Car lease question - Page 4

Plaid Pants2 · ‎03-14-2015

@Tinkrbl44 wrote:
@esmeraldagooch wrote:
From Dave Ramsey
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car
@esmeraldagooch

I agree with everything above except the highlighted part. I find it hard to believe anyone would actually fall for that, and ignore the dollar comparisons.

There are people who feel that they MUST have the latest and greatest vehicle, and it MUST have all the bells and whistles.

It their way of saying, "Look at me!!! Look at me!!! Look at what I'm driving!!!"

I think that's what he ment by "sophisticated people".

Think of "keeping up with the Jonses".

People want others to believe that they are the Jonses.

Elom · ‎06-15-2010

Thank you all for the thoughts and advice. I read all the articles also. I am calling today to get my options and I have a few months to absolutely make my decision. I leased this car for a specific reason but I will be purchasing this time around. Again, much appreciated.

Ibby114 · ‎03-10-2010

Add all the payments you've made, include any deposits you made initially- and then add the $16,000 residual value. If those totaled are less than the current book value it'd be a wise purchase.. Otherwise, get a different car.

Ibby114 · ‎03-10-2010

@GCR18 wrote:
The buyout price can be researched in the newspaper and Kelly's Blue Book, etc. If it's a fair deal, you like the car and can afford it, why not buy it.

Something else to think about is what if you have to break the lease. My sister leased a car in October and we are trying to break her lease. She's since been sick and no longer able to drive. We are going to have to pay thousands to terminate the lease. Waiting for the exact figure.

@GCR18 It might be better to continue paying the lease- my Dad passed away after having a lease for a year. The leasing comany 'made a deal' with me (I'm the executor) - give them the car to auction and the estate would only be responsible for the remaining lease payments after it sells. The $12,500 sale price covered the remaining lease payments easily. When push came to shove they re-negged on that arrangement (saying I 'misunderstood' - ha! ) and they're trying to ALSO get the residual value of the car from the estate! HUGE difference. Get whatever arrangement you make in writing- and hope for the best. And stay away from Hyundai finance!!

software · ‎06-08-2016

@Tinkrbl44 wrote:
@esmeraldagooch wrote:
From Dave Ramsey
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car
@esmeraldagooch

I agree with everything above except the highlighted part. I find it hard to believe anyone would actually fall for that, and ignore the dollar comparisons.

I agree with you, Tink. When Ramsey pontificates, I take him with a grain of salt. But when he's talking about facts, I usually listen (but still make my own decision).

Lucky Charm · ‎03-09-2010

We just got back from a long road trip yesterday in our new car which I absolutely LVE.

But I ran to the store for a few necessities in my old car (same model as new) and just kept saying I still LVE this car!!! (it's an SUV, but I call them cars).

We owe for a few more years on the new one, but no worries, I'll keep her for at least a decade.

My old one has been paid off over over a decade. She'll be 15 this August. Still pretty as the day I drove her off the lot--inside and out. Or I'd kick her to the curb...lol.

Not to mention my husband's pick up which is ten years old. A work truck that comes clean inside and out like brand new. Loved the look of that model year. Paid for years ago.

My advice is to buy always, what you can afford. If your payments bother you, you went too high.

And always, ALWAYS, buy WeatherTech liners for front, back and back back.

esmeraldagooch · ‎03-10-2010

@Plaid Pants2 wrote:
@Tinkrbl44 wrote:
@esmeraldagooch wrote:
From Dave Ramsey
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car
@esmeraldagooch

I agree with everything above except the highlighted part. I find it hard to believe anyone would actually fall for that, and ignore the dollar comparisons.

There are people who feel that they MUST have the latest and greatest vehicle, and it MUST have all the bells and whistles.

It their way of saying, "Look at me!!! Look at me!!! Look at what I'm driving!!!"

I think that's what he ment by "sophisticated people".

Think of "keeping up with the Jonses".

People want others to believe that they are the Jonses.

Totally agree. I've seen people living in old used single wides driving Cadillac escaldes.

esmeraldagooch · ‎03-10-2010

@esmeraldagooch wrote:
@Plaid Pants2 wrote:
@Tinkrbl44 wrote:
@esmeraldagooch wrote:
From Dave Ramsey
QUESTION: Listener asks Dave to break down the mathematical flaws in a car lease.
ANSWER: A car fleece is basically renting a car. You pay $400 a month and at the end of the new car lease, you turn it back in. If you want to buy it, you are buying it for what they estimate at the beginning of the fleece to be the market value. At the end of the lease, it’s called the residual value. If you pay $400 a month for 60 months, you pay $24,000 before turning it in. The car will not have gone down in value more than that, because the car companies would lose money if it did. When they get the car back, you will have paid them more than the car has depreciated during that time.
During that time, you’re maintaining the car as if you owned it. You’ll get charged for excessive wear and tear, or if you put too many miles on it. If you rent it for $24,000 and it went down $15,000 in value, then it cost me $9,000 to rent this car for this period of time. That is their profit during that time.
Another thing is that the interest rates on a vehicle lease are not disclosed because the Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet. The interest rates you get charged are unbelievably high. That’s where you’ll realize you got screwed over.
People get sold automobile leases because they are told that it’s what sophisticated people do. But as it turns out, the car companies make more money on leasing you the car than if you bought the car with cash, according to the National Auto Dealers Association. Broke people think ‘how much down and how much a month’. Rich people think ‘how much’. If you can’t pay cash for a car, then ride a bicycle. But don’t lease a car
@esmeraldagooch

I agree with everything above except the highlighted part. I find it hard to believe anyone would actually fall for that, and ignore the dollar comparisons.

There are people who feel that they MUST have the latest and greatest vehicle, and it MUST have all the bells and whistles.

It their way of saying, "Look at me!!! Look at me!!! Look at what I'm driving!!!"

I think that's what he ment by "sophisticated people".

Think of "keeping up with the Jonses".

People want others to believe that they are the Jonses.
Totally agree. I've seen people living in old used single wides driving Cadillac escaldes.

By the way. I have two relatives who owned businesses and their companies payed the lease payments. One did it because she couldn't keep up the life style she wanted others to think she was leading and wanted the flashy car, and it all came to a screeching hault when she sold the business and the new owner defaluted a few months later with the payments on the business and filed bankrupsy. No retirement, lost her home and the car.

sunshine45 · ‎03-09-2010

@Lucky Charm

those weathertech mats are amazing, arent they?

anytime i change my car i order a set.

i gave a set to my sister for christmas and she loves them.

********************************************
"The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing." - Albert Einstein

sfnative · ‎03-10-2010

@Elom

I've not read any posts with the exception of your original question.

Just give this a thought: Should you decide to lease another vehicle, keep in mind that you are renting that car. Each and every dollar you pay up front huge bucks and every month are rental FEES. You gain nothing.

If I were in your shoes, I would turn in the used leased car and purchase a new care, not rent a new car.