By on March 3, 2016

subprime-lenders-car-get-you-guaranteed-approval-on-bad-credit-auto-loans

Good times have clearly arrived, because Americans are flinging money at cars like it’s going out of style.

Leasing has never been more popular for American car buyers, reports the Detroit Free Press, and the size of their auto loans have also reached record territory.

According to industry data tabulator Experian Automotive, 33.6 percent of new car and truck purchases in the fourth quarter of 2015 were leases, with average vehicle loans hitting $29,551. The findings aren’t surprising when you consider the combination of growing economy, low interest rates and cheap gas prices spurred record vehicle sales last year.

“In order to stay within their budget goals we have seen that more consumers are turning to leasing and used vehicles as alternatives,” explained Melinda Zabritski, Experian senior director of automotive finance.

However, more buyers are also discovering their vehicle desires aren’t aligned with the reality of their bank balance.

Fitch Ratings noted last month that a growing number of subprime auto loans are becoming delinquent by 60 days or more, a condition fueled in part by easy-to-access credit and lower used car prices.

In February, the delinquency rate for subprime auto loans stood at 4.98 percent, passing the 4.87 percent recorded in September 2009. The percentage of loans seen as likely to default grew as well — 8.72 percent in January — and is expected to hit 10 percent by the end of this year.

More than one-in-five Americans taking out a car loan have a low or very low credit rating, resulting in a higher fixed interest rate on the loan. Couple that with the 72 month loan periods many sellers offer in the interest of advertising a low monthly payment, and many economically vulnerable citizens are buying cars only to find themselves unable to pay due to work or health circumstances.

While the trend in the default rate seems concerning, Fitch says the depth of the recession saw rates at 13 percent, so a crisis point is far from being reached.

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153 Comments on “Americans Loving Their Leases, Not so Much Their Loans...”


  • avatar
    seth1065

    folks will never learn and this is during cheap cheap gas, what will happen when fuel goes back up and folks can pay their lease for the month or fuel for the month. I get for a subset of folks leasing is a good way to go but I doubt that subset is 33% of the population. It is always having a car payment and for most folks that will hurt them over the long haul.

    • 0 avatar
      bikegoesbaa

      I look forward to gas prices tripling.

      Not only will there be less traffic, but it will be gratifying to hear people who are opting to buy new low-efficiency vehicles today complain about how they can’t afford to drive the truck that they are still making payments on.

      It should also be a good time to pick up a swank ride for cheap.

      Long term thinking, yo.

      • 0 avatar
        Yuppie

        I also used to think that expensive gas would mean less traffic, but that was not the case in Los Angeles. Traffic was still just as bad even when 87 octane gas was about $4.50/gallon.

      • 0 avatar
        maxxcool7421

        pheh. If gas tripling in price disallows you from driving you should not have a car *at all*.

        • 0 avatar
          seth1065

          Maxxcool7421,
          Must be nice to be rich, if gas triples to say $6.00 a gallon it would put a world of hurt on people, I drive about 25,000 miles a year so if i had a car that got 25 real world MPG combine I use roughly 1000 gallons of gas and the extra $4.00 a gallon would definitely be felt , hell it is a lease payment for a 3 series around here.

      • 0 avatar
        Chan

        I despise the old SUVs rolling around in CA with questionable maintenance.

        My stereotype is the Ford Explorer with peeling paint, tints, and either a wobbly wheel or a screeching belt. Driven by a mom who can barely see over the dashboard, and kids in the back. A disaster waiting to happen.

        • 0 avatar
          highdesertcat

          “I despise the old SUVs rolling around in CA with questionable maintenance.”

          With the sheer number of people in America today living from paycheck to paycheck or welfare check to welfare check, is it any wonder that there isn’t any money left over for maintenance and repair on their cars?

          I, too, have noticed the increase over the past seven years in the number of cars in a state of disrepair that are on the roads everywhere.

          From what I have seen, more people are driving much longer on tires that should have been replaced 3/32nds ago; like they’re beyond bald, with steel mesh showing.

          I don’t think it will get any better soon. People buying new cars these days do so because they can.

          But many more people hold on to their old cars longer because they cannot afford to buy anything else, new or used.

    • 0 avatar
      APaGttH

      It never ceases to amaze me the narrow view people have.

      It is real simple. Everything is tied to the cost of a gallon of gas. Because everything has to be transported. Even if you buy local sourced organic free range tomatoes, someone had to load them in a gasoline or diesel powered vehicle to get them from point A to point B.

      If you’re buying something manufactured, the raw materials have to get to that local hand crafted artisan from a gasoline or diesel powered vehicle. Even if it runs on electric, that means coal, oil, natural gas, and yes other renewable sources. Then after that hand crafted thing is lovingly built, it has to be shipped to the buyer – or the buyer needs to get somewhere to pick it up.

      So if you’re cheering for a 3X increase in gas, what you’re really cheering for is severe inflation and an economic shock that will cause a severe recession.

      It isn’t the price of gas that reduces traffic, it is the people who lost their jobs because of less available disposable income to buy – stuff – who aren’t on the road.

      Yay recession!

      • 0 avatar
        Kevin Jaeger

        Correct, but you need to understand a certain segment of the population genuinely wants a severe recession and to see much of the domestic industry shut down. Need to break a few eggs to defeat capitalism and save the environment, don’t ya know?

        • 0 avatar
          dal20402

          Seems to me like the ones rooting for a severe recession are the ones who think we’ve all been mollycoddled with easy money and the real problem with America is a lack of RUGGED ECONOMIC TOUGHNESS.

          • 0 avatar
            Kevin Jaeger

            Yes, unfortunately there are some of those, too.

            I’d like to think their real desire is for society and the government to live within its means, but some do sound exactly as you describe.

      • 0 avatar
        krhodes1

        The cost of the fuel for transportation is still a tiny, tiny percentage of the cost of most goods and services. There are exceptions of course – the airline industry being a huge one.

    • 0 avatar
      krhodes1

      For the average person who doesn’t know which end of a screwdriver is which, there is a lot to be said for treating transportation as a utility. When you can lease a perfectly nice mid-size car for about the price of a loaded cable TV package, I certainly see the appeal, even if I prefer to buy. You always have a relatively recent car under warranty (and free maintenance too, possibly). The monthly outlay is predictable and manageable. If you are at the point in life where you would probably get a new car every few years anyway because you CAN, that is another good reason to lease.

      Mind you, there are a TON of reasons not to lease as well, but if it works for you it works for you. I’ve leased one car, and if the conditions were right I would do it again. I rarely say never to anything (other than owning a Camry).

  • avatar
    CoreyDL

    It’s hilarious how simpleton consumers just cannot seem to figure out that just -because- a bank will loan you a certain amount of money for house/car, it’s not -a good idea- to take that amount.

    But hey, as long as you get plenty of selfies with your AMG GLC for those 90 days until they take it back, go on wit ya bad self.

    • 0 avatar
      Kyree S. Williams

      Well, some people don’t know better. I’ll say that in my own family, debt and financial education wasn’t exactly a priority, and so generation after generation would repeat the same mistakes. I’ve got my stuff together, but I really don’t have the energy to pass judgment on other people—including family members—who don’t.

      However, others very much do know better. To quote speedlaw below: “For those who have no real hope of building much, or at least think that, it is a rational choice to go big, and look good, at least until the LPR goes ping and the repo truck shows up.”

      • 0 avatar

        If you are ever in NY, I owe you a beer.

      • 0 avatar
        CoreyDL

        I think a lot of people who end up in these situations would know better if they’d just think about numbers a little bit. But I know there are some people who are not taught or do not possess the “responsible” trait.

        I’d end up guilt-tripping myself every day if I did something irresponsible like lease some Land Rover for $650/mo. Could I afford it? Yes. Would it be ignorant – hells yes.

  • avatar
    threeer

    Just never have been a fan of leasing…the thought of *renting* a vehicle for several years is lost on me. Maybe I’m not money-smart enough. I’m sure that a large number of those shiny new 3-series parked outside of my office are leased, but I’m kind of just as pleased to walk over to my paid-for 2004 Lancer Sportback and drive my happy self to my old house out in the sticks.

    • 0 avatar
      sportyaccordy

      Some people don’t want the hassle of dealing with an old car’s problems. For example I spent ~$1500 to fix my car’s A/C last year. That would have been covered under a warranty, and likely wouldn’t have happened with a newer car in the first place.

      Some people don’t drive much and want to take advantage of low interest rates and company subsidized leases. Taking advantage of said opportunities doesn’t mean people can’t afford them.

