CriticalCore
Well-known member
What, 172 applies to losing grip or sliding… Would move to middle of nowhere to pursue these recreational activities in that case. Ontario wouldn’t be getting my fun tax, sucks for them.
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Should I buy out our leased car?
- Thread starter stangn99
- Start date
it does, stunt driving.
Haha, you don't even need to spin the tires, the executioner just has to think you intended to and you are guilty. Press the happy pedal, make a loud noise, guilty.
"Driving a motor vehicle in a manner that indicates an intention to cause some or all of its tires to lose traction with the surface of the highway while turning."
I would drive it into the ground if the residual wasn't $20,000.
The more I think about this the more I'm leaning towards either:
- Buy it out using line of credit, sell it for a profit (though I REALLY hate selling anything, and with a fresh baby I may not have the patience)
- Use said profits to buy an EV (Ionic or Soul ev + federal rebates of $5k)
- Give it back and buy a beater hatch (Mazda 3 maybe?) ($4-7,000 max)
Spent $200 on it to get it road ready and drove it for 3 years. It had 110,000km when I bought it (body was dented/scratched).
Sold it 3 years later for $700 with a little under 160,000km on it.
Part of my really loves beaters.
sell for a "profit" (not likely) , but then you will go out and spend more money on a new model, and pay more for everything.
first mistake was leasing in the first place anyway, now you just need to cut your losses by buying it out, and riding it into the sunset.
buying a beater could be a potential mistake, could get lucky, could get cursed. I'd rather not find out.
Leasing is not always a mistake. There are many good reasons to lease, if your circumstances warrant it.
We leased because at the time we had a business and were able to write-off a portion of the lease payments, insurance, etc. We closed our business after 2 years but had signed a 4 year lease. I don't consider that a mistake.
Had we not had a baby this year we would have returned the car and leased again. Not having to worry about a thing and getting a new car every 3-4 years, in my opinion, is worth the extra money. I'd even pay for the full damage protection fees again because I basically just have to bring the car back running.
Unfortunately daycare costs about $25,000/year, so we need to spend wisely going forward.
Except for the govt meddling around business lease vs loan. They dont treat them equally.
Relax
Well-known member
As mentioned, depending on your circumstances, the math can work out better:
- sales tax paid on depreciated value only, instead of the full amount (let's say an average of 50% savings)
- manufacturer-subsidized lease rates can be significantly lower than finance rates (for someone who needs financing)
- set your monthly lease amount to $800 and you get to write it all off compared to CCA deductions
My last 2 Honda leases have been at 0% thanks to their low rates when MY changes (July-September) and my loyalty discount. Combined with $750 off from Honda and $1250 from the dealer it makes sense. I had a '17 Civic touring for $330 per month (48 months) taxes in and now '18 hatch sport $369 taxes in. No headaches and little maintenance.
When you get a lease at 0% there is almost no benefit to finance. Even if the finance is 0% the extra monthly payment saved by leasing can be put to use in the market. You can simply choose after the lease is up whether you want the car. Honda charges $400 for you to buy out your lease.
Also, for some vehicles, the residual is set artificially high by the leasing company - much higher than if you were to sell the car after the same period. Since you are only paying for the difference between the cap cost and the residual, it makes sense to "rent" the vehicle for that subsidized period. A good example is the Toyota Tacoma, which has a whopping 82% residual after three years. You'd be hard-pressed to sell a 3-year old Tacoma for that price. Makes more sense to lease a Tacoma if you can write off the interest as a business expense and you know you will be getting into a new vehicle after 3 years is up.
You can also residualize factory-installed options, like bigger wheels, suspension upgrades, etc., so that you're paying a fraction of that total cost instead of the whole thing.
Some people are savvier than others when it comes to money and choose not to tie up their capital in a depreciating asset when it can be put to better use - like making more money.
That's assuming they actually invest the difference, instead of finding other reasons/uses for the cash.
OP - me personally I'd buy the thing out. You know the history, you know the car, and for 20k you're not going to get much better than that. My BIL just leased a snappy electric blue GTI...can't wait for his lease to come up. It didn't work out on his 240...but that car scared me in terms of maintenance. The GTI is a much easier pill to swallow.
If you go for the EV route, while you may save money in the long run...it's the typical justification for blowing additional money.
'What's an extra $200-300/month if I'm saving gas. Saving maintenance. Saving saving saving. Then you turn around and you're at 800-1000/month driving an EV to 'save' money.
I like the idea of reducing the state of being in debt in perpetuity. Best thing you can do is own a care that is well cared for, is priced low, and finance it at a great rate where you can invest the additional cash on hand at a higher rate.
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How easy is it to get your hands on a decent car at this point in time?
From what I've heard rental agencies were selling some of their fleet, as prices had risen, no one was renting, and they had nowhere to park them.
They should be back in the market for new vehicles as travel picks up. There are also some manufacturing shortages at this point.
From what I've heard rental agencies were selling some of their fleet, as prices had risen, no one was renting, and they had nowhere to park them.
They should be back in the market for new vehicles as travel picks up. There are also some manufacturing shortages at this point.
No...just no. Like anything that requires nuance...it depends. There is no "its a shaft"...it depends. I have old guys (and guys like you) who come in every 3 years to buy the same Camry they bought the last time. And every time I say you should lease and every time they just buy it cause they want to OWN it. They pay way more than if they had leased in the first place. There are other examples where the opposite is true (a Rav4 right now has terrible lease rates). It depends. But people who say "I'm not a fan of leasing" just haven't done their homework...it depends.
I'd be happy to show you the math anytime.
The real shaft is perpetual payments. That has nothing to do with leasing or buying and everything to do with eating the depreciation on a new vehicle every three years. In some situations it can still make sense (as previously mentioned, business tax efficiencies) but for the vast majority of people, the majority of the time, owning for 4, 5 or 10 years substantially reduces your cost per month/km. As you said, if someone is already mentally committed to a new car every 3 years, it makes sense to run lease and finance numbers before signing.
Please do not buy it out with the intention to then sell it. You instantly lose 13%.
20k plus tax is $22600. plus a safety plus license transfer $50 plus the fee you are going to get charged.
And then (using numbers from this thread) maybe sell it for $25k? to net $2k depending on the fees?
Instead: sell it before you buy it out. Do the same things and advertise on auto trader and kijiji....DO NOT tell anyone it is a lease.
When you have your agreed price from the buyer....just bring them to the dealership for the paperwork. if you sell it for the same $25k you will put $4500ish (depending on the fee) into your pocket.....even better if you buy the junker you want from them as you'll not pay taxes on $4500 of junk. The equity on your sale of $4500 saves you another 13% so $5085 off of the cost of another car.
4 and 5 years works too depending on the car....but that assumes no value in having a new car. Some people just want one. If we were all just going for lowest cost we'd all be driving 20 year old corollas. But we don't.
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