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I see lease as a predetermined depreciation schedule.
Whenever you sign a lease, it would give you a "residual value", this is important because it determines how much you end up paying.
For some domestic brands, this can be an advantage because when the residual value is set at a higher rate than what you'd get if you were to sell after 3-4years for another new car.
Lease makes sense if you the kind of person who change car every 3-4 years anyway. Your exposure to tax is lower (you only pay tax on the portion that depreciates, and not the residual) and if you can write off as expenses, even better.
For those who don't want to deal with the expenses on things like tires/brake wear... they even sell a "protective" plan now where you pay x amount in advance and it covers all wears and tears up to y amount.
Leasing can be at your advantage sometimes depending your own circumstances vs. financing or cash purchase.
The simple way to make it is ask yourself the question "how long do I plan to keep this car for?" If your answer is 3-4years, you might be better off just leasing. You are buying something that depreciate... that depreciation is your cost of ownership. Leasing gives you a clear idea on how much you'd be paying upfront. Whereas financing or cash, you'd be subject on how you'd sell your car. If you can get market price directly to another consumer, it MIGHT make sense. But if you were just going to trade it in or sell it to the dealer, I've yet to see cases where financing/buying came out ahead because dealer would just pay the lowest amount as they'd have to make money by selling at market pricing.
And another HUGE advantage for leasing... in a close lease with most of manufacturer financing arm anyway is that you don't have to worry about the potential loss in value if you ever get into an accident.
Say if someone rear-ends you and it's 100% their fault. ICBC would only pay to fix the car. But say the repair was $4000 (which is easy in modern cars) and when you go to sell the car, suddenly your car is worth a lot less. That loss in value is something you don't have to worry when you are leasing.
In the case of a lease, you just return it and that's it. The residual value stays the same.
So went and renewed my insurance today on my 2000 F150.. truck basically sits until I need it go to to the dump or pick up supplies etc.
Have zero collision, zero anything but 2 million liability, and underinsured motorist coverage, also have the 10% low KM discount
$1700 for the fucking year!! What in the actual fuck. I don’t even know if the truck is worth 1700.
I had her double check and she said the liability went up from $240 last year to $512 this year. 18 years safe driving no accidents, I’m the only driver on the truck. I got 1 speeding ticket in the last year but it was just a $135 ticket or whatever for like 18 over..would that increase my liability premium?
Jesus Christ..
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I hope nobody budgets $2k for brake pads and tires on a RAV-4, I'd expect to spend somewhere between 1/3 to 1/2 of that... but semantics I suppose, we'll use those numbers regardless.
Your lease is not free of maintenance, you're on the hook for brakes above a certain% and tire tread depth being above a certain amount when you return a lease... so tack another $2k on top of your TCO for the lease as well then. You also have to put cash down, nobody does $0 down leases for regular people, so you lose that cash that you put down too.
So realistically I'd say your TCO on the BMW for 3 years is more like $22-$24,000 whereas the proverbial RAV-4 assuming your depreciation numbers are correct and the maintenance costs are as high as you've put is still only $13,000
That's a huge difference. Nevermind the fact the curve flattens on a good quality purchased vehicle... the RAV-4's depreciation slows... the maintenance most likely doesn't get any worse...
Hey! Some great points - totally get where you're coming from here.
RE: TCO after 3 years being better if you buy, yep - you're 100% right there. I'll go as far as to say that a lease makes very little financial sense for most people - especially those who aren't getting value out of having another new car at the end of 3 years or just walk in to the dealer and get an awful lease deal with marked up money factor and no discount.
For myself though, I could see myself on the hunt in 3 years for something with more autonomy and improved crash safety (i.e. new NHTSA oblique overlap crash test (60 MPH, 30% overlap into a solid barrier at a 15 degree angle), IIHS rear seat crash test). We're already starting to see this with GM expanding Supercruise availability (uses HD maps + sensor fusion for better 'self driving' behaviour) and Acura adding the head cradle airbag on the new TLX.
My perspective is that my daily driver should be the best tool to solve my problem: energy spent on a driving experience that I add 0 value to when engaged since we're barely moving; energy that could be spent on other hobbies or triathlon training. I've been in an accident that resulted in a neck pain that took me out of training for a couple months so safety is also really important > can't get those months back.
RE: downpayment, less loaded vehicles Here are some links to broker deals: ~336 + taxes and fees > ~400 all in for a 330xi with the driver assist features I'm looking for.
I've also got college grad ($1k), corporate discount (~500), and an OL code (500-1k) from an event they held at work which should take this down to 375 all in. BMW CCA members get another $500 off.
RE: maintenance Cost doesn't just include pads and tires, but also rotors and other misc stuff that comes up (i.e. t case fluid, brake fluid, etc). Tires for those 19s on the RAV4 aren't cheap, Premiere LTXs go for ~900 + install. Throw in rotors as well for the mountainous driving I do (even with engine braking, the Accord and RAV at home experience shaking from uneven pad transfer from weekly Cypress/S2S trips).
