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  • #16
    Originally posted by ttc56 View Post
    Thanks for the replies. Biggest takeaways is DI & life for the wife, and a CPA for 1099 stuff + solo 401k, quarterly taxes. My wife was debating how much to work post training so that's why I didn't insure immediately. Also to the comment on our current savings, we literally started our jobs <1 mo ago after being unemployed 3 mo post training, after living in VHCOL area. I thought we did pretty decent given circumstances, and the loans we paid off.

    I know the traditional belief against leasing cars, but I value current car safety/autopilot tech (I would rather not own a car >5yr old) and can navigate leases well enough to make them relatively affordable (leasehackr anyone?, one my current cars is worth several thousand more than payoff amount, will likely buy out/sell to carmax and rinse-repeat). Consider it a splurge.
    The vehicle has a purchase price and a cost.
    The residual value is the same. One company provides the residual value for virtually everyone.
    The reason the location for resale matters is transportation. The auctions are virtually for the dealers. This is not a guess, probably +/- $100.
    When you buy it cash, there is no interest, lease agent commission and the leasing company’s cut.
    If you are selling to CarMax , you are simply recovering some of your lease payments.
    The interest, commission, and leasing company is already gone.
    The message is, leasing is a form of financing. If you do 3 year leases repetitively, you are taking the financial hit for the age of the car for the first three big hits.
    Your strategy loses on the car depreciation and the transaction costs of leasing. It’s an expensive habit long term. Latest and greatest is overshadowing the safety. Bad habit that will cost you.
    Last edited by Tim; 09-20-2020, 09:30 PM. Reason: https://www.alg.com/product.html

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    • #17
      I didn't know about this lease hacking thing. Here is an interesting youtube video
      https://www.youtube.com/watch?v=hYsdjV-K9GI

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      • #18
        Yeah I was about to point out there's rare circumstances where leasing is a decent idea. It takes a lot of work but can definitely work out in your favor especially if you like driving newer cars with all the safety/gizmos.

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        • #19
          Originally posted by Tim View Post

          The vehicle has a purchase price and a cost.
          The residual value is the same. One company provides the residual value for virtually everyone.
          The reason the location for resale matters is transportation. The auctions are virtually for the dealers. This is not a guess, probably +/- $100.
          When you buy it cash, there is no interest, lease agent commission and the leasing company’s cut.
          If you are selling to CarMax , you are simply recovering some of your lease payments.
          The interest, commission, and leasing company is already gone.
          The message is, leasing is a form of financing. If you do 3 year leases repetitively, you are taking the financial hit for the age of the car for the first three big hits.
          Your strategy loses on the car depreciation and the transaction costs of leasing. It’s an expensive habit long term. Latest and greatest is overshadowing the safety. Bad habit that will cost you.
          It is definitely costing me more than buying a 5+ year old model and driving it to the ground. But combining lease incentives (sometimes by manufacturers to increase cpo volume), demo/loaner models, multiple security deposits etc you can get essentially 0 interest and pay very little more than what a used car would depreciate in the same time frame. No warranty or repair costs and you may even come out even. Definitely not for everyone and definitely not every car.

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          • #20
            Buy new, used, tax credits, discounts whatever.
            Different vehicles retain used car values at different rates.
            Model year by vehicle determines largest component. Biggest hit by far is year one in any vehicle. What does this mean? Lease a 2021 in 2020. Residual value is based on model year, not how long you drove it.
            Lease as early as possible, but as late as possible.
            It all comes down to purchase price and how you finance it. Cash, loan or lease. Because you are selling to CarMax, you are getting an “easy” wholesale price. Money left on the table as well.
            The previous video explained it, leasehack was purchase price hack.
            Fact, even a one year old car will save the biggest amount. Still in warranty. Don’t kid yourself, leasing companies don’t pay maintenance, you do.
            Leasing companies don’t pay repairs, that’s warranty. Same result if you paid cash. Don’t focus on the 5 yr beater, the purchase price will decline to the residual value based on model year.
            If you want new, great. Leasing new, rinse and repeat is the absolute worst financial decision.
            That couple thousand back is simply a return of a portion of your money was my point.
            Buying 1 ,2 or 3 years old vehicles will save significant depreciation.
            Buying instead of leasing will save the friction.
            Each change of vehicle will cost you as well.
            Drive what you want. Leasing “new” at the end of model year doesn’t save you money.
            The automotive industry is very mature in both marketing and financing. They have convinced you that a couple grand check is a “good deal”.
            They want you to rinse and repeat. That makes them money. Buy what you want. Keep it as long as you want. Simply wanted you to understand that it isn’t in your long term interest.

            https://www.edmunds.com/bmw/4-series...tyle=401804195

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            • #21
              Can't believe I've never heard of lease hacking. Can you ELI5?

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              • #22
                Originally posted by 8arclay View Post
                Can't believe I've never heard of lease hacking. Can you ELI5?
                Check out leasehackr.com, specifically the forums. Essentially target specific cars that tend to be higher MSRP with significant discounts, with near 0 lease fees/"interest".

                For example, a popular target is a Volvo XC90. Example MSRP of 65k (residual at 3 years of ~60% so 40k). However negotiate "selling price" down to 50k (sometimes utilizing low mileage loaners/demo cars), and pay essentially 50k-40k= 10k plus taxes and minimal fees over 3 years. These regularly go for ~400/mo all inclusive--14k over 3 years. A good marker for a "good deal" is that paying these payments, it would take >10yrs to reach the purchase price of the car. Again, some don't want to pay nearly this much for the luxury of having a new car every 3 years.. Others do.

                Also if this seems too time intensive, there are specific lease brokers that will search the country for perfect targets for leases and have them shipped to you, for a nominal fee.

                However, with the current state of car production, it's a terrible market for leasing.

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                • #23
                  If your 1099 spouse is using a leased vehicle primarily for work, leasing can offer a larger business write-off than owning. But there are rules and documentation requirements for this. Your spouse should consider using the more expensive leased vehicle for work as much as possible, and use the other vehicle for personal use as much as possible. Review the lease deduction rules by doing online research on your own or by discussing this with the CPA.

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