I posted this in another group, but I think its good info so I'm sharing it here as well. It was in regards to a discussion about leasing vs buying a car:

You would need to get an 84 month loan to purchase a $45k minivan and have the monthly payment be about $650/mo.

Still worth it though. The real value comes from the fact that you have an asset.

Quick comparison:

TLDR: always buy used, but definitely don't ever ever ever lease!!!

Lease for $650/mo.

The total cost after 10 years is $78k.

Buy New at $45k for 84 months and sell after 5 years:

• Monthly payment would be about $650. $39k after 5 years

• After 5 years the car would have depreciated about 50% (this is a high estimate, its probably decently lower) and could be sold for $22.5k

• The remaining principle that needs to be paid would be about $14k.

• Each car would cost $39k + 14k - 22.5k = 30.5k over 5 years

Total cost after 10 years would be about $61k. This is $17k less than leasing.

Buy used 2-3 years old at $30k for 60 months and sell after 3.33 years:

• Monthly payment would be about $580 ($70/mo less than previous examples). $23k after 3.33 years.

• After 3.33 years the car would have depreciated about 25% from its purchase price. It would be sellable for $22.5k

• The remaining principle that would need to be paid would be about $11k

• Each car would cost $23k + 11k - 22.5k = 11.5k over 3.33 years.

Total cost after 10 years would be about $38k. This is $23k less than buying new, and $40k less than leasing!

A used car is 38% cheaper than a new car, and 51% cheaper than a lease, plus it has a lower monthly payment.

A new car is 22% cheaper than a lease and 60% more expensive than a used car.

A lease is 27% more expensive than a new car and 105% more expensive than a used car.

This all assumed an interest rate of 6%.

This is a great write up! I'd like to point out a few things that I think make buying even cheaper: 1. 3 / 4 leases will probably go up more than 1 / 2 purchases 2. You can keep the car for all 10 years 3. You can sell a purchase at the most opportune time 4. You can probably get a better interest rate on a purchase 5. You can refinance to a better rate

Agree - I think you should buy something 2-5 years old and keep it until it's at least ten years old.

My family's mehalech has been "drive it until it won't start" (or until it starts needing frequent / expensive maintenance). Is it better to sell it while it's still a viable vehicle?

Driving it till it dies is one way of going about it. This was mostly written with the philosophy that people don't want to be driving around in a car that requires them to have to give it in to the mechanic for a few days once or twice a year. The financially optimal way would be to drive it until the maintenance starts costing more than the cost of getting a new car, but that also comes along with being less optimal with your time and the stress of not having your car when you need it. This is especially true if you only have one car.

yeah that's definitely a concern. Our minivan wheezes, you can hear it coming down the street from a few blocks away, the front bumper is partially held on by orange duct tape, and one of the sliding doors is inoperable. We're hanging on for dear life, because our next vehicle is going to need to be a 12 seater and I just don't have the budget for that right now 🙈

Personally, i’m definitely in the buy used camp (never even had to finance as I just bought my first car and it’s nearly my age 😂, but what nobody is talking about is the value of getting a new car every few years, I don’t feel the comparisons are apples to apples except for cost

If interest rates are less than 5%, I see no reason to save up to buy a car

@witty-engineer-80805 I see what you did there with your family’s “mehalech” (when the car breaks down, you have to walk) 🙂

Heritage Hyundai just quoted me a brand new Santa Fe at below MSRP and below their Certified stock at 0% for 4 years

Probably says something about the car if the company is basically paying you to take it lolsob

It's beautiful. The issue is that the car market has no customers right now

Siennas have a waiting list longer than the line to withdraw money from SVB

Minivans are not the "car market"

Excuse me, this is FRUM finance

Lol