| Author | Message | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Member Username: Lwausbrooks Post Number: 265 Registered: 8-2002 |
Frank, my reference to the 288 GTO and F40 wren't about long-term. People who were on the list to get brand new cars were flipping them for a quick profit (hence the forced-lease situation on the F50). | ||
| David Jones (Dave)
Member Username: Dave Post Number: 287 Registered: 4-2001 |
Noah, spend 3 Grand and get a car that will last you through school, save the rest of the money and invest it in yourself for your college education.... Then buy a nice car when you have a job making the big bucks.... Just my two cents worth... | ||
| Frank Parker (Parkerfe)
Intermediate Member Username: Parkerfe Post Number: 1294 Registered: 9-2001 |
L.Wayne, even if one bought a 288GTO or F40 new for MSRP they would have still lost money compared to what that same amount would have earned in the market. | ||
| Warren L. (Warren)
Junior Member Username: Warren Post Number: 116 Registered: 2-2002 |
Wayne, I unfortunately live in NJ (the highest Auto Insurance premiums on the planet). I think we get the tax break on the trade ins but I really don't know how it works on a lease. UNBELIEVABLE that some states make you take the whole hit on the sales tax even if you are trading in a vehicle. That's like paying tax twice!!! What's your tax rate in CA, DC, MD, MI, VA ? As far as the states without tax, does this mean you can buy a car in one of these states, without paying the tax, register it in that state, then transfer it to whatever state you are living in later. You can skip out on paying tax altogether????!!!! Noah, I say go for the g money cars, it sounds like your parents will help you out if you do get into trouble, which you shouldn't if your business is doing ok. I think the more $$ car should really help you with your social/sex/quality of life in college. As wrong as this sounds, it's the sad truth. And that's one of the good and bad things about college. HOWEVER, cars get dinged pretty badly at school. I had a 3000GT and it got scratched, abused and KEYED by an anonymous a-hole... so if you are going to worry about your car constantly, DON'T get an expensive one. College kids are the wildest bunch of 'em all. | ||
| Rikky Alessi (Ralessi)
New member Username: Ralessi Post Number: 12 Registered: 5-2002 |
Noah, If I were you I definitely would not go for the 30,000 dollar car approach with a lease, or even the 16,000 dollar car approach buying it outright. That kind of a car will just be a problem in high school. I am 16 and worry about people messing with my car (1999 Mazda Protege), and would be going crazy if I owned a G35 or something. You do not need an expensive car, just get something modest (5-10k) and then sell it at the end of high school if you don't need it for college. If I were you, I would look into invest your money in mutual funds. There is something called a UGMA account which would let you do that interest free since you are under 18. This way, your money you are making now will grow and by the time you get out of college, you can buy something really nice, like a house, or a ferrari ;-) | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Member Username: Lwausbrooks Post Number: 263 Registered: 8-2002 |
Noah, Listen to Chris T. $16K can get you plenty of cool. I'm not saying that people who can't afford to buy expensive cars should lease them. That's not what it's all about. Besides, at only 16 years old, I'm sure there will be plenty of expensive cars in your future... when you can more easily afford them. | ||
| Chris Tanner (Ctanner)
New member Username: Ctanner Post Number: 28 Registered: 5-2001 |
Noah, I don't think you should lease a car. First, at age 16, I don't think a finance company would make you the lease. At least not at the teaser rates you see advertised in the paper. Great financing deals take great credit, which takes years to get. You appear to be a savvy business man already, but with no long term monthly income history, you would get the high risk rates. For you to get a lease would probably require your parents to lease another car. Second, 16 is too young to be a slave to car payments. I disagree that $16K will not buy a cool car. Check out the Porsche 944 Turbo or 968, the Mazda RX7 after '93, or dare I say it, the Supra. And finally, insuring the cars you list will cost a 16 year old $$$. Heck, insuring the cars I list will cost $$$, but hopefully not as much. | ||
| Chris Tanner (Ctanner)
New member Username: Ctanner Post Number: 27 Registered: 5-2001 |
