Length of Car loans

Rams and Durangos had serious transmission issues around 10 years ago, as did anything else from Dodge/Chrysler like minivans.

 

Yes, Chrysler was notorious for transmission problems and soft brake rotors. And the older Ram's got terrible gas mileage.

Wife had a 1997 Grand Caravan that we put 120,000 miles on it over 13 years. Went through five brake jobs, rebuilt transmission, engine control module, starter, etc. etc. Couldn't wait to get rid of it.

 

Yep, if you plug it into the auxilary jack of your car stereo. And I use my phone for GPS navigation.

 

Getting aftermarket brakes that don't wear out so fast is easy enough, but our 2003 had the planetary gears blow up while we were going down the interstate, at 120,000 miles. That's not so cool.

Also had the water pump go out, power lock and window problems, strut issues, never could balance tires or align it properly so everywhere we went there was a vibration. Lots of other issues.

 

I know, I know, everyone thinks they have more expertise that the dealer who leases the vehicle. Financing and leasing are rip offs no matter how you slice it up.

Save up about 6 or 7 thousand for a used car and pay cash. Right it off on your taxes if its for business. You owe no one, you do not pay exorbitant fees and prices, and you live debt free.

 

I've done eight leases over the past 18 years. I know a teensy-weensy bit about it. How many have you done?

So, how many have you done?

OK, find me a decent used truck for $7,000. That doesn't even take into account the idea of tying up $7,000 for a truck when you could be using it to market your products, purchase inventory, or buy equipment.

That's pretty glib--"save up $7,000", small business owners would love to be able to do that.

 

No, that is not cool.

Yes, we had the water pump go out, also the power steering lines. Oh, and the strut problem--are you talking about the strut tower housing rusting out? We had that big time. So bad I was afraid driving over a big bump in the road would shoot the strut through the end plate.

 

Not sure if it was rust but yeah there was an issue with the strut mount.

 

That depends on circumstances doesn't it? And the deal you were able to negotiate.

So if your car loan payment was say, $400 a month for four years, and you had put a down payment of $8,000 at origination of the loan, and it's now paid off. (That's a $27,000 car.)

You now have a vehicle with 50,000 miles on it. You start saving $400 a month. So after about 60 months, or 5 more years you would have saved almost $24,000 to buy a new vehicle. Now you have a car with 110,000 miles on it that might be worth $5,000. You've got $29,000 to spend.

Realize that for less than $400 a month I can drive 3 new trucks in those 10 years. Of course, I won't own anything after 10 years. But I haven't had a day of worry about costly repairs since they were always under the bumper to bumper warranty. My out of pocket expenses for each truck was for 5 oil changes and perhaps a set of wiper blades. The cost of the lease was a business expense (write off against profits, thus lowering potential taxes.)

It's a business expense. It's a cash flow item in my business. Small businesses typically don't have $7,000 lying around doing nothing. Even if they did, they wouldn't buy a vehicle with over 150,000 miles on it.

Any truck for sale at $7,000 has likely over 150,000 miles on it. That is a major repair waiting to happen. And it's probably not going to have new tires, new brakes, and a new battery in it, since the owner likely didn't want to sink any more money into it. That's why they're selling it.

 

You're mixing up too much stuff. Let's compare apples to apples here shall we?

If you want to use about a $27,000 car then that's fine. How about a new but base model 2015 Nissan Altima SL which has an MSRP of about $28,975. It's the closest I can think of.

If you lease it, you've got an acquisition fee and signing fee of about $1,000. You'll have it for 3 years and will pay $397 a month. Assuming zero inflation, which ain't reality, 9 years of that and you've spent about $46,000 and have nothing to show for it. Except it will be more due to inflation and rising car costs.

Here's the thing though. You can actually get that same model of car for $17,000 if you shop around. You could actually almost buy 3 new Altima SL's for what you would pay for the lease. At the same $1,000 down and $397 a month that you'd be paying for the lease at the current 1.9% APR, you'd have it paid off in less than 3.5 years. Actually they're advertising 0% APR right now. For less than $50 a month more you'd pay it off in 3 years.

Assuming 12,000 miles a year you'd have a 3 year old Altima with 36,000 miles at that point. A 2012 Altima "S" with that kind of mileage is worth over $12,000 according to the Kelley Blue Book assuming you sell it to a private party.

So, even if you immediately sold it at the end of 3 years, even with zero inflation, you'd come out over $36,000 ahead in the time period you gave, and you'd be driving almost new vehicles that whole time. If you saved and invested that same amount instead of continually buy new vehicles, you'd be even more better off. Even if you considered the extra nearly $50 payment I mentioned to keep us comparing apples to apples, considered no inflation, and did not invest it, you'd come out over $30,000 ahead with no difference in your overall experience.

You can do that with a payment though, again not comparing apples to apples.

They need to.

 

Bam! And there it is. Clear cut common sense.

 

Again, that depends. It's not a simple math problem of which cost more money. You are not actively looking to have an expense to offset business profits, nor are you getting a new vehicle every 3 years at no direct cost to you (company paid lease). I don't want to make a huge down payment to acquire the vehicle. I want reliability and I'm not interested in worrying about unexpected expensive repairs. I don't want to pay $1,200 for a set of new tires (twice in 100,000 miles) or rebuild the 4X4 transfer case. Batteries, brakes, coolant flushes, transmission fluid/filter changes, air conditioning service--don't want to deal with it.

 

I'll make this easy for you to comprehend.

Do you want to spend corporate money to get a new vehicle and use the expense as a tax write off?

Or would you rather not get the vehicle and send more money to Uncle Sugar?

How about the company not get the vehicle, rather it pays you more wages so you can buy something yourself? Now you and your company are paying FICA and Medicare taxes and having more taxes withheld from your paycheck.

 

Why are you stuck on the idea that you can't do the same with a purchased vehicle? Leases aren't magic, you can deduct purchased vehicles just the same if it's for business use. No difference.

 

Oh its easy to comprehend alright. Live in debt or live debt free as much as possible. No matter how you add it up living in debt is living beyond your means. Pay for a vehicle in cash and take the money that would have been used for a car payment and put it towards the house payment and get that payed off as soon as possible.

Tax breaks do not justify debts and payments.