Help me out guys!

[2ndCamaro79]

I am not a mathmagician, so any help would be appreciated. We are replacing my wives truck and we have two options. A one payment(24 mo.) lease(don't want monthly payments) of $37,737.11 (most of it my trade) or purchase the car outright $64,XXX out the door. We plan on keeping the car for a long time, and eventually giving it to our son to drive. Thank you so much in advance, this is giving me a ulcer.

[ckaram]

Maybe I'm missing something but if you plan on keeping the vehicle long term you're better off with the outright purchase. I generally think leases blow so I'm biased...

[Egon]

Leases can be complex and there are a lot of “gotchas” on them if you are not familiar with them. Also keep in mind that a lease is really for people that like to change the car they drive every few years. By your statements that you plan on keeping the vehicle for a long time and passing it on to your son the lease is definitely not for you. How much are you planning on putting down? Give us some more details on the car/truck you are going to be purchasing. Is it new or used? Do you have a link to the vehicle for sale on the dealers lot, and do you have good/bad credit and what is the likely interest rate you will qualify for and I can probably come up with some probable monthly payment for you. Take a deep breath, and we can help you figure this out.

[2ndCamaro79]

Originally Posted by Egon

Leases can be complex and there are a lot of “gotchas” on them if you are not familiar with them. Also keep in mind that a lease is really for people that like to change the car they drive every few years. By your statements that you plan on keeping the vehicle for a long time and passing it on to your son the lease is definitely not for you. How much are you planning on putting down? Give us some more details on the car/truck you are going to be purchasing. Is it new or used? Do you have a link to the vehicle for sale on the dealers lot, and do you have good/bad credit and what is the likely interest rate you will qualify for and I can probably come up with some probable monthly payment for you. Take a deep breath, and we can help you figure this out.

Thanks, its a 2013 new Lexus LX 570 with a MSRP of $90,787 with 6 miles. We bargained them down to $82,850.00. We have excellent credit (780) and would be putting down our paid for trade ($22,000) and maybe another $5000.

Link to car (Lexus dealers don't put new cars on site anymore

http://www.autotrader.com/cars-for-s...gIndex=2&Log=0

[Egon]

Originally Posted by 2ndCamaro79

Thanks, its a 2013 new Lexus LX 570 with a MSRP of $90,787 with 6 miles. We bargained them down to $82,850.00. We have excellent credit (780) and would be putting down our paid for trade ($22,000) and maybe another $5000.

Link to car (Lexus dealers don't put new cars on site anymore

http://www.autotrader.com/cars-for-s...gIndex=2&Log=0

Taking into account your excellent credit I think it’s safe to assume you will qualify for financing in the 2.5-3.5% range. This is a big loan tough I don’t know if you would be able to get anything lower than that unless you want to pay it off in 3 years or less. Here is how it will break down at 2.5% interest rate assuming you will be borrowing $64,000. 3 Year loan, monthly payment of $1,848, total interest over the course of the loan is $2,530. 4 Year loan, monthly payment of $1,403, total interest of $3,366. 5 Year loan, monthly payment of $1,137, total interest of $4,209. 6 Year loan, monthly payment of $959, total interest of $5,058.

Just from a quick glance around the interwebs this vehicle does seem to hold its value well but it is still very expensive. The gas mileage is 12-17 mpg and the insurance is likely to be significant, somewhere north of $120 even with an excellent driving record. (please check with your agent before making a decision to buy) Adding gas, (assume 15,000miles/year) insurance and monthly payment on a 6 year loan your cost per month is going to be something close to $1,400. If that, along with any other automobile expenses on other vehicles you own is less than 20% of your combined after tax take home income then I think it’s something you can handle. (that would be an after tax take home of nearly $7000/month) 20% is just a rule of thumb but I am sure you are a responsible adult and I am not trying to talk you out of anything just providing the facts for you. Hope this break down helps, let me know if anything is unclear.

[2ndCamaro79]

Originally Posted by Egon

Taking into account your excellent credit I think it’s safe to assume you will qualify for financing in the 2.5-3.5% range. This is a big loan tough I don’t know if you would be able to get anything lower than that unless you want to pay it off in 3 years or less. Here is how it will break down at 2.5% interest rate assuming you will be borrowing $64,000. 3 Year loan, monthly payment of $1,848, total interest over the course of the loan is $2,530. 4 Year loan, monthly payment of $1,403, total interest of $3,366. 5 Year loan, monthly payment of $1,137, total interest of $4,209. 6 Year loan, monthly payment of $959, total interest of $5,058.

Just from a quick glance around the interwebs this vehicle does seem to hold its value well but it is still very expensive. The gas mileage is 12-17 mpg and the insurance is likely to be significant, somewhere north of $120 even with an excellent driving record. (please check with your agent before making a decision to buy) Adding gas, (assume 15,000miles/year) insurance and monthly payment on a 6 year loan your cost per month is going to be something close to $1,400. If that, along with any other automobile expenses on other vehicles you own is less than 20% of your combined after tax take home income then I think it’s something you can handle. (that would be an after tax take home of nearly $7000/month) 20% is just a rule of thumb but I am sure you are a responsible adult and I am not trying to talk you out of anything just providing the facts for you. Hope this break down helps, let me know if anything is unclear.

Nope, you made it crystal clear (thank you)! I have worked hard to get where I am, and this purchase is going to take me in the wrong direction. Its one of those I can afford it, but I don't need it deals. I think I may look at certified used, or just try and keep my Denali on the road.

[Scrappy Doo]

Why not just get a new Denali for about half of that?

[2ndCamaro79]

Originally Posted by Scrappy Doo

Why not just get a new Denali for about half of that?

We were waiting to see the new in person, but there suppose to get a price bump too

[Egon]

Originally Posted by 2ndCamaro79

Nope, you made it crystal clear (thank you)! I have worked hard to get where I am, and this purchase is going to take me in the wrong direction. Its one of those I can afford it, but I don't need it deals. I think I may look at certified used, or just try and keep my Denali on the road.

Awesome, I am glad I could help. I didn’t want to come across as “you shouldn’t do this” because I didn’t know your financial situation, but that is a damn expensive car. I almost choked when I plugged the numbers into the amortization function. Sometimes being financially responsible sucks but in the long run it’s the best thing. Live within your means I always say!

[2ndCamaro79]

Originally Posted by Egon

Awesome, I am glad I could help. I didn’t want to come across as “you shouldn’t do this” because I didn’t know your financial situation, but that is a damn expensive car. I almost choked when I plugged the numbers into the amortization function. Sometimes being financially responsible sucks but in the long run it’s the best thing. Live within your means I always say!

You got it, I find you don't really enjoy it, if you spend your life figuring out how to pay for it. I am in a good spot now, where I actually get to spend time with my son. I don't want to give that up right now.

[Scrappy Doo]

Originally Posted by 2ndCamaro79

We were waiting to see the new in person, but there suppose to get a price bump too

Gotcha. Makes sense! Keep us posted what goes down.