      Some people don’t want to drive a 12 year old econobox from a dying brand and live in a tiny shack in the middle of nowhere. Surely you have some kind of wasteful, pointless indulgence. Travel? Food? Hunting? Model trains? As long as what they eat doesn’t make you crap who cares?

    • 0 avatar
      jmo

      Why don’t you live in a tiny house biking distance from work? Why do you waste so much money?

    • 0 avatar
      S2k Chris

      I’m not into leasing for a variety of reasons, but I do see the appeal. If you’ve got a good income, how is a $500/mo 328i lease payment, encompassing almost your entire car budget outside insurance and gas, that different than your $100 cell phone bill, $150 cable bill, $200 gas/electric, etc? I mean, you pay those indefinitely, how is this different? Sure, ideally you are going to pay a car off and then keep it payment free for years, but for people who aren’t interested in doing that, leasing isn’t a bad deal.

    • 0 avatar
      DukeGanote

      Years ago I leased a Civic because I needed reliable transportation and lower payments. At end of lease I converted to a standard loan. So cumulatively I paid for 7 years and drove it 14 years to 290,000 miles.

    • 0 avatar
      energetik9

      I’m convinced that at the end of the day, it’s just personal preference. Yes, both camps will argue financial advantages/disadvantages, but not sure it really matters and your just arguing other people’s money.

      I’ve done both, but prefer loans, but would seriously consider leasing if I could take advantage of tax breaks from it. I’ve just always had great luck with used cars to include a whole set of BMWs and a Porsche, so it’s never been an issue to me. My wife previously had a lease and was so convinced she wanted new and didn’t want to deal with the hassles of owning. I finally bought her a CPO BMW and she’s decided to keep it, even past warranty. She loves it, it’s worry free, we’ve never had any repairs beyond wear and tear and next year it will be paid for.

      • 0 avatar
        bunkie

        It really depends upon the vehicle. Leases are actually pretty simple. There’s a reason why 328s lease for a relatively low price and X4 and X6 lease payments are ridiculously high.

        To it looks like lease deals fall into three categories:

        1) High-demand, high-residual, low lease-price
        2) Move-the-metal, low-to-medium residual, highly-subsidized, low lease-price
        3) Middle-demand, medium depreciation, no-incentive, mid-to-high lease price.

        I leased my Tacoma. With the highest residual of any vehicle, it was the best way to acquire it. Furthermore, I wasn’t hit with the sales tax all up front and, at the end, I won’t have to deal with trade-in games unless I want to.

        Furthermore, I *hate* dealing with repair shops. I’ve had too many bad experiences with shops that were peopled by ham-fisted monkeys to want to trust my car to someone like that. My time is worth a lot to me, I don’t want to waste it dealing with situations that can be avoided.

    • 0 avatar
      Powerlurker

      Though definitely a minority use case, leasing makes a lot of sense for vehicles used for business or people who drive for work and get a car allowance. In the first case, leasing vastly simplifies accounting and expensing; it’s a simple monthly business expense instead of a capital purchase that needs to be depreciated. In the latter, your employer typically has certain requirements that your work vehicle needs to meet (e.g. less than three years old, with automatic transmission, and at least midsize, etc.) and is paying you extra money towards that end, and since you need to replace the car regularly anyway, leasing just makes everything easier

  • avatar
    SoCalMikester

    maybe, just maybe i might consider a lease when the condo is paid off. i dont drive much and trying a different new cheap car every 2 to 3 years is appealing.

    but nah- ill probably stick with my 40k mile xA and drive it til i die.

  • avatar
    don1967

    There will always be some percentage of subprime loans behind on their car payments at any given time. 1 in 20 strikes me as a fairly benign number, perhaps in part because of tighter lending standards. This is not 2008.

    One good thing about leasing is that it imposes some discipline on new-car buyers to stick with a term and then walk away debt-free. Better than financing over 7 years and then trading with negative equity after 2 or 3. Might even be better than buying used, which to my eyes looks badly overpriced in the U.S. these days.

    • 0 avatar
      dal20402

      There are definitely some cars and situations where buying new is more cost-efficient than buying used. For example, buying Subarus of a reliable age in the Pacific Northwest or Colorado.

      I bought, not leased, my Forester new in 2013 — partly because it was cheaper after factoring in expected maintenance and financing costs than a low-mile used SH Forester would have been. A combination of ridiculous resale value and very good deals on the new cars was to blame. When/if I replace it with an Infiniti QX50 I definitely don’t expect the same situation to apply.

      • 0 avatar
        Quentin

        4Runner and Tacoma are the same way. You are better off buying new. Leasing either is insane because Toyota doesn’t seem to include their crazy good resale value in the residual.

        My FR-S, on the other hand, is a perfect car to lease. Depreciation is heavy and my work does a depreciation subsidized, insurance-maintenance-consumable include lease program that makes my FR-S ridiculously cheap per month.

        • 0 avatar
          bunkie

          “Leasing either is insane because Toyota doesn’t seem to include their crazy good resale value in the residual. ”

          This argument makes sense only if you are lazy. What’s to stop you from buying the Taco at the low residual and either re-selling it or keeping it and getting a deal?

          I will do either one of those two when my Taco lease expires in 2018, assuming that the vehicle is worth more than the residual (which I fully expect because it will have very low mileage).

          • 0 avatar
            Quentin

            I think it depends on the lease agreement. Does Toyota always set the lease-end buy price at lease signing? I admittedly didn’t look into it a ton.

            My anecdote is that I bought my 2010 4Runner for $32k and traded it 40 months and 38k miles later for $27.5k. The vehicle I traded it for was purchased at invoice price and I paid the difference in cash. I can’t imagine that there was any leasing scenario where I’d come out that good.

          • 0 avatar
            don1967

            Nothing wrong with buying out a low-residual lease (aka the build-it-yourself used car), especially if one has taken advantage of the affordable lease payments to accumulate sufficient cash. But if it turns into a 9-year finance wolf in sheep’s clothing, then clearly one is living beyond one’s means.

  • avatar
    sportyaccordy

    It will be really interesting to see what happens to the auto market with the inevitable rate hikes. I can’t imagine people were doing too much leasing back when interest rates were in the double digits.

    • 0 avatar
      krhodes1

      It’s still relative. Leases will cost more, but so will loans. We will probably see even MORE subvented leases at that point. It’s a way to move the metal without affecting resale values vs. straight cash on the hood, and the automaker has a much lower cost of funds than an individual does.

      For sure when car loan interest rates were in the 8-10% range, I was not nearly so keen on borrowing money for a car. I mostly paid cash back then. With rates so low, I am taking advantage of it. My credit union actually called me today (during dinner!) to see if I would be interested in refinancing (seems they are having a special) – they lost out to BoA when I bought my new car, but if they can beat the current 1.9% rate, you bet I will. And for a shorter term at this point, I am 9 mo into a 60 mo loan (and paid well ahead), I would probably refi to a 42.

    • 0 avatar
      markf

      I don’t think rate hikes are so inevitable. Look at Japan, 20+ plus years of 0 or near 0 interest rates. The US is closing in on 10 and when the Fed has no plan to raise rates back to any level that anyone would consider Normal. The joke of a .25% “raise” this winter seemed to be done so they could say they did it.

      Really, I wouldn’t even worry about interest rates. For the foreseeable future (10-20 years) they will not be a factor.

  • avatar

    In my job as traffic attorney, I see the tickets. I am often amazed at the nice car on the ticket….and how often it does not match the address.

    … but the client has to make payments for the retainer (it isn’t yuuuge, trust me), and after the case is done, I get a courtesy call from the Court Clerk because they are slow pay on the fine and suspension is imminent, even after we work out a sweet deal.

    There are a lot of folks out there ‘frontin’ as they would say in some places. I’ve learned that your car, unless a total beater, isn’t much insight into your actual situation.

    Leasing allows ‘frontin’ to the max degree. Sign and Drive !

    In an age of negative interest rates, it is a rational choice if you are sitting on piles of money (QE) from the Feds, to loan folks with no credit at high rates to get some return, even factoring in the repos and the increased handling of “no money-slo pay” customers.

    The concept of an adult in the room making the loans is quaint…almost like your local bank taking local deposits and lending them out to local businesses known to the bank and known to be trustworthy…..now banking is centralized, the deals are chopped into secured instruments, sold to bond holders, and there are no brains, mercy, or common sense anywhere to be found. Defaults have been entered into the equations by the Quants, and there won’t be any “wait till I get paid Friday” forbearance.

