Bad ideal to buy then sell in 2 or 3 years? To get a new one or just lease

[Thatrabbitfoot]

Is it a bad idea to buy then sell in 2 or 3 years, or should i just lease? Want new car every couple of years

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[Renegade]

Is it a bad idea to buy then sell in 2 or 3 years, or should i just lease? Want new car every couple of years

If you know you’re going to get a new one in 2-3 years, you may save up to a few thousand dollars on sales tax by leasing. Different states tax vehicles differently, so you will have to do a bit of research. In Tennessee, buyers pay 7% on the purchase price. If you lease, you only pay tax on difference in the sale price and the residual value. In my case, the savings is almost $2,500 during the first 3 years. If I buy at the end of my lease, I pay another 7% on the residual.

 

[Thatrabbitfoot]

Im in Michigan 6% on the monthyl payments

 

[Raven]

I would get the best lease deal possible for 3 years and at the maturity date weigh the value. If you have equity, buy it out and sell it yourself. If you’re under water, turn it in and get into your next one. If you purchase, you will have higher payments the next 3 years and don’t have the security of a fixed residual.

My .02

 

[Thatrabbitfoot]

I would get the best lease deal possible for 3 years and at the maturity date weigh the value. If you have equity, buy it out and sell it yourself. If you’re under water, turn it in and get into your next one. If you purchase, you will have higher payments the next 3 years and don’t have the security of a fixed residual.

My .02

So at lease end see if its worth buying then selling

 

[Thatrabbitfoot]

I would get the best lease deal possible for 3 years and at the maturity date weigh the value. If you have equity, buy it out and sell it yourself. If you’re under water, turn it in and get into your next one. If you purchase, you will have higher payments the next 3 years and don’t have the security of a fixed residual.

My .02

How much is too much to put down on a 3 year lease

 

[rvillano8188]

How much is too much to put down on a 3 year lease

That depends on preference, mileage, payment you want, credit, etc. There's no one size fits all when it comes to leasing.

 

[Raven]

How much is too much to put down on a 3 year lease

#1 rule when leasing is to put zero money down. I see the national lease deals stating 4K down and that’s absurd. They only put that to show a lower payment.

Let’s say you put the 4K down. You drive off the lot and total the truck. The insurance company is only going to pay enough to make the lender whole. You will never see your 4K again. Zero down and you won’t have that risk.

When I lease, I pay for the first months payment, acquisition fee (for Jeep is $595, don’t let dealers up charge you) and all of the misc doc and title fees up front. Usually never more than $1,000 because I don’t want that rolled into the lease and be paying interest on it.

I lease everything and I will be leasing my gladiator. I usually upgrade every 2-3 years. If I had purchased all of my previous vehicles I would be so upside down it wouldn’t even be funny. Lol

 

[rvillano8188]

#1 rule when leasing is to put zero money down. I see the national lease deals stating 4K down and that’s absurd. They only put that to show a lower payment.

Let’s say you put the 4K down. You drive off the lot and total the truck. The insurance company is only going to pay enough to make the lender whole. You will never see your 4K again. Zero down and you won’t have that risk.

When I lease, I pay for the first months payment, acquisition fee (for Jeep is $595, don’t let dealers up charge you) and all of the misc doc and title fees up front. Usually never more than $1,000 because I don’t want that rolled into the lease and be paying interest on it.

I lease everything and I will be leasing my gladiator. I usually upgrade every 2-3 years. If I had purchased all of my previous vehicles I would be so upside down it wouldn’t even be funny. Lol

1) that's just not true if you have the proper insurance coverage. Gap insurance should cover the difference, plus any applicable replacement costs, and in my experience, with the 2 vehicles I've totaled, I've always ended up with a check from the insurance company (both under Geico, and both cars were low residual vehicles). To say that's the #1 rule is just uneducated, as maybe the person leasing wants a higher value vehicle but with lower monthly payment.

2) One way or another, your 4k is going out the window, whether it be over 36, 39, etc. months, or right now. The value of the car is the value of the car, the residual is the residual, and the MF is the MF. Also, you're paying usage tax on your payments, and you will save on that tax by putting more down and keeping your payments lower. Keeping that 4k in the bank vs using it to lower your payments on a vehicle at 4% interest just doesn't make any sense, as you won't be earning that in a savings account/CD.

