What to buy besides Genesis V8

[Disaster]

I couldn't have put this any better. I stopped leasing as well. Even though it was for work, it's still basically a horrible financial proposition.

I was told, the one advantage of a lease, for a business, is the entire cost can be expensed immediately/monthly. With a car purchase it has to be treated like a capital expense and that can financially be a worse proposition.

Now you return the car, you have to lease again.

That is one of the biggest gotchas. You suddenly need a car today, because your lease is expiring. There was a time when lease companies would let you extend the lease on a month to month basis for the current lease rate or often even lower. Now, it is common for them to charge huge penalty lease rates, if you want to keep the car a bit longer. This forces your hand at a time when there may not be the best deal available for that next car. If you own the car you have much more freedom to shop for the best deal when they are available.

Of course this doesn't fit into our culture of, keeping up with the Jones',impulsive consumer habits.

True. People never get ahead of their bills and don't have money for down payments. They are also enticed into buying a more expensive car for the "same" monthly payment...not taking into account that they are not building any equity during the lease. They often don't take into account the cost of the acquisition and disposition fees, either. Then there are the longer leases, where the customer has to replace the tires and is expected to fix every little scratch or dent. All this can add up to additional thousands of dollars spent. With just a little patience and thriftiness, they could very well have enough cash on hand to buy that next car outright.

We now have zero car payments and I would be very happy if that were the case for the rest of our lives.

 

[TJPark01]

I was told, the one advantage of a lease, for a business, is the entire cost can be expensed immediately/monthly. With a car purchase it has to be treated like a capital expense and that can financially be a worse proposition.

One of the few ways a lease makes sense is if you can write it off as a business expense. You can rationalize it that way. But one must also consider whether spending that much on transportation is good cost allocation. I think the number was coming out to be about 10k a year when you factoring in everything associated with leasing a car,taxes,insurance, etc. It's not a bad number in an of itself, but the issue is that it's reoccurring and exists in perpetuity.

I think the thing that makes the most financial sense from a personal auto purchase perspective, is to buy a 2 or 3 yr. old Certified Pre-Owned car coming off a lease, like a BMW. You know all the maintenance has been done, because it's free. Most of the painful depreciation has already occurred, the car is still under warranty, and you can still spread the payments because the dealership has the financial capability to do it. Of course you are going to have to settle for a specific color combo that may not be perfect, or the options specs might not be exactly what you want, but a 2-3 year old car is still very much a new car at a considerable discount.
* However, there is a certain value to knowing that you are the first and only person to have farted in the car. How much you're willing to pay for that novelty is up to you.

 

[Disaster]

I think the thing that makes the most financial sense from a personal auto purchase perspective, is to buy a 2 or 3 yr. old Certified Pre-Owned car coming off a lease, like a BMW. You know all the maintenance has been done, because it's free. Most of the painful depreciation has already occurred, the car is still under warranty, and you can still spread the payments because the dealership has the financial capability to do it. Of course you are going to have to settle for a specific color combo that may not be perfect, or the options specs might not be exactly what you want, but a 2-3 year old car is still very much a new car at a considerable discount.
* However, there is a certain value to knowing that you are the first and only person to have farted in the car. How much you're willing to pay for that novelty is up to you.

I used to think the same thing, but with some of the huge discounts these last few years, and the almost linear depreciation of Japanese cars (short of the first 6 months to a year) it has made less financial sense to get a used one. Beemers are another story, but I'd insist on a full extended manufacturers warranty and dump the vehicle before that warranty ran out.

 

[TJPark01]

I used to think the same thing, but with some of the huge discounts these last few years, and the almost linear depreciation of Japanese cars (short of the first 6 months to a year) it has made less financial sense to get a used one. Beemers are another story, but I'd insist on a full extended manufacturers warranty and dump the vehicle before that warranty ran out.

The more expensive the car, the depreciation gets worse. I just saw a 2007 Mercedes S550 sedan with 8k miles on it. The guy was asking 55k, the car was over 100k when he bot it new 3 years ago. Lets just say the used 55k car market has a narrow following.

 

[sandy]

TJ and Disaster, you accurately point out the negative aspects of leasing. I agree that it gives you less flexibility in timing your next purchase and the added acquisition and termination fees mount up. And if you plan on keeping your car for many years, or drive lots of miles, leasing doesn't make sense.

But.....if you enjoy driving a new car every few years, it's a much simpler and less risky way to go. And not prohibitively more expensive.

You eliminate the risk of resale value being lower than expected due either to economic conditions or low demand for your particular car at the time of sale. This is particularly true of new models such as the Genesis where eventual resale value is pure guesswork.

