Taco Brethren - Taking over a lease, Good Opportunity? Please advise...

Psssh if you don’t pay cash you’re an idiot. Damn millennial making smart financial decisions and planning for the future.

 

Rereading this post and this stood out. I admit this is sadly me. I’d like to think I’m relatively financially savvy, but the truth is I’ve only been fortunate to out earn my stupidity. Changing this will be a 2019 resolution for me

Thank you.

 

Thank you for a non-flaming response.
If you ever care to chat about finances you can pm me.
I’m working on my 2019 financial resolutions already.

 

OP - don't do any deal until you can understand how the seller is benefitting. A true good deal is one where both sides benefit in some way. If a deal looks like a steal for the buyer, then something is afoot and probably not right. You have to do a little due diligence. Getting the dealership involved is great idea in the way you have described.

Also the Occam's razor principle applies to this kind of decision making. If there are two competing hypotheses that define this deal, then the hypothesis that requires the least amount of explanation ( i.e. the simplest explanation) is most likely to be correct. You've got to find out why this person is offering this deal. What is his motivation? Then ask "how can I get screwed on this deal?" It's all about managing risk.

 

Not only are you an idiot, but its clear you dont know anything about leasing except dave ramsey in a podcast told you "fleeces" are bad

 

Damn the name calling is fierce. Keyboard black belt. Look out!

 

BTW my dad did something called a "no pay" lease on a Lexus. It involved him trading in his Lexus and the difference was due at the end of the term. They gave him a great deal on his trade in and the car he got was already a good deal. He tends to hide the trade in prospect until after he negotiates the best price. He did that in this case and then they threw in thid "no pay lease" deal. It worked for him and he has never been a lease guy. He paid the difference months before the deadline and somehow owns the car LOL.

 

Clearly you are not going to become a financial planner any time soon. Leasing is a losing proposition. Your logic about pumping money into something that depreciates is spot on, but leasing isn't a better financial solution. A vehicle depreciates whether you own it or lease it. It is all about how much you are paying to barrow the money for the chance to possess said vehicle. Lease terms are based on residual value and you have no ability to negotiate that. You are betting that at the end of the lease that your vehicle is worth less than what the financier expects it to be. This is a gamble that the house always wins. The only way they don't win is if there is something like the Explorer roll over issue or a brand that goes out of business like Saturn. At the end of a lease you have nothing.

Conversely, if you have to finance, and manage your debt responsibly, you can have equity in the vehicle that can be used toward your next purchase. I realize it is hard and millennials don't like to work, but that is how you do it.

Your idea that leasing allows you to invest could be logical except that you have to get a return that is higher than what it is costing you to lease. It is possible, but it is a huge risk. Considering that you appear to not be very knowledgeable in finances, I would question your ability to pick stocks. Stocks are not an easy way to make money. Even the savviest of investors do not do it alone and have guidance, that guidance erodes your return, but is a necessary evil to protect your investments.

Paying cash is usually the best approach, but there are times where financing makes more sense. Right now money is cheap and if I can get zero percent interest, there is no reason not to take advantage of that, but you have to be very well off financially for that to make sense. They only give cheap money to those that have money. If you are leasing and have debt, you are not getting cheap money. My advice to any millennial is to resist the material items you can't afford.

 

I agree, we shouldn’t debate in OP’s thread. But his question was about ‘is this a good deal’. Your comments, worthy as they are, are all about wealth growth and management. And not about the deal offered.

My comparison between a ten year buy and hold vs this two year in-n-out was to show that on a repetitive basis, this is a better financial deal than the ten year hold. “Never lease” is not always the right answer.

If someone offered me a perpetually cycling lease every two years for $150/month, or $3k every two years, I’d be all over it like a duck on a beetle.

 

I stop reading your post when you stated millennial's don't like to work. Generalize much? 80 million millennials in the US and people base the entire millennial population on the few they see on social media. Also, I don't expect to keep my car beyond 3 years so not sure where you got the first part.

But I guess I didn't work hard enough. I lived in the Ghetto when I was a kid to a single mom on welfare. Joined the Military right out of high school for 5 years as a paratrooper. Got out of military used the GI bill and went to college at a big 10 university. Even walked onto the football team and was a college athlete. I graduated college. Now I'm in graduate school part time and work full time as a DOD contractor. I didn't work enough for any of these things. There are millions of "lazy millennials" just like me.

 

Purchasing any depreciating asset is a losing proposition.