2) Again, high residual vehicle we're talking about here. I've leased almost every vehicle I've ever owned except my first car. You can probably purchase this vehicle, and in 2-3 years it's very possible that you're either ahead or equal to what you owe. I'm buying for exactly that reason (plus this will be my new toy, and I don't want to be at the mercy of a leasing company with wear and tear, etc). The finance interest rate is cheaper than the lease interest rate, and with the deals we're all getting on these, I'll parlay that into owning this vehicle much cheaper than the average schmo buying off the lot.

 

[Raven]

1) that's just not true if you have the proper insurance coverage. Gap insurance should cover the difference, plus any applicable replacement costs, and in my experience, with the 2 vehicles I've totaled, I've always ended up with a check from the insurance company (both under Geico, and both cars were low residual vehicles). To say that's the #1 rule is just uneducated, as maybe the person leasing wants a higher value vehicle but with lower monthly payment.

2) One way or another, your 4k is going out the window, whether it be over 36, 39, etc. months, or right now. The value of the car is the value of the car, the residual is the residual, and the MF is the MF. Also, you're paying usage tax on your payments, and you will save on that tax by putting more down and keeping your payments lower. Keeping that 4k in the bank vs using it to lower your payments on a vehicle at 4% interest just doesn't make any sense, as you won't be earning that in a savings account/CD.

2) Again, high residual vehicle we're talking about here. I've leased almost every vehicle I've ever owned except my first car. You can probably purchase this vehicle, and in 2-3 years it's very possible that you're either ahead or equal to what you owe. I'm buying for exactly that reason (plus this will be my new toy, and I don't want to be at the mercy of a leasing company with wear and tear, etc). The finance interest rate is cheaper than the lease interest rate, and with the deals we're all getting on these, I'll parlay that into owning this vehicle much cheaper than the average schmo buying off the lot.

I'm not here to get into a pissing match and you're acting like I said "Chick-fil-a isn't delicious". You obviously have a way you do things, and that's fine, I'm glad you're happy with it. But there is an entire community over at leasehackr.com (an enthusiast group that strives to get the best lease deals) that disagrees with your "money down" philosophy. And this is the internet after all so I guess I will have to vet myself, I have sold cars for many years and have been leasing cars as a hobby for just as long. So I guess its time for my response:

1) I don't know if you misunderstood me or not, but I maintain, you DO NOT want to put any money down in the form of a cap cost reduction on a lease. There is no need to have the "proper insurance" as you state because GAP protection is baked into your actual lease through CCAP so you don't need to carry it yourself. For example (very rough math not getting into money factors), if you lease a gladiator that stickers at 40k for 3 years at 75% residual and you put 4k down, the amount you owe is 6k over the life of the lease. If you drive off the lot and total it, the insurance company will pay what it is worth. Lets say its worth 35k to them. They cut a check for 35k to Chrysler capital, GAP protection picks up the remaining 1k to make the lease whole. Where does that leave the 4k that you put down? No where... you don't get that back. If you didn't put that 4k down, that GAP protection would be picking up 5k of negative equity on the back half of that situation.

2) Again, if you make a down payment, you risk losing it. And if we wanna talk putting our money to work, I have been doing much better than 4% in the market (also with risk lol).

3) The greatest benefit of a high residual is that it is forcing the leasing company to hold all of the risk of depreciation. This point you are trying to make is merely personal preference. My current vehicle is a 2018 Ram 1500 that stickered at 45k. If I would have purchased the truck and gotten 10k off through rebates and negotiation, I would have a payment of $585 for 60 months with 2k due at signing. Instead I leased, my payment is $212 per month for 36 months with 1k in fees paid upfront. At the end of 3 years, the purchase may be upside down. Zero chance of that with my lease.