As Wayne said, if you are going to get a new car every 3-4 years, leasing should be considered. If you are going to keep the car for a long time, pay cash, or finance to buy it. When you lease a car, you are buying the depreciation. Your monthly payments are the amount a car depreciates per month plus the interest on the money you bought to buy the depreciation, plus sales tax. In a finance to purchase, you are buying the equity per month and paying interest on the cost of the car, less your down payment. More interest at the start of the loan, more equity at the end of the loan. At the end of the term, the car has depreciated, regardless of how it got in your driveway. With a lease, you give it back (remember you only bought the depreciation over a set number on months). Because the leasing formula is a little convoluted, people can end up not understanding what they are buying, and end up with expensive deals. There are only 3 things to worry about when negoiating a lease (closed end type)...(1) the cost of the car..get the lowest sales price you can, in leasing terms it is the capitalization cost, (2) get the lowest interest rate you can, in leasing terms it is called the lease factor...multiply the lease factor by 2400 to get the interest rate, (3) the residual percent, this is the value of the car at the end of the lease, the higher the better. Items (1) and (2) are just like financing. I'm not in the car business, or finance business, but I do research quite a bit when I'm going to make a big purchase, and leasing can be a good financial transaction for the car buyer if you pay attention to the 3 topics. Don't and you will get the lease that Magoo speaks of. | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Member Username: Lwausbrooks Post Number: 262 Registered: 8-2002 |
Ok, Warren, so far you're S.O.L. (no tax break) if you live in the following states: CA, DC, MD, MI, VA (erroneously had Hawaii in previous list) You're really lucky (no tax)if you live in: AK, DE, MT, NH, OR And doing just fine (tax break) in all the other states. In most of these states, the consumer must hold the title to the vehicle they are trading in, meaning that there is no balance owed on the trade. When it comes to leasing it gets more complicated. For example, Illinois gives the tax credit to the lessor and allows that the lessor may pass this credit on to the lessee in the form of reduced payments. The law says "may." Anyway, let me know what state you're in and I will find out for you or will lead you in the right direction. As Anthony pointed out, you can call the DMV (a nightmare here in CA) if all else fails. | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Member Username: Lwausbrooks Post Number: 260 Registered: 8-2002 |
Warren, I've been doing some research. Anthony is right. It depends on what state you live in. We're getting ripped here in California! So far I've found that the following states definitely do not allow for a break on sales tax for a trade-in: California, District of Columbia, Hawaii, and Maryland The following states have no sales tax on automobile purchases whatsoever: Alaska, Delaware, Montana, New Hampshire, and Oregon I'm not certain about the rest. I checked in PA about leasing and this is what the law states: "Leased Vehicles: The tax is computed on the full amount of the purchase price of the leased vehicle less any trade-in deduction. Total lease price charged includes money down, capitalized cost payments and any other payments made to reduce monthly payments. Note: customer must offer title to the vehicle being traded-in to count toward trade-in exemption." Let me know what state you live in and I will find a definite answer for you. Wayne | ||
| Anthony Randazzo (Antroc)
New member Username: Antroc Post Number: 15 Registered: 4-2002 |
On the sales tax In Pennsylvania when you trade in a car on another, either new or used, you only pay sales tax on the balance remaining on the car you are purchasing I have been in the automotive field for 15 years Warren, what state do you live in, your department of motor vehicles should know if a trade in works the same way for you | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Member Username: Lwausbrooks Post Number: 259 Registered: 8-2002 |
Warren, without going back into purchasing vs leasing (sorry Noah), I am positive that trading her car in on either a purchase or a lease will not save her any sales tax. Think about it. Someone has a used BMW that's worth $20,000. They trade this car in for a $20,000 Toyota. They don't pay sales tax on the Toyota? Of course they do. Anytime you make a purchase, you pay tax on that purchase, regardless of the fact that you've paid tax on previous purchases. They have nothing to do with each other. I'm very positive. | ||
| Warren L. (Warren)
Junior Member Username: Warren Post Number: 113 Registered: 2-2002 |
Wayne, Are you sure about your tax saving knowledge? (I am NOT trying to challenge your knowledge, I just heard differently) I thought because my sister already paid sales tax when she bought the bmw, whatever value she gets for it as a trade in, is taken off the sale price of the new car hence she does not have to pay tax AGAIN on her portion of the trade in. This would make the most sense to me. I believe some people trade their cars in for this reason, so they can get the value of their trade in subtracted from the sale price and pay lower tax. Please let explain. | ||
| Warren L. (Warren)
Junior Member Username: Warren Post Number: 112 Registered: 2-2002 |
