Car loans

Mark Sullivan62 said:I highly doubt you'll find any better terms through a lease than a traditional loan.

First off, you’re going to have to shell out a down payment in cash, and let's be real, that’s definitely not going to be less than 20% of the car's value. Plus, you’ve got that residual value hanging over your head at the end of the lease term; that could easily be around 20%. Your monthly rent hike will likely be right in line with a loan payment, or maybe even higher. And don't forget, with a lease, you're only paying off about 60% of the total vehicle value over the term, whereas with a loan, you're covering the whole thing.

Also, I think you’re going to be pretty disappointed at the end of year five when the lease expires and you realize you’ve just been paying rent this whole time—just paying for that "right to use" it. Basically, once that five-year lease is up, you’ve got nothing to show for it; the car isn't yours, and you can't sell it. When you compare the sum of the lease payments against the total cost of a loan, the numbers will probably end up being very similar. But with a loan, you actually own the car, meaning you can sell it and walk away with some cash. Even if you opt for a lease-to-own setup, you still have to pay that residual value (that ~20% I mentioned), which, if you ask me, makes zero sense financially. If it were actually a good deal, considering how many cars Americans buy every year, way more individuals would be jumping on leases, but they aren't—so why do you think that is? Seriously, go grab a quote for a lease payment versus a loan payment and compare them yourself.

Furthermore, don't forget that with a lease, you’re forced to carry full comprehensive insurance for all five years. If you buy a car with a loan, you’ll probably handle the insurance yourself, but you'll likely only stick to the heavy coverage for the first year or two, right? I highly doubt anyone wants to be paying premium comprehensive coverage for a car that’s already 3-$1333 years old... people just don't do that.

And another thing: leasing companies push you hard to use their authorized dealerships for service, and man, that is expensive. As an actual owner, once your warranty expires, you get to choose exactly where you want to take your
vehicle.

Since you aren't the legal owner under a lease, you don't even get a say in where the car is registered. The car gets registered in the jurisdiction where the leasing company is headquartered. Most of them are based in major hubs like New York City. And in places like NYC, registration and insurance are the most expensive. The leasing company might give you power of attorney to handle the registration yourself, but not in the location you actually want.

Look at all those massive corporations with fleets of company cars headquartered in NYC but with branches all over the US—notice how all those vehicles have New York plates? That’s not a coincidence.

Look, I get it. It all boils down to the math and the fine print in the contract. I’m always stuck in this "either-or" loop. Honestly, I just don't have the heart to drive a five or six-year-old car; I'd much rather be in something fresh every five years. 🙂 Though, looking back, maybe I'm being a bit too idealistic. Maybe I should dial it back a notch—just talking to myself here. 🙂
We'll see how it plays out. I gave myself a year before making any final calls anyway. Until then, I'll just keep putting extra cash toward investments or building up the fund for the next ride. I don't actually *need* a new car right this second. My current one still runs fine, even if it is eight years old. And since it's a Korean model, maintenance has been practically nonexistent outside of standard service visits—I always stick to the dealership, which is why it’s still in great shape—gas, and the usual stuff.

Thanks, Edgar, for the deep dive on the whole loan versus leasing debate. 🙂

Mark Sullivan62 said:I highly doubt you'll find any better terms through a lease than a traditional loan.

First off, you’re going to have to shell out a down payment in cash, and let's be real, that’s definitely not going to be less than 20% of the car's value. Plus, you’ve got that residual value hanging over your head at the end of the lease term; that could easily be around 20%. Your monthly rent hike will likely be right in line with a loan payment, or maybe even higher. And don't forget, with a lease, you're only paying off about 60% of the total vehicle value over the term, whereas with a loan, you're covering the whole thing.

Also, I think you’re going to be pretty disappointed at the end of year five when the lease expires and you realize you’ve just been paying rent this whole time—just paying for that "right to use" it. Basically, once that five-year lease is up, you’ve got nothing to show for it; the car isn't yours, and you can't sell it. When you compare the sum of the lease payments against the total cost of a loan, the numbers will probably end up being very similar. But with a loan, you actually own the car, meaning you can sell it and walk away with some cash. Even if you opt for a lease-to-own setup, you still have to pay that residual value (that ~20% I mentioned), which, if you ask me, makes zero sense financially. If it were actually a good deal, considering how many cars Americans buy every year, way more individuals would be jumping on leases, but they aren't—so why do you think that is? Seriously, go grab a quote for a lease payment versus a loan payment and compare them yourself.

