Edmunds Members - Cars and Conversations (Archived)

driver100

Today I parked at tennis in a spot with only 2 spots, I backed into the one on the left and got close to the curb to leave an extra wide space between cars. The lot was fairly empty but, guess who parked next to me? I was already playing tennis so didn't see the slob-lady. When I came back she was gone...but, my car looked OK. She didn't leave a note or try to find me to pay to have the car repaired which I didn't expect but would have been nice.

driver100

One of the guys leased a new Cadillac XT5. He was going to put $5000 down, but, the salesman said it will be cheaper if you don't put anything down. He has a 36 month lease for $14000 or $465 a month. If he had put $5000 down he would end up paying $900 a more. He says a Lexus would have been $18000 but he doesn't like the looks, especially the grill and the pop up GPS screen. The salesman told him not to bother with buying it back after the lease. He is happy to lease a new car every 3 years.

Mr_Shiftright

How does he end up paying more if he reduces cap cost?

28firefighter

driver100 said:

One of the guys leased a new Cadillac XT5. He was going to put $5000 down, but, the salesman said it will be cheaper if you don't put anything down. He has a 36 month lease for $14000 or $465 a month. If he had put $5000 down he would end up paying $900 a more. He says a Lexus would have been $18000 but he doesn't like the looks, especially the grill and the pop up GPS screen. The salesman told him not to bother with buying it back after the lease. He is happy to lease a new car every 3 years.

I don't understand - how does that make sense? If you make a cap reduction it reduces the net cap cost, which reduces the amount subject to financing and reduces the monthly payment. Generally folks shouldn't make big cap reductions because you lose that money if the vehicle is totaled - but that is a very different line of reasoning than it costing more money to put money down.

stickguy

I have seen this in ads, where they give a payment with money down and one without. Sometimes the total spend is higher putting money up front. Which logically makes no sense.

laurasdada

Q: Sorry to hear, has happened to me a couple of times, last in '95. Retrained, employed since. Good luck, no doubt change will be for the better as it sounds like it has been for most of the good folks here that have been in the same situation.

driver100

Mr_Shiftright said:

How does he end up paying more if he reduces cap cost?

I think stick has solved the riddle. He did a lot of crunching the numbers and I think what happens is he is looking at the total amount he will have to pay over 3 years....that amount is $14000, and would have been $14900 if he put $5000 down. Cadillac probably has some deal where if you buy a new model, they absorb a lot of what would be interest, if you don't pay anything down. They really want people to buy an XT5 so they make it as attractive as possible. Something like 0 down, and 0% interest.

He also started out considering buying one one or two years old, but, this worked out much better for him.

stickguy

I would bet that car depreciates more than 14k in 3 years, plus interest on a purchase. So very likely a much smarter move, especially if he wants to flip it by then.

houdini1

graphicguy said:

@imidazol97.......after logging the complaint with Amazon, they apparently sent it to the company who I was trying to order from, RAV POWER.

RAV POWER got back to me, essentially stating that the promotional price they quoted on Amazon would have resulted in taking a loss on the wireless charger I ordered. OK! Not sure what that has to do with me, but if they can’t do a price analysis before posting a price, why should I care?

Anyway, another company I will steer clear of.

Something similar happened to me on Amazon a few months back. I posted a very negative review on the selling company, (not Amazon) without being over the top, etc., just stated my case and gave them 1 out of 5 stars. Apparently they are very protective of their ratings on Amazon because I got a nice letter from them telling me I could keep the faulty item and also get a full refund (after blowing me off before the review)....in exchange for changing my review to be more favorable. I had no problem doing this as I was now satisfied. Sometimes you have to use a hammer.

driver100

He said it won't be worth much in 3 years so he didn't even bother with a buy back. They probably inflate the residual value to get a cheaper lease rate and then they will worry about it in 3 years....probably try to sell it used for more than it is really worth. I think it is a case of Cadillac worrying about that problem later....for now it is just try to sell cars.

oldfarmer50

stickguy said:

I would bet that car depreciates more than 14k in 3 years, plus interest on a purchase. So very likely a much smarter move, especially if he wants to flip it by then.