I think Young Mr. Weinberger should have started a thread of his own. J.K. Anyways, to clarify my sister's position the Lexus Lease makes sense. Like Magoo, I was skeptical and then furious when I first heard that she went into the lexus dealership and just said yes to the lease. I TOLD HER to ask me first before purchasing anything. Nevertheless, I went into the dealerdship with her the next day and the numbers do work out. Here is what it looks like: It's a 48 month lease with 10,000 miles/year. It's a close end lease so she turns in the car at the end of 4 years, of course she can always buy it from the dealership as well, after negotiating the price. She needs to get full insurance coverage. She needs to get the oil changed. She does NOT NEED to get the car serviced, it's not in the contract. Anyways, I don't know what the exact figures are off the top of my head but after 4 years, and the "unnegotiated buyout price" the price of the car was about 10-12500 more than if she just bought the car with cash. SO... if she didn't get one of those low 5.9% interest rates, then leasing the car would be BETTER than financing it because in the end she could just turn the car in or buy it (she has the option), she doesn't have to maintain the car, LOWER PAYMENTS. The mileage doesn't matter because she doesn't drive over 10,000 / year anyways. I don't really like the lexus body look either, but the interior is SWEET. | ||
| Todd Gieger (Todd328gts)
Junior Member Username: Todd328gts Post Number: 97 Registered: 6-2002 |
Noah, Listen to Magoo...I can promise you this...if you do lease, in the end you are going to wish you didn't...buy a mint used car so at least you will have something to show for it in the end...especially at your age...be smart with your $ especially when you are young...don't worry about impressing others...live below your means...nothing else is better than being liquid! | ||
| Noah Weinberger (Noahweinberger)
New member Username: Noahweinberger Post Number: 2 Registered: 8-2002 |
Interesting topic, I know we've seen this before. I have a similar question for myself, only this is a bit different situation. I turn 16 this October (youngest member of F-Chat?). I have been running my own business since last September as an online Ticket Broker, and have made about 11,000 dollars so far. I am in the market for my first car, to take delivery December 21st this year. My parents will put $5,000 to the cost of the car, plus pay for insurance/taxes. At about $16,000 (which is if I decide to spend every penny I own in cash), I could obviously not get a "nice" new car...or even late model used car. For me, (I think) leasing is the best option. Here is my game plan, let me know what you think: I lease a brand new car with my parent's $5,000 as a down payment, which would SIGNIFICANTLY lower the monthly payments. I can comfortably afford to pay $315 a month payments, which is great for me, because I do not lose all of my business capital at once, and can still earn money with my business to pay the payments. A 36 month lease would end right when Im off to college, when I would not need a car, and then after college, hopefully I will be able to afford to purchase a car after getting a job, and with the money I have made through HS. (FYI, I'm currently looking at the BMW 330i, Infiniti G35, MB C230 Sports coupe, a 2000 model MB SLK230, and the Jaguar Xtype) Does this make financial sense for me? My parents are out $5,000 whether I buy a car or lease, and if I buy, Im out 11k forever, and if I lease at 315 for 36 months, thats 11K over 3 years, when I would have extra money outside of car money. Let me know if you suggest this or think it's a dangerous idea. Neither me nor my parents knows much about cars. My parents have also leased cars since I've been born, new one every 3 years, which they can write off for business. Should I get out of the cycle? or does this make sense for me? Thanks a lot! | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Member Username: Lwausbrooks Post Number: 258 Registered: 8-2002 |
 "Pay no attention to them, Warren. Just sign right here." | ||
| magoo (Magoo)
Advanced Member Username: Magoo Post Number: 3103 Registered: 2-2001 |
Wayne, I happen to agree with Frank. You have to believe in what you sell and I respect that. I have just seen too many cases in leases where people end up on the short end with nothing and still having to pay to get out. Even the Devil will convince you when he takes your soul. This is just as I see it and have seen it in the past. So with that I leave you with my opinion and my last comment. | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Junior Member Username: Lwausbrooks Post Number: 249 Registered: 8-2002 |
Gee, Warren, are we answering your question here? | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Junior Member Username: Lwausbrooks Post Number: 248 Registered: 8-2002 |
I've never seen anyone come out ahead on a new car, period. (Of course we're not talking about cars like the 288 GTO or F40 here.) | ||
| Frank Parker (Parkerfe)
Intermediate Member Username: Parkerfe Post Number: 1293 Registered: 9-2001 |
Buy the car you can afford rather than leasing one you can't. I have never seen anyone come out ahead in a leased car. You are always upside down and if you keep it till the least is up, you have no car left. Kinda stupid IMHO. Even in a business car situation, by the time you count your personal use of the car and pay the taxes on that income, you still come out way behind. | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Junior Member Username: Lwausbrooks Post Number: 247 Registered: 8-2002 |
