I currently own a MB and the warranty expires in May. I want to trade my cars when the warranty expires and might consider a Genesis this time around. A new car every three or four years is what I would like

I keep my cars in tip top shape. If it rains the car stays in the garage. No one sits in the back seats and I have no pets or haul anything other than maybe a set of golf clubs. There is just the two of us. I make no modifications to my cars. Monthly payments are a non issue and so is purchase price. Therefore I can make any amount of payments on a lease or just buy the thing by writing a check. What would you all suggest in my case on this lease/buy question?

 

[Mark_888]

your first paragraph explains what I cant seem to convey to Mark 888

Cash flow savings and preservation of capital

In your situation I agree...you could not lease a car under those conditions with those type of miles

GE typically dictates that we turn our cars in at about 40-50K miles for a new car...

No doubt if you can drive a car with the type of miles that you mention..owning is definitely providing you a cost savings

Warren

I still am not sure what you are talking about. Probably because you are using a mobile apps?

Leasing companies borrow money to purchase their assets, so the capital issue is a non-starter IMO. Anyone can borrow money to purchase a car, whether they keep the car themselves or lease it others.

Leases are much more convenient and might save money for some companies by not have employees managing fleets, but they do not save on taxes. Taxes was the original issue discussed with regard to leases. It is a common myth that one can save on taxes by leasing.

 

[Mark_888]

Lots of opinions on lease/buy - some of you guys sound like experts. I have been toying with the idea recently of leasing for the first time in my life. What are the opinions in my case as I'm looking for advice. I am 68 years old and put no more than 9000 miles a year on my car. I currently own a MB and the warranty expires in May. I want to trade my cars when the warranty expires and might consider a Genesis this time around. A new car every three or four years is what I would like

I keep my cars in tip top shape. If it rains the car stays in the garage. No one sits in the back seats and I have no pets or haul anything other than maybe a set of golf clubs. There is just the two of us. I make no modifications to my cars. Monthly payments are a non issue and so is purchase price. Therefore I can make any amount of payments on a lease or just buy the thing by writing a check. What would you all suggest in my case on this lease/buy question?

The Hyundai warranty expires after 5 years or 60K miles in the US, and starting in 2016 model year that includes the Audio/Nav system also. So after 5 years you would only drive 45K miles (9,000 miles per year).

The advantage of leasing is that you know up front what your residual value is, and don't have to worry about negotiating a trade-in. Other than that it is probably a toss-up. Most of the discussion has been about tax advantages for business use, and it doesn't sound like an issue for you.

I would consider purchasing for cash if you can do it. I have done that for all my cars bought since 1988, when interest on car loans became no longer tax detectable for individuals. There is a lot more liquidity in the used car market these days, since companies like CarMax will offer you cash for a car, at a similar price that a dealer would give you on trade-in (although dealers have ways of making it "look" like they are giving you more for the trade-in).

 

[turnne]

I still am not sure what you are talking about. Probably because you are using a mobile apps?

Leasing companies borrow money to purchase their assets, so the capital issue is a non-starter IMO. Anyone can borrow money to purchase a car, whether they keep the car themselves or lease it others.

Leases are much more convenient and might save money for some companies by not have employees managing fleets, but they do not save on taxes. Taxes was the original issue discussed with regard to leases. It is a common myth that one can save on taxes by leasing.

and I am still not sure what you are talking about

let me state again

Cash flow savings and preservation of capital


you said you didnt understand my cash flow point?

The major advantage of a lease is the cash flow savings and thus preservation of capital expenditures
I am not sure how much more clear I could state that

Since Liquid capital is very important to some business...that was my point

In regard to taxes..that is a much more convoluted situation.
depending on where you are located...what business you are and the intended use of the item

Warren

 

[turnne]

The Hyundai warranty expires after 5 years or 60K miles in the US, and starting in 2016 model year that includes the Audio/Nav system also. So after 5 years you would only drive 45K miles (9,000 miles per year).

The advantage of leasing is that you know up front what your residual value is, and don't have to worry about negotiating a trade-in. Other than that it is probably a toss-up. Most of the discussion has been about tax advantages for business use, and it doesn't sound like an issue for you.

I would consider purchasing for cash if you can do it. I have done that for all my cars bought since 1988, when interest on car loans became no longer tax detectable for individuals. There is a lot more liquidity in the used car market these days, since companies like CarMax will offer you cash for a car, at a similar price that a dealer would give you on trade-in (although dealers have ways of making it "look" like they are giving you more for the trade-in).

the audio/nav system has always had 5yr 60K warranty on the Equus
https://www.hyundaiusa.com/assurance/america-best-warranty.aspx#2

I am not sure I would agree with your points about the advantages of leasing

In a luxury car, such as the Equus, the payment difference is going to be the major plus( lease vs retail purchase). That in itself if going to be thousands of dollars saving over 36 months
The downside is that you are never building any equity and its a never ending payment scenario...though you always have something fresh and current to drive, if that is your thing

For the last 4-5 cars I have bought lease returns that still had some factory warranty and/or were certified
I like something "newer"...but clearly I dont have to have the newest of the new
For cars that sticker over $50-60K there are always tons of lease returns that are still in the factory warranty

I am not sure paying cash for a car at current interest rates is the best use of cash
I got a loan for 2.5% simple interest and will probably pay off the Equus in 24-30 months
I can do a lot better than 2.5% return on investments in the same timeframe and think that is a far better use of cash than paying for the Equus in cash

Now ..if rates were over say 6% or higher..I would agree with you

Warren

 

[Mark_888]

and I am still not sure what you are talking about

let me state again

Cash flow savings and preservation of capital


you said you didnt understand my cash flow point?

The major advantage of a lease is the cash flow savings and thus preservation of capital expenditures
I am not sure how much more clear I could state that

Since Liquid capital is very important to some business...that was my point

In regard to taxes..that is a much more convoluted situation.
depending on where you are located...what business you are and the intended use of the item

Warren

I am saying that it is not really a cash flow problem, because one can borrow money to purchase the cars. That is what leasing companies do.

The problem comes into play with regard to hiring people to figure out how to borrow the money, and all the other people required for managing a fleet. So by no means am I saying that it is a bad idea to hire an outside company to manage the fleet and to lease cars.

Look at it this way. For an individual, is leasing a preservation of cash? Not really, since one can get a car loan just about as easy, and then purchase instead of lease.

 

[turnne]

Lots of opinions on lease/buy - some of you guys sound like experts. I have been toying with the idea recently of leasing for the first time in my life. What are the opinions in my case as I'm looking for advice. I am 68 years old and put no more than 9000 miles a year on my car. I currently own a MB and the warranty expires in May. I want to trade my cars when the warranty expires and might consider a Genesis this time around. A new car every three or four years is what I would like

I keep my cars in tip top shape. If it rains the car stays in the garage. No one sits in the back seats and I have no pets or haul anything other than maybe a set of golf clubs. There is just the two of us. I make no modifications to my cars. Monthly payments are a non issue and so is purchase price. Therefore I can make any amount of payments on a lease or just buy the thing by writing a check. What would you all suggest in my case on this lease/buy question?

if you know that you always want a NEW every 3-4 years and drive those low miles...and dont care to "own" a car outright that may be older than you would like

then you sound like a very good candidate for leasing

Warren