GTF-RX-8

A local dealer is now advertising a lease package on the 8.
$299 a month with $0 down for 48 months.

Full warranty and scheduled maintenance.

Ughhhhhhhhh!!!!!!!!!!

GTF-RX-8

That is a mere $14k depreciation over 4 years.
I think I lost probably $5k after driving it off the lot!!!!!!!!!!

legokcen

Well, from what I hear the 8 doesn't depreciate that quickly. I was talking to the finance guy when I bought my 8 and he told me that after 4 years, it still has 60% of it's original value. He also added that that is pretty high for most cars.

StphNieuw

________________________________________________

That seems a little high, especially when you later try and trade the car in or sell it you always seem to hear the excuse that the car is old and didn't keep its value as well as they thought

Elara

Is this for a base model? That's not really that odd, if it is.

GTF-RX-8

I didn't research it that much but the ad states that they have a large inventory.

If the $299 is for an automatic with no options then I wouldn't feel so bad. If it is for a loaded GT then I'm going to cry!

I can look into it further.

Gary

Outlaws eXtreme

They have the same deal here in So Cali, I see the ad for 299 no money down for 4 years... read the fine print it'll say...Base model manual, 1 in the lot, demo version.

GTF-RX-8

Hmmm.... I didn't see that.
The ad states that many models are available.

I'll look into it.

911SC

How on earth can someone tell you what the value of a new car model will be four years from now? If they sell all they have then it may have a good resale value, but if they stay on the lots and are discounted at the end of the year i doubt it will hold it's value as a used car.

rx8cited

Where's the deal here? You pay $299 for 4 years, then return the car at the end of the lease and walk home because you have no car? No thanks!

Oh, yeah, you go lease another car and keep doing this forever ....... what a waste of money! But that's what some people like to do I guess.

rx8cited

GTF-RX-8

I think you are missing the "big picture".
In 4 years you would have (possibly) lost $14k in depreciation anyway.

VikingDJ

Leasing a vehicle is one of those things that many people cannot understand, but is indeed practical and a good idea for certain people and their lifestyles. People who have no attachment to any specific car ever, and simply like driving a car, they can basically swap for another car when lease ends, do indeed find reward in leasing. If you plan on trading your car in every 2-3 years, it actually is a good idea. Like stated before, depreciation is large, and leasing is an easy way out to avoid depreciation, and not lose that much in return. If course it depends which vehicle you lease, and how much you pay, but for many people is actually a good idea. If you look at the big picture you will understand, but for many of us it's just not practical, but if you do the research and math you will understand it does work for many people who just need transportation, and do not want to be tied down to a vehicle.

GTF-RX-8

Precisely!
I bought my 8 with intentions of modifying as the warranty ends.
Dollar for dollar though......If i was anticipating a stock car for several years then a $299 lease would be great due to the depreciating factor.
Perhaps the car will have a decent value in 4 years but the current depreciation sort of sucks. You lose about 5 grand after you drive it off the lot! $14k over 4 years isn't bad compared to that.


Another thing to consider in regards to leasing is that several states (namely Florida) require you to carry outrageous insurance limits that can really drive up your cost of ownership.

JMO

Gary

rx8cited

I'll own the car when I've finished paying for it - no more payments.I did not buy the car as an investment and don't plan on selling or trading it in, so depreciation is irrelavant to me.

Leasers get to make lease payments for life and never own the car - much like renting furniture.

Yes, I know you get to drive the latest and greatest by leasing - if that's how you want to spend your hard earned money, it's perfectly okay with me .

Washington Post article: Your Lease, Your Loss


rx8cited

davesaunders300

I agree about the lease generally being a bad deal. If you assume that the $14,000 depreciation mentioned above is correct, then you still have about $14,000 in equity if you purchased the car over 4 years. You also have a period of no car payments if you keep the car beyond 4 years. I usually drive mine for about 10 years and I expect to do this with the RX8.

To me the biggest drawback with a lease is the mileage limit. Usually you pay about 10 cents a mile or more for every mile over 12,500. I drive about 20,000 per year so thats another $60+ on top of the $299 per month.

maxx25

You need to balloon.........You can get out when you want....Your principle balance goes down like a regular finance.......If you can sell it when you want then milage is not an issue....... :D

pktrckt

There are a lot of math mistakes and guesses here that are more based upon personal experiences and judgements than truths. It is very very easy to make leasing more expensive than owning, but it's also easy to make leasing cheaper than owning. It comes down to your choices in risks. Buying and leasing have the same amount of risks, neither is a better choice with no personal factors involved. It's once you as the individual and your personality and traits become involved that risks and benefits take shape.
It's not hard to show how a lease can cost less than a loan or even full payment upfront over a period of time. Taking things like the time value of money, state sales tax, risk of life changes and risk of depreciation can give you better understanding of all the costs involved.
In the case of the RX-8 and incentives for it, leasing gains a heady advantage over buying outright. In the case of many of us in high sales tax states that advantage gets bigger.