Furthermore, don't forget that with a lease, you’re forced to carry full comprehensive insurance for all five years. If you buy a car with a loan, you’ll probably handle the insurance yourself, but you'll likely only stick to the heavy coverage for the first year or two, right? I highly doubt anyone wants to be paying premium comprehensive coverage for a car that’s already 3-$1333 years old... people just don't do that.

And another thing: leasing companies push you hard to use their authorized dealerships for service, and man, that is expensive. As an actual owner, once your warranty expires, you get to choose exactly where you want to take your
vehicle.

Since you aren't the legal owner under a lease, you don't even get a say in where the car is registered. The car gets registered in the jurisdiction where the leasing company is headquartered. Most of them are based in major hubs like New York City. And in places like NYC, registration and insurance are the most expensive. The leasing company might give you power of attorney to handle the registration yourself, but not in the location you actually want.

Look at all those massive corporations with fleets of company cars headquartered in NYC but with branches all over the US—notice how all those vehicles have New York plates? That’s not a coincidence.

Just so I can set the record straight here. Most leasing companies actually give you a choice regarding the plates.

This is a direct copy from the Porsche Financial Services website:

Operating Lease with a Security Deposit

Leasing is a contractual relationship that allows the Lessee to use an asset (the Leased Object) owned by the Lessor in exchange for agreed monthly payments.
- The legal and economic owner of the vehicle is Porsche Financial Services.
- This is designed for individuals and businesses who want to use the vehicle rather than own it.
- A security deposit ranging from 20% to 33%. This is returned at the end of the Contract.
- The Contract duration ranges from 36 to a maximum of 60 months.
- The Contract does not include a buyout option.
- Comprehensive insurance is mandatory. Porsche Financial Services has established insurance Contracts with several providers, allowing you to benefit from preferred rates.

List of cities where you can obtain registration plates:

Des Moines, Annapolis, Charleston, Columbus, Madison, Providence, Indianapolis, Makarska, Topeka, San Diego, Seattle, Akron, Wichita, Miami, Savannah, Cleveland, Evansville, Tampa, Chicago.

Benefits for Individuals:
simple and fast processing
no co-signers required
low contract setup costs

Benefits for Businesses:
the vehicle is not recorded as an asset of the lessee
monthly payments are booked as expenses, and sales tax is deductible

TERMS FOR ENTERING INTO A LEASING CONTRACT

INDIVIDUALS
- Unencumbered monthly income must be three times the monthly payment amount
- Security deposit / Down payment
- Comprehensive insurance

BUSINESSES
- Stable business operations
- Security deposit / Down payment
- Comprehensive insurance

Kimberly Lopez65 said:Look, I get it. It all boils down to the math and the fine print in the contract. I’m always stuck in this "either-or" loop. Honestly, I just don't have the heart to drive a five or six-year-old car; I'd much rather be in something fresh every five years. 🙂 Though, looking back, maybe I'm being a bit too idealistic. Maybe I should dial it back a notch—just talking to myself here. 🙂
We'll see how it plays out. I gave myself a year before making any final calls anyway. Until then, I'll just keep putting extra cash toward investments or building up the fund for the next ride. I don't actually *need* a new car right this second. My current one still runs fine, even if it is eight years old. And since it's a Korean model, maintenance has been practically nonexistent outside of standard service visits—I always stick to the dealership, which is why it’s still in great shape—gas, and the usual stuff.

Thanks, Edgar, for the deep dive on the whole loan versus leasing debate. 🙂

Your best bet is to pick up a two-year-old car every couple of years. Specifically, buy from people who lease them—they love swapping out their brand-new cars every two years anyway.😉

Plus, if you run a business and import vehicles through the company, you can write off the sales tax and get those credits back. That's the real way to win.

