"APPROVED" for a lease through Honda :-)

[Cgriswold]

The MATH never works out in your favor over paying cash for a car, PERIOD.

Right, but the OP isn't asking any one of us for permission and shouldn't have to be talked down to, in my opinion.

Yep, they are just out of BK. Maybe they are in a position where paying cash for a car doesn't work, for whatever reason. And so, yeah, they math is wrong...but it's their deal and maybe some suggestion on HOW to make sure they can afford this math post BK would be more helpful than scoffing from the vets around here.

What do I know?

[HHM]

Right, but the OP isn't asking any one of us for permission and shouldn't have to be talked down to, in my opinion.

Yep, they are just out of BK. Maybe they are in a position where paying cash for a car doesn't work, for whatever reason. And so, yeah, they math is wrong...but it's their deal and maybe some suggestion on HOW to make sure they can afford this math post BK would be more helpful than scoffing from the vets around here.

What do I know?

Um, not exactly rocket science, I suspect you may not have read the original post. They are putting $5K down, going to pay hundreds of dollars a month in insurance plus the $400 car payment, so you ask HOW...hmmm, find a car that cost $5K, or save up that almost $1,000 per month in expense, and buy a little more expensive car.

Let's do the math.

Based on the above, the OP I will assume a total cost of $700 per month between car insurance and lease payment (it is probably much higher, but he didn't state an insurance cost on the lease).
Let's assume the car cost $35,000.

Instead, let's say client buys a $5-6K car for cash, and saves the car payment. In 4 year, he will have $42,240 in cash. Let's not forget the depreciation. Nearly all cars depreciate 50% in the first 3 years, so there is a loss of at least $17,500. Also, since the alternative is a lease, there is no cash value in the car once the lease expires.
So "conservatively" the OP is costing themselves $42,240 in lost opportunity + they receive NO VALUE at expiration of lease term. No matter how you slice any tax benefits, and what not, it never makes financial sense.

[disconapper]

Based on the above, the OP I will assume a total cost of $700 per month between car insurance and lease payment (it is probably much higher, but he didn't state an insurance cost on the lease).

The OP says something like $647 per month for the lease payment and $600 per month for the insurance (and that's not a typo)....I'm falling out of my chair as I type...and let's not forget about gas either....

But to each his own, I guess in the end if someone is happy and can afford such an expense it really doesn't matter, at least not to me.....LOL

[IBroke]

Um, not exactly rocket science, I suspect you may not have read the original post. They are putting $5K down, going to pay hundreds of dollars a month in insurance plus the $400 car payment, so you ask HOW...hmmm, find a car that cost $5K, or save up that almost $1,000 per month in expense, and buy a little more expensive car.

Let's do the math.

Based on the above, the OP I will assume a total cost of $700 per month between car insurance and lease payment (it is probably much higher, but he didn't state an insurance cost on the lease).
Let's assume the car cost $35,000.

Instead, let's say client buys a $5-6K car for cash, and saves the car payment. In 4 year, he will have $42,240 in cash. Let's not forget the depreciation. Nearly all cars depreciate 50% in the first 3 years, so there is a loss of at least $17,500. Also, since the alternative is a lease, there is no cash value in the car once the lease expires.
So "conservatively" the OP is costing themselves $42,240 in lost opportunity + they receive NO VALUE at expiration of lease term. No matter how you slice any tax benefits, and what not, it never makes financial sense.

Some assumptions here:

- I can already tell you that a car priced at $5K is going to need some "attention" over the period of 4 years.
- The "NO VALUE"-claim only applies if the OP returns the car. However, the car could be purchased once the lease expired. In that case, the "deal" is much better.
- We don't know the income/tax situation of the OP. He might be facing the decision to either pay taxes or pay on a lease. I was in that situation before and voted for the BMW.

Everything comes at a price: The new car is simply better than the $5K-car - and that's what you're paying for. For some, a car is just more than an option to get from A to B. Some have said $5K-car but go on vacation 3 times a year. Is that a wise investment? Some go out dining every week. What "value" does that have? Some are happy in a 2 room apartment - for others, a garden and a pool are "essential".

HHM, what you are stating is nothing more than a personal choice. Cars are depreciating in value - but so are 90% of the things we spend money on.

[rustymich]

Same here whats the total bill for that a month with insurance again??