Lifestyle change I suppose a RAV4 should be fairly easy to sell privately and/or wholesale value shouldn't be too too bad. I imagine a 400pm BMW lease should be fairly easy to transfer as well.
At the very end of this all...Suppose we assume a 375/mo payment on the BMW and 2k of maintenance, we're at 15.5k vs 13k for the rav. I'm happy to pay the extra couple grand for the extra noise comfort (the engine on RAV4 is seriously gritty sounding), hands off traffic jam assist, fun to drive factor, and image.
So went and renewed my insurance today on my 2000 F150.. truck basically sits until I need it go to to the dump or pick up supplies etc.
Have zero collision, zero anything but 2 million liability, and underinsured motorist coverage, also have the 10% low KM discount
$1700 for the fucking year!! What in the actual fuck. I don’t even know if the truck is worth 1700.
I had her double check and she said the liability went up from $240 last year to $512 this year. 18 years safe driving no accidents, I’m the only driver on the truck. I got 1 speeding ticket in the last year but it was just a $135 ticket or whatever for like 18 over..would that increase my liability premium?
Jesus Christ..
I'm in a similar situation as you. Just renewed yesterday on a truck that sits most of the time until needed for move large items. Insurance went up about $350 for the year and it was majority due to the 3rd party liability. Putting day permits would have been cheaper in the long run, but the truck is parked on public roads when not in use.
Maybe I missed something but why compare the lease cost of one vehicle to the purchase cost of a different vehicle? Just compare lease vs purchase for the same model.
Quote:
Originally Posted by Hondaracer
So went and renewed my insurance today on my 2000 F150.. truck basically sits until I need it go to to the dump or pick up supplies etc.
How often do you use it? A day permit is like $30, a UHaul pickup is $20/day.
__________________ 1991 Toyota Celica GTFour RC // 2007 Toyota Rav4 V6 // 2000 Jeep Grand Cherokee
1992 Toyota Celica GT-S ["sold"] \\ 2007 Jeep Grand Cherokee CRD [sold] \\ 2000 Jeep Cherokee [sold] \\ 1997 Honda Prelude [sold] \\ 1992 Jeep YJ [sold/crashed] \\ 1987 Mazda RX-7 [sold] \\ 1987 Toyota Celica GT-S [crushed]
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Originally Posted by maksimizer
half those dudes are hotter than ,my GF.
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reading this thread is like waiting for goku to charge up a spirit bomb in dragon ball z
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OH thank god. I thought u had sex with my wife. :cry:
Maybe I missed something but why compare the lease cost of one vehicle to the purchase cost of a different vehicle? Just compare lease vs purchase for the same model.
If we're discussing whether leasing can be a good option, limiting the examples to a specific model wouldn't provide a holistic view of the problem because the leases are structured differently.
Example 1: RAV4 - Financing Costs Less Lease - Toyota USA offer: 3k down, $430/month = ~$19k Finance: 65% of value retained over 3 yrs, 32k MRSP, = ~11k
Example 2: BMW 330ix- Lease Costs Less Lease from broker: $1.3k in fees, $375 a month = ~15k Lease - BMWusa.com offer: $2.6k down, $439/month = ~18k Finance: 55% of value retained over 3 years, 42k MRSP = ~19.8k
Maybe I missed something but why compare the lease cost of one vehicle to the purchase cost of a different vehicle? Just compare lease vs purchase for the same model.
How often do you use it? A day permit is like $30, a UHaul pickup is $20/day.
Probably like 4-6 times a month so it’s right at that stupid threshold of being worth it VS day permits unfortunately
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How indepth do you want to tallk about tax impact on lease vs buy?
Leasing a car is preferred from a tax-savings point of view since the whole payment can potentially be used to reduce taxable income (up to $800/month). When the car is purchased, only the interest portion of the loan payment (if any) and the CCA "depreciation"of the car (valued up to $30,000) can be used to reduce taxes. What i mean is that, if your purchase/financed a car worth more than $30k, the amount exceeding $30k doesn't benefit you for tax purposes. This is where leasing is an advantageous.
When the car is leased, there are more tax deductions, but the trade-off normally is a higher cash outflow. If your business can handle that cash outflow, great, lease it up.
68, thank you for your response, much appreciated.
Now I'm confused even further here, can you explain how I can write off the lease for tax purposes? I figured that was only allowed if it's commensurate to my employment, my company reimburses me by the KM, thus I've never been able to claim against my vehicle.
Am I completely missing out a write off for all my leases over the years?
Another thing that can workout for leasing, if you've kept the KMs fairly low, and the vehicle is in good condition along with money put down (I put $8K down on my lease), I can purchase the vehicle prior to the end of the lease, and sell it for a good amount for cover my cash down (i.e buyout is $14K, car sells for $22k+).
The way tech continues to change at such a rapid rate in vehicles nowadays, I always figured leasing was the better option.
The days of cars being pretty much the same from year to year from a technological standpoint seem to be over here.
Am I completely missing out a write off for all my leases over the years?
Not always necessarily. You can sometimes come out top depending on how much your employer pays you per KM driven, and how often you drive.