And what about when your vehicle is worth more than the house expects it to be, like many Tacomas? You can private sale it or trade it to a dealer, avoid all end of lease fees and in some cases if you have taken well enough care of your Tacoma, make a bit of money back in the deal.

You can have equity in a lease. See the above.

Right.

Its not that hard to just up your contribution to a 401k which will compound into far more than you would save by carrying a car note or paying cash outright.

You don't say? You mean it is actually best to never pay interest at all? I sure wish I knew that when I financed my house! Thanks Grandpa!

 

The real issue is exposure to liability. When you think in terms of liability, then the picture might become clearer. I'm quite sure that insurance on a lease vehicle is more costly than a non-leased vehicle. And every mile, dent, ding and scratch has it's own costs.

I've tried paying cash for a vehicle before but was declined due to a deal I got on a Ford Escape. I got $8,000 off MSRP ($24,000 base model for $16,000) which was a steal but as I was told "we have to make a little money off of this." The only way they made a little was through Ford credit...for which I refinanced through another borrower at half the rate the next day. In short I didn't let a few hundred dollars get in the way of saving $8,000. So cash money doesn't always work in every case. Also the low cost of borrowing can free up money for other opportunities that could be lost due to being cash poor. Depends on people's circumstance and what you can stomach.

People think houses are an asset. However they are a liability until they are sold. It's really about how one thinks about things and what their circumstance is.

 

Good golly. Everything in your post is inaccurate. Literally everything. I’m not trying to debate but seeing such financial incompetence is difficult to let go.

 

I am not really sure that you understand the full costs of leasing. Actually I am convinced that you don't which is why you are arguing. Now there are some areas that you can negotiate to minimize your loss, but it is a loss all the way around. There is a chance that you could get lucky and come out ahead, but you might as well play the lottery if you hope to win because the odds are much better.

As for your 401K, you should contribute and max out to the point of your employer's contribution. That is free money. However, there is risk. There is no such thing as a compounding value in your 401k. It isn't a loan that has compounding interest. 401Ks can go up, but they can also go down. Just ask anyone who had a money invested in a 401K when the market crashed. All that wealth vanished in an instant. You know what didn't vanish? Debt. Nope that stuck around unless you are desperate enough to file bankruptcy.

Your house is a different story than a car. I am really not sure why you would even bring that into the discussion because that is a completely different asset.

Don't get me wrong, I admire your interest in your finances. I assume you just haven't put as much effort into understanding how it works. It isn't easy. There was a time when I thought I knew it all and got burned, but eventually even I started listening to those with money and not those without.

Of course that is if your overall objective is to get ahead in life. If you want a car that is more than you can afford right now and are comfortable drowning in debt, lease on my friend.

 

Since you understand leasing better than him, care to enlighten us on why it is a loss all around? I’m very curious to hear what you have to say.

 

Wut? Where are people reading about finances? This is 100% wrong.

The whole point of the stock market is that it’s compounding. The money you add today and tomorrow the next day and the earnings on that money compound and can continue to grow (or lose). That’s how 400 a month for 30 years becomes a million. Not just $144,000 which is what 400 a month for 30 years is. When the stock market crashes it’s not gone! You own the exact number of shares as the day before. It’s the value that changes. If you didn’t touch your 401k you didn’t lose a single penny. If a stock goes to ZERO then yes, you could lose it all.

People are killing me with their wrong info.

 

You should learn about basic fundamentals of finance before deciding to give people advice about their financial decisions.

https://www.investopedia.com/walkthrough/corporate-finance/3/discounted-cash-flow/compounding.aspx

 

Relax. The only reason I mentioned millennials is because you did. No need to post your life's work.

Now put your big 10 degree to work here for a second. Do you really think that these guy selling cars are going to offer a financial product that would allow the consumer to get over on them? Take this a step farther. Who are leases marketed to? Not the guy with the 800 credit score. They market them to those that want something more than they can afford because they know that people that lease will put the material item ahead of their financial well being. They make a killing off of leases. That isn't to say that they don't make a lot of money off high interest loans to those with bad credit, they do, but a lease is just as bad.

 

Alright. I’ll agree with you on all the above this time. Not about the 401k though.

 

Arguments like this are useless as neither side will admit they are wrong or change there mind about leasing, but damn is it fun to argue. I just find it funny when people will argue who have never leased before and all they do is spew more regurgitated BS they heard from some guy on the radio. Learn the facts of BOTH sides then you can have a legitimate debate. Most people who think leasing is bad have either 1. Never leased before and just someone told them it’s bad or 2. Didn’t do enough research and got screwed on a bad lease deal.