Why the push for leasing, Kia?

[adam1991]

And I don't have any "safety technology" on my GT1 and don't want any.

Sure you do--the same way that the 2009 Malibu in this video has advanced safety features compared to its 1959 counterpart:

That's what I meant when I said "passive safety features". Built in. You don't control them.

 

[MerlintheMad]

Sure you do--the same way that the 2009 Malibu in this video has advanced safety features compared to its 1959 counterpart:

That's what I meant when I said "passive safety features". Built in. You don't control them.

Ah, missed the "passive" part. Someone says "safety tech" and instantly I am thinking about electronic nanny stuff.

 

[WRXtoStingerGT]

RE: Leasing - everyone has a different financial situation and motivation. For example, some value "pride of ownership", to others it's not significant. I'm in commercial real estate, and my mantra is to own assets that typically increase in value, and rent/lease those that are expected to decrease in value. Perhaps these Stingers will be highly collectable one day, but IME the odds favor real estate going up, and used cars going down.

That's a solid mindset! I will admit that with the exception of my vehicle I always try to save/invest my money. I don't spend money on watches or fancy brand-name clothing or any of that kind of stuff. My goal is to someday purchase a home but that will take a fair bit of time.

 

[Revvdmedia]

RE: Leasing - everyone has a different financial situation and motivation. For example, some value "pride of ownership", to others it's not significant. I'm in commercial real estate, and my mantra is to own assets that typically increase in value, and rent/lease those that are expected to decrease in value. Perhaps these Stingers will be highly collectable one day, but IME the odds favor real estate going up, and used cars going down.

I took a different approach to lease vs. buy on my most recent acquisition. I have never kept a financed car longer than 3-1/2 years, and as I watch the progressive degradation of a car over its life while still making the same payments as new, it drove me crazy, made me feel the car wasn't worth what I was paying as it got worse over time. For me, the lease was a mental perception that I am basically driving a rental, so I really don't need to put the time and effort nor the caring into it as I do a vehicle that could theoretically be kept for the long term. I now just use a quick sealant rather than spending an entire weekend ceramic coating, I am less anal with fixing rock chips (but I still do), and as the car degrades I can rest assured that I can just hand it back to the dealer when the term is done and call it quits without fighting over trade in value and whatnot. The lease worked out to be a few grand more dollars than an equivalent finance, but I was willing to pay a bit extra to have the freedom to hand it back all willy nilly at the end of the term all while caring about a degrading asset a bit less.

 

[Nedstand]

I took a different approach to lease vs. buy on my most recent acquisition. I have never kept a financed car longer than 3-1/2 years, and as I watch the progressive degradation of a car over its life while still making the same payments as new, it drove me crazy, made me feel the car wasn't worth what I was paying as it got worse over time. For me, the lease was a mental perception that I am basically driving a rental, so I really don't need to put the time and effort nor the caring into it as I do a vehicle that could theoretically be kept for the long term. I now just use a quick sealant rather than spending an entire weekend ceramic coating, I am less anal with fixing rock chips (but I still do), and as the car degrades I can rest assured that I can just hand it back to the dealer when the term is done and call it quits without fighting over trade in value and whatnot. The lease worked out to be a few grand more dollars than an equivalent finance, but I was willing to pay a bit extra to have the freedom to hand it back all willy nilly at the end of the term all while caring about a degrading asset a bit less.

We have a meeting of the minds... but that wasn't always the case. I used to buy new cars cash, and thought that a well maintained car would give me 10-15 years of reliable service.

A 2005 BMW X5 changed my thinking. I say half joking, "The X5 knew the day it went out of warranty". We got 10 years out of it, but the last 5-6 years were expensive & time consuming. That was the last car I bought.

Since then, I've leased 5 cars for my wife & I. The first was an Audi A6 which I turned in early when the dealer rolled me into a new A6 at same monthly payments. Also a Q7 for my wife. The 2nd A6 and the Q7 were constantly going back to the dealer for repairs & recalls. Now I have the Stinger and my lady has a Subaru SUV.

I like that the cars go back after 3 years, but if we really like the car, we have the option to purchase. Yes, it's more costly, but I feel it's worth it not to deal with time & cost of repairs.