Some jobs/roles enable a monthly allowance to lease a vehicle for work purposes (Hehe's wife is an example, lucky guy scored a trophy wife) where she gets a nice allowance for vehicle lease, but some employers will pay a fixed amount, or mileage. So it all depends in the circumstances. Best to speak to an accountant for such advice. Probably some lurking here for sure.
There were times where I used to get up to $1,000 in mileage, but that was rare, and more often than not, company asked us to rent a vehicle, or sign out a fleet vehicle instead. It was often nice to get a $200 - $300 monthly to cover gas/maintenance/insurance, but we didn't always drive, so leasing made no sense to me.
If we're discussing whether leasing can be a good option, limiting the examples to a specific model wouldn't provide a holistic view of the problem because the leases are structured differently.
Example 1: RAV4 - Financing Costs Less Lease - Toyota USA offer: 3k down, $430/month = ~$19k Finance: 65% of value retained over 3 yrs, 32k MRSP, = ~11k
Example 2: BMW 330ix- Lease Costs Less Lease from broker: $1.3k in fees, $375 a month = ~15k Lease - BMWusa.com offer: $2.6k down, $439/month = ~18k Finance: 55% of value retained over 3 years, 42k MRSP = ~19.8k
Generally speaking, you should never put money down on a lease.
can you explain how I can write off the lease for tax purposes? I figured that was only allowed if it's commensurate to my employment, my company reimburses me by the KM, thus I've never been able to claim against my vehicle.
Am I completely missing out a write off for all my leases over the years?
Assuming you're NOT running a business, merely an employee, you can claim the business-use portion of your vehicle expenses. I would like to make a disclaimer that CRA expects the taxpayer to provide a detailed log of of all business-use trips whenever they demand it as mentioned by BIC_BAWS in the last page. Since it is impractical and unlikely that people record the distance of each and every business-use travel, CRA loves to audit this line item and denies a lot of these expenses. No, credit card statements are not permissable as proof and get automatically denied by CRA. So it would be best to review what you claim with an accountant before you claim everything willy nilly.
OK Mr. Employee, who isn't running a business, if you're required to travel to clients to make money (e.g. financial advisor, insurance sales guy, etc) your employer would have issued a form T2200 outlining what types of expenses they expect you will incur and whether or not they reimburse any amounts.
So for example, if it turns out that your personal vehicle was used for business activity 40% of the time (e.g. 7,200 km/ 18,000km). Then you can claim 40% of your motor vehicle costs you paid during the year (e.g. gas, lease payments, icbc, repairs & maintenance). Lets say for example the total of these expenses totalled to $10,000. You would be allowed to claim $4,000 ($10,000 total expenses × 40% business-use) on your tax return. If the T2200 your employer provided you said they gave you an allowance of $100 per month, then you can only claim the non-reimbursed $2,800 on your tax return. It doesn't stop there. To clarify, you're not getting a tax break of $2,800. Your tax savings will be less than 50% of that $2,800.
But since it sounds like your employer doesn't issue a T2200 and they just pay you a $rate per km, then none of the above applies to you. Can't expense motor vehicle expenses on your tax returns unless you start some sort of subcontracting gig which involves lots of driving around like doordash, uber...
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Quote:
Originally Posted by SSM_DC5
I'm in a similar situation as you. Just renewed yesterday on a truck that sits most of the time until needed for move large items. Insurance went up about $350 for the year and it was majority due to the 3rd party liability. Putting day permits would have been cheaper in the long run, but the truck is parked on public roads when not in use.
Leave basic 3rd party liability.
No fault insurance switch next year + the underinsured 1 mil other drivers have if the at fault driver doesn't have enough (basic 200k).
Well, i finally renewed under the new system at ICBC and my basic auto insurance actually went down but that was mostly due to my car having autonomous breaking. BCAA optional insurance went up a bit though so they essentially balanced each other out.
I renewed my insurance on my 2016 4Runner.
It went from $170/m to $190. $205 with the wifey and $215 with the wifey and brother in law(we live in the same place)
Not huge increase but still. It’s about $4-500/year more
Compared some pricing on my GTI between ICBC/Private. ICBC was asking $3900 for 300/300, 2 mil underinsured, 3 mil third party. Under ICBC basic+BCAA with identical coverage is $2720.
Do you guys think it's worth skipping third party liability if you're a student / new grad where you have no major assets anyways. So why bother with extra 3rd party. If it's going to be an extra $1.5+/year. If you save it from 18 - 24 that's like $9k in savings.
Do you guys think it's worth skipping third party liability if you're a student / new grad where you have no major assets anyways. So why bother with extra 3rd party. If it's going to be an extra $1.5+/year. If you save it from 18 - 24 that's like $9k in savings.
Good luck if you get into any sort of accident. Basic liability coverage is only $500k, I think? If there are more than 2 persons getting injured, you are on the hook for their medical, recovery, and income replacement bills because that $500k coverage won't be enough.
Last I heard, bankruptcy is not a very nice thing. If you can't afford the extra liability coverage, perhaps taking transit is a better bet.
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