1. Is it even feasible to secure an auto loan if I work as a seafarer—not for a domestic firm, but on cruise ships—where most of my pay comes in cash, even though the base salary listed in the contract is the official part?
By "contract," I mean the amount looks tiny on paper, but between commissions and tips—which aren't mentioned in the paperwork—I’m actually pulling in about 80 percent of my total income...

2. Would this be possible for someone who isn't an American citizen?

Honestly, let's talk about leasing... it just doesn't make financial sense!
It’s really no different than weighing whether you should buy a house or just rent one. Your monthly mortgage payment ends up being roughly what you'd pay a landlord anyway... leasing works the exact same way; the monthly payment usually mirrors what a standard auto loan would cost. It isn't a great deal for people with solid credit, but I suppose for those who can't qualify for traditional financing, it feels like their only real option.

ironsurfer10 said:Honestly, let's talk about leasing... it just doesn't make financial sense!
It’s really no different than weighing whether you should buy a house or just rent one. Your monthly mortgage payment ends up being roughly what you'd pay a landlord anyway... leasing works the exact same way; the monthly payment usually mirrors what a standard auto loan would cost. It isn't a great deal for people with solid credit, but I suppose for those who can't qualify for traditional financing, it feels like their only real option.

Sorry, but honestly, that math doesn't really hold up here in the States right now. Like, if you look at a small 600 sq ft apartment for maybe $250k, rent might be around $1,800, but a 30-year mortgage at 7% interest would run you closer to $1,600 plus taxes and insurance. Or even a tiny studio for $150k—renting could be $1,200 while a mortgage might be around $1,000 for 30 years or jump way up if you try to pay it off in 15.

George Phillips said:Sorry, but honestly, that math doesn't really hold up here in the States right now. Like, if you look at a small 600 sq ft apartment for maybe $250k, rent might be around $1,800, but a 30-year mortgage at 7% interest would run you closer to $1,600 plus taxes and insurance. Or even a tiny studio for $150k—renting could be $1,200 while a mortgage might be around $1,000 for 30 years or jump way up if you try to pay it off in 15.

It really depends on the type of loan you get and where you're buying. My cousin bought a 650-square-foot apartment, and her monthly mortgage payment is $833. Renting an identical place would cost her about $350.

Anyway, I don't want to derail the conversation here...

ironsurfer10 said:It really depends on the type of loan you get and where you're buying. My cousin bought a 650-square-foot apartment, and her monthly mortgage payment is $833. Renting an identical place would cost her about $350.

Anyway, I don't want to derail the conversation here...

👍

So, about that whole leasing vs. personal loan debate...
The real kicker is the Sales Tax on the interest you get with a lease. You don't deal with that when you go through a bank, since banks aren't part of the Sales Tax system...
Also, if you just want to drive and don't care about owning the thing, an operating lease with a residual value is actually pretty sweet for a regular person. Your monthly payments stay lower, and you dodge all those headaches like service costs, new tires, and stuff like that. Though, if you crunch the numbers and add up every single payment—including that 22% Sales Tax on the interest—it does end up costing more in the long run...
Take a Honda Civic, for example. You could do a lease where the residual value is 40%, assuming you stick to a 20,000 mile per year limit over five years. But honestly, that’s just a fair price for the car... basically, you only paid for what you actually drove...

reply to gentleridge44
regarding point one, yeah, that works... but point two? nah, definitely not....

Richard Lewis16 said:It’s totally doable to either get them to shave a bit off the price—you know, that whole "let's negotiate the contract terms" dance—or just insist they throw in some higher-end equipment instead

but you really have to be the one to push for it, because you've got to play as hardball as they do... there's honestly no shame in being a little ruthless when it comes to these things 😉

Hey, is it actually possible to get a discount on a floor model? 😉
Like, you just walk in there and tell them you want the exact unit sitting right in front of you because you don't feel like waiting months for a shipment to arrive?

From what I've gathered, they shouldn't be charging the full MSRP for display models compared to something still in the box. Or am I totally off base here? 🙂

Look, if these salespeople are going to act shady, why shouldn't we act the same way as buyers? Why not try to legally squeeze them for every cent we can? 🙂

Kimberly Lopez65 said:I'm voting for unsecured too. I’ve been crunching the numbers for a new ride and I need maximum flexibility with my monthly payments. I don't want to deal with co-signers or having my paycheck garnished if things go south. I want minimal paperwork and zero headaches, which basically means going the unsecured route.

