Crunched Numbers? Best Long Term Financial Strategy

[kirkhilles]

I've been looking at the Civic for a number of months now and I've come to realize that the traditional philosophy of "buy used with low miles and keep forever" is not as good of a strategy as people make it out to be and that Leasing isn't nearly the worst-financial-thing-you-could-ever-do strategy that have been drilled into our heads.

What I'm finding out is that... its freaking complicated with endless variables.

First off, buying a recent super low mileage used car is generally a BAD idea unless you can do some serious negotiating or unless you are dealing directly with someone that was going to trade in the car. I mean, dealers list 3 year old (not even CPO) cars for $2k less than they sell new... often even closer to the new car price. I guess people just compare it to MSRP and don't realize that you can get thousands if you buy new.

So, assuming you buy new, what is your best strategy? I ran the numbers and was shocked at how much our used 15 and 16 year old cars cost per month when averaged out. It makes sense though because we paid $15k for one and its worth $500 now. That's $14,500 in depreciation and then you add Tires and repairs and brakes and everything else and it's like... WOW, I could've leased a car and gotten a new one every 3 years for that!

My local dealer has an amazing Lease deal on an LX that I WISH I could take (I would likely just regret not getting the EX upgrades + Sensing + maybe even Turbo + maybe even Leather) and it has me thinking about other ways I could make it work with an more expensive model.

For instance, has anyone crunched the numbers for buying New and selling at 3 years or selling at 5 years? I'd be perfectly happy keeping the car for 5 years if the numbers works out. Are Lease options pretty close to what you'd spend if you were to buy and sell back to the dealer? I know they are complicated which means there is always ways for the dealer to sneak in profit.

I just know that I'm at my limit with cars that have stalled (dealer wanted $2,500 for that fix - did it myself for less), have had blown radiators, dead radiator fans (overheated with kids screaming during Summer trip on way home...fun!), Battery issues, Ignition Coil failures, etc, etc. I enjoy doing the regular maintenance (oil, tire rotation, fluids changes, etc) and saving $ that way, but I never want to try and remove a stuck, stripped bolt again if I don't have to!

Any ideas? Feel free to give examples of trade ins or whatever.

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[Newflyer3]

I don't know much about leasing but I sold my white 2014 Honda Civic EX for my asking price of $18,500. Had it for one year, 8 months, 14,700 kms. Bought it for $21,516 ($22,700 OTD) brand new with hood deflector, mats, trunk tray, block heater, splash guards, wheel locks and sport pedals. Girl who bought it was a 4th year accounting undergrad. Shopped for a 2016 Civic LX (which is pretty much the better option in the Canadian market considering it has display audio and the 8 speaker sound despite not having moonroof or alloys. The 10th gen is just a 'better' car than the 9th regardless of trim) Took a $4200 loss in two years which I didn't care about to upgrade. But in all honesty, I thought her money was better spent if she dropped $3000 more and bought a 2016 LX. She said it was too big or some nonsense like that. I didn't tell her of course because I wanted my car gone, but that 9th gen just wasn't special... My Touring on the other hand, it's somethin else...

In my case I think Hondas just suck for leasing. Same with how their pricing model was always bad for rental or fleet sales (which is good for us consumers for brand protection). If you run a business and have a good reason to lease, then lease, but if you just lease for personal use, the residuals on Hondas are always less than what you can get on the market at the end. So the lease is never great and it usually ends in a buyout which is what most Hondas are anyway. Bought, and owned by loving people, not banks or financial institutions. On the otherhand, BMWs, that's a wet dream for someone who wants to lease. 60% residuals after 4 years on certain models... Ha, my ass.

I wouldn't want to be caught dead leasing the Touring at these numbers...

 

[kirkhilles]

Yeah, its pretty crazy that there isn't a SINGLE CIVIC within 200 miles of my house on AutoTrader that is <= 3 years old with <= 36k miles that is listed for at a price at or below what you can purchase the Civic for at Lease end. I mean, Carmax has a 2016 Civic EX w/ 4k miles listed for $21,600! That's $2,600 over what our fixed price dealer has them for new!

Of course, that means that you SHOULD be able to sell your equity at end of lease for a small profit which would be awesome if you go that route.

 

[kirkhilles]

I don't know much about leasing but I sold my white 2014 Honda Civic EX for my asking price of $18,500. Had it for one year, 8 months, 14,700 kms. Bought it for $21,516 ($22,700 OTD) brand new with hood deflector, mats, trunk tray, block heater, splash guards, wheel locks and sport pedals. Girl who bought it was a 4th year accounting undergrad. Shopped for a 2016 Civic LX (which is pretty much the better option in the Canadian market considering it has display audio and the 8 speaker sound despite not having moonroof or alloys. The 10th gen is just a 'better' car than the 9th regardless of trim) Took a $4200 loss in two years which I didn't care about to upgrade. But in all honesty, I thought her money was better spent if she dropped $3000 more and bought a 2016 LX. She said it was too big or some nonsense like that. I didn't tell her of course because I wanted my car gone, but that 9th gen just wasn't special... My Touring on the other hand, it's somethin else...

In my case I think Hondas just suck for leasing. Same with how their pricing model was always bad for rental or fleet sales (which is good for us consumers for brand protection). If you run a business and have a good reason to lease, then lease, but if you just lease for personal use, the residuals on Hondas are always less than what you can get on the market at the end. So the lease is never great and it usually ends in a buyout which is what most Hondas are anyway. Bought, and owned by loving people, not banks or financial institutions. On the otherhand, BMWs, that's a wet dream for someone who wants to lease. 60% residuals after 4 years on certain models... Ha, my ass.