 

[MerlintheMad]

I took a different approach to lease vs. buy on my most recent acquisition. I have never kept a financed car longer than 3-1/2 years, and as I watch the progressive degradation of a car over its life while still making the same payments as new, it drove me crazy, made me feel the car wasn't worth what I was paying as it got worse over time. For me, the lease was a mental perception that I am basically driving a rental, so I really don't need to put the time and effort nor the caring into it as I do a vehicle that could theoretically be kept for the long term. I now just use a quick sealant rather than spending an entire weekend ceramic coating, I am less anal with fixing rock chips (but I still do), and as the car degrades I can rest assured that I can just hand it back to the dealer when the term is done and call it quits without fighting over trade in value and whatnot. The lease worked out to be a few grand more dollars than an equivalent finance, but I was willing to pay a bit extra to have the freedom to hand it back all willy nilly at the end of the term all while caring about a degrading asset a bit less.

We have a meeting of the minds... but that wasn't always the case. I used to buy new cars cash, and thought that a well maintained car would give me 10-15 years of reliable service.

A 2005 BMW X5 changed my thinking. I say half joking, "The X5 knew the day it went out of warranty". We got 10 years out of it, but the last 5-6 years were expensive & time consuming. That was the last car I bought.

Since then, I've leased 5 cars for my wife & I. The first was an Audi A6 which I turned in early when the dealer rolled me into a new A6 at same monthly payments. Also a Q7 for my wife. The 2nd A6 and the Q7 were constantly going back to the dealer for repairs & recalls. Now I have the Stinger and my lady has a Subaru SUV.

I like that the cars go back after 3 years, but if we really like the car, we have the option to purchase. Yes, it's more costly, but I feel it's worth it not to deal with time & cost of repairs.

This is interesting in a disagreeable way: I get it, but I still don't want to have that monthly payment. The buyout freed me from that. As long as the Stinger looks new(ish) and is reliable, I won't mind keeping it for well over five years. If it started to be a time sink (aka letting me down, going in for this, that and the other thing), I'd regret my decision to end the lease: I'd be contemplating a lease from now on (paying for the privilege of leasing, and ditching each car to take up a brand new one each time), and not getting "attached" to the vehicle. That would be a mindset totally different from how I feel currently. And of course, I hope that my decision to do the buyout (and own outright) doesn't bite me in the butt.

 

[Travis Wills]

Leases are simply a bet on depreciation. The bank/lessor is betting that the car will be worth the residual at the end of the lease and that they will make their profit from the “bank fees” and the money factor(interest).

The buyer/lessee is(or at least should be) betting that the car won’t be worth the residual at the end of the lease so they are going to turn it in. The lessee should be betting that the fees and money factor will not exceed the interest and depreciation that they would incur if they bought or financed the car instead of leasing.

That is the proper way to look at leasing as a purely financial decision. Taxes can be a factor in this calculation but they vary by state so it is hard to factor that into the calculation without knowing the state’s specific rules for leases.

 

[Gilley]

For someone that drives more miles than a typical lease allows, buying used seems would be the best way to get into a Stinger.

 

[DaveC]

Leases are simply a bet on depreciation. The bank/lessor is betting that the car will be worth the residual at the end of the lease and that they will make their profit from the “bank fees” and the money factor(interest).

The buyer/lessee is(or at least should be) betting that the car won’t be worth the residual at the end of the lease so they are going to turn it in. The lessee should be betting that the fees and money factor will not exceed the interest and depreciation that they would incur if they bought or financed the car instead of leasing.

That is the proper way to look at leasing as a purely financial decision. Taxes can be a factor in this calculation but they vary by state so it is hard to factor that into the calculation without knowing the state’s specific rules for leases.

Great write-up. Someone who knows what they’re talking about!

 

[Nedstand]

Leases are simply a bet on depreciation. The bank/lessor is betting that the car will be worth the residual at the end of the lease and that they will make their profit from the “bank fees” and the money factor(interest).

The buyer/lessee is(or at least should be) betting that the car won’t be worth the residual at the end of the lease so they are going to turn it in. The lessee should be betting that the fees and money factor will not exceed the interest and depreciation that they would incur if they bought or financed the car instead of leasing.

That is the proper way to look at leasing as a purely financial decision. Taxes can be a factor in this calculation but they vary by state so it is hard to factor that into the calculation without knowing the state’s specific rules for leases.