So if it depreciates more than $14k you wouldn't want to buy THAT car because the buyout would be based on only $14k off, right? But couldn't you go out and buy a different XT5 for a cheaper price based on the actual depreciation?

Am I understanding this right? Leasing makes my brain hurt.

ab348

oldfarmer50 said:

stickguy said:

I would bet that car depreciates more than 14k in 3 years, plus interest on a purchase. So very likely a much smarter move, especially if he wants to flip it by then.

So if it depreciates more than $14k you wouldn't want to buy THAT car because the buyout would be based on only $14k off, right? But couldn't you go out and buy a different XT5 for a cheaper price based on the actual depreciation?

Am I understanding this right? Leasing makes my brain hurt.

I don't understand anything as laid out so far in this particular example.

driver100

I am saying it is done through smoke and mirrors. There is the sale price X and the residual price at the end of the lease Y. GM just wants to sell cars, so they boost the residual value to make the monthly payments less.

The car won't be worth we'll say X (selling price) which may be $40000 (which is probably also an inflated price for a car that gets mediocre reviews and is nice inside but not that luxurious) less the lease amount of $14000 including interest etc and is expected to be worth in this case $26000. in 3 years. They would have to try and sell it for at least $30000 as a used car. They do price their used cars high, comparable to an MB, but, I don't think they will get it.

I think they will try, but all they care about now is building sales and getting people into Cadiallacs.

GM did something similar when they had their financial crisis.....introducing a 100000 mile warranty. The cars weren't any better, it was do or die, if they didn't sell cars they would go under and wouldn't have to honor the warranties, if they sold enough cars and made it...then they would worry about how to honour the warranties....I know, my BIL has a 2008 Impala and it isn't a great car.

It's just my theory, a Cadillac should be worth half of it's current price in 3 years, $14000 in lease payments over 3 years doesn't come close.......it is some kind of marketing plan.

isellhondas

qbrozen said:

For the past 10 years, I have been in pharmaceutical advertising. I was with this agency for just 17 mos. Reason for the mess is that they brought in many new people (including me) to help them grow and become more than just a hole-in-the-wall project shop, but then failed to listen to those people. They kept too many folks around who were stuck in the old ways and continued to drag the whole company down. It resulted in a largely unhappy workplace and, consequently, unhappy clients. In these 17 mos, they have gone from being a $24M agency, with eyes on being $50M with new aquisitions, to a projected $12M as of last week.

I have been looking for a few months now anyway. I just can't afford to be without a paycheck, however. My focus until now has been on pharma companies rather than agencies because I'd really like to get away from agency life. But now I'll have to take whatever comes along. That may even mean taking something with a brutal commute. Time is no longer on my side and I can't be picky.

Our son got shown the door after nearly ten years with a local well known software/gaming company. It seems they like to replace people like him with contract workers that come from other countries. Very tough on him right now. especially after working so hard and receiving rave reviews.

Today, there is no loyality from either side. If a company can save a couple of bucks, jobs and family seciruty mean nothing. So much for working hard for forty years and retiring with a nice pension and a gold watch.

Today, expereince is considered to be something "bad" and not good and is often looked upon as a person inflexible and unwilling to embrace change. It's dog eat dog. Mr. Q, you will not only land on your feet but the door that opens will be bigger and brighter than what you left. I just know it!

stickguy

Farmer, I think you got it. My point was, Driver's friend was smarter to lease the caddy rather than buying a new one. In leasing, ,you are basically paying for the depreciation over 3 years. But, the amount is fixed. and my assumption is that the true depreciation would be more than that fixed amount, so if he bought the car and sold for market value 3 years later, he would be out more money.

flip side, yes, the buyout on the lease is going to be higher than what you could buy a similar car for if you want a 3 year old one.

qbrozen

If I get desperate, I'll go into auto sales. Haha. That was the first thing my kids said. I had to explain "if you don't sell, you don't eat." They don't quite get it. As much as I try, money is an alien concept to them.

stickguy

if you open a nice friendly hi end used lot, I will be happy to come sell for you when I retire. And by sell, I mean spend all day driving the nice cars around to make sure they are 100% ready to go.

