Thats all I am saying. There are not many cars that are "like new", have less than 12,000 miles, are less than a year old, and are marked down 20-30% on dealer lots. That is what Orman is telling everyone to buy, and its just not going to happen.

I actually didn't think the thread was heated at all, I thought it was rather civil, but if it is i'll bow out. Its a good idea for a thread, all I'm trying to get across is "DONT LISTEN TO SUZE ORMAN". :stubborn:

 

I agree that Suze Orman tried to over simplify a complex set of balances into something concise. But was so oversimplified as to be useless.

The point is the deal you can make. If you negotiate well, you can win (or lose) with either. And generally it is about convenience or the specifics.

If it is a new car and new model, then car companies often offer good incentives on leases. If they aren't, then it is less good. The way a lease is calculated is just the depreciation on a car for the duration is calculated, and you're paying that.

If you're turning over you car every 3 years, then there's a ton of convenience in just leasing. If you keep a car for 5-8 yeaars, then you almost always want to buy (rather than lease then convert). Often you'll lose a little more in a lease, but is a lot more convenient and that has some value. It is a lot easier for dealers to hide things in leases, but you can watch things and make sure you negotiate a lease as hard as you would a sale (and don't let them put things on that you wouldn't in a sale). The main reason I don't like leases is it changes your driving and emotional factor -- you watch your milage and think different about trips, and aren't as likely to add things to your car, and so on. It becomes about risidual value and penalties for going past your milage limit.

But your success in leasing will be based on specifics of the lease, dealer incentives, how often you change cars -- as well as what you do. If you are self employed or have a small business, you can probably write off the lease a lot easier than you can figure out the depreciation schedules on your car, and so on. But to generalize all leases as good or bad, is like generalizing that you're going to get screwed on every car purchase. It doesn't work that way. It is a little harder to work a lease to your advantage, and you'll probably want to know more. But there are good reasons for leasing.

I think Suze's point is if you don't know enough to ignore her advice, then you should probably just buy instead of lease.

 

I leased a '02 Jeep Grand Cherokee Laredo for 4 years for my wife. Low payments, 15,000/yr mileage and a warranty that will cover the 4 years. After the 4 years, if I want it, I'll continue the payments and for a few more $$$ I can get a 100,000 7 yr extended warranty. If I don't....I walk away with money if the vehicle is worth more than the lein. If not, I just walk away. No cost to me. Leasing a vehicle is much better these days than it was in the past. I've had absolutely no problems returning leased vehicles. In fact, Chrysler gave me a great rebate on being a returning customer (like $3000.00 more) in addition to any other rebates that were available. If you put tons of miles on your vehicle, then leasing is not for you. My GT is paid for so we mostly go everywhere in my car. Her Jeep is for her traveling to work and for trips. If you plan on modding, definitely don't lease. But if you are a 2 car family and one of your cars is a purchase, then I don't see why you can't get a much better vehicle by leasing and just watch the mileage.

 

I agree that as an investment, a car is a dumb idea. But I think that the idea of a car being an investment is a popular misconception. I have heard a lot of people consider vehicles an investment. I do not believe a car is an investment.

 

True, a car is not an "investment" in a sene that you can expect to make money on it, unless you are a car dealer of course.

However, you are committing to put money into it, so technically, it is an investment, it is just one you can expect to lose money on.

If you have the money to pay cash, IMHO, the best deal is a "new used" car. The best car deal I ever made was on a 2 year old Ford Ranger, with 10000 miles on it. Drove the truck for 7 years, lost $8500 on it when I sold it, but I got 7 years and 175000 miles out of it in the meantime.

I bought a 2001 Mustang GT brand new for $22000, drove it for 2.5 years, and 35000 miles. Financial priorities changed, sold it for $12000, lost $10000, but only drove it for 2.5 years.

Which one was the better choice financially? It seems obvious to me.

However, if you are financing the vehicle, you need to look at the big picture. Sure you can buy an 03 Mustang GT for quite a bit less than an 05 Mustang GT. The problem is, you won't get as good an interest rate on the 03 (assuming they still offer really low interest rates on the new ones), so you pay more for the money you borrow.

If the car price is cheaper, but the payment is the same, on the same loan term, then obviously the new one is the better choice, because ultimately you paid the same for both cars.

I watch Suze's show from time to time. I have heard her say many things that make sense to me, and I have looked at money differently after hearing her thoughts. I can't say I agree with 100% of everything she says, but more often than not, what she says makes perfect sense.

I do agree with her assessment on leasing. It is absolutely not an option for me. I drive 50 miles round trip to work every day. If I leased, I could drive to work, but would have to park it the rest of the time and would not get to enjoy it.

Sorry for rambling.

 

I had to go back and re-read this. I thought I was going to have to correct you. I am living proof that a house will ALMOST always gain value.

I lived in my old house for 12 years, have no idea how many thousands of dollars I sunk into it, and MIGHT, just might, get what I payed for it originally when I do sell it.

Come to think of it, why am I even posting in a "financial advice" thread. LOL