    That local bank ? It is now a rotting hulk and eyesore in your old downtown.

    Social wreckage as folks are given loans they can’t pay and should never have received in any rational world ? We are still sorting out the last time that happened….and bankruptcy laws were made stricter courtesy of Biden and signed by Clinton the First, but only for people, not corporations.

    Also, those of us who believe in a stable financial situation with mostly commonsense choices, cannot understand how you can do this. It is a conceptual gap. For those who have no real hope of building much, or at least think that, it is a rational choice to go big, and look good, at least until the LPR goes ping and the repo truck shows up. Oil hasn’t been changed but there are 20 inch wheels ? Totally consistent.

    • 0 avatar
      redliner

      I occasionally work with an attorney that drives a clean early 90s Lexus LS as his “going to see a client” car, but owns an assortment of flashy and fun vehicles for every season and mood. He claims clients see him as more personable and hard working when they see him pull up in a 25 year old car. Then when he takes his percentage, his clients don’t feel quite so robbed. It’s like reverse frontin’.

      • 0 avatar
        Kyree S. Williams

        I never understood that. If I hire a lawyer and he pulls up in a 6-Series Gran Coupe or an S65 AMG or whatever, I’m not going to think that it’s because he makes too much money off the backs of his customers.

        That said, here in Oklahoma, most people just buy pickup trucks in order to floss without flossing. Never mind that your F-350 Super Duty King Ranch cost as much as a Range Rover Sport; it looks less ostentatious and flashy to clients. Plus, depending on what you do, the F-350 may be much more usable and will probably last longer. I don’t think the current Super Duty is a proper luxury vehicle, but the 2015-present F-150 certainly is once you get to King Ranch, Platinum and Limited trims.

      • 0 avatar

        I found as a traffic lawyer, that I do best with an enthusiast car-but not too much. This is important for when you give a talk to a car club. It is kinda like in the age of GM supremacy, the Buick was the “doctor’s car”. You look prosperous but not greedy. Having said that, in 99% of my situations, my clients never see my car.

      • 0 avatar
        dal20402

        Attorney here. My clients also only see my car occasionally, but for those that do there’s a sweet spot somewhere in the middle. They want to know I’m doing just fine but also that I’m thrifty and sensible. Honestly my LS 460 is probably a bit too much, even though I paid about as much for it used (with 40k miles) as I would have for a new Accord EX-L. The right product would be a few-years-old ES or RX. But a 25-year-old car (such as my ’95 Legend) would seem too old and decrepit to most of them, and they’d wonder why I wasn’t (in their mind) able to afford something modern.

      • 0 avatar
        runs_on_h8raide

        Around here NYC metro..if a lawyer is rolling in a 25 year old Lexus…no one would hire him.

    • 0 avatar
      krhodes1

      Meh, the contents of my garage are commensurate with my current income level. My house is commensurate with the $35K a year I made when I bought it 15 years ago (though I have done a LOT of work on it in the past few years, a nice BMW’s worth). I would much rather have a garage full of cool cars than the 3500sq/ft McMansion I could easily “afford”. Not having a wife allows that indulgence… In my experience, the show palace is ALWAYS to keep the wife happy.

      If times get REALLY tough, CarMax is but an hour drive away and a couple cars go bye-bye.

      • 0 avatar

        It isn’t the wife that is expensive, it is the accessories that arrive in due course thereafter….

        • 0 avatar
          krhodes1

          But it is usually SWMBO who needs the big house with the 2-story foyer to impress the friends and relatives. Most guys are happy to live in a cave.

          I would actually like a smaller house and a bigger garage than I currently have. 1200sq/ft house, 2700sq/ft garage, wish it was more like 900/6000.

          • 0 avatar
            Lou_BC

            krhodes1 – When I purchased my place I viewed it as a 24×26 shop with a large driveway with 1180 sq.ft. of living quarters thrown in for good measure.

          • 0 avatar
            krhodes1

            @Lou_BC

            Yup, same here! I rolled in with my realtor behind me to look at the place. Got out of our cars, she walked onto the back porch of the house as I disappeared into the 32×40 2-story garage. I came out, went up to her and said “I hope the house isn’t collapsing because I am buying it anyway”. I bought the place for less than that garage alone would have cost to build. Deal of the century. It’s an OK house too, just really old and a little weird having been added onto several times over the past 190 years.

          • 0 avatar
            Lou_BC

            krhodes1 – my house was just 10 years old at the time of purchase. I didn’t want a fixer-upper. IF I was married at the time I doubt I could of got away with it.
            My wife whines about a bigger house but I’m not willing to move unless I can find an acreage in the country with an even bigger shop.

            It sounds like you have a place with plenty of character.

    • 0 avatar
      DeadWeight

      By and large, and I work with many attorneys as part of the REIT responsibilities I have, the sharpest attorneys (tax, commercial transactions and real estate) drive average vehicles. IN FACT, the sharpest attorney I’ve ever witnessed, who probably has an IQ of 180, doesn’t EVEN OWN A VEHICLE, takes public transportation into his office, and asks associates & other partners for a ride home if he misses the bus cutoff.

      The attorneys with the 100k vehicles tend to be flashy, small firm, less cerebral personal injury & litigation mill attorneys.

      • 0 avatar
        yamahog

        Long time lurker, first comment.

        You make a very interesting point – there are different types of attorneys.

        My old neighbor was a judge, he bought a new Lexus LS and drove it for 20 years. Another neighbor is the managing partner in the local office of a national law firm. He could be one of the smartest and most frugal people I know. He went out to buy a Volvo but the Volvo dealership had a used Corolla on the lot and he bought it because it was a good deal.

        The corporate finance attorneys / compliance folks at my work drive sensible cars (like Accords and Scion XBs). But the people who handle litigation and trails drive European luxury SUVs.

        A guy in my bowling league primarily practiced in auto injuries – he drove a Lexus GS and then he bought a Volvo.

        Really intelligent people seem to avoid blowing a large fraction of their money on cars, imagine that .

        • 0 avatar
          A09

          Really intelligent people seem to avoid blowing a large fraction of their money on cars, imagine that.

          This point was driven home to me as I read “The Millionaire Next Door” when I read it over ten years ago. I remind myself about the stories within that book whenever I make a major purchase. The premise of the book is that the high-wealth people are living right next to you and they are not driving flashy vehicles; they actually have the DN101 or D186 Ford Taurus in their driveways.

          My wife and I are solid mid-career corporate cogs. My wife is an accountant, I’m an engineer. My wife had an eye for Lexus NX since it launched. When she entered the market last December we started shopping and found the NX to be crazy expensive. I matter-of-factly told her “The Honda CR-V Touring does the same thing as the NX and costs $15k less”. She ended up with the CR-V.

      • 0 avatar
        DeadWeight

        yamahog & A09, there are many religions here, but welcome to DeadWeight’s Church of Financial Common Sense, where we can be enthusiasts, have fun, be justifiably critical when warranted, and in the end, laugh at the inevitable, perpetual economic suicide (because they refuse to act rationally) of a huge % of our fellow members of society.

        I have a friend who works for a large law firm, and the staff have an office pool as to how long it will take particular clients to get into serious financial distress based on the MSRP of the vehicles they drive (this typically applies to 90k and well above that – Bentley 200k, etc., – and up territory).

        Remarkably, their wealthiest clients with true, liquid, solid wealth (cash saved & cash-flow rich, strong businesses) almost universally drive far more modest vehicles, with F150s, Toyotas, Buicks, Hondas, Silverados, Tahoes, Lexi (usually RXs & ESs), etc., many with near or greater than 100,000 miles on the odometer, being the rides of their truly wealthy clients, and uber-luxury vehicles being the domain of the up-to-their-eyeballs-in-debt-and-fronting clients.

        • 0 avatar
          28-Cars-Later

          Oh wait so now *you* have a church too.

          I’ll overlook this blasphemy if I see your butt in the pew for my Sunday sermon on coil packs at the true church, the Church of 3800.

          • 0 avatar
            DeadWeight

            It’s non-denominational so you’re welcome to attend.

            And the altar stone is fabricated from a 3800 Series II engine block.

          • 0 avatar
            krhodes1

            You guys really need to clue me into this joke. Because having driven literally countless cars powered by these turds back when Avis was owned by The General, I fail to see the appeal in any way. Uninspiring lump of an engine bolted into uninspiring turds of cars.

            At least Panthers are hilariously inept to drive, and everyone around you thinks you are a cop. Which is it’s own sort of fun. Everything with a 3800 in it is just boring.