Unless you're paying cash, you have finance costs either way, and if they are low for buying they usually will also be low for leaseing.

If you love the car and want to buy it at lease end, you have a guaranteed price which may be better than market. Or you can walk away and not worry about "double" negotiating on your next deal...new car price plus trade-in.

I've been leasing for more than 20 years and do the best I can at making the lease vs buy calculations....and figure it would cost me about $6000/year either way to drive a new car every few years.

 

[Disaster]

The more expensive the car, the depreciation gets worse. I just saw a 2007 Mercedes S550 sedan with 8k miles on it. The guy was asking 55k, the car was over 100k when he bot it new 3 years ago. Lets just say the used 55k car market has a narrow following.

This is probably why so many of those guys lease. It can't be fun to try to sell a car and take a $45,000 hit after 3 or 4 years.

My neighbor got what I thought was a great deal on a used '03 or '04 E500. Not an expensive S series but I was surprised and a little jealous when he only paid 4 or 5 thousand more than I did for a similarly old Acura TL. Since then I've put nothing but a set of ceramic rear brake pads into the Acura. He bought the expensive extended warranty and has used it.

 

[TJPark01]

TJ and Disaster, you accurately point out the negative aspects of leasing. I agree that it gives you less flexibility in timing your next purchase and the added acquisition and termination fees mount up. And if you plan on keeping your car for many years, or drive lots of miles, leasing doesn't make sense.

But.....if you enjoy driving a new car every few years, it's a much simpler and less risky way to go. And not prohibitively more expensive.

You eliminate the risk of resale value being lower than expected due either to economic conditions or low demand for your particular car at the time of sale. This is particularly true of new models such as the Genesis where eventual resale value is pure guesswork.

Unless you're paying cash, you have finance costs either way, and if they are low for buying they usually will also be low for leaseing.

If you love the car and want to buy it at lease end, you have a guaranteed price which may be better than market. Or you can walk away and not worry about "double" negotiating on your next deal...new car price plus trade-in.

I've been leasing for more than 20 years and do the best I can at making the lease vs buy calculations....and figure it would cost me about $6000/year either way to drive a new car every few years.

For certain people, leasing can be very appealing.
Leasing: New car every few year, who doesn't love that?
-New Safety Features
-Lower Payments
-Little to no maintenance costs.
-Easier turnover, no need to sell car in open market

If you have stable income, house is paid off, kids are out, you are living off savings, and you want to enjoy the fruits of your labor with the novelty of driving something new and fun every 3 years, and it works within your personal budget, then it can work in that scenario.

 

[ASHDUMP]

* However, there is a certain value to knowing that you are the first and only person to have farted in the car. How much you're willing to pay for that novelty is up to you.

Favorite quote of the thread!

 

[Disaster]

TJ and Disaster, you accurately point out the negative aspects of leasing. I agree that it gives you less flexibility in timing your next purchase and the added acquisition and termination fees mount up. And if you plan on keeping your car for many years, or drive lots of miles, leasing doesn't make sense.

But.....if you enjoy driving a new car every few years, it's a much simpler and less risky way to go. And not prohibitively more expensive.

You eliminate the risk of resale value being lower than expected due either to economic conditions or low demand for your particular car at the time of sale. This is particularly true of new models such as the Genesis where eventual resale value is pure guesswork.

Unless you're paying cash, you have finance costs either way, and if they are low for buying they usually will also be low for leaseing.

If you love the car and want to buy it at lease end, you have a guaranteed price which may be better than market. Or you can walk away and not worry about "double" negotiating on your next deal...new car price plus trade-in.

I've been leasing for more than 20 years and do the best I can at making the lease vs buy calculations....and figure it would cost me about $6000/year either way to drive a new car every few years.

For certain people, leasing can be very appealing.
Leasing: New car every few year, who doesn't love that?
-New Safety Features
-Lower Payments
-Little to no maintenance costs.
-Easier turnover, no need to sell car in open market

If you have stable income, house is paid off, kids are out, you are living off savings, and you want to enjoy the fruits of your labor with the novelty of driving something new and fun every 3 years, and it works within your personal budget, then it can work in that scenario.

If you have the disposable income, and like new cars, I can definitely see the advantage. I also like the idea of getting new features, like BT and HD radio, and the safety improvements in the last century have been quantum.

For us, as we get nearer to retirement, I look back on all those years of leasing with a bit of remorse. I wish I had some of that money back to put into a retirement property...especially considering how my other investments worked out. We have probably been leasing for 15 years and if you say the average lease cost $6000/yr, vs. the average longer term purchase of $3000/yr. and multiply that by our two cars you have close to $100K that could have been put toward that little retirement home on the beach.

