Car leasing

The thing about leasing is that you are paying interest on money that you have no intention of paying the principal on.

The way a lease is worked out is kind of like this:

1) You buy a car for $30,000
2) The leasing company promises to buy the car back from you in 2 years for $20,000
3) Over those 2 years, you pay the leasing company interest on the $30,000, and pay off $10,000 in principal
4) At the end of the lease, the leasing company buys the car back from you clearing the remaining $20,000 principal
 
Bill Jennings said:
Not only that, but 84 month loans are now becoming quite common. C'mon, man! 84 months? Seven year car loan? That's NUTS! :yikes:
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My parents took out a 30 year mortgage for less money than a new car is now. Of course it's nuts, but so is consumerism, it's a Ponzi scheme that if it doesn't continually see new growth will collapse.
 
My daughter turned 11 this year, and I bought my car just after she was born.
 
denverpilot said:
P.S. Another interesting side effect of driving a truck with a manual and an exhaust brake...

The automatic drivers can't figure out how you're slowing down in front of them without your brake lights coming on.
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The Volt has a mode to put the car into a more aggressive regenerative braking when you take your foot off (sort of an electronic version of the Jake Brake). My wife couldn't figure out how I was handling heavy traffic without ever stepping on the brake either.
 
JeffDG said:
The thing about leasing is that you are paying interest on money that you have no intention of paying the principal on.

The way a lease is worked out is kind of like this:

1) You buy a car for $30,000
2) The leasing company promises to buy the car back from you in 2 years for $20,000
3) Over those 2 years, you pay the leasing company interest on the $30,000, and pay off $10,000 in principal
4) At the end of the lease, the leasing company buys the car back from you clearing the remaining $20,000 principal
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I have never leased a car, but I thought you payed interest only on the $10,000 -- the delta between the price and the residual?
 
JeffDG said:
The way a lease is worked out is kind of like this:

1) You buy a car for $30,000
2) The leasing company promises to buy the car back from you in 2 years for $20,000
3) Over those 2 years, you pay the leasing company interest on the $30,000, and pay off $10,000 in principal
4) At the end of the lease, the leasing company buys the car back from you clearing the remaining $20,000 principal
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Worse, actually. You are also paying the lessor for taking the risk on the residual value of the car and you are paying the dealership and the salesman for putting you into the lease. Over and above the CPA-type analysis, you are paying whatever the traffic will bear, hence WakeNCAgent's anecdote: "Everyone was high-fiving each other as she drove off. They more than quadrupled their profit that day ..."

Really, that anecdote is all that anyone should need to know about leasing.
 
ColoPilot said:
I have never leased a car, but I thought you payed interest only on the $10,000 -- the delta between the price and the residual?
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Nope, you pay the interest on the entire financed amount. It couldn't possibly make any sense otherwise for the lessor. What are they going to do for the cost of money they are out for the rest of the vehicle purchase price?

As stated, it's pretty much structured like a car loan with a balloon payment set at the end of the lease term for the projected value (and if you want one of these you can get one, GM offers them called SmartBuy (heh heh)). As Airdale states, you pay even MORE than the interest rate as their is additional risk and expense the leasing company takes on at the end of lease.
 
airdale said:
Worse, actually. You are also paying the lessor for taking the risk on the residual value of the car and you are paying the dealership and the salesman for putting you into the lease. Over and above the CPA-type analysis, you are paying whatever the traffic will bear, hence WakeNCAgent's anecdote: "Everyone was high-fiving each other as she drove off. They more than quadrupled their profit that day ..."

Really, that anecdote is all that anyone should need to know about leasing.
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That risk can be substantial. Saturn dealerships took serious hits from lease returns on pre-2006 Ions and Vues due to their faulty transmissions and the resulting reduced resale values.

Rich
 
SCCutler said:
I bet you're gonna love the Fusion, Kent; I have friends who drive a Fusion Hybrid, and it is stupidly nice, and darned near manufactures its own fuel. :)
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Kinda like the Mooney. :)

When I did a test drive, we went burned a whopping 0.14 gallons of gas for a total of 158 MPG!

I pick it up today. :)
 
flyingcheesehead said:
When I did a test drive, we went burned a whopping 0.14 gallons of gas for a total of 158 MPG!

I pick it up today. :)
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Congrats! And, give is a PIREP after you've lived with it for a while. After the move, my wife rarely drives more than 10mi/day, so this type of car is on our radar. Our next car will likely be the Fusion Energi or the Volt.
 
