Auto Trade-In Rules

[jainen]

Me too

Me too.

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Myself as well.

[Snaggletooth]

Lease = Fleece

Looks like most of the folks are lining up behind Jainen on this one.

Not me. I think the finance folks have pretty well fixed the terms so that there is no significant difference. The appeal is lower payments but the downside is that you never have any equity in the vehicle. Thus when the lease is over you have to either turn it in or buy it after you've already paid significant amounts. I've done literally dozens of "lease vs. buy" models and there's not really a nickel's worth of difference either way. The finance people design these leases such that a car lease is economically the equivalent of a sale.

I guess what burns me up is the heavy touting of leases by car dealers. Their whole approach is built around whatever monthly payment the buyer will qualify for. They automatically assume the buyer will prefer to pay less and give up his equity/ownership rights.

And how many of us have customers who come to us and ask, "The guy at the dealership says there are tax advantages to leasing a car" and expects us to collaborate this idiocy. Fact of the matter is that there ARE some differences if the car is a real lease, but only in timing and not necessarily in favor of the lease.

[Bees Knees]

I had a good friend in the car sales business tell me that there is absolutely no difference between all the different deals out there, whether it is cash rebates, lower interest rates, lease, or a combination of things called smart lease or smart buy.

The car dealership and manufacturer get the same amount for the car either way. They simply play with numbers and financing arrangements to fool the customer into believing that the option they choose is the best deal for them. A sort of tell the customer what they want to hear, but you still get the same amount out of them. A lease is no different than a purchase as far as the car dealership and manufacturer is concerned. It is simply another way of manipulating the numbers to arrive at the same profit.

[Armando Beaujolais]

It just depends. There are some lease deals that are much better than buying. I know a bit about number crunching, and I'm leasing my car for $6,000 less than it would cost me to buy it over 48 months. Which would you rather have in four years, no car and $6,000 in the bank? Or an old car that you have to start pumping money into for repairs?

I've leased with the same outfit for years, and I do a bit of homework on it. Every time I've turned in a vehicle, it's worth thousands less than the capitalized cost. I ask my car guy how they can do that, and he can't understand it either, but they do it. It's a particular car they're trying to flood the market with I suppose.

[jainen]

Just another example

>>It's a particular car they're trying to flood the market with <<

Just another example of that wise old marketing maxim -- "We lose money on every sale, but we make up for it in volume!"