While it was nice getting new cars, the fact is, there were many cars I would liked to have kept longer, and many that we ended up just leasing the model again. For example, my wife loved her Volvo XC70's. We leased 4 of them. Didn't find any real joy turning in a clean 2 year old one just to pick up the same new one.

I'm hoping to get the best of both worlds now. Since there are two of us that need cars, we can alternate purchases and get a new car every 3-5 years. I think that, coupled with the occasional high end rental and the occasional purchase of an older, fun, sporty car...like a Honda S2000 or a Mazda Miata, will satiate our motoring appetite.

 

[TJPark01]

For us, as we get nearer to retirement, I look back on all those years of leasing with a bit of remorse. I wish I had some of that money back to put into a retirement property...especially considering how my other investments worked out. We have probably been leasing for 15 years and if you say the average lease cost $6000/yr, vs. the average longer term purchase of $3000/yr. and multiply that by our two cars you have close to $100K that could have been put toward that little retirement home on the beach.

You just described one of the nastiest hidden costs of leasing, and that's long term allocation costs. Meaning the money you could have allocated toward something that is a "investment" is being allocated toward a "cost" which is a car. The notion that a car is the second largest investment you will ever make next to your home is a misnomer. The home has the potential to increase in value. The car will never increase in value, unless it's some rare car that you lock in a garage and never drive, and what's the point of that?

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[TJPark01]

Favorite quote of the thread!

I have been looking for some decent used cars, and Southern California used car market is rich with inventory right now. One of my biggest pet peeves, is getting into a car that someone has smoked cigarettes in. I can tell right away. No matter how much you clean the car, you can't get that smell out.

 

[Disaster]

You just described one of the nastiest hidden costs of leasing, and that's long term allocation costs. Meaning the money you could have allocated toward something that is a "investment" is being allocated toward a "cost" which is a car. The notion that a car is the second largest investment you will ever make next to your home is a misnomer. The home has the potential to increase in value. The car will never increase in value, unless it's some rare car that you lock in a garage and never drive, and what's the point of that?

Tell that to my house, which went down $150K in value, over the last few years!!! :-O

Of course, with a car there is also insurance, finance charges, maintenance, tires...etc.

We might actually be coming up to the perfect time to buy real estate. The only killer with real estate, is the real estate taxes, which can be a huge drain. When looking for an investment property that taxes need to be a big consideration.

I have been looking for some decent used cars, and Southern California used car market is rich with inventory right now. One of my biggest pet peeves, is getting into a car that someone has smoked cigarettes in. I can tell right away. No matter how much you clean the car, you can't get that smell out.

Hate that. I've Febreezed the heck out of cars but depending on how long they've smoked in it, it can be a losing battle. That reminds me of our first house. When we bought it the lady living there had pictures hung on the walls. When she moved out, it was a lighter color under the picture frames. This is usually the opposite of what you see...darker color where the paint hasn't faded. But, in her case the picture frames blocked the tar. When I first painted the walls the tar oozed out through the latex paint and ran down the wall in brown streaks. I had to use Kilz to form a barrier over all of it. I can only imagine what her lungs looked like.

P.S. Around here, the dealers seem to be looking for decent used cars. I suspect that a lot of people shopped down to the used market and ate up the inventory.

 

[sandy]

Tell that to my house, which went down $150K in value, over the last few years!!! :-O

Of course, with a car there is also insurance, finance charges, maintenance, tires...etc.

We might actually be coming up to the perfect time to buy real estate. The only killer with real estate, is the real estate taxes, which can be a huge drain. When looking for an investment property that taxes need to be a big consideration.



Hate that. I've Febreezed the heck out of cars but depending on how long they've smoked in it, it can be a losing battle. That reminds me of our first house. When we bought it the lady living there had pictures hung on the walls. When she moved out, it was a lighter color under the picture frames. This is usually the opposite of what you see...darker color where the paint hasn't faded. But, in her case the picture frames blocked the tar. When I first painted the walls the tar oozed out through the latex paint and ran down the wall in brown streaks. I had to use Kilz to form a barrier over all of it. I can only imagine what her lungs looked like.

P.S. Around here, the dealers seem to be looking for decent used cars. I suspect that a lot of people shopped down to the used market and ate up the inventory.

