# New Car: To Lease or Not To Lease? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [April 14, 2010, 3:03pm UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067 "2010-04-14T15:03:47Z")\ **Posts on this page:** 7\ **Page:** 4
**Author:** ![Necros](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/necros/32/11086_2.png) [@Necros](https://boards.straightdope.com/u/Necros)\ **Post date:** [April 16, 2010, 2:40pm UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067/61 "2010-04-16T14:40:41Z")
> [@RickJay](#): > > That’s a possibility. It’ll also raise the car’s end price to about $37,000. > > There is no way around the fact that we would have been better off buying. Buying the car would have cost, with financing, about $28,000. It was a mistake I will never make again. I’m a bit confused by this price disparity. either you got seriously hosed on the lease rate or…? You do know that you won’t have to pay any penalties (normally) for mileage or damage if you buy the car when the lease ends rather than turning it in, right? ---
**Author:** ![crazyjoe](https://avatars.discourse-cdn.com/v4/letter/c/f14d63/32.png) [@crazyjoe](https://boards.straightdope.com/u/crazyjoe)\ **Post date:** [April 16, 2010, 3:06pm UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067/62 "2010-04-16T15:06:13Z")
> [@DrDeth](#): > > Sure, but that’s a ROI, not interest. Thus you mean the stock market or other investments. _Which can go down._ > > And how much did you pay? No way, the stock market can GO DOWN? As someone who was born the DAY BEFORE YESTERDAY I had no idea that could happen. I mean, I have only been alive durnig the more recent boom, and never bought (or even mentioned in my previous post) equities that lost 70% or more of thier value. Bricker will have to clear up whether he actually thought the bank was going to pay him 5% interest, or if he was considering using a safer investment method, like bonds, to deliver the returns. And while my loan was small, $3250, the rate was good for loans up to 25K. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 17, 2010, 1:40am UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067/63 "2010-04-17T01:40:08Z")
> [@Sam\_Stone](#): > > I doubt that. You must be comparing apples to oranges, like the dealer wholesale price when new to the retail price when used, or something like that. There is no way that a new vehicle is only going to depreciate 10% in its first year. > > In fact, I just went to the Kelly Blue Book, and compared trade-in values so we’re looking at the same thing. > I have no idea how you came to believe that you only lose 20% of the value of a vehicle in 2 years. I didn’t say it’d only DEPRECIATE 20% over 2 years, I said that the \*price difference \*would be around 20%. Sure, buy the car new, then sell to a dealer 2 years later, and you are talking a large loss, maybe even 40%. But that is because you are buying retail and selling wholesale. Next- Kelly Blue Book is crap, it’s only use nowadays is convince naifs their car isn’t worth much. Try Edmunds. We have a new Civic- base, cheapest model. New=$15000. A 2 yo Certified Used same models, same stuff= $12915. Or $17%. But the trade in would be only just under $9000. So, yes, in 2 years the retail/wholesale **PRICE** went down 40%. Yaris= new 12500. Certified used, 2yo= $12485 or 1%. Malibu= New $22k, 2yo Cert=$16,221. 27% Or my car- the Volvo C30. New=$24k. 1 yo cert-$21867 or 9% in one year. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 17, 2010, 1:42am UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067/64 "2010-04-17T01:42:27Z")
> [@Sam\_Stone](#): > > In my example, which I think is realistic, the new car costs $25,000, and the two year old car costs $15,000. > > No you won’t. $15,000 at 6% for four years is 18,937.15. $25,000 at four years at 0% interest is… $25,000. Looks bigger to me. 1. Not realisitic. 2. Only based upon the used car SELLING for 40% less than a new car. Which it won’t. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [April 17, 2010, 2:50am UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067/65 "2010-04-17T02:50:23Z")
Do you honestly believe you are going to get the certified used price for your car? Do you understand what the certified used price represents? It represents a vehicle that has been gone over by the dealership’s mechanics, had anything replaced that was worn, was detailed, and then given a _warranty_. Comparing certified used cars on the dealer’s lot with the resale price of your car after two years is insane. When cars are traded in, the dealership goes over them and picks out only primo examples for their certified used fleet. And at that, they only pick out the vehicles that are in highest demand and/or they have a low inventory of. The rest of them get sold at auction at the wholesale price. A dealership simply isn’t going to give you anywhere near the certified used price for your car. If they do, I guarantee they’re making you pay the difference somewhere else - either they won’t discount the new car as much as they otherwise would, or they won’t give you as good an interest rate, or they’ll only agree to do it after you buy an extended warranty, undercoating, and fabric protection for your new car. Either way, you’re not getting that kind of price for your car. You didn’t even comment on the fact that I compared apples to apples by looking at trade-in values of cars two years apart. That’s a fair comparison. Yours is not. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [April 17, 2010, 3:00am UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067/66 "2010-04-17T03:00:51Z")