I wouldn't want to be caught dead leasing the Touring at these numbers...

Wow, those numbers are INSANE. Its crazy, they don't even have a 3 year lease which I'd imagine 90%+ of people choose. $420 a month? Yeah, right. I guess the problem is the "selling price" of $29,200. MSRP for the Touring is only $26,500 and you should be able to get it at $24,500 or less.

 

[Newflyer3]

Wow, those numbers are INSANE. Its crazy, they don't even have a 3 year lease which I'd imagine 90%+ of people choose. $420 a month? Yeah, right. I guess the problem is the "selling price" of $29,200. MSRP for the Touring is only $26,500 and you should be able to get it at $24,500 or less.

I'm in Canada so the pricing is higher north of the border. If you read the Canadian pricing thread, people in Ontario are paying upwards of over $30,000 for the car because of a 13% tax. Our Destination charge is also double at $1,595 and there's other government fees relating to AC and Tire disposal. Vehicles almost always sell above invoice too because our market isn't as competitive and there's no holdback.

But at $420/month even in Canada, I could lease a BMW 3 series.

 

[kirkhilles]

Still crunching numbers and in endless debate. I just calculated numbers for a Touring with a plan to keep for 8 years with a 7 year loan.
Get a 8 year/120k at say $25,000 before Taxes and $26,700 OTD.
- Add in a Warranty ($1k)
- Add in Interest (2.9%) of $2,839 over 7 years

You get $30,589 which breaks down to $364 per month.

The KBB Residual for an SI (presume its about the same value) after 8 years/120k in "Good" condition is $8,000.

That nets out to about $268.92 (of course, you don't get that $8k back until you sell)

Of course, then you have to add in additional maintenance. Oil changes always have to be done on leases too, but you've got Tires (big one) + alignments + brake pads + likely rotors + coolant + spark plugs (likely) + transmission fluid.

If you were to spend an additional $3,000 over 8 years compared with a lease, that winds up adding $35.71 per month.

So, my grand total net (no vehicle at end of 8 years too) is $304.63 a month which is probably about $20 per month less than a lease.

Pretty insane!

 

[Justin G]

I got the LX on a lease. $0 out of pocket. Not a dime. $258 a month. At the end of the lease the buy out will be $12,588 on a 3 yr old car with 36k miles. Not bad. So my options will be to continue making payments for another 3 years and a little higher payment or step right into another lease in a brand new model. I drive under 12k a year and I am very good on my cars. We have a second car for road trips. So a lease (for now) works for me.

 

[kirkhilles]

I got the LX on a lease. $0 out of pocket. Not a dime. $258 a month. At the end of the lease the buy out will be $12,588 on a 3 yr old car with 36k miles. Not bad. So my options will be to continue making payments for another 3 years and a little higher payment or step right into another lease in a brand new model. I drive under 12k a year and I am very good on my cars. We have a second car for road trips. So a lease (for now) works for me.

Thanks. Wound up getting a 3 year, 15k yearly EX-T build from Jan 06 for $265 per month with just $500 trade in. Thats at $20k price + $599 processing fee and some $600 "preferred option" probably rip off. Georgia also screws you on taxes and makes you pay full tax for every lease. Grrr... was hoping for $230 or so but feel it's do-able

 

[Justin G]

That's a real sweet deal. Now I feel like I got screwed. Lol.

 

[kirkhilles]

That's a real sweet deal. Now I feel like I got screwed. Lol.

Nah, different areas of the country have different deals and timing matters big time too. Those getting deals 3-5 months from now will be far better than ours. But, the good thing about a lease is you can negotiate again in 3 years

 

[Justin G]

I did get free oil changes and tire rotations for the life of lease and free 1st brake pad replacement. I think with the next lease I will get the upper model then buy that one out.

 

[MuGeN PoWeR]

i got EX on lease. paying 209/month paid 2000$ upfront plus $500 was the grad money they gave us! i am going to buy it after 3 years. not planning to turn it in!!

i also compared it with the financing at that time. the rate they were giving me was 4.5% for 60 months. and currently the lease is around 1.9% so i am happy with it!!

 

[Justin G]

If you take that $2000 down and divide it by 36 you get the difference in our payments. I don't see the point in putting money down on a lease. I will only lease with nothing out of pocket. Just makes more sense to me.

 

[civicmanic]

But at $420/month even in Canada, I could lease a BMW 3 series.

I am in Canada and I can say for an absolute fact that you cannot lease a brand new BMW 3 series for anywhere close to $420 tax in per month, UNLESS you make a sizable downpayment. But then your payments aren't truly that cheap, are they? You can make any car you want, no matter how expensive have that monthly payment with a big enough down payment. Any time you see a bmw lease ad, read the fine print!!

 

[civicmanic]

If you take that $2000 down and divide it by 36 you get the difference in our payments. I don't see the point in putting money down on a lease. I will only lease with nothing out of pocket. Just makes more sense to me.

Some people like to have a certain monthly payment for a car and are willing to make a down payment to get it there. THAT'S the point!

As an example, if your payments are $300/month for 36 months with zero down, OR $245/month for 36 months with $2000 down, what's the difference? To say you will only lease with nothing out of your pocket is very short sighted, as at the end of the day the same amount is coming out of your pocket either which way.

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