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Old 04-07-2015, 08:52 PM   #1
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Car lease vs buy

Hey all. I can't think of a more diverse place to look for advice than the group we have here on the forum. So, I would like to present the age old question. What's better for acquiring a daily driver for my wife. Buy or lease.
I have always heard that leasing is a good way to go if you are payment shopping, but you have no asset in the end. After a purchase is paid for, you can sell it and recoup some of the value.

My wife would be using the car for her business (an LLC) driving locally, less that 15k miles per year.
With the current tax laws, we would be able to deduct most of the lease payment (we think). Apparently a purchase would be a deduction of about $1000 less per year.
So, I wonder what the real world experiences are out there. We have looked at this on paper for a few days. The lease rationally looks pretty good, but the irrational part of my brain says "it looks too good to be true...".
Any advice would be appreciated.

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Old 04-07-2015, 09:14 PM   #2
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Leases are for people who want a new car every year and just want to rent. Not a very good business deal. Leasing a new car, you will still have to go through the 'new car has bugs' dance to get fixed. Leasing will have restrictions and high insurance demands.

Buy a pre-own mint car that you like, one or two years old that already has the deprecation hit, and all the bugs out of it, but still has several years of full factory warranty. You can still get all of your 'Business deductions' in a pro-rated bases. After 3-4 years the car is yours and you still can get business deductions for the business/family truck...errr car....

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Old 04-07-2015, 09:26 PM   #3
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Your wife has to log her business mileage separate from her personal mileage & then use that ratio to determine how much of the annual cost she can deduct. You can also choose to deduct 57.5 cents per (business) mile, which sometimes is the better choice if a lot of miles are used for business & the annual cost of ownership is low.

IMO leases are good for realtors, etc. because clients often ride-along in your car. Always having a new car (lease) makes you look more successful. In comparison, if put a lot of miles on the cars doing deliveries, etc. then a lease is a bad idea. Better to get a used car & write-off 57.5 cents per mile...
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Old 04-07-2015, 09:36 PM   #4
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Our business guy says leasing is actually the most expensive way to own a car.......... I can not as we drive too many miles.....Also you take a huge hit if you go over the annual mileage allowance most leases charge a per mile, mileage rate over the base miles. To the average Joe there is no tax advantage nor to many businesses. If you take a tax deduction then any personal miles need to be accounted for. If you own the car then you can take the business mileage, and a portion of the interest. Talk to your tax person!!!!!!!!

We bought a new car in Sept 2014 & already have over 20,000 miles on it. If we had leased it we would already owe about $5000 extra dollars. We had a person at work that leased a car She had to pay an extra $4000 as she went over the mileage allowance for the lease term..... Beware !!!!


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Old 04-07-2015, 10:14 PM   #5
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IMO, unless the tax advantage is better in the long run, buy a good used vehicle 2-3 years old. Let someone else take the high initial depreciation hit.

I leased when it made financial sense because I drove a lot of miles for business (I never exceeded my lease mileage limit so I never had that expense), but when my business mileage decreased a lot and the lease ended, I gave back the leased vehicle and bought used. I've only bought brand new once - my first car.
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Old 04-08-2015, 06:21 AM   #6
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Thanks all. Everyone is agreeing with my gut. We tend to keep a vehicle until the wheels fall off (or the floor boards rust out) so having to buy the car at the end would add burden we usually try to avoid.
We really are looking at the tax break (being an SBO is new for us) but I'm having a brain block with resolving the total cost of ownership for either method.
I really appreciate all the feedback.

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