            If they run a long time, that just extends the amount of time you have to spend in a hateful car.

          • 0 avatar
            28-Cars-Later

            My what a fine altar, my son.

    • 0 avatar
      drw1926

      Am I the only one who doesn’t know what “LPR” means?

  • avatar
    Kyree S. Williams

    Cue the holier-than-thou comments from people who think they have life figured out.

    It goes without saying that you shouldn’t buy a car you can’t comfortably afford, although if that’s your thing, so be it. However, things do happen to people, and sometimes they find that their relatively-cheap $220 /month used-car payment that was no problem seven months ago is now a big problem because they were laid off and burned through their savings.

    As far as leasing, I’m all for it. There’s nothing wrong with it. If you get a new-car itch every few years , it’s generally cheaper to lease. Some cars, you should probably *only* lease, and not keep past their warranty expirations. But seriously, if you can comfortably afford the 328i lease and like the car, why not? That doesn’t make you any more stupid or financially unwise than the person that bought a used one outright. Different situations for different people, I always say.

    • 0 avatar
      SCE to AUX

      My first and only lease so far was for my former 12 Leaf, because my crystal ball told me the thing would be worthless at the end of 3 years due to battery degradation.

      I was right, and Nissan is taking it on the chin as thousands of Highly Depreciated Leafs come off lease.

      But as you say, some people don’t want to worry about car repairs – ever – so a lease keeps them in a new, stylish car with a warranty. They think of the perpetual lease as a utility payment. Not my choice normally, but I get it.

      • 0 avatar
        Kyree S. Williams

        Yeah, people who leased the Leaf and had cheap transportation for three years came out really well versus the people that bought it. The Volt has suffered a similar fate.

        • 0 avatar
          JonBoy470

          The Leaf and Volt have only been depreciation bombs because everyone does the math based on the original MSRP, instead of the original “out the door” transaction price. The latter is what really matters. Everyone who bought a Volt or Leaf new got at least the $7500 federal tax credit. The off-lease models are now worth about half that original “out the door” price, which isn’t out of line with other cars.

    • 0 avatar
      87 Morgan

      I agree, these types of discussions always lead to the I’m smarter than you because….
      Different strokes for different folks. I have had both. I will agree with what was mentioned above about the guilt of having a massive stroke every month. I had a F250 diesel for 9 months that was on an 84 month loan at $764 a month.
      I couldn’t take the guilt that I felt every day driving it. I sold it to a Ford dealer and amazingly was not upside down much. This was in 2000 so the details are a bit fuzzy, other than the payment. That is tattooed on my brain.
      16 years later I can afford to drive whatever I want. As I have mentioned, for now, I am perfectly content cruising a 2007 Accord that I bought for 8k. Kind of liberating driving a car that I just don’t care about.

  • avatar
    kvndoom

    car prices are going up. Wages aren’t. People are shopping the monthly payment, not the actual amount of the loan.

    Hence the rise of leases and longer loan terms. Sign o’ the times.

    • 0 avatar
      carguy

      + 1 – As long as the Fed keeps pumping cheap money into the system, the car buying bubble will continue as buyers try to compensate for their shrinking wages with longer term loans. However, as soon as rates rise to real market levels, the longer term loans will become expensive due to the higher interest costs and car sales will contract significantly. Don’t be surprised if we’re back at 10-12 million car sales a year once the free money circus is done.

    • 0 avatar
      S2k Chris

      For people leasing new, higher-priced vehicles, I’m not so sure wages aren’t going up. For the middle class, yes, but for upper middle class professional types, they haven’t seen quite the wage stagnation that others have.

    • 0 avatar
      SCE to AUX

      Maybe, but somebody is buying up all those trucks every month, with an average price of $40k. That impresses me.

    • 0 avatar
      runs_on_h8raide

      That is true. What is also true is people with Honda Civic budgets going out and leasing Audis and BMWs. GTL baby!!!!

  • avatar
    DeadWeight

    MOAR DEBT!!!!

    MAWWWW!!!! MAWWW!!!!! MAWWWWWWW!!!! MAWWWWWWWW!!!!

    FEEED ME!!!!!!!!!!!!!!!!!!!!!!!!

    DEBT GOOD!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    MAWWWW!!!! MAWWW!!!!! MAWWWWWWW!!!! MAWWWWWWWW!!!!

    • 0 avatar

      HELLCAT CHARGER 2016 – $74,000

      Jeep SRT 2015 – $78,000

      The look on your face when you’re doing 105 in a 60MPH zone and there are no cops and all you hear is the engine WHISTLING….

      PRICELESS.

    • 0 avatar
      runs_on_h8raide

      Keep American Rolllllling! A couple years back a local Hyundai dealer touted in their tv spot….”Got 99 dollars and a job? YOU’RE APPROVED!!!” They since upped it to $299. YEEEEHAW KIM CHI!!!!!

    • 0 avatar
      DeadWeight

      And to make it even better .

      MOAR DEBT ON MASSIVELY !!!DEPRECIATING!!! ASSETS!!!!!

      DEBT GOOD! BORROW MORE MONEY & BUY MOAR RAPIDLY DEPRECIATING ASSETS!!!!

      COOKIE MONSTER!!!!!!!

      • 0 avatar
        runs_on_h8raide

        If moar is better than much moar is much better! “Hey Betty, I just got a raise of $1.50/hr….Lets go get that 335is you liked.”

        “Really honey?”

        “Yes, dear….its only Federal Reserve Notes after all!!!!!”

        Three months later after he’s laid off and his job sent to MEHico.

        RIIINNNNNGGGG RINNNNNGGGGG RIINNNNNNNGGGG. Mr. Smith this is BMW Financial, you are 4 months late on your payment. We are now forced to repossess your vehicle.

  • avatar
    squidge

    If you can’t pay it off in 36 months, you probably shouldn’t buy it.

    • 0 avatar
      Felix Hoenikker

      Is that you Suze? I agree but would go out to 48 months in the low interest rate world we now live in.

    • 0 avatar
      DeadWeight

      You can finance furniture at an alleged 0% interest (there’s a finance charge, but it’s hidden) for 5 and even 6 years now, which used to be auto loan territory.

      Borrow MOAR! Finance all purchased with DEBT!

      3% down home mortgages through FHA & cash those checks the credit card companies send with the monthly statement & SPEND, SPEND, SPEND.

      • 0 avatar
        VoGo

        Leasing furniture scares me. You tend to see these places next to the BHPH lots, check cashing places, liquor stores and dollar stores.

        All appear cheap; none is good value.

        • 0 avatar
          bunkie

          It’s interesting to note where they get their capital. I worked for a very large, well-known hedge fund that packaged loans from these places into portfolios that they sold to their very well-heeled clients. The returns are *massive*. The founder of the firm routinely brings home north of $500m/year. They also bought up lots of houses under the program that was supposed to allow banks to re-sell the overvalued stock at a discount to individuals. The government bought the loans at face value with the idea that the banks would buy them back at true market value and then re-sell them at market value to get the housing market moving. Instead, they got snapped up by big firms who felt no need to pass along the discount, renting them out and waiting for the market to turn.

          We can moralize all we want about the choices made by those on the margins, but the ugly truth is that, as Orwell said, “It’s more profitable to take pennies from the poor than pounds from the rich”.

    • 0 avatar
      Chan

      You could extrapolate that to the extreme and say, “If you couldn’t buy out the car in cash, you shouldn’t lease it.”

      I think the appropriate generalisation is, if the car is wildly out of place in your ‘hood, you probably can’t afford to own and maintain it.

      • 0 avatar
        highdesertcat

        I disagree with squidge although I understand the sentiment behind the comment.

        In the case of old people, many of them choose to lease instead of buy, and their reasons are numerous, ranging from factory warranty coverage to driving a new car every 36 months to one less thing for their heirs to fight over when they die.

        When my daughter-in-law worked for Baxter Pharma, that’s all she did was lease. At home she had two additional other cars available, hers and his. But the miles she piled on the leased car.

        • 0 avatar
          wstarvingteacher

          @HDC; Baxter Pharma paid for it one supposes. The idea of a lease is appealing to me but it’s 20 miles to the grocery store or anywhere else. Seems that mileage is the limiting factor in most of the leases. Would have explored that much deeper if it were not the case.

          • 0 avatar
            highdesertcat

            wstarvingteacher, yes, they did pay for it. But there were other options as well, for which they also would have paid.

            If you’re considering leasing, get with a pro, a disinterested party preferably like YOUR banker, and suck their brain dry on leasing a vehicle.

