Five Reasons Why I'll Lease

[evnow]

After three years of use on the Leaf with low miles I would compare all the Lease costs and payments VS the purchase price and resale of the car at that time. Not sure the car will depreciate that much and if one wants out early they can sell if they buy.

That would be a fair comparison.

If there are cars costing about 25K after credit with 150 miles range, I think the resale value will suffer.

But if the gas price has gone up and there aren't good competitors available, the resale value will be good. In which case, a person who leases can buy the car paying low residual value and either own it or sell it for the higher resale price.

 

[smkettner]

And why compare at the exact length of the lease? Why not 3.5 years or 2.5 years?
It really favors the lease to assume you will have it for the exact term and that will exactly fit your lifestyle.

 

[mitch672]

After three years of use on the Leaf with low miles I would compare all the Lease costs and payments VS the purchase price and resale of the car at that time. Not sure the car will depreciate that much and if one wants out early they can sell if they buy.

That would be a fair comparison.

If there are cars costing about 25K after credit with 150 miles range, I think the resale value will suffer.

But if the gas price has gone up and there aren't good competitors available, the resale value will be good. In which case, a person who leases can buy the car paying low residual value and either own it or sell it for the higher resale price.

Yup. most here are failing to realize that just because you lease it for the 3 or 4 year term, doesn't preclude buying it at the end of the term. Sure, it might end up costing a few bucks more, but it's an insurance policy, if the Leaf is doing great, and is worth more than the residual you can always buy it; if it turns out to be a real dog, and the residual is higher than what the car is worth, turn the Leaf in and end the lease. If you own it, you don't have that option, you must deal with the loss, and deal with disposing of the car.

 

[LEAFer]

i've never leased before so correct me if i'm wrong but from my calculation it will cost ~$15,600 to lease for 3 yrs compared to $23K or so for buying it out right in CA and owning it for as long as I want. if this is the case, i'm certainly buying it. i don't see the logic of spending $15K and gone in 3 yrs.

I am anxiously awaiting evnow's spreadsheet. But I think trentr is not presenting a fair comparison in this analysis. The lease cost should be also reduced by $5k CA CVRP rebate ... so that makes it $10,600 over three years, and you're left with "nothing", as compared to a purchased LEAF that's now worth ?how much? But again, the key issue is the leased version is not $15k.

 

[Coffee_Slurry]

Let's look at it another way.. where are you in three years:

I can buy the Leaf outright with $37,500 out the door (all of it -- California, sales tax, eTEC, etc).
I get back $12,500 from Fed+CA, so $25,000 out of pocket, right? Not much mystery there.

I can lease: It's $1,999 plus tax title and license, according to Nissan.
I don't know what tax is, but I assume sales tax on $7500 and $2000, so $800 or so. $500 registration.
Call it $3300 out the door.
Then there's 36 payments of $379, right?
So all told, $17,000 in payments over the three years.
And you do get $5k from CA, so $12,000 out of pocket.
Is there an extra cost to buy a car at the end of the lease? I don't know.

At the end of the lease, the buyer will be $13,000 poorer than the guy with the lease looking at giving back his car.

Do you think you could SELL a Leaf after three years for $13,000? If so, you're dead even with the lease return.

(I have cash, so financing isn't involved in the purchase calculation. I'm also ignoring the TVM for the lease.)

 

[evnow]

I've started the financial comparison thread. Let us talk about financial aspects in that thread.

http://www.mynissanleaf.com/viewtopic.php?f=23&t=1640&start=0

In this thread let us discuss non-financial aspects.

 

[planet4ever]

(I have cash, so financing isn't involved in the purchase calculation. I'm also ignoring the TVM for the lease.)

evnow may hate me for continuing a "financial aspect" discussion here, but I can't let GroundLoop's statement stand. Money always has a time value, no matter how much or how little you have, and you can never make a meaningful comparison of lease to purchase without taking that into account.

In GroundLoop's case, even ignoring the time delay in getting the $12,500 back, he is $25K out of pocket, money that would otherwise be earning dividends for him. It's true that if he "invests" it in a savings account right now he would get next to nothing, but interest rates are at an historic low; they will go up. If he invests the $25K in stocks, and does it wisely, he could earn 10% per year. (Compare Dow Jones stock average a year ago to today.) That would be $7,500 he is throwing away in three years by spending the money now.