Bill Jennings said:
Congrats! And, give is a PIREP after you've lived with it for a while. After the move, my wife rarely drives more than 10mi/day, so this type of car is on our radar. Our next car will likely be the Fusion Energi or the Volt.
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If it's a second car and she doesn't drive much, look at some pure EVs as well and save the money and complexity. My buddy's Mitsubishi MiEV has been holding up pretty well, though he did do some insulation mods with bubble wrap to help out in the St Louis winters.
 
flyingron said:
Nope, you pay the interest on the entire financed amount. It couldn't possibly make any sense otherwise for the lessor. What are they going to do for the cost of money they are out for the rest of the vehicle purchase price?

As stated, it's pretty much structured like a car loan with a balloon payment set at the end of the lease term for the projected value (and if you want one of these you can get one, GM offers them called SmartBuy (heh heh)). As Airdale states, you pay even MORE than the interest rate as their is additional risk and expense the leasing company takes on at the end of lease.
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Yes, now that I think about it, that makes sense. The bank has shelled out the entire amount for the car, so you get to pay interest on it.

I've never considered a lease since I tend to keep my cars too long -- we "name" our cars (more of a description than a name):

"New car" is 4.5 years old
"Sports car" is 8.5 years old
"Old car" is 65 years old
 
My car history:

2014 Volt (purchased new)
2004 Toyota Tundra D-Cab Truck (NC truck, purchased used)
2004 Avalanche (Purchased New, Traded in on Volt in 2014).
1994 Suburban (Purchased new, totalled by moving van, replaced by the Avalanche).
1986 Nissan Stanza 4WD Wagon (hauled off when it was rusting away in the driveway replaced by the Suburban).
1980 Nissan 200SX. I drove that one until I got the Stanza and kept it around until I finally donated it to a friends mother who was in desparate need of a car.
1968 Ford LTD (my college beater).


I've also got an 1987 Avanti.

No, I've never considered a lease either.
 
Henning said:
My parents took out a 30 year mortgage for less money than a new car is now. Of course it's nuts, but so is consumerism, it's a Ponzi scheme that if it doesn't continually see new growth will collapse.
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No different than insurance company's. They are among the biggest ponzi schemes. AGI would be a classic example. Maddof is a beginner in comparison.
 
Admittedly, while I'm a tremendous fan of the internal combustion engine and tinkering with it, being able to have an EV for my current commute (40 miles/day normally, almost never more than 100 miles in a day) has some appeal. But not for the environmental reasons, rather as something new to tinker with that would end up reducing operating costs. I remember seeing a home-brewed VW Rabbit probably 15-20 years ago that someone took the gas engine out of, stuffed it full of batteries, and made into an electric vehicle. It even maintained a normal transmission (important to me since I like clutches). I could do something like that.
 
I'm starting to buy off on the EV concept. Not due to economy at all. The idea of instantaneous (or I guess for all intents and purposes "instantaneous") max torque excites me. I don't like that there isn't a fire breathing fuel fed motor belching behind the scenes and making those glorious high performance motor noises, but you can't argue with the low 4 second 0-60 claims (and 1/4 trap speeds) that Tesla is throwing down for all their products. That is the territory of supercars from last generation, or most luxury performance vehicles of right now. Just like cool sounding Merlin engines of times past......they sounded cool and made great airplanes, but then the turbojet came along and fundamentally changed everything we ever thought to be true about performance in an airplane.
 
flyingron said:
The Volt has a mode to put the car into a more aggressive regenerative braking when you take your foot off (sort of an electronic version of the Jake Brake). My wife couldn't figure out how I was handling heavy traffic without ever stepping on the brake either.
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Pays to read the manual, eh? ;)
 
Bill Jennings said:
Congrats! And, give is a PIREP after you've lived with it for a while. After the move, my wife rarely drives more than 10mi/day, so this type of car is on our radar. Our next car will likely be the Fusion Energi or the Volt.
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I have a Fusion Energi and mostly like it. I have about 28k mi on it. I did a lease, but drove it across the US from DC to WA since it was cheaper than shipping it. Granted I'm over my miles now, but I'll use it as a negotiation chip come trade in time. :yes: I've been looking to upgrade or finding someone to assume the lease as we are due a baby in less than a month and the trunk is less than stellar with the battery pack. :mad:
 
Daytonabch04 said:
as we are due a baby in less than a month and the trunk is less than stellar with the battery pack. :mad:
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Ha! When we found out we were expecting, my wife was driving a BMW Z3 convertible. Not exactly kid friendly.:lol: She wanted space for strollers/pack n play, etc., but didn't want an SUV, so we bought a Crown Vic.