28firefighter

qbrozen said:

If I get desperate, I'll go into auto sales. Haha. That was the first thing my kids said. I had to explain "if you don't sell, you don't eat." They don't quite get it. As much as I try, money is an alien concept to them.

I have to wonder if the fact that we are moving towards a largely cashless society hurts the ability of kids to understand the concept of money. Its much easier to understand the value when you physically have something in your hand and have to give it away to get something else, vs swiping a credit card or tapping a phone.

stickguy

that was actually hard for my daughter. We had a lot of discussions about how to appropriately use a credit card. Though she is obsessed with wanting to pay of charges as soon as they appear. But she is acutely aware of money coming out of her bank account balance. Neither of my kids tends to use or even carry much cash (drives me nuts when my son maybe has $1 on him, and we are out places that don't all take cards).

me, I am not handing over a CC to some random dude behind a bar to keep charging against. I will happily just pay cash.

28firefighter

stickguy said:

Neither of my kids tends to use or even carry much cash (drives me nuts when my son maybe has $1 on him, and we are out places that don't all take cards).

HAHA. This is my wife and I, though lately I try and keep at $60-$80 in cash on me at all times. We use credit cards for just about everything - we pay them off in full each month and never go over our budget, but the points add up quickly. Plus its a free 30 day float on the money. That said if we are going to a bar (well, not since Sam was born), I'll never leave a tab open - I order what I want and close the tab out.

tbirdmarco

https://m.youtube.com/watch?v=mMBAfnfIzHY

oldfarmer50

stickguy said:

Farmer, I think you got it. My point was, Driver's friend was smarter to lease the caddy rather than buying a new one. In leasing, ,you are basically paying for the depreciation over 3 years. But, the amount is fixed. and my assumption is that the true depreciation would be more than that fixed amount, so if he bought the car and sold for market value 3 years later, he would be out more money.

flip side, yes, the buyout on the lease is going to be higher than what you could buy a similar car for if you want a 3 year old one.

Thus, two leasees should get together and buy each other's car after they hit the car lot. Assuming they both wanted to continue driving that car.

oldfarmer50

stickguy said:

if you open a nice friendly hi end used lot, I will be happy to come sell for you when I retire. And by sell, I mean spend all day driving the nice cars around to make sure they are 100% ready to go.

Ooh ooh can I be the swap driver?

explorerx4

@stickguy,
You're son is smart. Sorry dad, I don't have any cash on me.

andres3

fintail said:

Jobs? Salaries? Summers? Scenery? Maybe you like congestion and bad drivers? That's all I can think of

28firefighter said:

Why did I move here again? 

Have you seen Southern CA during the first major rain event of the season? It is like everyone suddenly thinks they are out driving on summer slicks on polished ice! Except some panic at the feeling of "loss of traction" and do stupid things that lead to spin outs, on get this, straight-away sections of multi-lane Interstate Freeway!

andres3

fintail said:

Jobs? Salaries? Summers? Scenery? Maybe you like congestion and bad drivers? That's all I can think of

28firefighter said:

Why did I move here again? 

Have you seen Southern CA during the first major rain event of the season? It is like everyone suddenly thinks they are out driving on summer slicks on polished ice! Except some panic at the feeling of "loss of traction" and do stupid things that lead to spin outs, on get this, straight-away sections of multi-lane Interstate Freeway!

andres3

driver100 said:

graphicguy said:

@imidazol97.......after logging the complaint with Amazon, they apparently sent it to the company who I was trying to order from, RAV POWER.

RAV POWER got back to me, essentially stating that the promotional price they quoted on Amazon would have resulted in taking a loss on the wireless charger I ordered. OK! Not sure what that has to do with me, but if they can’t do a price analysis before posting a price, why should I care?

Anyway, another company I will steer clear of.

My guess would be your argument is with RAV POWER and Amazon is just the link. If you have a copy of the original confirmation they should be legally obliged to sell for the advertised price.....even if they made a mistake. Be sure to give them a terrible review.