            Miles-included is a variable. Sales reps have unlimited mileage on their leased vehicles, but it does affect the resale value at the far end, so the leasing company ups the monthly lease payment accordingly.

            Every time I buy a new car I consider leasing, weigh the pros and cons, and so far I have ended up buying because it works for my situation.

            I have no way to write off a leasing expense although most old people offset that with the other benefits of leasing. I’m a tightwad. I don’t share. I don’t pay extra.

            I just bought a new 2016 Tundra on 1 Feb but I knew in advance I was going to BUY because in all likelihood it will be the last new truck I buy for myself for the remainder of my lifetime.

            And that works for me because my heirs already know what they’re getting when I kick the bucket.

  • avatar
    PeriSoft

    It boggles my mind how few people *on a car enthusiast site* of all places don’t understand that you pay for the amount of car you use.

    Buy a new car and drive for 10k a year? You’ve used three years and 30k miles worth of car, whether your took out a loan on the whole amount, paid taxes on the whole amount, and made payments, *or* whether you took out a ‘loan’ on the part of the car you expected to use, and made payments on *that* to the car company. One way you pay taxes on a larger purchase; one way you give up a degree of flexibility (ie, if you end up driving 5k miles per year you still pay for the depreciation you’d incur if you drove 10k).

    It makes no difference (aside from interest payments and opportunity cost) if your car depreciates by $10k over three years and you took out a million-year loan with a dollar a year in payments and had to pay $9997 after three years, or if you leased it for $277/month and owed zilch at the end of the term.

    Do the lease if your circumstances are stable and you want to let the car company take the risk of expected resale value being low.

    Take out a long loan if you might use the car a lot less and you’re willing to take the risk of expected resale being low, and if you can get a good interest rate and invest your money at an even better one.

    Pay it all up front and sell the car after 3 years if you’d otherwise just be keeping the money in a super-low-return savings account anyway.

    Or you can pay for a different part of the depreciation curve by buying a used car and potentially incurring risk via repair costs.

    This isn’t rocket science, and it’s not a moral issue. You pay to mitigate risk or to transfer risk to another party; you pay for the amount of usage you get out of the vehicle. Sometimes the economies of scale that an automaker has, and its broader priorities, mean that it makes sense for it to take on risk on your behalf (with a low-cost lease). Taking advantage of that doesn’t mean you’re a rube or that the automaker is making a mistake: It’s arbitrage, and it’s how the world turns.

    • 0 avatar
      Chan

      There are people who think $500/month is a great deal and lets them put cash in other projects. They can’t be bothered to take the time to buy and sell cars, anyway.

      Then there are people who think $500/month is “doable” when they have $800 of discretionary income per month after paying rent. What? I haven’t budgeted food yet? Wait, you mean $500 is before taxes?

      I have a feeling nobody here is trying to be critical about the former.

    • 0 avatar
      orenwolf

      I completely agree. I lease because I don’t really want to deal with a car after three years. I’d rather have something new – I like advanced safety features and music coming off of my phone automagically when I get in the car. For me, the car’s just a monthly expense, not an investment, and I budget it the same way I budget my phone / hydro / etc bills. The lease mileage is perfectly fine for my use case.

      As such, I lease what the payment i want to pay is, after looking at mu budget and figuring out what works for me.

      I get people would rather assume the risk of owning a car longer, and those people *probably* pay less than me if they hold onto their car for a decade versus ten years of my leasing, but at the same time, I’m not driving a decade old car.

  • avatar
    VoGo

    Leasing is cheap when:
    – depreciation is low
    – interest rates are low
    – car prices are low
    – repairs are expensive

    Relative to other times, now is a smart time to lease, given that cars are relatively affordable, interest rates are low, resale values are high and repairs expensive.

    If VW is going to lease me a new Jetta for $159/month with zero down, why not?

    • 0 avatar
      jkross22

      Man, that is a cheap lease! VW must be having to eat dirt when those are turned in.

    • 0 avatar
      formula m

      I helped my cousin lease a new car the last week of December. I cross shopped a VW 16′ Jetta mid level with heated seats, Bluetooth,auto with a comparable 16′ Mazda3 GS. Thought the VW would be easy to get a strong end of year price on because of the diesel situation. Very wrong!!
      Dealers were from her hometown Montreal. VW gave an all in, zero down, low mileage lease price of $350/m for 48months taxes included Cdn.
      Mazda3 she leased was $280/48m tax included.

      VW dealers aren’t doing anyone favours.

      • 0 avatar
        derekson

        I see Jetta offers for $79/month with ~$3000 down or ~$159-179/month 0 down all the time in the local ads. Maybe it’s different in Canada, but in US the dealers are definitely cutting deals to move the cars.

  • avatar
    28-Cars-Later

    “economically vulnerable citizens”

    That’s pretty much everyone, isn’t it?

    • 0 avatar

      Depends on whose narrative you believe. If you can afford major illness and unemployment for a year, then you can be properly libertarian. If you can’t, you might want a touch of socialism.

      • 0 avatar
        28-Cars-Later

        I was thinking maintaining a savings account, proper cash flow, and owning real assets but you’ve got interesting points to add.

      • 0 avatar
        dal20402

        A year? My wife has been hit by three separate major medical issues (all three rather freakish, and nothing life-threatening, but requiring plenty of care) over the past two years, and one of them remains ongoing. If it hadn’t been for my very good insurance, we’d be broke and in major debt. As far as I’m concerned, all of those who think only the successful and healthy should be entitled to buy insurance can go eat a d!ck.

        • 0 avatar
          28-Cars-Later

          Wow, I’m sorry to hear of her trying health problems. My thoughts are toward your wife’s recovery and good health.

          • 0 avatar
            dal20402

            Thanks — I appreciate it. She’s a tremendously positive person so she manages it with real grace, but it’s been hard for her because she was in perfect health her whole life.

          • 0 avatar
            CoreyDL

            Sorry to hear that :(, I know you have a little kiddie to think of as well.

        • 0 avatar

          single payer, here. I’ve seen it in Germany and Canada with relatives. Whatever issues it presents are far less than insurance by Hobbes like we have.

          • 0 avatar
            krhodes1

            As someone who got his professional start working for a health insurance company, and a NON PROFIT one at that, I am firmly of the opinion that when the revolution happens, we should line all the insurance execs up against the wall and shoot them in the head.

            Anyone who is opposed to Obamacare and/or single-payer IMHO is a complete and utter imbecile. And I don’t even think it is a great law, it just was a good start. The insurance pool in this country should be every single person in this country, without exception. There are certain things that simply should not be for-profit. The army, the police, the fire dept, health care…

          • 0 avatar
            highdesertcat

            “Anyone who is opposed to Obamacare and/or single-payer IMHO is a complete and utter imbecile.”

            $70B was taken from Medicare to fund Obamacare, services for old people were reduced and co-pays increased.

            How is this a good thing for old people paying monthly premiums for Medicare?

            How about younger people who funded their own healthcare premiums and saw their premiums skyrocket, services reduced, co-pays increased, and policies padded with coverages they did not want or need.

            How is this a good thing for them?

            It isn’t a good start when you take away coverages from more people to fund coverages for fewer people.

          • 0 avatar
            DeadWeight

            Obamacare will self-implode. It’s a matter of time as deductibles and premiums both keep increasing as fewer people voluntarily opt in to state exchanges, which is already making taking the penalty the rational economic choice for many.

            Obamacare was a gift to Big Pharma, Big Health Insurance Companies, and large hospital networks, at the expense of American Consumers, as it limits competition and forces a reverse-robinhood subsidy, and IT (THE ACA) WAS LITERALLY WRITTEN BY BIG HEALTH CARE CONCERNS.

            Conspiracy theory, you retort?

            Get something as inexpensive as you can, because health care premiums and costs will rise at twice their annual pre-decade rates between 2016 and 2026.

            “When the legislation that became known as “Obamacare” was first drafted, the key legislator was the Democratic Chairman of the Senate Finance Committee, Max Baucus, whose committee took the lead in drafting the legislation. As Baucus himself repeatedly boasted, the architect of that legislation was Elizabeth Folwer, his chief health policy counsel; indeed, as Marcy Wheeler discovered, it was Fowler who actually drafted it. As Politico put it at the time: “If you drew an organizational chart of major players in the Senate health care negotiations, Fowler would be the chief operating officer.”