Huge trunk and actually a nice car once you get past the looks. I enjoyed how well it cleared the fast lane on the highway. :yes:
 
Ted DuPuis said:
Admittedly, while I'm a tremendous fan of the internal combustion engine and tinkering with it, being able to have an EV for my current commute (40 miles/day normally, almost never more than 100 miles in a day) has some appeal. But not for the environmental reasons, rather as something new to tinker with that would end up reducing operating costs.
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You'd get the most benefit out of the Fusion Energi by charging at both ends, as it (supposedly) has a 20-25 mile electric range. I don't know how real that is yet because, being a data guy, I bought one of those "Kill-a-Watt" meters to keep track of my electricity usage, and the meter fried on the first night. :mad2:

Really, anyone who buys a hybrid for "environmental reasons" is deluding themselves. Sure, you burn a bit less gas, but you're also hauling around 400 pounds of a very nasty substance that's gonna get tossed in a landfill in 10 years. It's a wash at best, and may end up actually being harmful to the environment.

I like it because I can move a lot of my energy usage to electricity from gas, which saves me money (lower TCO) and reduces the amount of money we're sending to the Middle East. Electricity can be generated many different ways, so it has some advantages in infrastructure and fuel flexibility. Finally, it's quiet, and I like it because it's kinda geeky too. :)
 
A 20-25 mile electric range to me is useless. I find hybirds a deplorable waste of our roads. But pure EVs I can be a nerd about. :)
 
flyingcheesehead said:
You'd get the most benefit out of the Fusion Energi by charging at both ends, as it (supposedly) has a 20-25 mile electric range. I don't know how real that is yet because, being a data guy, I bought one of those "Kill-a-Watt" meters to keep track of my electricity usage, and the meter fried on the first night. :mad2:



Really, anyone who buys a hybrid for "environmental reasons" is deluding themselves. Sure, you burn a bit less gas, but you're also hauling around 400 pounds of a very nasty substance that's gonna get tossed in a landfill in 10 years. It's a wash at best, and may end up actually being harmful to the environment.



I like it because I can move a lot of my energy usage to electricity from gas, which saves me money (lower TCO) and reduces the amount of money we're sending to the Middle East. Electricity can be generated many different ways, so it has some advantages in infrastructure and fuel flexibility. Finally, it's quiet, and I like it because it's kinda geeky too. :)
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Kill-A-Watt isn't rated for that current draw, I don't think. They also have significant errors built in for some types of loads.
 
flyingcheesehead said:
... Really, anyone who buys a hybrid for "environmental reasons" is deluding themselves. Sure, you burn a bit less gas, but you're also hauling around 400 pounds of a very nasty substance that's gonna get tossed in a landfill in 10 years. It's a wash at best, and may end up actually being harmful to the environment. ...
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Positive or negative, the effect is statistically insignificant. If it makes you feel good, fine, but don't believe that it matters.

Out of seven billion, there are a billion people in the world with no electricity at all and probably another two or three billion with inadequate electricity. These people are not going to willingly sit in the dark forever and alternately sweat or shiver. They want their governments to do something, and in a large number of cases that something will be done with coal The numbers dwarf anything that is feasible to do in the US.

China alone already emits 50% more carbon than the US and its per-capita electricity use is IIRC a third or a quarter of ours. Run those numbers on 1.4 billion people and see what you get. Even these latest Obama BS "targets" expect that China's carbon emissions will continue to rise for another 16 years (!). A few soccer moms and dads running around USA suburbia in hybrid or electric cars just doesn't matter.
 
Bought an early 2012 prius V. Drove it 20,000 miles. Great car! 40-42 miles to the gallon, rode well, plenty of acceleration, very nice on the turnpike. Niece needed car, sold it to her. She loves it. Can't beat it. Toyota makes very few mistakes. We've also had two lexus sedans. Great cars.
 
I've leased - only vehicles that were going to be sold eventually, of questionable reliability [mostly GM] and similar.

My wife leases a Volt for the car pool lane access. The only reason. I had concerns about the long term reliability of anything GM - and electric tech anyway changes so fast that - the 2013 we leased is basically already obsolete since they will have a 100 mile range next year . . . couple that with the GREAT deals they were doing in 2012 . . . the lease has a 62% residual with 45000 total miles - GM is gonna want $26k for the car and the 2013's are wholesaling right now for $14k . . . .I don't understand why Ally Bank will not negotiate with you at the end of a lease- its give me the $26k or turn in the car. I can find a dealer to buy it at wholesale and sell it back to me for $750 over what they paid. . . . .