We have ordered 100s of things from amazon without a problem. With Prime things usually arrive in a day or two with free shipping. If there is a problem they have always resolved it in our favor. I like the choices, the reviews, they keep a record of your purchases, you can track your purchase, ease of ordering. I support bricks and mortar stores when I can, but, hard to beat the spectrum of products, prices and ease of ordering on amazon.

My experience with Amazon has been very positive as well.. They won't hesitate to send a $10 credit to make up for something, whereas Rite Aid would rather declare World War 3 than give you a 100% refund. I suspect people got better refunds with less hassle from Trump University than one does with Rite Aid.

suydam

andres3 said:

fintail said:

Jobs? Salaries? Summers? Scenery? Maybe you like congestion and bad drivers? That's all I can think of

28firefighter said:

Why did I move here again? 

Have you seen Southern CA during the first major rain event of the season? It is like everyone suddenly thinks they are out driving on summer slicks on polished ice! Except some panic at the feeling of "loss of traction" and do stupid things that lead to spin outs, on get this, straight-away sections of multi-lane Interstate Freeway!

Well, up our way, “rain event” meant a mudslide that so far has killed 17 people, destroyed over 100 homes, and closed the major coastal freeway for 30 miles in both directions. Several inches fell in just a couple of hours. Not exactly ordinary! Until at least Monday, the only way for us to go south is by air or boat. Or you could make a 6 hour trek across, up, and through the mountains.

ab348

stickguy said:

that was actually hard for my daughter. We had a lot of discussions about how to appropriately use a credit card. Though she is obsessed with wanting to pay of charges as soon as they appear. But she is acutely aware of money coming out of her bank account balance. Neither of my kids tends to use or even carry much cash (drives me nuts when my son maybe has $1 on him, and we are out places that don't all take cards).

me, I am not handing over a CC to some random dude behind a bar to keep charging against. I will happily just pay cash.

I had an interesting realization last week. I'm trying to clean out the part of the basement that is storage. I have a bunch of plastic totes and cardboard boxes in there that haven't been touched in 20 years, and what is in them maybe hasn't been touched since the '80s or before. Two of them were nothing but paper - old bank statements from the '80s, cancelled cheques from back when banks used to return them, my first few tax returns, hundreds of old pay stubs, a bunch of credit card statements and charge slips (the old kind that were carbon imprints of your card), all stuff that needed to go. I couldn't help but go through them before I tossed them.

What I discovered was that most of my credit card statements from the early '80s - I had both a Visa and a MasterCard then - usually only had one or two items on them each month. I only used them for "special" purchases, something that I wouldn't usually wouldn't pay for in cash, like a suit or a piece of furniture. Maybe a night out. But they really didn't get used much. That is totally in contrast with today where I use them for most everything and pay them off each month. I was surprised but it made me realize that I always paid cash for groceries and gas and everyday purchases back then.

stickguy

my wife is obsessed with keeping all that old paper too. And spent hours organizing them a few times. I tell her that it is all useless at this point but she can't let go. Occasionally I consolidate a bunch and sneak it away. but when we move, it all needs to hit the shredder.

ab348

I think I broke my shredder today after using it for a bunch of that stuff.

suydam

There’s actually a timeline you can find that says how long you need to keep this stuff. When we moved we shredded enormous amounts! Statements for homes we havent owned in 20 years! Now I’m trying to go paperless as much as possible.

explorerx4

When I was cleaning out my Mom's house, there were tax returns going back to the mid 60's.Among other things, I also found my old school report cards. Those got shredded ASAP!
The funniest thing I found was a report card for some cousin who she complained about a lot, we never met and went to her school.
In 1 quarter, 42 absences.

qbrozen

stickguy said:

if you open a nice friendly hi end used lot, I will be happy to come sell for you when I retire. And by sell, I mean spend all day driving the nice cars around to make sure they are 100% ready to go.

Opening a nice used lot is actually is my lottery dream. Well, one of them. 

fintail

They often do that here, too. I think rain adds a good 50% to a commute, especially in the evening. But with local traffic, it's hard to spin out at 15-20 mph (which is about my average speed on the evening commute, and I leave before 5).