I agree with many of your points... but Covid certainly threw a twist. One of the major factors on how much the car will depreciate is the mileage at lease end. Due to Covid, we haven't put as many miles on our leased cars as anticipated, which is one reason I am considering buying the Stinger at lease end (it will probably only have about 10,000 miles). I did check a couple of the car buying services (Carvana is one) and the website indicated I could buy the Stinger and flip it for a profit.

I admit to being no expert on the used car market. That said, it seems to me, at the time we signed the lease, Kia made a guess as to resale value 3 years forward. When the lease is up, if the actual resale value is lower than my fixed buy-out price, the car goes back. If I can flip it for a profit, that's another option the lease offers me.

 

[Revvdmedia]

I agree with many of your points... but Covid certainly threw a twist. One of the major factors on how much the car will depreciate is the mileage at lease end. Due to Covid, we haven't put as many miles on our leased cars as anticipated, which is one reason I am considering buying the Stinger at lease end (it will probably only have about 10,000 miles). I did check a couple of the car buying services (Carvana is one) and the website indicated I could buy the Stinger and flip it for a profit.

I am actually 100% in the same boat as of now. I thought 16,000 KM (10K miles) per year would be about right, but I'm 2 weeks shy of 1 year and I've put on less than half of that. If the mileage stays low I will considering checking the market value and look at buying out and selling for a "profit."

 

[WRXtoStingerGT]

Leases are simply a bet on depreciation. The bank/lessor is betting that the car will be worth the residual at the end of the lease and that they will make their profit from the “bank fees” and the money factor(interest).

The buyer/lessee is(or at least should be) betting that the car won’t be worth the residual at the end of the lease so they are going to turn it in. The lessee should be betting that the fees and money factor will not exceed the interest and depreciation that they would incur if they bought or financed the car instead of leasing.

That is the proper way to look at leasing as a purely financial decision. Taxes can be a factor in this calculation but they vary by state so it is hard to factor that into the calculation without knowing the state’s specific rules for leases.

I love learning something new every day!

 

[Travis Wills]

I agree with many of your points... but Covid certainly threw a twist. One of the major factors on how much the car will depreciate is the mileage at lease end. Due to Covid, we haven't put as many miles on our leased cars as anticipated, which is one reason I am considering buying the Stinger at lease end (it will probably only have about 10,000 miles). I did check a couple of the car buying services (Carvana is one) and the website indicated I could buy the Stinger and flip it for a profit.

I admit to being no expert on the used car market. That said, it seems to me, at the time we signed the lease, Kia made a guess as to resale value 3 years forward. When the lease is up, if the actual resale value is lower than my fixed buy-out price, the car goes back. If I can flip it for a profit, that's another option the lease offers me.

This is an excellent point. Like I said leasing is betting on the residual. Because of outside factors the actual value of the car is different than what you and the Lessor bet on. In this case it may be beneficial for you to buy and then sell the car at the end of the lease because the actual value exceeds the residual value. However, you shouldn't go into the lease expecting to buy the car out at the end of the lease.

If your car is worth more than the residual at the end of the lease then that just means that you paid more in deprecation during the lease than you really should have. Sure it feels good to get money back at the end but you are really just paying yourself back with your own money minus the interest that you paid to the lessor.

The best possible situation for a lease is one where the lessor has grossly overestimated the residual AND they have offered a very low money factor. Then at the end of the lease you turn the vehicle back over to them and let the bank take the financial hit for thousands of dollars of extra depreciation. That scenario almost never happens. However, it can happen. Most of the time if the car has a high residual then it will also have a higher money factor. If the car has a low money factor then it will almost certainly have a low residual.

Leases are not the horrific financial decisions that some people make them out to be. Don't get me wrong. Most people get taken to the cleaners with leases. However, the people that do their research and especially the people that can take advantage of the tax benefits can really make leases work for them.

I did an introductory video about leases on YouTube.

 

[WRXtoStingerGT]

This is an excellent point. Like I said leasing is betting on the residual. Because of outside factors the actual value of the car is different than what you and the Lessor bet on. In this case it may be beneficial for you to buy and then sell the car at the end of the lease because the actual value exceeds the residual value. However, you shouldn't go into the lease expecting to buy the car out at the end of the lease.

If your car is worth more than the residual at the end of the lease then that just means that you paid more in deprecation during the lease than you really should have. Sure it feels good to get money back at the end but you are really just paying yourself back with your own money minus the interest that you paid to the lessor.