This is quite literally a public forum in which we all try to help each other achieve the goal of obtaining the thing we all have in common. If you want to put money down to lighten your payment, go right ahead, but remember, there is risk. The equation for a great lease is high residual+ low money factor+ high rebates+ low selling price= minimal risk

 

[rvillano8188]

I'm not here to get into a pissing match and you're acting like I said "Chick-fil-a isn't delicious". You obviously have a way you do things, and that's fine, I'm glad you're happy with it. But there is an entire community over at leasehackr.com (an enthusiast group that strives to get the best lease deals) that disagrees with your "money down" philosophy. And this is the internet after all so I guess I will have to vet myself, I have sold cars for many years and have been leasing cars as a hobby for just as long. So I guess its time for my response:

1) I don't know if you misunderstood me or not, but I maintain, you DO NOT want to put any money down in the form of a cap cost reduction on a lease. There is no need to have the "proper insurance" as you state because GAP protection is baked into your actual lease through CCAP so you don't need to carry it yourself. For example (very rough math not getting into money factors), if you lease a gladiator that stickers at 40k for 3 years at 75% residual and you put 4k down, the amount you owe is 6k over the life of the lease. If you drive off the lot and total it, the insurance company will pay what it is worth. Lets say its worth 35k to them. They cut a check for 35k to Chrysler capital, GAP protection picks up the remaining 1k to make the lease whole. Where does that leave the 4k that you put down? No where... you don't get that back. If you didn't put that 4k down, that GAP protection would be picking up 5k of negative equity on the back half of that situation.

2) Again, if you make a down payment, you risk losing it. And if we wanna talk putting our money to work, I have been doing much better than 4% in the market (also with risk lol).

3) The greatest benefit of a high residual is that it is forcing the leasing company to hold all of the risk of depreciation. This point you are trying to make is merely personal preference. My current vehicle is a 2018 Ram 1500 that stickered at 45k. If I would have purchased the truck and gotten 10k off through rebates and negotiation, I would have a payment of $585 for 60 months with 2k due at signing. Instead I leased, my payment is $212 per month for 36 months with 1k in fees paid upfront. At the end of 3 years, the purchase may be upside down. Zero chance of that with my lease.

This is quite literally a public forum in which we all try to help each other achieve the goal of obtaining the thing we all have in common. If you want to put money down to lighten your payment, go right ahead, but remember, there is risk. The equation for a great lease is high residual+ low money factor+ high rebates+ low selling price= minimal risk

Oh, I wouldn't have even responded if you said "Chick-Fil-A isn't delicious", I would've just voted to ban you lol

Maybe using the wrong term, but regardless, both times I leased, and both times the car was totaled, and both time I got a check equal to or slightly less than my initial down payment. Now maybe I just got lucky and that skewed my opinion.

The other issue with the lease is the obvious wear and tear (I mean, we're buying offroad machines, so there is the risk that we might be moving straight past the basic wear and tear and into "gotta fix it" category, which in the case of my Audi, will cost me some significant change)

I guess what it comes down to is if the OP wants to wheel offroad, or whether the furthest they'll go is over a curb at the mall. There are people that would argue that a lease is an expensive rental. Just like a D/P, you're basically paying for something that you almost never own at the end (unless you buy out). Considering Lease MF's are running higher than finance rates, you could make the argument that either one makes sense.

Either way, we're spending significant money on a rapidly depreciating asset, which makes us all equally not very smart, but Jeep

 

[Raven]

Oh, I wouldn't have even responded if you said "Chick-Fil-A isn't delicious", I would've just voted to ban you lol

Maybe using the wrong term, but regardless, both times I leased, and both times the car was totaled, and both time I got a check equal to or slightly less than my initial down payment. Now maybe I just got lucky and that skewed my opinion.

The other issue with the lease is the obvious wear and tear (I mean, we're buying offroad machines, so there is the risk that we might be moving straight past the basic wear and tear and into "gotta fix it" category, which in the case of my Audi, will cost me some significant change)

I guess what it comes down to is if the OP wants to wheel offroad, or whether the furthest they'll go is over a curb at the mall. There are people that would argue that a lease is an expensive rental. Just like a D/P, you're basically paying for something that you almost never own at the end (unless you buy out). Considering Lease MF's are running higher than finance rates, you could make the argument that either one makes sense.

Either way, we're spending significant money on a rapidly depreciating asset, which makes us all equally not very smart, but Jeep

Lol we never claimed to be smart. We want what we want and we work too hard not to have it. I don’t smoke, golf or have a hooker on speed dial so look at all the money I’m saving, I’m gonna get a Jeep lol.

My gladiator will be running up and down the highway, no off road until the warranty is up. I guess that is a factor to consider for others.

 

[Ichthus]

Well, I just learned a lot more about leasing than I care to know..

