You think it is the majority of people that can't afford to lease? 1) You realize that 80 percent of people that buy a car, either finance it or pay cash right? Leasing rates are below 20 percent. So you are wrong there. 2) yes, alot (not all) people that lease a car can't afford to buy them. While credit standards may be more strict for leases, leases require little to no money down, allowing people to afford "more car" than they could by purchasing. 3) leasing usually hurts residual values. That is why Chrysler stopped leasing entirely a couple years ago, and thats why you can pick up a used BMW or Mercedes for dirt cheap 2-3 years after new. BMW has horrible residual values. 4) many automakers will finance a purchase at 0 percent or very low interest rates, so if its easier to purchase than lease, why don't these same people that can afford their cars, not just use the free money to buy the product?

As to investments, i have already made it clear that i am happy with my investments. I don't need to get on a public forum and pronounce that i am getting 9 percent interest like you feel the need to do. Hell, i wouldn't tell my closest friends what investments i have and what i am making on them.

My point is that the average American does not realize a rate of return of 9 percent on their money, whether by investments or just savings. And i think you need to look at bank rates, because that IS where most Americans put their money (outside of 401k, ect.)

 

This thread makes me laugh with the amount of assumptions and generalizations that people have about others finances.

To actually answer the original question in this thread.

The only real difference is lowering your monthly payment. Some people don't want to put money down, some do and want a lower payment. In the end you pay basically the same rate.

 

To answer your question, YOU wouldn't. 9% ROI is very difficult right now and most forms of investment are MUCH lower. Also, much car loans are much higher than 1.54%.

At 2% ROI and a 4.5% car loan, it obviously makes sense to pay cash if you can.

 

You think it is the majority of people that can't afford to lease? 1) You realize that 80 percent of people that buy a car, either finance it or pay cash right? Leasing rates are below 20 percent. So you are wrong there. 2) yes, alot (not all) people that lease a car can't afford to buy them. While credit standards may be more strict for leases, leases require little to no money down, allowing people to afford "more car" than they could by purchasing. 3) leasing usually hurts residual values. That is why Chrysler stopped leasing entirely a couple years ago, and thats why you can pick up a used BMW or Mercedes for dirt cheap 2-3 years after new. BMW has horrible residual values. 4) many automakers will finance a purchase at 0 percent or very low interest rates, so if its easier to purchase than lease, why don't these same people that can afford their cars, not just use the free money to buy the product?

As to investments, i have already made it clear that i am happy with my investments. I don't need to get on a public forum and pronounce that i am getting 9 percent interest like you feel the need to do. Hell, i wouldn't tell my closest friends what investments i have and what i am making on them.

My point is that the average American does not realize a rate of return of 9 percent on their money, whether by investments or just savings. And i think you need to look at bank rates, because that IS where most Americans put their money (outside of 401k, ect.)
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Ok keep believing all of that

 

To answer your question, YOU wouldn't. 9% ROI is very difficult right now and most forms of investment are MUCH lower. Also, much car loans are much higher than 1.54%.

At 2% ROI and a 4.5% car loan, it obviously makes sense to pay cash if you can.
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1.54% isn't way off. If you have good credit, which you should since we're all financially responsible here :roll eyes:, Penfed has rates @ 1.99% up to 60 months. many local credit unions are financing @ 2.5% or under for 60 months.

 

Wtf is this thread about, again??

 

I've personally had 3 cars (for myself) in 21 years.

1987 Nissan Pulsar SE. Purchased in 1990 for $8200, traded it in on car #2 for $2,000.
1998 Acura Integra GSR. Purchased brand new in 1999 for $19,900, sold it in 2008 for $8,800.
2003 S2000. Bought in 2008, going on 9 years old now currently in it for ~$3,000.

So in 21 years my total depreciation is right about $21,000... or barely over $80/mo.

Of course I've probably had a few grand in repair costs, plus sales tax and minimal loan interest, etc... but this gives you a general idea of how owning a car doesn't have to cost insane money.

 

I've never owned a car for less than 7 years (I owned my s2000 for 11 years) and I usually pay them off in 2 or 3 years. Prior to getting my Boss 302, I went 5 years without a car payment. That was pretty nice.

 

This is the one scenario where I do think financing is a great idea. My main point is to build wealth. Most Americans who finance cars are just paying interest on their desire to keep up with the Jones'.

If your desire is to switch cars in three years or less, I would say that buying new or leasing aren't the cheapest option. .This of course all boils down to personal priorities and values, but I would rather buy a car that is a few year old and keep it for as long as I can. I buy every car at a good enough price that I can get out of it in two years and break even. My S2000 is worth about what I paid for it two years ago and I have put 50k miles on it since i bought it. I plan on keeping it for another year or two, but I could sell now and be out with little more than what I have spent on maintenance.

The hardest part of all of this is being able to make the short term sacrifices (driving the S2000 longer instead of selling
it for a new car) in order to acheive the long term gain of more money in the future.

 

yes but like you said you only had 3 cars in 21 years. There are many people who want to, and can afford to, switch cars every 3-5 years. If you want to switch every 3ish years, leasing is the best deal depending on how many miles you drive.

Certain cars make sense to buy. Certain cars make sense to lease. & Remember the s2k is an exception! not the rule! Used s2k values have slightly appreciated in the past 2 years! thats not normal guys and not indicative of majority of the auto market.