WA drivers are often CA drivers who couldn't hack it.

andres3 said:

Have you seen Southern CA during the first major rain event of the season? It is like everyone suddenly thinks they are out driving on summer slicks on polished ice! Except some panic at the feeling of "loss of traction" and do stupid things that lead to spin outs, on get this, straight-away sections of multi-lane Interstate Freeway!

driver100

stickguy said:

Farmer, I think you got it. My point was, Driver's friend was smarter to lease the caddy rather than buying a new one. In leasing, ,you are basically paying for the depreciation over 3 years. But, the amount is fixed. and my assumption is that the true depreciation would be more than that fixed amount, so if he bought the car and sold for market value 3 years later, he would be out more money.

flip side, yes, the buyout on the lease is going to be higher than what you could buy a similar car for if you want a 3 year old one.

Exactly stick. The salesman and my friend knew he would never buy the car at the end of the lease, it wouldn't make sense.
Companies like leasing....it means they get to lease out another car in 3 years, and it gives them nice clean low mileage used cars to sell.
But, I think there is some kind of game going on when you can lease a luxury car for $0 down, $465 a month, and the payments aren't even close to matching the depreciation over 3 years. It is similar to the financial meltdown, leasing cars at bargain basement prices and worry about it in 3 years time when the chickens come home to roost....to put it in terms oldfarmer will really understand.

It will be interesting to see what those cars eventually do sell for.

Michaell

driver100 said:

stickguy said:

Farmer, I think you got it. My point was, Driver's friend was smarter to lease the caddy rather than buying a new one. In leasing, ,you are basically paying for the depreciation over 3 years. But, the amount is fixed. and my assumption is that the true depreciation would be more than that fixed amount, so if he bought the car and sold for market value 3 years later, he would be out more money.

flip side, yes, the buyout on the lease is going to be higher than what you could buy a similar car for if you want a 3 year old one.

Exactly stick. The salesman and my friend knew he would never buy the car at the end of the lease, it wouldn't make sense.
Companies like leasing....it means they get to lease out another car in 3 years, and it gives them nice clean low mileage used cars to sell.
But, I think there is some kind of game going on when you can lease a luxury car for $0 down, $465 a month, and the payments aren't even close to matching the depreciation over 3 years. It is similar to the financial meltdown, leasing cars at bargain basement prices and worry about it in 3 years time when the chickens come home to roost....to put it in terms oldfarmer will really understand.

It will be interesting to see what those cars eventually do sell for.

It won't matter, because in almost all cases the leasing bank has an insurance policy that covers them if the market value is less than the contract residual value.

That's why the dealer can often buy the vehicle at the end of the lease for a lower price than the customer.

Michaell

suydam said:

andres3 said:

fintail said:

Jobs? Salaries? Summers? Scenery? Maybe you like congestion and bad drivers? That's all I can think of

28firefighter said:

Why did I move here again? 

Have you seen Southern CA during the first major rain event of the season? It is like everyone suddenly thinks they are out driving on summer slicks on polished ice! Except some panic at the feeling of "loss of traction" and do stupid things that lead to spin outs, on get this, straight-away sections of multi-lane Interstate Freeway!

Well, up our way, “rain event” meant a mudslide that so far has killed 17 people, destroyed over 100 homes, and closed the major coastal freeway for 30 miles in both directions. Several inches fell in just a couple of hours. Not exactly ordinary! Until at least Monday, the only way for us to go south is by air or boat. Or you could make a 6 hour trek across, up, and through the mountains.

I've been reading about that - pretty major damage, and I just heard that the 101 is going to be closed until Monday.

suydam

Two Channel Island boat tour groups are running ferries between Ventura and Santa Barbara harbors. $32 each way. Many people who work in Santa Barbara County can’t afford to live there. I don’t know what they’re going to do till the 101 opens.

oldfarmer50

ab348 said:

stickguy said:

that was actually hard for my daughter. We had a lot of discussions about how to appropriately use a credit card. Though she is obsessed with wanting to pay of charges as soon as they appear. But she is acutely aware of money coming out of her bank account balance. Neither of my kids tends to use or even carry much cash (drives me nuts when my son maybe has $1 on him, and we are out places that don't all take cards).

me, I am not handing over a CC to some random dude behind a bar to keep charging against. I will happily just pay cash.