 

[DaveinOlyWA]

i posted on this thread from my droid yesterday and it disappeared but

i am leasing as well. i had originally planned to buy, had $10,000 in ready cash as a down payment and planned to finance the remaining $24,000 at around 3% for 5 years. payments just over $400. i would be getting around $4,000 of the tax rebate back, but could manipulate my stocks to get more.

well, the loan option does not seem to be as easy as i thought it would be. "missing credit history" is the reason. i have not had a loan for anything since i sold my house in 2003. that might have been a mistake. i have purchased 4 new cars in the past 6 years. paid off my student loan, etc. have no outstanding debts. my credit rating is over 740 so i qualify for the top tier leasing terms, so i will lease.

in anticipation of buying, i changed my withholding. now, i normally pay around $1000 in income taxes yearly (i dont allow Uncle Sam to hold my money) but next April, my tax bill will be around $3500. so the 10,000 cash i have will be used to pay that with the leasing agreement. the rest; well, Vegas is the top option right now (really want to go see that new bridge over the Colorado!!)

i figure 4.99% interest on the lease is still not bad (although i hate paying someone to give me money!!) as i could potentially loose all that and more should EV tech take off. i am in that boat now. i am trying to sell my Zenn and having a hard time getting anyone interested. this area is big on EV's but i think the Leaf is sucking up all the demand.

i am afraid that i will be in the same boat in 3-4 years when the next version of EV will be out at $30,000 that does 250 miles on a charge

 

[ttweed]

It's true that if he "invests" it in a savings account right now he would get next to nothing, but interest rates are at an historic low; they will go up.

Yes, there is nowhere to go from nearly zero but up. The question is "how much?" Unless inflation takes hold in the next few years and the Fed boosts rates, it is not likely that returns on cash will rise much.

If he invests the $25K in stocks, and does it wisely, he could earn 10% per year. (Compare Dow Jones stock average a year ago to today.)

Or you could compare the DJI average from 2008 to 2009 when it dropped from 13000 to 7000 and only the short sellers made any money. How smart are you about such things? There is no guarantee in equity investments for the casual investor over the next 3 years--some are still predicting a "double dip" and there are trillions of dollars sitting on the sidelines refusing to invest in equities. The market may never be the same as it once was after the revelations of fraud and manipulation during this crisis. Volatility is still at historic highs and it could go sideways or plummet just as easily as rise from here.

YMMV,
TT

 

[Coffee_Slurry]

evnow may hate me for continuing a "financial aspect" discussion here, but I can't let GroundLoop's statement stand. Money always has a time value, no matter how much or how little you have, and you can never make a meaningful comparison of lease to purchase without taking that into account.

I get what you're saying. I just know that in my own useful-to-me calculation, TVM is real close to zero. The cash I've been sitting on for the past three years has done little. The stock investments, much worse. I'm better at earning than investing.

If I didn't buy the Leaf with cash, it would be earning about 1%APR, since I'm not going to invest it in anything with risk. I just don't care about TVM, really. Cash is cash.

 

[DaveinOlyWA]

i have a relatively high risk 401 K right now and depending on where its going, its pretty much staying static. stocks did recover about 75% of what it lost 2 years ago, but has become rather flat over the past several months and that will not change until jobs come back and i dont expect that to happen anytime soon.

now there are many bond markets, low risk, high dividend stocks as well that are available that are outperforming the interest rates by a bit. but they also had a few quarters where they were static or even dropped a few percentage points, so there is very little out there is providing a guaranteed rate of return.

but stocks should be invested over the long term. some say a minimum 10 years. not sure that that is a valid projection anymore . i think that the market will not continue to rise which means that to make a return, a managed portfolio is really the only way to go.

 

[planet4ever]

Look, guys, we are just clawing our way out of the worst recession since the great depression of the 1930's. True, employment is still in the dumps and foreclosures are a mess, but the future direction is definitely up. No matter who wins the election next month, I promise you that things are going to look a lot better two years from now.

There is really only one thing that can stop the recovery, and that is mass discouragement. If we give up as a nation, and as a world, we will fail. So don't be so gloomy!