Magoo, believe it or not, automobile manufacturers can and do take losses at lease end, particularly on luxury models. In recent years, most banks have either gotten out of the leasing business or have changed their leasing programs to a point that they are no longer serious players. Manufacturers don't have the same options but still make money on the cars themselves, parts, etc. The problem with leasing is that most people don't understand what they're doing or how to negotiate for a fair deal on the car when leasing. This results in the dealer making a big profit, not the manufacturer. Either way, somebody paying the same price for the same car (that's the trick, now isn't it?) and knowing that they are not getting killed on a marked-up money factor, is no better off purchasing their car than leasing it, that is, if they are going to only keep the car for a few years. The biggest problem with leasing is UNDERSTANDING WHAT IS GOING ON. You might find this unbelievable, but most of the automotive sales force out there doesn't even really understand what they're doing when it comes to leasing. The bottom line: if your plan is to lease the car and then buy it out at the end, just buy it in the first place. If you're going to get rid of the car in three years and get another new car only to get rid of that one in three years, you should be leasing your cars. | ||
| magoo (Magoo)
Advanced Member Username: Magoo Post Number: 3101 Registered: 2-2001 |
Wayne, I also was in the automobile business for a number of years. I can tell you that Lexus is not going to lose miney or take a bath. It just isn't designed that way. I marvel at the number of people who say "isn't it wonderful" as they lease the car and when it is over they wish they hadn't. This is not intended to debase or degrade your profession it just is my opinion and experience over the years along with many others I have spoken to. There seems to be a lot of pluses on the front side it's going out when one wishes he hadn't leased his car. Regards | ||
| L. Wayne Ausbrooks (Lwausbrooks)
Junior Member Username: Lwausbrooks Post Number: 246 Registered: 8-2002 |
Warren, Leasing is a perfectly fine alternative for people that are constantly buying new cars every few years. She won't lose any more money than if she had bought the car and then tried to sell it or trade it in in 3 years. In fact, Lexus has pumped the residuals up so high on their cars, that it is Lexus that will take a bath on the car when she turns it back in. I've explained before the details of how a lease works. See this thread: http://server.ferrarichat.com/~ferrari/ferrarichat.com/discus/messages/21/105612.html?1029799399 Her old car, if she doesn't owe money on it, will be applied as cap cost reduction and will lower her net cap cost. She will pay tax on the amount of the cap cost reduction and will not save on sales tax because of her trade-in. On the other hand, you're mistaken about what happens if she buys the car. The tax is figured on the sale price of the car (nothing to do with down payment or trade-in). Then the car, tax, and any license fees are totalled and the downpayment, be it cash or trade-in, is subtracted from the total. Again, she doesn't save any sales tax because of her trade-in. I've been in the automotive finance business for over 10 years and currently run the finance departments of a dealer group here in So Cal. If I didn't answer your question or if you have any further questions, feel free to e-mail me. In fact, any F-chat members that have questions about financing/leasing or otherwise dealing with a new car dealership, feel free to e-mail me anytime. As for the SC430--matter of taste. Me? I think it's butt-ugly. Wayne | ||
| Lawrence Yee (Ferrariguy)
New member Username: Ferrariguy Post Number: 21 Registered: 8-2002 |
Hi Warren, I agree with Magoo on a lease. If she's not using it for business then don't bother, you'll lose bucks. Regarding the sc430, my neighbour has one and to be frank I'm not a big fan of them. It doesn't look right to me. I just saw the Nissan 350Z up close and personal and to me it's gorgeous, has great bang-for-the-buck (280 hp for $45,000 CDN) and if it's a convertible she wants, Nissan will come out with one next year I believe. | ||
| magoo (Magoo)
Advanced Member Username: Magoo Post Number: 3098 Registered: 2-2001 |
Just be sure to tell her that she will have nothing when her lease is over. I don't recommend them unless you have a business that can carry the car and can be written off as a business expense. Otherwise I see it as a rental with more problems in the end then if you had bought the car. It seems though the instant gratification that the people want today is give me a more expensive car on lease because I can't afford it otherwise. But in the end???? JMO | ||
| Warren L. (Warren)
Junior Member Username: Warren Post Number: 111 Registered: 2-2002 |
Not a F- question but you guys know everything. My sister is going to lease a car and wants to put her old car down as a down payment. If she was going to buy the car then she would save $$ on her trade in -whatever the value of the trade in times the tax rate. How does it work with a lease? Will she get any tax savings by trading in her old car? By the way, she is looking to trade in her BMW 325 convertible and get one of those lexus sc430s. What do you guys think of these batmobile looking cars? |