            What was most amazing about all of that was that, before joining Baucus’ office as the point person for the health care bill, Fowler was the Vice President for Public Policy and External Affairs (i.e. informal lobbying) at WellPoint, the nation’s largest health insurance provider (before going to WellPoint, as well as after, Fowler had worked as Baucus’ top health care aide). And when that health care bill was drafted, the person whom Fowler replaced as chief health counsel in Baucus’ office, Michelle Easton, was lobbying for WellPoint as a principal at Tarplin, Downs, and Young.

            Whatever one’s views on Obamacare were and are: the bill’s mandate that everyone purchase the products of the private health insurance industry, unaccompanied by any public alternative, was a huge gift to that industry; as Wheeler wrote at the time: “to the extent that Liz Fowler is the author of this document, we might as well consider WellPoint its author as well.” Watch the five-minute Bill Moyers report from 2009, embedded below, on the key role played in all of this by Liz Fowler and the “revolving door” between the health insurance/lobbying industry and government officials at the time this bill was written and passed…”

            Read the entire Glenn Greenwald expose here –

            Obamacare architect leaves White House for pharmaceutical industry job

            http://www.theguardian.com/commentisfree/2012/dec/05/obamacare-fowler-lobbyist-industry1

          • 0 avatar
            krhodes1

            It’s not great law, but is was the law that could get through Congress, and it is a start. It removed some of the most egregious practices of the health insurance industry (that I witnessed first hand). And it allowed people like my working poor brother and sister-in-law to afford health insurance for the first time in their adult lives.

            Fundamentally, the entire healthcare industry in the US is broken from top to bottom. But you have to start somewhere to get everyone covered. I hope it is a wedge to eventually joining the civilized culture of the rest of the western industrialized nation. The US is not special, other than in being an especially bad place to be poor among enormous wealth.

          • 0 avatar
            28-Cars-Later

            So… bad laws are ok, if they are just a “start” to something better?

            Glad we got that cleared up.

          • 0 avatar

            Agree with Krhodes it’s what they could pass. It was largely made up of ideas from GOP think tanks and a GOP governors plan (mittens) and of course heavily rewritten by the medical industry itself. So it really isn’t a great law, but for a country that had done squat with healthcare in decades it was impressive for anything to happen. Again we can only hope it leads to a better system in the future.
            It should be noted that healthcare was self imploding before Obama care. My premiums rose an average of 10% a year from 2004 to 2009 they have since leveled off but the deductible increases keep coming but again to be fair they went from $100 in 2003 to $2,000 in 2008 for a hospital stay. So they too were going nuts well before the law came into effect.

          • 0 avatar
            Lou_BC

            I have to agree with krhodes1. Some things should not be privately run. Free market capitalism where supply and demand regulates the price or even the choice of purchasing a service or not goes out the window with health care.
            If you start having left sided chest, jaw and arm pain at 5:00 AM you don’t have the time to shop around for the best priced cardiologist or lowest price on a thrombolytic.
            Even something less critical like osteoarthritis of a hip joint can become debilitating to the point of not being able to work.
            The so called “Obamacare” isn’t great but there had to be a start.
            In the USA per capita spending on healthcare is roughly double of that of Canada or Germany. Even with that amount of spending over 42 million people in the USA do not have health coverage. 60% of Americans felt that their system needed major change.
            Here is a fairly straight foreword PubMed article. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3633404/

          • 0 avatar
            markf

            I doubt most folks touting Single Payer” even know what it means. I live in Germany and it is not single payer, far from it. Yes, they have health care for poor folks (like the US) but anyone with a job has private health insurance (like the US) I asked my landlord (who is self-employed)how much his insurance is, 800 Euro a month plus 2000 Euro a year deductible.

            The health care is also segregated, if you have private insurance you see the top doctors (Herr Doctor Professor)

            Germany is not the healthcare utopia some folks think it is….

          • 0 avatar
            krhodes1

            But at least everyone in Germany gets some level of basic care for effectively no out-of-pocket at the time of care. If you want to pay more to get a better, or more comfortable, or quicker level of care, I am OK with that. But at least you won’t end up in the all too common situation where someone in the US who is working poor but more or less making it has a major health issue and is bankrupted by it, or tens of thousands in debt.

          • 0 avatar
            mcs

            There’s a new trend I’m seeing with US health insurers. If you get injured, their legal team scrutinizes it and will go after a third party if they suspect they are at fault. The most notorious case was where a woman was forced to sue her siblings because her nephew caused a broken wrist.

            http://www.huffingtonpost.com/entry/jennifer-connell-lawsuit-not-comfortable_us_56212c34e4b08d94253ef426

            I’ve had to deal with it twice personally. Once, when my daughter was injured at a concert venue. The injury was 100% my daughters fault, but we had to go a couple of rounds with the insurance company to convince them that the venue or other party were not at fault.

            I had to deal with it when I was injured at a work location. The work location, without question, paid for everything. Never a bill or claim on my insurance. My insurance company got wind of the injury and sent me forms and demanded that I fill them out to document the injury for their records. I sure that from now on, any malady with even the remotest possible connection to that injury will result in more paperwork.

            I don’t know about other NFL stadiums, but my local team has plenty of health insurers with luxury suites. One of them actually has two. Last year, the insurer with 2 suites paid their CEO $66.13 million and the head of one of their subsidiaries $21.8 million.

          • 0 avatar
            highdesertcat

            ” but is was the law that could get through Congress”

            IIRC the ‘crats owned the White House AND Capitol Hill when the law was passed. I think DW is right with his synopsis, there was no opposition to the law.

            Jonathan Gruber said that Americans were stupid but now we find that those objecting the most to this law are the UNIONS who were so much in favor of robbing the old to give to the young. Now their coverages are threatened. Who knew?

            This wasn’t a “start” and anecdotal individual successes do not make it universally acceptable as good for all.

            IMO, more people were hurt by this law than were helped. We sure were hurt.

            And like DW wrote, “Obamacare will self-implode. It’s a matter of time as deductibles and premiums both keep increasing as fewer people voluntarily opt in to state exchanges, which is already making taking the penalty the rational economic choice for many.”

            We had to drop our excellent BlueCross/BlueShield coverage because of doubled premium costs and settle for second-class, second-rate Medicare coverage where they make people wait for an appointment since patients with REAL insurance get preferred treatment because of the higher reimbursement for the provider.

            There’s more to the story here but I am afraid we’re stuck with it because Hillary will just extend Oba’s policies for another eight years.

            Hell, in another 8 years I may be long dead.

          • 0 avatar
            krhodes1

            Why shouldn’t there simply be Medicare coverage for every American? Why should you old farts be so special? It actually would be a step down from what I have now for coverage through my employer, but it would mean it wouldn’t matter who my employer is. If you want more/better supplemental coverage, buy it on the open market.

            But for those who were young and could not even dream of buying reasonable health insurance on the open market, and those with pre-existing conditions, and those that health insurers would have liked to drop because they got sick, Obamacare was a boon. If you got slightly worse coverage out of it, boo-hoo for you. Given the amount of bragging you do on here about buying cars for your sundry spawn, how about buying some better health coverage and let them buy their own damned cars. It’s people like you that are the reason we can’t have decent universal health coverage in this country. Far be it that you should suffer some small slight so that people who have nothing can have something.

            I am far from a member of the 1%, and I don’t enjoy paying taxes anymore than the next person, but if I have to pay more so that my health coverage is independent of my employer and people like my brother and sister in law can have coverage anywhere, I will gladly pay it.

        • 0 avatar
          nrd515

          I know someone who used to think that health insurance was only for “other people who don’t take care of themselves”. He learned differently when he went in for a physical a few years ago, and was told he had leukemia. He found out really quickly how fast his finances went into the shitter when you can’t work a large part of the time. His boss has kept him on, but isn’t paying him when he isn’t there. He had turned down insurance at work, and is paying the price for pocketing that deduction every two weeks. He’s doing ok, but I doubt at 60 now, if he will ever have any money ever again. Stuff happens when you approach 60 or so, it doesn’t matter how much money you make, or how well you “take care of yourself”.

          • 0 avatar
            CoreyDL

            “He had turned down insurance at work”

            THAT was a stupid decision. Getting some serious illness or requiring an operation even once over a 10 year period or so would wipe out any “savings” from not having to pay for work insurance.

          • 0 avatar
            Drzhivago138

            As Abel Morales said, “always take the fancy option.”

  • avatar

    I did a 3-year-loan on a Hyundai Azera.
    I put my money were my mouth was and took a chance on their product.
    FULLY LOADED – looks like a luxury car inside – even brighter interior colors than a Mercedes Benz.