Here are three case scenario's and assumptions:
Assumptions:
The average driver in California drives 14,300 miles a year so we'll do a 15,000 a year lease/purchase.
The average length of ownership of a vehicle is something like 3.2 years, I don't have the reference but this should be close if memory serves me. So lets go with a three year ownership term.
Many of us on here are savvy and attentive individuals so we will assume we have solid credit, 700 FICO.
We will go with a 6 speed, Grand Touring $31,200 MSRP, $28620 Invoice
Value after 3 years, 45000 miles, great condition, 51% $15912.

Upfront Cash:
No loan.
Sales Price $27,620....may get less I'm not aware of cash purchase incentives outside of the $1000 mail offer I received.
Sales Tax, CA $2279
Lost interest income at 3% compounded $2772
Value after 3 years $15912

Total Cost not including gas, insurance, maint, etc...
Sales Tax -$2279
Lost Income -$2272
Depreciation -$11708
Total -$16259

Loan:
5 year loan at 4.8% Zero Down (there may be better rates and shorter terms but this is the average length of loans)
Sales Price $27,620
Sales Tax $2279
Total Financed $29899
Total Payments after 36 months $19459
Remainder of loan after 36 payments $12385

Total Cost
Total Payments -$19459
Sale gain after loan payoff +$3527
Total -$15932

Lease:
3 Year Lease, Money Factor .00165
Sales Price $25,620 ($2500 incentive plus $1000 mailed offer, generous $500 profit in there)
Lease orgination of $500
No Security Deposit
Monthly Payment including sales tax $382 (let me know if you want all the numbers for this calculation)

Total Cost
Montly Payment $382 x 36
Total $13753

Total Cost Comparison
Cash $16259
Loan $15932
Lease $13753

So given those specific numbers it's clear that leasing is the cheaper choice over that set period of time. What is surprising to me and I have figure out further is how it is cheaper financing versus cash outlay. If I find errors I will post the corrections.
These are assumptions based on variables, you may not get a 3% compounded return on your money, depreciation could be greater or could be less and some may negotiate a better price or get better financing terms, you may love the car and want to keep it longer. The lowest variables are within the lease, mitigating several of the risks listed above.

I personally think the article by Michelle Singletary is based on emotion and her determination to prove her point. There were no true mathmatical equations showing the the costs and nature of ownership. It's incorrect to look at anything by it's face value of pricing, you look at the costs as a whole over the period of possesion, rented, leased, owned etc.
No kidding, if you go over your miles you pay a penalty, every single car driver does even if it's not in any contract. A 60,000 mile car will always be worth less than a 45,000 mile car it's just not in a written 15 cent per mile explanation as with a lease. Something rarely mentioned is that you can always adjust your lease mileage limits, some more often than others, but with most at least yearly. As well as pay less per mile upfront than at termination.

I'm happy to provide any additional information and if there are errors to report in my calculations I'm interested to hear about them.

DaveG

Pktrckt:

Wow, what an explanation. That bears out my thoughts exactly. Everyone keeps saying that leases are a terrible deal, but when you factor in the substantial rebates, leasing is very attractive and a good deal currently. Sure, leasing can be a bad deal without incentives, but most advertised leases include subsidies like our 2500 rebate. Under those situations leasing can be attractive.

rx8cited

By only presenting the case where leasing does come out ahead, you're doing what you say she's doing.

No argument that if you're the type that has to be in a brand new car every three years, then leasing is probably the way to go.

If you're open to the idea of driving the same car for more than 3 years and want to do more calculations, compare the cost of purchasing a new car and keeping it for 6/9 years vs leasing two/three cars back-to-back for 3 years each.

Yes, we know owning a car for six/nine years is not the same as driving a brand new car after three years, but just do it to compare the costs.

Here are two quotes from a free article by Consumer Reports on leasing.

"Leasing has its drawbacks. Once you're in the leasing habit, monthly payments go on forever. You do get to drive one late-model car after another, but you're always on the steep side of the depreciation curve--the time of a car's life when it depreciates the fastest. (It's the same as if you traded in your car in every two or three years.) "

"The bottom line: leasing is best for those who drive less than 15,000 miles a year, who keep a vehicle in good shape, and who tend to get a new car every two or three years anyway."

rx8cited

GTF-RX-8

Pktrckt:

That's a great post! You really put some time into that!


2 other things to consider though:

-In Florida (not sure about other states) insurance is significantly higher for a leased vehicle so that would need to be factored in if that aspect applies where you live. I'm not exactly sure of the conditions but the auto dealer requires you to get outrageous limits of liability because in Florida a person can sue the manufacturer if a leased vehicle is in an accident.

- You priced you're lease at $382 a month. I've seen it for $299 which is significantly less. Some have said that the $299 might be a stripped down model but it was advertised as if it covered any model. This would drop your cost of ownership even lower to $10764 +500.

Aside from that... why does a cash sale include $2272 of lost income as opposed to a loan?
I don't get that?

Reaper Man

hell- in MA- same dealer I bought mine from- the exact car- MT with sport package was 199 a month- maybe it was a misprint or I'm just not reading it right, but that had me looking going- geez- if it wasn't the fact that I hate leases, that's a great deal