> [@DrDeth](#): > > 1. Not realisitic. Yes, it is. I suppose you might do a little better selling it on the open market, but then you might do worse if you can’t find enough interested buyers. And then you open yourself up to liability if something goes wrong with your old car within a few months of selling it. Plus, you get the hassle of listing it, taking people for test drives etc. All that has cost in time and money and risk that you have to figure into the process. If you honestly think you can drive your car back onto the lot after two years and have the dealer give you the certified used price for your trade-in, you’re living in a fantasy. Expect a rude surprise. > [@](#): > > 1. Only based upon the used car SELLING for 40% less than a new car. Which it won’t. Call it 30% if you want. It’s still cheaper. Your notion of only losing 15-20% on a car after two years is a fantasy, unless you got it for a song in the first place. We had a 1994 Mustang that we tried to trade in in 1998. The new price was $25,000. The dealer offered us $6500 for it, and refused to budge on that (we had already negotiated the price for the new vehicle - something I always do before broaching the subject of a trade). We refused and sold it ourselves. I detailed it and put it for sale on the open market. After several test drives and other tire kickers, we finally found someone to buy it. We got $12,000 for it. It lost more than half its value in four years. And, it cost me a couple of hundred bucks to clean up, a day of my time, and then we had to be home for a week to take calls and make appointments for test drives. This was, by the way, about the the best example of a four year old Mustang you could ever find. It was always garaged, it looked brand new, it had all the options, and it only had about 35,000 miles on it. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 17, 2010, 6:22am UTC](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067/67 "2010-04-17T06:22:06Z")
> [@Sam\_Stone](#): > > Do you honestly believe you are going to get the certified used price for your car? > > Do you understand what the certified used price represents? It represents a vehicle that has been gone over by the dealership’s mechanics, had anything replaced that was worn, was detailed, and then given a _warranty_. Comparing certified used cars on the dealer’s lot with the resale price of your car after two years is insane. > > Either way, you’re not getting that kind of price for your cat. _Of course_ you’re not getting that price for your car. But, if you buy a used car, one in primo condition, that’s what you’re _paying_ for your used car. So, when we compare the “total price” of buying new vs buying used, you can’t compare what you’d **GET** for your 2 yo car, you have to compare what you’d **PAY** to buy a primo used car. It doesn’t matter what you “lose” after two years, if you’re going to keep the car for 10 years or so. What the hypothetical depreciation is in totally meaningless. What we were comparing is **buying new** , then driving for 15 years, as opposed to **buying a used 2yo** car and driving for 13 years. I quote "\*Whether you drive the vehicle in the ground or not is irrelevant to his point. His point is that if you’re going to drive a vehicle for 15 years, it indicates a preference for driving older, used vehicles that cost less money. In which case, you’re defeating your own purpose by buying new. … If you buy it new and drive it for 15 years until it has no value left then scrap it, your cost per year is $1,666 in depreciation, plus the cost of money. Let’s say your $25,000 would have earned you 5% interest per year. In 15 years, you would have earned 26,973 in interest. So your real cost for that vehicle was $3,464.88 per year. What happens if instead you buy a 2 year old vehicle and drive it for 13 years? It’s still 15 years old at the end, and overall reliability and such should be relatively equal. … The conclusion: If you’re the type of person that doesn’t mind driving used, and plans to drive the same car for a long time until its value is gone, it’s insane to start with a new car. Buy a car that is two, three, or four years old. You’ve hit on the general principle of driving cheap: Own the vehicle after the period of major depreciation has expired. Your strategy goes awry because you choose to do that AND own it during the two years of maximum depreciation, which is fundamentally at odds with your overall strategy. You could save yourself a bundle by making that slight modification to your plan." \* Thus what we have to compare is the price you would actually **PAY** for a new car vs a used 2you car (and of course, it has to be in primo condition, with a warranty, etc) What you compared is not the PRICE of BUYING new vs used, but the _Price_ of new vs the \*Value \*of used. But you can’t buy a car for it’s value. Thus, I used actual figures of what you’d pay to buy new vs what you’d pay to buy used. There, based upon actual Edmunds figures, you’d _lose_ money buying used. Your figure of what you’d get for _selling_ your used car doesn’t come into this at all. It only comes in if you buy new, drive it for 2 years, trade that in then buy another new car. That is indeed a very very bad money losing proposition. What we are talking about is buying new, driving until junk vs buying used, driving until junk. [Previous page](https://boards.straightdope.com/t/new-car-to-lease-or-not-to-lease/536067.md?page=3)