I had an interesting realization last week. I'm trying to clean out the part of the basement that is storage. I have a bunch of plastic totes and cardboard boxes in there that haven't been touched in 20 years, and what is in them maybe hasn't been touched since the '80s or before. Two of them were nothing but paper - old bank statements from the '80s, cancelled cheques from back when banks used to return them, my first few tax returns, hundreds of old pay stubs, a bunch of credit card statements and charge slips (the old kind that were carbon imprints of your card), all stuff that needed to go. I couldn't help but go through them before I tossed them.

What I discovered was that most of my credit card statements from the early '80s - I had both a Visa and a MasterCard then - usually only had one or two items on them each month. I only used them for "special" purchases, something that I wouldn't usually wouldn't pay for in cash, like a suit or a piece of furniture. Maybe a night out. But they really didn't get used much. That is totally in contrast with today where I use them for most everything and pay them off each month. I was surprised but it made me realize that I always paid cash for groceries and gas and everyday purchases back then.

I still do. The CIA won't be tracking me

Michaell

suydam said:

Two Channel Island boat tour groups are running ferries between Ventura and Santa Barbara harbors. $32 each way. Many people who work in Santa Barbara County can’t afford to live there. I don’t know what they’re going to do till the 101 opens.

And, it's 90 minutes one way - versus, as you've noted, 6 hours to take I-5 and miscellaneous back roads back into SB.

A close friend of mine retired a year or so ago from her job as a dispatcher for the Montecito Fire Dept.

venture

qbrozen said:

If I get desperate, I'll go into auto sales. Haha. That was the first thing my kids said. I had to explain "if you don't sell, you don't eat." They don't quite get it. As much as I try, money is an alien concept to them.

I just read what happened. I'm sure you will be fine. You're too smart of a guy to be out of work for long. Someone will snap you up.

oldfarmer50

suydam said:

There’s actually a timeline you can find that says how long you need to keep this stuff. When we moved we shredded enormous amounts! Statements for homes we havent owned in 20 years! Now I’m trying to go paperless as much as possible.

Be careful what you're throwing out. Years ago I decided burning would be a good way to get rid of decades old tax records. As I dumped one folder in the fire I saw the deed to my house. A quick grab got it out with some singed edges.

imidazol97

abacomike said:

Similar thing happened to me.  I ordered 4 boxes of 100 count Mr. Coffee Filters from Amazon a few months ago.  I called Amazon to complain to them that all 4 boxes were crushed when I opened the carton.  They said they were not responsible - that I had to call the company that shipped the package.  I called them and they said they were not responsible.  I called UPS and they told me to contact the shipper.  That was the last time I would ever order anything from Amazon - NEVER AGAIN!  Walmart treats you better!  

I was reading back through posts to look for the negative posts on Cadillac, and I realized what happened here. Your purchase was not fulfilled by Amazon. On the purchase page it said that it likely said this was being purchased from Happy Kitchen Ancillary Products Company and shipped by them, or some other no-brick company that's set up strictly to sell through Amazon and/or other online companies. So the other company was actually the one who packaged it. Amazon should have said, here's a $10 gift card on your Prime Account. We're sorry and Amazon should have noted that to the actual shipper.

I purchased 5 house air filters online. They're 20x20x5". So that's a big box. They were to come in a couple of days but they were not fulfilled by Amazon from their warehouse; it was a Happy Air company or such. They were at my door the next afternoon after I placed the order after 3 pm day before. Turns out the company was in Northern Cincinnati and they shipped via UPS. I had learned earlier when I used to order more through Amazon to notice who was selling. Best was if it said Juice Paper Products fulfilled by Amazon, meaning their warehouse (in Northern Ky or northwest of Indianapolis) actually packages and ships the item.

graphicguy

Re: Amazon....for a lot of these items, Amazon is just the ordering vehicle. They don’t warehouse, or ship. They just are the front end for ordering. The products themselves are shipped by the companies offering them.