Anyway - leasing is more complex than simple purchase- and given that you can generally find a 2-3 year old CPO model [which is essentially new] for what you'd pay for a lease . . . its makes zero sense usually. The Volt was the exception.
 
comanchepilot said:
electric tech anyway changes so fast that - the 2013 we leased is basically already obsolete since they will have a 100 mile range next year


Anyway - leasing is more complex than simple purchase- and given that you can generally find a 2-3 year old CPO model [which is essentially new] for what you'd pay for a lease . . . its makes zero sense usually. The Volt was the exception.
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Yep. I was surprised at the wide variation in how the various OEM's and models do things with the hybrid drivetrains. The Volt is on one end of the spectrum - The engine doesn't actually drive anything and is used solely as a generator. At the other end of the spectrum, things like the Subaru XV Crosstrek, which has an electric motor so small that it's really just an "assist" for the gas engine.

That tells me that we haven't really found the best way yet. There's also a lot of room for improvement in the battery technology.

So, while I am planning to buy the car at the end of the lease, if the tech has really moved significantly by then I may just lease again until it stabilizes.
 
Ted DuPuis said:
A 20-25 mile electric range to me is useless. I find hybirds a deplorable waste of our roads. But pure EVs I can be a nerd about. :)
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Someday I'd be there with you, but for now, the only pure EV that might meet my needs would be a Tesla and those are still just too expensive.

The plug-in hybrid, even with the 20-25 mile range, gives me the ability to get to work and home without burning any gas, but also gives me the flexibility to go way beyond the range of the pure EV's when I need to. Only Tesla has a long enough electric range to make me comfortable with not having the gas engine too.
 
denverpilot said:
Kill-A-Watt isn't rated for that current draw, I don't think. They also have significant errors built in for some types of loads.
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It says it's good for 15 amps. It was plugged into a 15-amp circuit, and the breaker didn't blow...

I exchanged it for a new unit which has been working fine, and if it does have errors, they're small. The results I've seen so far are exactly what I'd expect to see.

FWIW, I get ~40 mpg after the plug-in range is exhausted, and with our power rates around here, any driving I can do with plug-in power equates to burning $2.00/gal gas.
 
airdale said:
Positive or negative, the effect is statistically insignificant. If it makes you feel good, fine, but don't believe that it matters.

Out of seven billion, there are a billion people in the world with no electricity at all and probably another two or three billion with inadequate electricity. These people are not going to willingly sit in the dark forever and alternately sweat or shiver. They want their governments to do something, and in a large number of cases that something will be done with coal The numbers dwarf anything that is feasible to do in the US.

China alone already emits 50% more carbon than the US and its per-capita electricity use is IIRC a third or a quarter of ours. Run those numbers on 1.4 billion people and see what you get. Even these latest Obama BS "targets" expect that China's carbon emissions will continue to rise for another 16 years (!). A few soccer moms and dads running around USA suburbia in hybrid or electric cars just doesn't matter.
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Exactly, this is where fuel cells come in, especially now the Solid Oxide ones that can survive Natural Gas processes and such. No longer are grids necessary or mechanical generators. Tanks filled with LNG can provide these people and places not only sufficient electricity, but pure water and a lot of heat to make run a refrigeration process to cool the local meat locker. Thing is this technology will not become affordable at that level until the developed world adopts the technology at a mass market scale. This is a much more energy efficient technology that works hand in hand with all the current infrastructure. This is the technology we need for the future because it will also produce with hydrogen in the future. The technology will not disappear. The transformation would spur manufacturing and mining jobs in the US and support not only technology export, but actual product export as well, it even supports our Natural Gas industry. The Coal industry gets to put their deposits on hold for now and start mining the minerals to make the fuel cell stacks. This is all commercially available equipment right now, think of the market at the Apple Lisa level of the development scale.

This is the next big industry and it is part of of evolutionary process as a technologically advanced species. The sooner we embrace it, the sooner we have the tools to move up the evolutionary ladder. People seem to consider humans as they exist the end product of an evolutionary process. This is false, evolution is a constant function of time, we are just some random point along the way in the process. Either we embrace and adapt to the future, assuring we can provide for the needs of a growing, changing, population.