The best possible situation for a lease is one where the lessor has grossly overestimated the residual AND they have offered a very low money factor. Then at the end of the lease you turn the vehicle back over to them and let the bank take the financial hit for thousands of dollars of extra depreciation. That scenario almost never happens. However, it can happen. Most of the time if the car has a high residual then it will also have a higher money factor. If the car has a low money factor then it will almost certainly have a low residual.

Leases are not the horrific financial decisions that some people make them out to be. Don't get me wrong. Most people get taken to the cleaners with leases***. However, the people that do their research and especially the people that can take advantage of the tax benefits can really make leases work for them.

I did an introductory video about leases on YouTube.

That is your YouTube channel? I'm watching it right now to learn.

*** Even more so than financing it seems... That is why I have always been cautious about leasing a vehicle... but then again myself and my family like to keep our cars a very long time... minimum five years but some for over twenty years if you can believe it!

 

[Travis Wills]

I am actually 100% in the same boat as of now. I thought 16,000 KM (10K miles) per year would be about right, but I'm 2 weeks shy of 1 year and I've put on less than half of that. If the mileage stays low I will considering checking the market value and look at buying out and selling for a "profit."

It isn't actually a profit. You are paying yourself back with your own money. Think of it more as you put money in a stock for 3 years. That stock didn't lose value but it also didn't gain any value. You got a nice chunk of change at the end but that was money that could have been earning you interest if invested in other places that had a positive rate of return.

 

[Travis Wills]

That is your YouTube channel? I'm watching it right now to learn.

*** Even more so than financing it seems... That is why I have always been cautious about leasing a vehicle... but then again myself and my family like to keep our cars a very long time... minimum five years but some for over twenty years if you can believe it!

If you are going to keep a car longer than 36 months(39 months for INFINITI) then a lease probably isn't the right choice for you. Just get the zero percent financing and roll everything including the kitchen sink into the loan and then get gap insurance.

 

[WRXtoStingerGT]

If you are going to keep a car longer than 36 months(39 months for INFINITI) then a lease probably isn't the right choice for you. Just get the zero percent financing and roll everything including the kitchen sink into the loan and then get gap insurance.

I did a 75 month loan (no interest) to finance my car. Seeing as I am planning to keep this car at least a solid decade I am happy with my decision!

I finished your video. You mentioned the same thing with length and ownership!

 

[Nedstand]

Lots of great posts with lots of great points!

One reason I like leasing is how do I know I want to keep the car for more than 3 years? I mentioned previously, we leased an Audi Q7 which was my wife's daily driver. There's lots of great things about the Q7, and then there are the problems we discovered after having it less than a year. One in particular is that it rips front tires. This is well documented over in the Audi boards. When we brought it in for the first complimentary service at 10,000 miles the front tires had "chunks" of rubber missing from the outer edge. The Audi dealer said there must have been a problem with those tires, and got Goodyear to replace them "one time". The dealer also gave us a "complimentary" alignment and acted like they were doing us a big favor. I also took it to an independent tire shop, and the guy looked at the tires and said "WTF???". His best advice was to rotate the tires every 5K miles, which my wife hated doing. Audi gave us all kinds of excuses for only getting 10-15K from tires, but had no explanation why I got 30-40K from the BMW X5 we traded in.

Also, the brakes on the Q7 make a terrible squealing noise in reverse. I opened a case with corporate and was told, "All German cars make brake noise", to which I pointed out we are coming from BMW and MB, and neither of those cars made horrible brake noise.

Both problems well documented on Audi boards, but the Audi dealer & corporate acted like there was no problem.

At 2.5 years, when the guy called to see if we wanted to roll into a new Q7 lease, I was ROFLMAO.

 

[Travis Wills]

Lots of great posts with lots of great points!

One reason I like leasing is how do I know I want to keep the car for more than 3 years? I mentioned previously, we leased an Audi Q7 which was my wife's daily driver. There's lots of great things about the Q7, and then there are the problems we discovered after having it less than a year. One in particular is that it rips front tires. This is well documented over in the Audi boards. When we brought it in for the first complimentary service at 10,000 miles the front tires had "chunks" of rubber missing from the outer edge. The Audi dealer said there must have been a problem with those tires, and got Goodyear to replace them "one time". The dealer also gave us a "complimentary" alignment and acted like they were doing us a big favor. I also took it to an independent tire shop, and the guy looked at the tires and said "WTF???". His best advice was to rotate the tires every 5K miles, which my wife hated doing. Audi gave us all kinds of excuses for only getting 10-15K from tires, but had no explanation why I got 30-40K from the BMW X5 we traded in.

