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NY Times: Car Leases Can Be the Most Binding of Contracts

5092 Views 33 Replies 9 Participants Last post by  Got volt?
Must read for anyone planning to lease. NY Times has a tiered access policy. The first 10 articles each month are free:

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Oy, I'll just comment...So the gist of the story:

"After her doctor notified the California Department of Motor Vehicles last November that she should not be allowed to drive, and her license was subsequently suspended, leasing a Ford Edge at $347 a month became an unnecessary expense."

Girl lost her license and now FEELS their monthly payment is unnecessary...I could get a DUI, lose my license and feel the same! Mean old lender won't help poor license-less me...

Again, if you didn't lease, and financed the lender most likely wouldn't budge if you lost your license...If you truly develop a phobia of losing your license, do what lilninja would do, save up until you can afford it, buy it outright and deal with the depreciation in the event you sell due to losing your license...
Wow, now my name is getting dragged into a leasing thread... but my point is more than just an anti-leasing kick. It's also a "don't buy before you can afford it" kick. The entire car industry wants you to get new cars ALL the time because that's how they keep churning out vehicles. But if any event happens to cause you financial hardship, you can get yourself into a world of hurt (just ask anyone who lost their job during the financial crisis while up to their ears in debt). So for my example, i encourage people to pay cash for their cars. If you don't have the cash, that's a sign you can't afford it. Buy a cheaper car with cash you have on hand (this is temporary). With no car payments, you can always save more and upgrade cars along the way. If you lose your license, the paid-for car can sit, no skin off your back since it is paid for, your liability is $0 per month. If you decide to sell the car, you now have money in your pocket. No repo man is knocking at your door.

It's all a matter of risk. Leasing or borrowing adds risk. Paying 100% down minimizes risk.
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Figured you'd comment anyways :D Yup, you're anti-borrowing and often show up in leasing trends and tell people not to lease; sometimes people wrongfully ASSUME you favor financing...
I'm in favor of buying things when you have saved the money for it. Alas, don't be like some people who deal with cash only, and buy all sorts of toys as soon as you have the cash for it (it was amazing how the ocnstruction workers working on my house were all talking about the big screen tvs and atvs there were going to buy as soon as their paychecks arrived). You also need to save for retirement. kids college, a rainy day fund, cars, and any future plans you may have. The only exception to borrowing is housing where it's really hard to pay 100% on a house. For housing you rent until you have at least 20% down and buy only if you plan on staying in the house for a half a decade or more. Renting buys you patience with increasing rates every year and buying locks in your housing costs for the long term.
Sometimes you game the system, sometimes the system games you, as brought out in the article. If you have the golden key for gaming the system that everyone can use, post a thread and get it stickied.

On the subject of housing, I could pay off my house, but I usually make more in investments than I pay in interest on the house. So there's a net gain. But if I suddenly can't pay for the house, my equity gets flushed. That's the risk.

On a side note, we got a quote for health insurance that's more than our house payment (60% increase from last year). We've made other arrangements, but I don't know where to file that outrage. I foresee people not being able to pay their car lease payments, or worse.......

Bro tried again but the car selling service got wise to it, didn't give him that deal of the decade like the last Cruze he bought.

Yeah, I'm not looking forward to shopping healthcare plans with Obamacare. I may go out and get a regular J.O.B. Just for the company provided health plans.
On the subject of housing, I could pay off my house, but I usually make more in investments than I pay in interest on the house. So there's a net gain. But if I suddenly can't pay for the house, my equity gets flushed. That's the risk.
So ask yourself, if you had a paid-for house, would you borrow $100-200K against the house to make investments? If it were me, I'd pay off the house today, then without a mortgage, quickly replenish that investment account. It's amazing how much money you have when you have no payments. I'm not there yet, but having paid off two cars two years ago, the only thing I have left is the mortgage. I can't wait until that's done.
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