Embrace the future, embrace change.
 
airdale said:
We have some friends whose daughter's first "car" was an early 1960s Ford pickup, three on the tree. I'm not sure how hard they pushed to get her into that tank, but she's learned to work on it. Even changed out the radiator herself! Fantastic parenting skills = great life skills for her! She's not afraid of anything.
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First car I drove at home was a 1963 Rambler station wagon. 196 ci straight 6. Three on the tree with overdrive. Non-slip differential. Great snow car, it didn't have enough power to spin the rear wheels. :D
 
Henning said:
Exactly, this is where fuel cells come in, especially now the Solid Oxide ones that can survive Natural Gas processes and such. No longer are grids necessary or mechanical generators. Tanks filled with LNG can provide these people and places not only sufficient electricity, but pure water and a lot of heat to make run a refrigeration process to cool the local meat locker. Thing is this technology will not become affordable at that level until the developed world adopts the technology at a mass market scale. This is a much more energy efficient technology that works hand in hand with all the current infrastructure. This is the technology we need for the future because it will also produce with hydrogen in the future. The technology will not disappear. The transformation would spur manufacturing and mining jobs in the US and support not only technology export, but actual product export as well, it even supports our Natural Gas industry. The Coal industry gets to put their deposits on hold for now and start mining the minerals to make the fuel cell stacks. This is all commercially available equipment right now, think of the market at the Apple Lisa level of the development scale.

This is the next big industry and it is part of of evolutionary process as a technologically advanced species. The sooner we embrace it, the sooner we have the tools to move up the evolutionary ladder. People seem to consider humans as they exist the end product of an evolutionary process. This is false, evolution is a constant function of time, we are just some random point along the way in the process. Either we embrace and adapt to the future, assuring we can provide for the needs of a growing, changing, population.

Embrace the future, embrace change.
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There is all kinds of dreamland technology out there, none of which will be used extensively enough to keep the world's carbon emissions from climbing. Whether the technologies theoretically could be used is irrelevant. They won't be, for many mostly nontechnical reasons. Beating the drums for this kind of stuff is pernicious, though, because it is enabling for people who want to deny the inevitable -- more and more carbon for decades into the future.

BTW, a quick internet search seems to say that you neglected to mention that these wonderful fuel cells also emit plenty of CO2. It's about half the rate (per kw) that coal-fired plants emit, but it's nowhere near zero. (www.fuelcellseminar.com/media/52487/kent_mccord.pdf) But that is really irrelevant to my main point.
 
airdale said:
There is all kinds of dreamland technology out there, none of which will be used extensively enough to keep the world's carbon emissions from climbing. Whether the technologies theoretically could be used is irrelevant. They won't be, for many mostly nontechnical reasons. Beating the drums for this kind of stuff is pernicious, though, because it is enabling for people who want to deny the inevitable -- more and more carbon for decades into the future.

BTW, a quick internet search seems to say that you neglected to mention that these wonderful fuel cells also emit plenty of CO2. It's about half the rate (per kw) that coal-fired plants emit, but it's nowhere near zero. (www.fuelcellseminar.com/media/52487/kent_mccord.pdf) But that is really irrelevant to my main point.
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On natural gas they do, however you can mitigate that by filtering it through algae reactors and getting another load of energy out of it, and feeding it to plans in s geenhouse before dumping it into the atmosphere.

Whether we will or we won't get our collective heads out of our asses is yet to be determined.
 
flyingcheesehead said:
It says it's good for 15 amps. It was plugged into a 15-amp circuit, and the breaker didn't blow...



I exchanged it for a new unit which has been working fine, and if it does have errors, they're small. The results I've seen so far are exactly what I'd expect to see.



FWIW, I get ~40 mpg after the plug-in range is exhausted, and with our power rates around here, any driving I can do with plug-in power equates to burning $2.00/gal gas.
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Was thinking about your numbers. So what you're saying is you're paying about the same as gas users minus the taxes on the fuel.

Guess when they figure out how to pass along the "road" taxes on gas to the electrics (and they will... only a matter of time), it'll be just about a wash. Add higher costs for the various penalties on coal that'll soon be tied to electric and it'll definitely be a wash.

Glad the new Kill-A-Watt is working. Sounds like a QC problem, and there's a number of folks who've documented the weaknesses in the unit... The shunt is undersized and fails quite a bit, from a little Googling. I have one, but I don't think I'd leave it unattended pulling near 15A through it. Just not built very well.
 
Kent, curious, what are you paying for electricity?
 
jesse said:
Kent, curious, what are you paying for electricity?
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I was wondering the same thing because my buddy manages way better than that in his MiEV, but he gets electricity at industrial rates for having an EV, and he charges off peak through the night.
 
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