Also, the brakes on the Q7 make a terrible squealing noise in reverse. I opened a case with corporate and was told, "All German cars make brake noise", to which I pointed out we are coming from BMW and MB, and neither of those cars made horrible brake noise.

Both problems well documented on Audi boards, but the Audi dealer & corporate acted like there was no problem.

At 2.5 years, when the guy called to see if we wanted to roll into a new Q7 lease, I was ROFMAO.

In your case the lemon law is a more affective tool for getting out of a car than leasing would be. Again, I must say that leasing is strictly a bet on residual value. What makes leases good or bad is how high the residual is, the discount off MSRP, how low the money factor is, and how high the fees are. The sum of all of those factors tells you whether you should lease or not.

You can always get out of a financed car at 3 years just like you can a leased car. You just have to sell the car and either take the loss or take the profit depending on resell value. Buyers typically would say that leases are different because they give you an option to always get out of the lease for a few hundred dollars without the risk of losing thousands of dollars in depreciation.

The issue is that if the residual is too low on a lease then you are paying for that depreciation anyway. You just pay it throughout the lease instead of all at once at the end. Technically speaking it is better financially to pay the depreciation all at once at the end of the lease rather than in installments throughout the lease because that money could be earning you interest throughout the lease. In reality buyers won't save/invest that money during the lease so the lease acts like insurance against excessive depreciation.

Again, leases all boil down to a bet on residual value. It really is that simple.

 

[Nedstand]

In your case the lemon law is a more affective tool for getting out of a car than leasing would be. Again, I must say that leasing is strictly a bet on residual value. What makes leases good or bad is how high the residual is, the discount off MSRP, how low the money factor is, and how high the fees are. The sum of all of those factors tells you whether you should lease or not.

You can always get out of a financed car at 3 years just like you can a leased car. You just have to sell the car and either take the loss or take the profit depending on resell value. Buyers typically would say that leases are different because they give you an option to always get out of the lease for a few hundred dollars without the risk of losing thousands of dollars in depreciation.

The issue is that if the residual is too low on a lease then you are paying for that depreciation anyway. You just pay it throughout the lease instead of all at once at the end. Technically speaking it is better financially to pay the depreciation all at once at the end of the lease rather than in installments throughout the lease because that money could be earning you interest throughout the lease. In reality buyers won't save/invest that money during the lease so the lease acts like insurance against excessive depreciation.

Again, leases all boil down to a bet on residual value. It really is that simple.

You have some very good points, however I think that fits your individual situation. For me, a major reason to lease is to have a low maintenance car for 3 years. I literally want to drive it, get the oil changed, and return it. All the other stuff, including multiple trips to the dealer for repairs/recalls, takes away from the leasing benefit. If I have to hire a lawyer, that's more time & headaches for me.

As an aside, I looked up California lemon law, and found this:

California Lemon Law

The California Lemon Law (Civ. Code, § 1793.22) protects you when your vehicle is defective and cannot be repaired after a “reasonable” number of attempts. In such instances, the manufacturer must either replace or repurchase the vehicle—whichever you prefer.

Buying and Maintaining a Car

Buying and Maintaining a Car Buying a car – whether new or used – is one of the biggest purchases we make. It is important to take your time in deciding which car to buy and not be pressured by anyone who simply wants your money or your signature on a contract. Once you decide on the vehicle...

oag.ca.gov

I'm not sure the Lemon law would apply in the case of the Audi Q7 since they never attempted to repair the problems, since Audi didn't acknowledge the problems exist. With regard to the brakes, they finally did acknoweldge the problem, put out a TSB with a modification (some kind if clip was installed). This solved the problem for about 3 months, then it returned.

With the Stinger, I have the problem with the sound fader going to the back seat:

PS573: Sound Settings (Fader) Moves To Rear

stingerforum.org

Kia simply does not want to perform the work. They have made "zero attempts" to date. 2 weeks ago I spoke with both Corporate & a Kia Dealer, and someone is supposed to get back to me. We'll see....