 

[DaveinOlyWA]

IF everyone went back to work today, i personally know people who would take at least 2 years to dig themselves out of the financial hole they are in right now.

i think it will take a bit longer than that. we are still near 10% unemployment and have over 10 million that have been unemployed over 18 months. that has not happened since the depression. it will take a while for those families to get back on their feet

 

[evnow]

Look, guys, we are just clawing our way out of the worst recession since the great depression of the 1930's. True, employment is still in the dumps and foreclosures are a mess, but the future direction is definitely up. No matter who wins the election next month, I promise you that things are going to look a lot better two years from now.

May be, may be not. I expect stagnation - if we are lucky.

By 2015, things should be "interesting" - as the peak oil production plateau we are in would be over and we will be looking at the downward slope of the production curve.

 

[smkettner]

IF everyone went back to work today, i personally know people who would take at least 2 years to dig themselves out of the financial hole they are in right now.

i think it will take a bit longer than that. we are still near 10% unemployment and have over 10 million that have been unemployed over 18 months. that has not happened since the depression. it will take a while for those families to get back on their feet

10% is no doubt a lot but it is only twice the normal unemployment. You will not ever get to zero unemployment.

 

[evnow]

10% is no doubt a lot but it is only twice the normal unemployment. You will not ever get to zero unemployment.

If you consider U6 - it is more like 17%. In 2000, it was 7%.

U3 (the official number) is around 10% now. In 2000, it was 4%.

So, the unemployment has more than doubled. We have a long way to go before the excesses of the decade are swept out of the economy.

 

[DaveinOlyWA]

IF everyone went back to work today, i personally know people who would take at least 2 years to dig themselves out of the financial hole they are in right now.

i think it will take a bit longer than that. we are still near 10% unemployment and have over 10 million that have been unemployed over 18 months. that has not happened since the depression. it will take a while for those families to get back on their feet

10% is no doubt a lot but it is only twice the normal unemployment. You will not ever get to zero unemployment.

if it was just 10% then you would be right, but the real #s are actually 17% being underemployed or unemployed. the 7% are people who were generally employed full time at good paying jobs and are now forced to work at "transitional" jobs.

these jobs are generally considered part time, entry level, near minimum wage. iow, McDonalds is currently employing the most educated workforce in its history.

did you watch 60 Minutes last weekend? in it was a out of work personal manager. he went from a $80,000 a year job to one at Walmart paying $9.50 an hour. he was very happy to have it. after 18 months of unemployment, including the last 4 months with zero income, he was happy to be back working again.

 

[kolmstead]

Great discussion of lease vs. buying. evnow has made me reconsider my options. Especially since I have a real problem with the Leaf's styling. How can I admit to my friends that I actually bought a car that looks that bad? Guy I used to work with bought a Ford F-150 the first year the latest body style came out. While he was filling it with gas one day, a fellow walked up and asked him if had stolen the truck. Frank asked him why he said that. The guy told him that nobody would ever buy a truck that ugly.

I'm surprised that nobody mentioned the EV-1 story. If I buy the Leaf, Nissan can't take it away from me and crush it when the lease ends. If EVs don't become suddenly popular, owning one might be the only way to guarantee that I can drive one for the next few years.

 

[ttweed]

Great discussion of lease vs. buying. evnow has made me reconsider my options. Especially since I have a real problem with the Leaf's styling. How can I admit to my friends that I actually bought a car that looks that bad? Guy I used to work with bought a Ford F-150 the first year the latest body style came out. While he was filling it with gas one day, a fellow walked up and asked him if had stolen the truck. Frank asked him why he said that. The guy told him that nobody would ever buy a truck that ugly.

Three cliches come to mind: "Beauty is in the eye of the beholder," "Form follows function," and "There's an ass for every seat."

I actually don't think the Leaf styling is that bad, for an econobox, and looks as good as the Prius to my eye, and much better than the i MiEV. Any F150 looks better than a Chevy Armada, as far as I'm concerned, and what about that butt-ugly Pontiac Aztek (RIP)?

I'm surprised that nobody mentioned the EV-1 story. If I buy the Leaf, Nissan can't take it away from me and crush it when the lease ends.

I don't think there's a chance in hell of that ever happening again. There are too many companies committed to EV development over the next few years, and the infrastructure effort is 10 times what it was in those days. There's no turning back this time.

TT

 

[Coffee_Slurry]

In typical Nissan lease terms, do they have the right to refuse sale at the end of the term?

Or is it your (contract) privilege to buy it out if you choose?