[JKPDX]

I purchased a 2011 Toyota Camry seven months out of a chap 7 (650 credit score) with zero percent financing over five years. I was thinking of leasing, but when you lease, any down payment just reduces the monthly payments... so if you aren't going to be purchasing the vehicle at the end of the lease, that money is lost. I didn't want the depreciation of a new car, but I love the reliability, the features (Bluetooth, stability control, backup camera, warranty, maintenance included for two years, etc.) and I smile every time I make the monthly payment. Why? Because every cent of it goes towards the principal of the loan.. no interest.

[HHM]

Some assumptions here:

- I can already tell you that a car priced at $5K is going to need some "attention" over the period of 4 years.
- The "NO VALUE"-claim only applies if the OP returns the car. However, the car could be purchased once the lease expired. In that case, the "deal" is much better.
- We don't know the income/tax situation of the OP. He might be facing the decision to either pay taxes or pay on a lease. I was in that situation before and voted for the BMW.

Everything comes at a price: The new car is simply better than the $5K-car - and that's what you're paying for. For some, a car is just more than an option to get from A to B. Some have said $5K-car but go on vacation 3 times a year. Is that a wise investment? Some go out dining every week. What "value" does that have? Some are happy in a 2 room apartment - for others, a garden and a pool are "essential".

HHM, what you are stating is nothing more than a personal choice. Cars are depreciating in value - but so are 90% of the things we spend money on.

Not really a "personal" choice. The major failure for most people in buying cars is understanding the lost opportunity of the money spent on transportation. Transportation is a "need', but there in lies the key, focus on what actually satisfies the need, not the "desire". Again, on the tax issue, the numbers never work out in your favor...it is short term issue and it never really works out when you factor in the lost opportunity.

And people really overestimate the risk of costly repair costs on older cars. That is nothing more than fear. So, let's say you bought a $6,000 car, and over the course of 2 years, it needed $3,000 worth of work, and you keep the car for a total of 5 years. You still come out far ahead than if you purchased a $28,000 car and kept it for 5 years.

[IBroke]

Not really a "personal" choice. The major failure for most people in buying cars is understanding the lost opportunity of the money spent on transportation. Transportation is a "need', but there in lies the key, focus on what actually satisfies the need, not the "desire". Again, on the tax issue, the numbers never work out in your favor...it is short term issue and it never really works out when you factor in the lost opportunity.

It is a personal choice. "Desire" is a personal choice as well - depending on what you "desire". As I said, a car can be much more than just transportation. Sure, you can get a cheap car but as soon as you spend the saved money on something else, I could make the same claim of a lost opportunity about that. The only thing that doesn't "waste" money is investing it on something with a great ROI and never touching it. Some are happy with that and that's their "desire" - I would call it a lost opportunity...

And people really overestimate the risk of costly repair costs on older cars. That is nothing more than fear. So, let's say you bought a $6,000 car, and over the course of 2 years, it needed $3,000 worth of work, and you keep the car for a total of 5 years. You still come out far ahead if you purchased a $28,000 car and kept it for 5 years.

That's true. No doubt the old car is cheaper. I only mentioned that because you left it out in the "math"-part. We are currently driving a 2000 Mercury Sable with 130K miles on it and so far, it is VERY reliable. We had for almost 3 years now and had to get new brakes, tires, 2 Batteries, a starter and a few other minor things. We are certainly saving every month compared to a brand new car but nevertheless, we need a second car sooner or later. I'm going to drive this car which will be paid off in 3 months for the next 3 years. My mother, however, is self-employed and is going to get a new car. She is driving more than 15K miles/year and the car she wants is not available for $5K. Since gas-prices are going up, up, up, she wants a hybrid which makes sense.

So far, we are paying $300/month on the old Mercury. Once this car is ours, we have those funds available for the Hybrid. Keeping in mind that our savings on fuel might reach $200/month on such a car, I really don't think we are doing anything wrong.

[BKIN2010]

after waiting and waiting they came back and said Honda denied me bcause is to close to Bk.

How much time after your discharge did you apply for an auto loan?

[Kuya]

MIKEMIKE . .

Congratulations !!!!!!!! I know you have been working on this for a bit . . .been following your posts and inquiries . . .. excellent!! I am very happy for you.

[HRx]

Just out of the gate of Bk and already making poor financial decisions. Sorry.

I concur with the quoted sentiments above. It's never wise to jump back into major debt straight out of BK....most folks will end up being up to their eyeballs in debt within the first 1-3 years post BK. The key is learn from your financial mistakes and pay yourself first so you don't find yourself in this situation from poor money management.