Quote (h4bs @ May 19 2016 03:59pm)
Forget that 12 months crap, that isn't smart for anyone except people who have money to throw away. Also you're wrong, you can negotiate the price of lease and not just the interest %.
If you like to change cars every 4 years, leasing is the better option. So what? I bought a 37000$ car, paid 17000$ over 4 years (note: I also only pay taxes on 17000$ and not 37000$) and car is back to dealer with a residuel value of 20000$. While you took on a 37000$ loan, paying more than me per month, and after the same 4 years you have MORE than 20000$ left to pay on your loan. You want to trade it in? We all know dealer lowball you on trade-ins. So dealer is giving you 17000$ for your car you stil owe 23000$ on. Want to sell the car yourself for more? Go ahead, will take some time and you won't save from the tax break of trading it in and still wont make equity out of selling it.
I work in car finance industry and work with negative equity loans every day. If you can afford to change new cars every 4 years, lease is the way to go, if you buy NEW cars every 4 years, you will end up with so much negative equity you won't even be approved for your 3rd or 4th car.
Cars are NOT like houses, you don't invest/build equity on them. They drop so much in value.
If you are recommending ANYONE take out a 7 year loan you should be beat with a club. People that fall into the scenario you are describing are not financially smart. They all have the mindset that they can afford a 60,000 dollar car because they can finance it until they are looking at retirement.
I have personally NEVER had an auto loan longer than 48 months, and only 2 at that. All of my new vehicles are financed over 36 months.
Here's an example. I purchased a 2013 Ram 2500 Brand new for 63,900 Just shy of 3 year ago. It will be paid off in July. No down payment 1.9% interest rate. I'll end up paying 1890 bucks in interest on the 36 month loan and I have 45,000-47,000 dollars in equity built in the truck come July.
Come July, I can buy the same trim truck for 66k brand new. But wait, I trade my old one in and pay 21,000 dolalrs for a brand new truck. Keep my payments the same and have the new truck paid off in 12 months or less. Keep the truck for 24 months payment free and repeat again.
Leasing always looks great on paper on a case by case basis. Look at it long term and you will see how foolish it really is. If you can't afford the vehicle you want in 36 months or less then sure you're losing out eventually. But it's not my fault you can't live within your income.