That said, Jeep values tend to follow the economy...so if we are approaching another Recession, they may stagnate or drop more than they have in the past decade. You can be one of 2 types of people: those who PAY interest and those who MAKE interest. I prefer to buy outright or payoff rapidly.

I’ll give a few examples
2008 JKU Sahara purchased for $27,000, traded in ‘12 w/97k miles for $19,500
2008 JK X-S purchased late 08 for $18,300, traded in 13 w/68k miles for $15,300
2013 JKU Sport S purchased for $28,000, traded in 2016 w/45k miles for $26,500
2014 JKU Sport purchased for $27,500, trade offer is $21,000 w/79k miles

Sometimes I made out better than others, BUT I bought and sold when I wanted to, rather than based on a decision I made 3 years prior. I never had to worry about miles or feel like I was limited on what I did TO the Jeeps, or where I drove them. All saw trails before they hit 1,000 miles on the odometer. Obviously, the best deal was the Gecko 13...made even better by the fact that I traded it with an older soft top I paid $300 for on Craigslist and kept the hardtop for my 14. The problem there is that my wife was trading for a minivan, which drops in value faster than a politician breaks a campaign promise. In my opinion, you risk very little if you plan to sell in 2-3 years...unless the economy tanks and gas spikes again. In fact, I’m half expecting to drive the truck on order only until I can upgrade to a diesel...maybe waiting for that one to get through a year of sales first. If they offer Half Doors, I might trade earlier.

 

[rvillano8188]

Well, I just learned a lot more about leasing than I care to know..

That said, Jeep values tend to follow the economy...so if we are approaching another Recession, they may stagnate or drop more than they have in the past decade. You can be one of 2 types of people: those who PAY interest and those who MAKE interest. I prefer to buy outright or payoff rapidly.

I’ll give a few examples
2008 JKU Sahara purchased for $27,000, traded in ‘12 w/97k miles for $19,500
2008 JK X-S purchased late 08 for $18,300, traded in 13 w/68k miles for $15,300
2013 JKU Sport S purchased for $28,000, traded in 2016 w/45k miles for $26,500
2014 JKU Sport purchased for $27,500, trade offer is $21,000 w/79k miles

Sometimes I made out better than others, BUT I bought and sold when I wanted to, rather than based on a decision I made 3 years prior. I never had to worry about miles or feel like I was limited on what I did TO the Jeeps, or where I drove them. All saw trails before they hit 1,000 miles on the odometer. Obviously, the best deal was the Gecko 13...made even better by the fact that I traded it with an older soft top I paid $300 for on Craigslist and kept the hardtop for my 14. The problem there is that my wife was trading for a minivan, which drops in value faster than a politician breaks a campaign promise. In my opinion, you risk very little if you plan to sell in 2-3 years...unless the economy tanks and gas spikes again. In fact, I’m half expecting to drive the truck on order only until I can upgrade to a diesel...maybe waiting for that one to get through a year of sales first. If they offer Half Doors, I might trade earlier.

I believe it'll be tougher to buy outright or payoff rapidly on a 55k truck than it would be on a 28k truck. You could very well risk a lot if you end up upside-down after 2-3 years and your lifestyle changes/you have a need to get rid of this truck.

For me at least, I don't want to use my disposable funds to make a purchase of this truck with any more than 5-6k in down payment. No one wants to pay interest, but life happens, and gone are the days where the majority can just straight up purchase these things in cash for a couple grand. Doesn't mean I can't afford it, in fact, it's the opposite. I feel like I can do better keeping some of my money in the market at 8-10% and finance my vehicle at 4%. Depends on your lifestyle, but I see more people leaving money in a savings account doing nothing than I'd like to in my line of business. Either way, put that money to use!

 

[TheSolarWizard]

My only job outside solar was in auto finance


Leasing is great IF you own a business, love to trade vehicles ever 2-3 years or you’re carrying negative equity into new deal

Leasing a wrangler is great (to early to tell if the JT will be similar) because they carry value beyond anything besides maybe a 4 runner or Tacoma. At lease end it’s not atypical to have a residual value several thousand above the buyout. That means you’re pretty safe not caring about the mileage at the worst and at best, you may pocket some cash going into your next deal. I leased 4 wranglers and the worst I did was be up $1900.

Also important leasing ALWAYS includes gap. Put nothing down. Anything happens accident wise and you’re free and clear

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