    NOT A SINGLE PROBLEM.

    I have 120 days left on the lease and it goes back in June.

    I didn’t need an extended warranty.
    I never had a problem with it.
    Hyundai was extremely awesome and informative during the leasing period.

    Everything went 100% perfectly.

    Now I have a choice whether to keep the Azera or not.

    Will I?

    Well, it’s a better car than the Sonata 2.0T – even though the technology is about 2 years older. It’s more spacious and had all the features.

    The point is, if I choose to quit Hyundai, I can. I can go to anywhere I wanna go – even to a new Chrysler 200cAWD if I want.

    No one wants to get stuck in a 6 year loan anymore because of rapidly depreciating technology. The same goes for cars like Tesla Model S and X. Just a few years ago they had the P85. Who’d have though they’d have the P90D just a few years later? Or the Model X?

    No one wants to get stuck in an old car when their neighbor’s is new.

    Imagine being my neighbor and watching me parking HELLCATS and other ridiculously cool cars.

    Most of my neighbors are struggling to afford ML and old BMWs.

    • 0 avatar
      SCE to AUX

      I’m glad for your economic freedom.

      But since the average car on the road is 11 years old, the center 2/3 of Americans are driving mid-00s Cobalts, Corollas, Elantras, Civics, Camrys, Pontiac G5s, Focus, and Calibers. Hellcats, Azeras, and even old BMWs aren’t on the radar.

      Accordingly, even though car content is much improved for the money, wages haven’t kept up with prices – so they lease. The problem is compounded when they lease more than they can chew, just to keep up with their neighbors.

      • 0 avatar
        28-Cars-Later

        Bingo.

      • 0 avatar

        I know I go on too much about the hothouse flower of car style here in the green leafy burbs north of NYC, but you have just hit it.

        When I drive out to Orange or Dutchess County, which are just OUTSIDE the NYC area, there is an endless line of the exact cars you describe. Not much new, nothing fancy, certainly nothing enthusiast.

        Endless Camcords, mid line GM’s, well maintained drivers, ten years on.

        It is a totally different pool than the commuters going south to NYC at the same time from closer in.

  • avatar

    Speaking of leases, as you know I’m waiting for the Cadillac XT5 and CT6.

    My mom’s trade in is a loaded 2009 STS in Crystal Red AWD.
    A strikingly gorgeous car when clean.

  • avatar
    derekson

    Why is Ted Cruz in that car loan ad?

    But seriously the guy looks like a sleazy used car salesman.

  • avatar

    YOU BUY JAPANESE and you LEASE GERMAN

    The Japanese cars are relatively reliable so you don’t necessarily need extended-warranty.

    Meanwhile, German cars are most likely expensive and will break down soon after the initial 3 years – 36,000 miles.

    Lease them if you really want em and you’ll basically pay for half the car before returning it for them to dust off, wipe off and sell to some poor schlub wanna-be on Hillside Avenue who wants to be cool in a new BMW x6.

    He coulda just bought a loaded Toyota Rav 4 but he was NO WAY – I’LL NEVER BE COOL IN THAT UGLY THING – so he takes the X6 on 19.98% from Wells Fargo.

  • avatar
    gearhead77

    The wife and I lease because it works for us. Financially, it’s fairly bad, but so is trading a car every 3-4 years. So is just about anything to do with a car. A vehicle is a terrible financial vehicle period, no matter what the deal is. But some of us aren’t as good mechanics as we’d like to be or have schedules that don’t give us the luxury of being able to take the weekend and fix what’s wrong , so old cars as DD just don’t work as well as many of us like.

    Our Odyssey is a lease because I liked everything about the Odyssey, but still didn’t trust Hondas transmission. The prices on a used Odyssey aren’t justified to me, but I wasn’t buying a used Chrysler either(didn’t care for Toyota or Nissan vans). So we have an Odyssey that we give back in 16 months. I’m not entirely wedded to the Odyssey, so we might take a harder look at the other offerings rather than blindly getting another one.

    Maybe we’ll buy at some point, but it doesn’t matter to me. I like having a new car, I like my wife driving a new car, especially since I travel so much. Keeping the monthly payment at around $300 for a lease vs 500+ for the 36k Odyssey keeps the money down and out always about the same. We aren’t consumerists, if that’s a term, so a new car every few years is one of the few things we spend money on.

    Also, I just leased a Cruze for one of those $99/mo deals. My total for 24 months including money down, fees and disposal fee (unless I get another GM lease) will be about 3500. There was no car out there that I wanted for 3500-4000. Not one that would have given me zero problems with all problems (and maintenance) covered for the term. My car payment is less than my Sprint Unlimited Family plan per month. It’s not the most exciting thing to drive, but it works. And right now, with some other financial events on the horizon, I don’t need a giant lease payment (or car payment) for a car that sits mostly at the airport.

    So leasing can work. Or if you don’t like it, don’t do it. To each his own. The problem is when people lease a car for 10k a year ( as many of those low per month leases are) and then put 15k on it. Or don’t take care of it and get charged for the dents and dings or lack of oil changes. Or, as we saw when gas initially went through the roof, a 12 mpg SUV and a giant note to pay quickly sucks you dry.

    Living within means is key and not taught anywhere. I ran up debt when I was younger and regretted it, but I learned. But I didn’t learn from my parents, who are poster child “spend it” baby boomers. I didn’t learn it in school. I learned it by reading financial books and by seeing how my much more frugal in-laws deal with money.

    • 0 avatar
      Kevin Jaeger

      Leasing is a perfectly sensible approach for those who generally want a new car and can afford it. I have no idea why anyone criticizes the practice.

      Yeah, you pay a small premium over time but of course you do, because you always have new car and the benefits associated with that.

      • 0 avatar
        Chan

        Pretty sure all the critics here are focusing on that key phrase…. “and can afford it.”

        Because $500 (OK, $300 for the really desperate entry shoppers) lease specials at the German brand dealers are enabling thousands of image-thirsty people to drive $60,000 luxury cars when they couldn’t actually afford the purchase price. Dealers love it because it has multiplied their sales. Banks love it because they rake in the interest……and the re-po’s.

        For those who can, have at it and let someone else worry about actual depreciation. That’s the entire point.

        • 0 avatar
          krhodes1

          I’ll clue you into some reality – despite the Internet meme that BMW wildly subsidizes their leases, in the real world there is not THAT much difference between the payment to lease and the payment to buy over the typical 60mo term. For my M235i, it was about $150 month difference to buy vs. lease. ~$550 vs. ~$700. The out of pocket was a little higher on the buy because I put some money down, but it was not a radical difference.

          Occasionally, BMW DOES have really good lease deals. But only occasionally. Like trying to make numbers at end of year to beat Mercedes. And even then, I have never seen a deal that was all that crazy cheap. Maybe save $50-$75/mo. Day-to-day, not as cheap as you think. Especially if you add a few options.

          Nor are there really any huge number of people that are leasing them because they can’t afford to buy them. After all, if you lease, you just have to do it again in 2-3 years. It works out pretty much the same unless you are the type to buy and hold for 20 years. Which also pretty much only exists on the Internet, with very rare exceptions. The average 3 series buyer is in their mid 40s and makes over $100K a year. Yeah, I am sure in LA there are a few kids trying to look rich while living 12 to an apartment and eating Raman noodles, but like most things in California, it just isn’t the real world.

          Reality is that at this point in my life, and the life of a typical new BMW buyer or leasor, a $50K BMW represents a smaller portion of gross annual income than a used Corolla would have 20 years ago. And a WILDLY smaller amount of my disposable income vs. back then, since other than having nicer cars, my lifestyle hasn’t changed all that much.

  • avatar
    SCE to AUX

    I would think there’s a market for very clean CPO leases, but I’ve only heard of leases being available for brand new cars.

    Can someone explain this? Every car has some residual value, so I’d think you could construct a lease to suit the used car market.

    Wait… I found the answer:
    http://www.edmunds.com/car-leasing/yes-you-can-lease-a-used-car.html

    • 0 avatar

      My guess is that a lease only works in a world where there is a warranty and the user is taken care of. A used car won’t have the dealer-maker warranty so is prone to more problems.

      • 0 avatar
        VoGo

        The problem with leasing CPO, even with a warranty for the length of the lease, is that maintenance is excluded. This means $500 for tires, $400 for brakes, a new battery, etc.

        The very people who would be attracted to a CPO lease are ones who would struggle with an unexpected $500 bill, making this a tough sell. You might be able to make it work by giving the buyer a $500/year credit for maintenance/repairs at your dealership for the life of the lease, but then it would cost about the same as a new car lease, so what’s the point?

