Re: [OT] we need a new car - leases

["Vee Dubb" <Scirious@hotmail.com>]

Is the Good place likely?

Car companies spend tons of time and money calculating residual values and
lease payments with one purpose.  They want to make sure that THEY end up in
a Good Place, not you.

If doing a lease, worry about the residual value at least as much as the
payment amount.  A nicer car never costs the same amount as a cheaper one.
Do the math.

BH
----- Original Message -----
From: Neal Tovsen <sixteen.volt@gte.net>
To: '84 Scirocco <scirocco@macslut.org>
Cc: vw list <scirocco-l@scirocco.org>
Sent: Tuesday, March 06, 2001 12:02 AM
Subject: RE: [OT] we need a new car - Follow uP


I don't know much about car financing or money in general. However, I am 1.5
years into a 4 year lease on my car, and this is what I understand the world
to be. It may be wrong (somebody please tell me if I'm way off!). Hopefully,
you'll get some other explanations besides mine and you will be able to find
the truth between all of them!

The key is that, with a lease, you supposedly "pay for what you use". On one
hand, you can think of it as a rental. On the other, think of it as though
you're buying the car and automatically selling it after the lease term (say
two years w/ 24k miles on the ODO). The cost of the car new, minus the money
you plan to get when you sell it, is what you pay for on the lease. You're
basically talking about "car futures". This relies heavily on knowing what
the car will be worth in two years as well as your ability to guarantee that
the car will still be in good condition and only have the agreed-to mileage
on the clock in two years' time.

If you *know* you will take good care of the car, and you ***know*** you
won't drive more than the allowed mileage during the X months you have the
car, a lease will probably allow you to have a lower monthly payment. If you
plan to drive a new car every few years, and thus you plan on having a car
payment **forever**, this is a pretty decent deal.

If there is a chance that you will go over your mileage, DO NOT go for a
lease. If you go over, you will be left with two options. Either pay the
"over-mileage" fees, which are usually obscene, or YOU get to be the one
that buys the car after two years, meaning you take out a loan and buy the
car for whatever the pre-arranged amount was. If the car was undervalued
when you bought it, and it held it's value surprisingly well, you might find
yourself in a Good Place (see below). On the other hand, it probably means
you paid too much for the lease to begin with. The double-whammy is that if
you're over mileage, the car probably isn't actually worth as much now,
anyway.

If you can put some money down and can get a really good financing deal
through a credit union or whatever, you can probably come close to a lease
payment and a better deal in the long run. For example (these are all very
ROUND numbers!), my friend and I bought the same Impreza for $21k. He has
access to a really good credit union and paid $5k down on a 5 year loan
instead of my $2k on a 4 year lease. I don't know all the terms of his loan,
but our monthly payments are within $5/month. The difference is that I can
walk away from the car after 4 years and owe/own nothing, but if I buy it I
still owe $10.5k (based on a 55% "residual value"). After one extra year of
payments, he COMPLETELY OWNS his car. Bottom line: If I pay cash for the car
after four years (paying no interest for a $10k loan), he'll have saved
about $3500 compared to me.

The Good Place: The only way I would come out even is if, at the end of my 4
years, I can buy the car for $10.5k (the pre-arranged price) and turn around
and sell it on the street for $14k. This is the "undervalued" situation I
mentioned above. Conversely, if the street value of the car is only $7k and
I just walk away from the lease, it means I just stuck the bank with a $10k
payment on a car that is only worth $7k, and that I'm now theoretically
ahead of my friend who now owns a $7k car (but that's just "thought money"
unless he is actually planning on selling...).

Is the Good Place likely? I don't know...we'll begin to see what things look
like in another year or so. The cars are becomming very popular, but the new
model is coming out this month...

I hope that helps. Again, YMMV!
Neal
'88 16v


> -----Original Message-----
> From: owner-scirocco-l@scirocco.org
> [mailto:owner-scirocco-l@scirocco.org]On Behalf Of '84 Scirocco
> Sent: Monday, March 05, 2001 10:35 PM
> To: Kevin Collins
> Cc: vw list
> Subject: Re: [OT] we need a new car - Follow uP
>
>
> Went to the stealership tonite, they said they wouldnąt have any Jetta
> Wagons until May.  We cant wait that long.  Drove a Golf GLS, was nice car
> (luxury package) but the high pressure salesman tried to talk us into a 5
> year lease - too long.  It was a pretty bad experience, cept two of the
> other ppl commented on my Scirocco.  I hate shopping for cars.
> Anyone know
> a good resource to read up on leasing options?  Either short term
> lease (2-3
> years) are gonna be out of our price range, or this dude was just
> giving us
> the scam.  He said because of residual value, the luxury GLS would be the
> same payment as the GL base model, even though there is a large difference
> in the sticker price.  I'm pretty confused.  So without starting
> a lease vs
> buy flame war, I just need info.
>
> Greg
>
>
>
> on 3/5/01 21:08, Kevin Collins at kcollins1@socal.rr.com wrote:
>
> > The '84 Scirocco wrote:
> >
> >> Well our sable wagon has finally bit the dust, so we're
> thinking of leasing
> >> a new / late model used something or other.  Unfortunately we
> cant afford a
> >> VW (I donąt think) unless its a Golf.  Anyhow drive anything
> decent the can
> >> recommend?  My wife loves the wagon, but I donąt think we can
> afford another
> >> big wagon, even though I'd love a Passat.  How are the new
> Golfs anyhow?
> >
> > The Mk4 Golf is a pretty nice car.  You can get the 1.8T motor
> in the 4-door
> > Golf now..
> >
> > BTW, the Jetta wagon is just about to hit the showrooms, in
> fact they're in
> > port already.  That might be a good option for you?
> >
> > +
> > --
> > Kevin Collins
> > Huntington Beach, CA
> > '86.5 16V 2.0
> > '00 Passat GLS 1.8T
>
> --
> Greg Coan
> St. Louis, MO
> '84 Scirocco
> '88 Sable Wagon (for the dog)
> scirocco@macslut.org
>
>
> --
> Email LIST problems to: scirocco-l-probs@scirocco.org.
> To unsubscibe send "unsubscribe scirocco-l" in the message to
> majordomo@scirocco.org
>



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