This is a good time to look for investment property. There are tremendous bargains available if you look carefully. While taxes are indeed an important consideration, at least they are a deductible expense against rental income. Plus you also get to deduct depreciation, (the really big killer in car costs). But, as with any investment, you need a long term perspective. Prices may continuje to fall short term as more mtg defaults hit the market, but over time you can do well.

 

[TJPark01]

Hate that. I've Febreezed the heck out of cars but depending on how long they've smoked in it, it can be a losing battle.

You can't get the smell out because it's not a smell. It's a toxic substance that permeates through every pore of the interior of the car. You would have to replace the HVAC system, interior trim, insulation,speakers, carpets, leather, headliner, etc. It's what referred to as "Third hand smoke" which is the residue from tobacco smoke that clings to virtually all surfaces long after a cigarette has been extinguished. Personally, I wouldn't be able to live with a car like that.

 

[jailer]

Well TJ, the F10's are hitting the U.S. dealers. Why don't you go drive a 535i somewhat hard, and see how nice it really is.

It looks like these guys on Bimmerpost are REALLY impressed with the way it HANDLES, and pretty much everything else.

http://f10.5post.com/forums/forumdisplay.php?f=192

 

[STREETS]

Not a big fan of the overly blunt nose on the Bimmer. Of course new regulations for pedestrians mandate such, but side view isn't very pleasing.

A former BMW owner, viewing the new 5 series interior solidifies my appreciation for the Genesis' simple, elegant design.

 

[TJPark01]

Well TJ, the F10's are hitting the U.S. dealers. Why don't you go drive a 535i somewhat hard, and see how nice it really is.

It looks like these guys on Bimmerpost are REALLY impressed with the way it HANDLES, and pretty much everything else.

http://f10.5post.com/forums/forumdisplay.php?f=192

Dealers around here just got them. I have the all clear to get one, but I was thinking about waiting a few months so that, I'm not the first one in the pool. Also I don't think there will be much discounting right now.

 

[Socrates]

I wouldn't go so far as to say all German cars have terrible reliability.

I would. As a lemon law attorney, I can tell you that the German makes have a disproportionately large volume of unreliable vehicles.

I think the big things like, engines, tranny's are solid, but electronics are definitely more fiddly.

The German electronics are a nightmare, but their engines and transmissions are far from reliable. BMW in particular has been having a lot of engine problems of late.

The Japanese cars are simpler in their execution, functionality and reliability. Also, they tend to be easier to fix and parts tend to be easier to access. The one thing the Europeans have is a certain flare, a real feel for a dramatic interpretation of what a car should be, especially the Italians. Now this doesn't translate to easy livability on a daily basis, but it is undeniable. Asian cars tend to be more appliance like. They function brilliantly but they lack a "soul".

On this we can agree. I'm struggling with the same thing. Why pay a lot more for a German car which will likely be prone to reliability issues? Because if the German car doesn't have problems, you will love it. A Japanese or Korean car you may like a lot, but you know that you may never love it the way you would a properly functioning German automobile.

The question is: Is buying German worth the money and worth the risk? I don't know, but I do know that the new 5 series is available for test drive at my local dealer in just over a week.

 

[jailer]

I would. As a lemon law attorney, I can tell you that the German makes have a disproportionately large volume of unreliable vehicles.

I hear you Socrates, and nice to actually hear from one of you guys. The thing about all these German makes though, would there maybe be a large bias in the direction of, say, slightly older VW, and any year Mercedes??

The German electronics are a nightmare, but their engines and transmissions are far from reliable. BMW in particular has been having a lot of engine problems of late.

Again, which specific engine?? I would take a guess as to more of the BMW Nikasil lined cylinder V8's, and the recent twin turbo'd BMW six. Regarding transmissions, most of the BMW's use ZF which I would probably choose before any other make.

 

[Disaster]

Again, which specific engine?? I would take a guess as to more of the BMW Nikasil lined cylinder V8's, and the recent twin turbo'd BMW six. Regarding transmissions, most of the BMW's use ZF which I would probably choose before any other make.

I can give one example, from my recent research. Was looking to buy a used BMW 3 series. Wanted one with immaculate service records. Looking at a few that did have thorough records was an eye opener. The water pumps, on the 6, seem to be good for between 40 and 60K miles. One older car I looked at had the water pump replaced three times. That was one specific thing that stuck out, but there was a myriad of other items that were fixed and replaced on their lists. When I did some more research, on different BMW forums, there were several people who posted the advice to never buy a BMW 6 cylinder, 3 series, with more than 100K on it, sans warranty, unless you were prepared buy $1000's of dollars of parts a year and do the service yourself. In contrast, our Toyota Avalon, with 110K miles on it, has not had one engine related failure.