    • 0 avatar
      Chan

      No, don’t encourage the banks! I want those CPO prices to remain un-inflated!

  • avatar
    JEFFSHADOW

    I leased my 1998 Oldsmobile Aurora with $800 down and $4-4-2 (what else?) per month for 36 months, so an expenditure of about $16,700 to drive a $37,000 American-made luxury car with a V8 was a fantastic deal. And, of course, no mechanical problems at all.
    I now have six Oldsmobiles ranging from 1969 to 2003.
    Just about ready to lease a Plum Crazy Challenger SXT Plus for around $300 per month. It’s the only way to feel like I finally got the 1979 Dodge Magnum GT I always wanted…
    With leasing in most states you only pay sales tax per month, not upfront. Why give all that cash to Governor Brown to spend on his bullet-train-to-nowhere? Sales tax on the 2016 Challenger would be $2,600; monthly tax will be $23.

  • avatar
    Mathias

    I just leased a Chevy Cruze LS with manual transmission. Zero down, $44/month. Tax & fees included. Thank you, GM Card.

    Even without that credit card, I think both the Cruze and the [old-model] Malibu could be had south of $200/month.

    Yeah I can probably do better with a used car, but only if I (i) know what I’m doing and (ii) get just a little lucky. That $200 would be a great “investment” for someone who just started a career and really doesn’t have time to mess with cars and really would like to show up on time every morning.

    I don’t get the hate against leases.

    • 0 avatar
      28-Cars-Later

      $44/mo is cheap…

      • 0 avatar

        To me the only negatives these type of deals are

        Credit score: about 70% of consumers in the US have too low a credit score for these deals

        Property tax: In my town in CT the property tax on a new cruze would be $55 a month more then I pay for my old Volvo

        • 0 avatar
          CoreyDL

          You pay property tax on cars?

          • 0 avatar
            Chan

            In some states, yes.

            One thing California fortunately does not do. However, we get hosed at resale, as the DMV attempts to charge “sales tax” at every resale, even private sales.

          • 0 avatar
            CoreyDL

            Yep Ohio does this. You pay sales tax on whatever the amount is listed as the sale price on the title, at registration.

            Consequently, a lot of used cars get sold for $500.

            I believe in Kentucky (a commonwealth), you pay a property or sales tax on the estimated book value of the car each year at registration. Fack that.

          • 0 avatar
            krhodes1

            Not true. I wouldn’t mind a railroad running though my backyard at all. I love trains, and I love bargain prices on houses. I lived in an apartment next to the mainline through DeKalb IL when I was in Law School. Didn’t bother me a bit. Cheeeaaap apartment too.

          • 0 avatar
            28-Cars-Later

            @Chan

            Oh they do that here as well, more or less anything which can be registered will be taxed and retaxed.

          • 0 avatar
            CoreyDL

            PA makes things easy, like buying liquor.

          • 0 avatar

            We pay sales tax (6%) on all sales including private sales. They collect when you register the car so private sales don’t need to collect it. They used to go on the bill of sale now they go on blue book unless you can prove it was worth less. The towns collect the property tax in my little city I pay to the town hall plus a little more to a utility district (paid fire fighters) that I happen to live in. This is one of those things that makes the North east an expensive place to live along with high real estate prices that mean our home property tax is pretty damn high as well. I really hate property tax.

          • 0 avatar

            It’s even worse in CT if you live in one of the bigger cities (CT has very poor cities some are just now being gentrified but in general they have been very poor since the 60’s all the wealthy people and middle class live in the suburbs) I worked in Hartford for a while I had a coworker who lived in one of the nicer new apartment buildings in Hartford he buys himself a new VW CC bang $3,000 a year tax bill.

          • 0 avatar
            krhodes1

            Not uncommon at all to have an annual tax bill on cars. Mine ranged from $1300 on the M235i to $35 on the Spitfire. Small saving grace is that it is a Schedule A deduction for the Feds if it is based on the value of the car, and it is in Maine. What sucks is it is based on original MSRP, so my $5000 Range Rover costs 5x as much a year as a $5000 Corolla. Excise tax money goes to the town or city you live in here, not the state. 2.4% the first year, declines for 7 years then doesn’t get any cheaper.

            The state collects 5.5% sales tax every time a car changes hands. And a really fun one is Maine is that you pay sales tax on MSRP on a LEASE, up front. The ladies at city hall will usually take your word for it on the value, but they do have the power to use Kelley Blue Book if they think you are full of it. No, you did not get a 3yo Mercedes for $500…

          • 0 avatar
            CoreyDL

            That’s so much taxation on car possession! At least it goes to local works, rather than vanishing at the state level.

            Here in OH there’s just the change hands sales tax, and registration annually is $50-75. That’s all.

            The lease tax seems particularly egregious.

          • 0 avatar
            krhodes1

            Yes, this is an expensive state to own a nice car tax-wise. On the plus side of the ledger though, the M235i only costs me $535/yr to insure. All four together are ~$1250/yr, high liability limits, low deductibles, full coverage on everything. So on average not sooo bad.

  • avatar
    Cactuar

    In my eyes, leasing is similar to risk management. For financially independent people with no debt, decent assets and a large emergency fund, used cars aren’t frightening. They are simply affordable deals to be had. Or one might choose to splurge on a brand new car and pay cash for it.

    But most people are loaded with debt and carry the emotional burden that comes with it. These people have very little financial flexibility therefore a low, and most importantly FIXED car payment is the best option to them. It allows them to manage the risk in their life. With a lease they get a reliable car for a small payment and they get to look prosperous as well. They are reassured with the fact that they will never need to come up with 2500$ for that transmission repair (remember these people don’t have an emergency fund).

    I think the precarious financial situation of a large segment of the population contributes to the popularity of leasing. These people need financial education but the risk management that leasing allows is too good to pass up and requires no sacrifice. That’s why leasing is popular.

    • 0 avatar
      Chan

      Here in California a lot of my friends lease cars to have a steady tax write-off for a business-owned asset.

      The cars get turned over back at the dealer without hassle, maintenance is a known factor, the car is paid for with pre-tax dollars.

      The good leasing.

      Then there’s the stereotypical brand new 3 series parked in a shared carport at an apartment complex that smells like weed, even out in the parking lot. The bad leasing.

  • avatar
    ajla

    So:

    Is it that today’s vehicles are more reliable than ever and there are no bad cars anymore and they all can go 190K miles with just tires, brakes, and oil changes and the only thing people complain about on reliability surveys is infotainment interfaces and the difference between the top Lexus and the lowest Range Rover is insignificant.

    Or are today’s cars so complex and expensive to repair that you’re better off leasing for 36 months at a time because at some point in years 4-7 you’ll be on the hook for an ~$3K+ major repair that will put you in jeopardy of job loss.

    • 0 avatar
      Quentin

      I haven’t run the numbers, but for the Clubman that my wife wants to buy, leasing is at least a consideration. Our previous MINI has been a good car for the 11 years we’ve had it, but we really should have sold it 3 years ago. It looks amazing, but we now have an 11 year old car with 78k miles from a brand with a terrible reliability reputation. Leasing keeps you from getting too attached to a money pit, too.

    • 0 avatar
      CoreyDL

      That depends. Are you going to buy an Audi?

      :D

    • 0 avatar
      Chan

      It’s a little extreme to suggest that LRs are as reliable as Lexus today. Not even close. Although modern cars seldom strand people on the road, a Land Rover will typically pelter you with various error lights, even brand new.

      The newest ones with Ford powertrains are better, but consistently reliable cars tend to be from Japanese brands. As it has been since the 1980s.

  • avatar
    Corollaman

    Haven’t made a car payment since 2002. Don’t miss it at all. When it’s time to replace, I have enough saved to buy something used.

  • avatar
    CincyDavid

    Our household is a mish-mash…3 cars we own outright, including my 20 year old Volvo wagon with 205,000 miles. We also lease two Hondas, largely because my wife and step-daughter have NO mechanical aptitude and having newish cars keeps them happy, AND prevents brain damage on my part…no more “it won’t start” calls.

    I am at an age and stage that the cheap Honda leases are sounding more and more seductive…our 2016 CR-V costs $265/mo with no money down…put gas in it, coupla tire rotations, 5-6 oil changes and in 2019 it goes back, to be turned in for a new shiny toy of my wife’s choosing. The cost per mile on my older cars is pretty low, but I also won’t be crawling around under a new Honda putting brake hoses on it…


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