I'm in a postion where i can pay cash for an 04.....it will hurt a little, but i can do it.

If i do, i consider the money i would be making on car payments to go towards recouping my savings; earning interest. Yeah, i'm rationalizing.

However, i'm self employed, so if i lease thru my company i'll deduct the payment from my salary (untaxed dollars). I have enuf right offs so thats not much of an issue.

My question is this: Assuming i only keep the car for 3 years, which scenario will i lose less?? If it's close...i would lean towards a lease as reducing savings by $33k is always a little unsettling.

All financial advise apreciated.

 

If you know you are going to get rid of it in three years, lease the thing. I will not post figures, but most would be SHOCKED to what the 02's wholesale for. The benefit of the lease is you are basially paying the depreciation of the car and have the opportunity to walk away after 3 years. I know a lot of people will tell you that "you don't own the car" and quite franly, unless you are going to pay cash for the car, you don't own it on a purchase till the last payment is made. Just don't plan on getting out of the car early if you lease it. It's really hard to. I used to sell Hondas for 3 years so I know a bit about how leasing works. If you do lease for 36 months, don't get anything from the F&I dept. when you go in and sign the deal. Also, a lot of dealers have "leg" in the payment they quote you, (inflated from what it really is) so that the F&I dept. can say "how about an extended warranty for only $20 more a month" so be on the look out for that as well. The only thing to consider is if you are looking to lease for only 36 months, I would also consider some German cars and the higher line Jap cars. I know the payment will be at least $425.00 not including tax. Good luck to you.

 

Uh, have you talked to your accountant about deducting the s2k lease??

I also have my own business and look for every deduct I can. Unfortunately I drive a lot of miles so the whole lease through the business thing doesn't really pencil very well. The other thing is that it's not as simple as just saying "I own my own business and now deduct 100% of this lease from my income".

If you have Id like to visit a little more.

I would also rather invest the $30k in my business and make payments on a toy than dump it all in a car (toy).

 

Good points.

Understood the deduction is not a 100% but any bit helps.

The business needs no more capital invested so this would be strictly disposable income. Working wife/no kids senario.

New to leasing so lots of research is in order.

What will this car be worth after 3 years if sold privately assuming approx 36K miles??

 

Low $20k range I would think.

Way too many variables for anyone to give you an answer without knowing more about your personal situation. I always get a kick out of the posts that say "lease is a ripoff" or variables of that, when they have no idea of the indiviuals situation.

 

I am not an accountant but I am an actuary. I have my own business too. I went through the same kind of logic and ended up buying outright (in Canadian $, taxes are not the same over here). based on my personal parameters, the decision hinged on:

1. The interest rate deemed to be used by Honda to calculate lease payment. Here it was 7.5% at the time. Anything lower than 3-4% would greatly favor the lease.

2. I found that I had to be able to deduct at lease 50% of the cost of the vehicle as business expense for the lease to make sense. here in Canada we pay taxes on the portion not deemed for business. Also, we can pay ourselves a mileage allowance if we own it and use it for business. Finally, don't forget you would pay yourself a salary equivalent to the amount of the lease. Hence, this is money in your pocket to pay the lease.

3. How much can you earn on your money if you invest it. I find here you have to do the math based on a secure investment, i.e low interest

4. At the end of the day I decided to buy the, consider it as an asset and have the freedom to sell it if I want a Porsche instead.

Good luck

 

When I leased mine, I first haggled like I was going to finance. Got the MY03 price down to 30,200. I figured they won't budge as easily on retail price if they knew you were leasing to begin with.

Then I told them I want to lease. I got the lease for 396/mo with $2000 down (39mo, 12000 miles/year). But that was after a day of haggling just the lease plan. They kept talking about a 'money factor'. They started with a m.f. of 5, making monthly payments around $500. I promptly walked out. They called me back the next day with a different lease agent and a m.f. of 1, giving me the $396/mo figure. You probably can't get 30,200 for a MY04, but don't settle for anything over $425/mo or you might be better off with a low interest finance.