If it’s not Amazon offering the product directly, it will usually say something along the lines of “sold by XYZ, an Amazon Partner”. If it’s sold directly by Amazon, they’re usually really good about customer service and will either replace, or refund anything sold by them directly.

In the case of the wireless charger, that’s exactly what happened. Amazon didn’t sell it directly. It was actually sold by another 3rd party. They only listed it through Amazon.

My complaint to Amazon that it was a “bait and switch”. They offered my a gift certificate, even though it wasn’t their fault directly.

driver100

Michaell said:

driver100 said:

stickguy said:

Farmer, I think you got it. My point was, Driver's friend was smarter to lease the caddy rather than buying a new one. In leasing, ,you are basically paying for the depreciation over 3 years. But, the amount is fixed. and my assumption is that the true depreciation would be more than that fixed amount, so if he bought the car and sold for market value 3 years later, he would be out more money.

flip side, yes, the buyout on the lease is going to be higher than what you could buy a similar car for if you want a 3 year old one.

Exactly stick. The salesman and my friend knew he would never buy the car at the end of the lease, it wouldn't make sense.
Companies like leasing....it means they get to lease out another car in 3 years, and it gives them nice clean low mileage used cars to sell.
But, I think there is some kind of game going on when you can lease a luxury car for $0 down, $465 a month, and the payments aren't even close to matching the depreciation over 3 years. It is similar to the financial meltdown, leasing cars at bargain basement prices and worry about it in 3 years time when the chickens come home to roost....to put it in terms oldfarmer will really understand.

It will be interesting to see what those cars eventually do sell for.

It won't matter, because in almost all cases the leasing bank has an insurance policy that covers them if the market value is less than the contract residual value.

That's why the dealer can often buy the vehicle at the end of the lease for a lower price than the customer.

Correct me if I am wrong, but don't most car companies run their own financing.....example GMAC?
(That's partly why car companies own their own finance companies. Ford does. ... GM is building one out of GM Financial, a subprime auto lender GM acquired in 2010).
I believe GMAC was sold off but the new company acts almost like GM's banking arm.
If it is, they can pretty well set their own values on selling price and set their own residual value.

Just from a quick view, I don't think the Cadillac XT5 was that much nicer than the KIA Sorento I was in a few weeks ago. My guess is the Cadillac has a much higher MSRP than it deserves, but people will pay a premium price, to own a Cadillac.

driver100

graphicguy said:

Re: Amazon....for a lot of these items, Amazon is just the ordering vehicle. They don’t warehouse, or ship. They just are the front end for ordering. The products themselves are shipped by the companies offering them.

If it’s not Amazon offering the product directly, it will usually say something along the lines of “sold by XYZ, an Amazon Partner”. If it’s sold directly by Amazon, they’re usually really good about customer service and will either replace, or refund anything sold by them directly.

In the case of the wireless charger, that’s exactly what happened. Amazon didn’t sell it directly. It was actually sold by another 3rd party. They only listed it through Amazon.

My complaint to Amazon that it was a “bait and switch”. They offered my a gift certificate, even though it wasn’t their fault directly.

So amazon did offer the difference?

Amazon Prime products are stored in the warehouse and it seems Amazon takes responsibility for those items. My pineapple bourbon sauce was a Prime product.......the wrong one arrived the next day, they sent me the correct one two days later, no mention I had to return the wrong one (raspberry).

You can't ask for better service....I think amazon delivers beyond expectation in most cases.

fintail

For the high end cars especially, it is just a subsidy. No doubt they want you to lease rather than buy - for the reasons you mention, and will reward leasers more than buyers.

I think these cars have enough profit margin to make it work and then some - it's not like MB, BMW et al are losing money. You can't tell me it costs anywhere near 70K to build a moderately optioned E or 5er, or 55K to make that Caddy. I suspect the margins on such cars are yuuuuuge. Creatively account your way through it, and all you need to think about is the next model year.