By the way, quick question... there's a decent chance I'll have enough cold hard cash in a year to just buy the car outright. Do dealerships actually give discounts to people paying cash versus those financing through a bank? Is it possible to negotiate a lower price or maybe throw in some extra features for the same cost, or am I wasting my time?

No. They don't care. The bank pays them the full amount regardless of how you fund it.

You'll find better deals if you look at demo vehicles used for test drives. Or try finding something that's been sitting on the lot too long. Sometimes you can even snag a deal if the dealer owner gets a special commercial discount.

Regarding auto loans, one of the requirements set by JPMorgan Chase as a security measure involves having a liability insurance policy that includes death benefit coverage, where the insured amount is at least equal to the agreed loan balance. For instance, imagine a scenario where the car is worth $33333 and the loan stands at $26667. My question is whether this expanded liability policy must maintain a minimum coverage of $26667 every single year, or if it's possible to scale that amount down as we gradually pay off the principal?

rowdyranger3 said:Regarding auto loans, one of the requirements set by JPMorgan Chase as a security measure involves having a liability insurance policy that includes death benefit coverage, where the insured amount is at least equal to the agreed loan balance. For instance, imagine a scenario where the car is worth $33333 and the loan stands at $26667. My question is whether this expanded liability policy must maintain a minimum coverage of $26667 every single year, or if it's possible to scale that amount down as we gradually pay off the principal?

Honestly, by next year, nobody will probably even bother asking you about it, but why even bother trying to reduce the coverage? The extra cost for that "enhanced" insurance is pretty much pocket change when you consider all the other expenses tied to owning a car or managing the loan itself.

rowdyranger3 said:Regarding auto loans, one of the requirements set by JPMorgan Chase as a security measure involves having a liability insurance policy that includes death benefit coverage, where the insured amount is at least equal to the agreed loan balance. For instance, imagine a scenario where the car is worth $33333 and the loan stands at $26667. My question is whether this expanded liability policy must maintain a minimum coverage of $26667 every single year, or if it's possible to scale that amount down as we gradually pay off the principal?

Seriously, what kind of difference does that even make to the premium? Are we talking $40-$$17 ??

Richard Wright said:Seriously, what kind of difference does that even make to the premium? Are we talking $40-$$17 ??

Yeah, something along those lines... if I'm remembering correctly, it’s roughly $3 per every $20,000 in death benefit coverage.

Jason Brooks3 said:Yeah, something along those lines... if I'm remembering correctly, it’s roughly $3 per every $20,000 in death benefit coverage.

I don't think you get what he's saying—he’s asking why the hell his bank is forcing him into a policy that leaves him so broke he can barely afford a pack of Marlboros two days later.😁>

So, I just finalized a deal on a car. I put down a $667 deposit, and we settled on a price of about $7,700 (roughly $17150). The dealer had me fill out some paperwork for both my employer and myself, including my average salary info. They sent everything over to the bank, and now my approved loan amount is $18623. I’m honestly a bit confused—does anyone know what the standard processing fees are for these loans? Also, what happens to my initial deposit and the difference from the $1500? 😕 On top of all that, I had to pay a notary fee. Now the car is costing me an extra $900.

You really ought to double-check that directly with the retailer..

Nicholas Harris10 said:So, I just finalized a deal on a car. I put down a $667 deposit, and we settled on a price of about $7,700 (roughly $17150). The dealer had me fill out some paperwork for both my employer and myself, including my average salary info. They sent everything over to the bank, and now my approved loan amount is $18623. I’m honestly a bit confused—does anyone know what the standard processing fees are for these loans? Also, what happens to my initial deposit and the difference from the $1500? 😕 On top of all that, I had to pay a notary fee. Now the car is costing me an extra $900.

Look, you didn't even mention which bank you're using, nor did you bother to ask about the terms yourself, yet here you are asking me what the costs are!? Based on the tiny bit of info you provided, I shouldn't be expected to know those details any better than the guy selling you the car or the bank where you submitted your application—even if it was through a dealership intermediary...

All these question marks?????????????????