Buy a car cash or lease?

[Carlos Florez]

I know its not Real estate related but I would like to know from fellow real estate investors, what would you choose, or what have you chosen? have you bought your car all in cash: No cash out flow payments.

Or got a lease: monthly payments for a car you never own.

Please advice.

[Sam Fickel]

From what I understand, leasing only makes sense if the following apply to you:

-You will never drive anything older than 3 years

-You like the novelty of being the FIRST primary driver

-You don't drive more than normal (~12,000 miles/year or 1000/month)

If that's you, then you'll lose a shut ton of money by purchasing and trading in every other year, to the point where you save a good amount of money by just leasing.

If you drive more than 12k miles/year (or whatever the lease agreement says, could be 10k) then you will be charged for the additional miles.

If you lease and then decide to purchase after the lease period, well, you just bore the brunt of its Depreciation AND you don't have any equity when you start the loan from scratch.

I've found the best way to purchase a vehicle is either Memorial Day (for some reason I'll never understand) or the end of the year. Dealers give their biggest discounts to clear out inventory for the new stuff. Get yourself a vehicle that is 4-6 years old with less than 80,000 miles. It'll still have all the "new" features you need, but won't be beaten up from all the mileage yet. Also, most of the Depreciation happens by year 3, so your trade-in value will be no-bad in a few years when you're done with it. I prefer dealers over private sellers because you can bet they've inspected the vehicle to protect themselves against lemon laws. I just feel more comfortable with it.

Hope that helps!