Regarding a meltdown, many doomers have been harping on car-related issues for years, but it hasn't happened. For these cars, if a profit still exists, it works. These leases have existed for years. Subprime auto loans haven't caused any real issues yet either. I'd be more worried about two particularly American types of debt - medical debt, and especially student loan debt - I think the latter has the potential to cause trouble.

driver100 said:

Exactly stick. The salesman and my friend knew he would never buy the car at the end of the lease, it wouldn't make sense.
Companies like leasing....it means they get to lease out another car in 3 years, and it gives them nice clean low mileage used cars to sell.
But, I think there is some kind of game going on when you can lease a luxury car for $0 down, $465 a month, and the payments aren't even close to matching the depreciation over 3 years. It is similar to the financial meltdown, leasing cars at bargain basement prices and worry about it in 3 years time when the chickens come home to roost....to put it in terms oldfarmer will really understand.

It will be interesting to see what those cars eventually do sell for.

Michaell

driver100 said:

Michaell said:

driver100 said:

stickguy said:

Farmer, I think you got it. My point was, Driver's friend was smarter to lease the caddy rather than buying a new one. In leasing, ,you are basically paying for the depreciation over 3 years. But, the amount is fixed. and my assumption is that the true depreciation would be more than that fixed amount, so if he bought the car and sold for market value 3 years later, he would be out more money.

flip side, yes, the buyout on the lease is going to be higher than what you could buy a similar car for if you want a 3 year old one.

Exactly stick. The salesman and my friend knew he would never buy the car at the end of the lease, it wouldn't make sense.
Companies like leasing....it means they get to lease out another car in 3 years, and it gives them nice clean low mileage used cars to sell.
But, I think there is some kind of game going on when you can lease a luxury car for $0 down, $465 a month, and the payments aren't even close to matching the depreciation over 3 years. It is similar to the financial meltdown, leasing cars at bargain basement prices and worry about it in 3 years time when the chickens come home to roost....to put it in terms oldfarmer will really understand.

It will be interesting to see what those cars eventually do sell for.

It won't matter, because in almost all cases the leasing bank has an insurance policy that covers them if the market value is less than the contract residual value.

That's why the dealer can often buy the vehicle at the end of the lease for a lower price than the customer.

Correct me if I am wrong, but don't most car companies run their own financing.....example GMAC?
(That's partly why car companies own their own finance companies. Ford does. ... GM is building one out of GM Financial, a subprime auto lender GM acquired in 2010).
I believe GMAC was sold off but the new company acts almost like GM's banking arm.
If it is, they can pretty well set their own values on selling price and set their own residual value.

Just from a quick view, I don't think the Cadillac XT5 was that much nicer than the KIA Sorento I was in a few weeks ago. My guess is the Cadillac has a much higher MSRP than it deserves, but people will pay a premium price, to own a Cadillac.

Right - we have the numbers from GM Financial, but dealers are free to use 3rd party banks to fund their leases, as well. Ally and US Bank are big players.

venture

driver100 said:

graphicguy said:

Re: Amazon....for a lot of these items, Amazon is just the ordering vehicle. They don’t warehouse, or ship. They just are the front end for ordering. The products themselves are shipped by the companies offering them.

If it’s not Amazon offering the product directly, it will usually say something along the lines of “sold by XYZ, an Amazon Partner”. If it’s sold directly by Amazon, they’re usually really good about customer service and will either replace, or refund anything sold by them directly.

In the case of the wireless charger, that’s exactly what happened. Amazon didn’t sell it directly. It was actually sold by another 3rd party. They only listed it through Amazon.

My complaint to Amazon that it was a “bait and switch”. They offered my a gift certificate, even though it wasn’t their fault directly.

So amazon did offer the difference?

Amazon Prime products are stored in the warehouse and it seems Amazon takes responsibility for those items. My pineapple bourbon sauce was a Prime product.......the wrong one arrived the next day, they sent me the correct one two days later, no mention I had to return the wrong one (raspberry).

You can't ask for better service....I think amazon delivers beyond expectation in most cases.

A few months ago I ordered a luggage set from Amazon - on a Sunday evening. It was on my front porch Tuesday morning. I don't have Prime.

I liked it so I ordered another 24" spinner. It took well over a week for that to arrive.