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#31
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Why pre-ordering is dangerous (and often stupid)
On 6/29/11 2:32 PM, Alan Browne wrote:
On 2011-06-29 17:27 , tony cooper wrote: On Wed, 29 Jun 2011 16:57:53 -0400, Alan Browne wrote: On 2011-06-29 16:40 , tony cooper wrote: On Wed, 29 Jun 2011 16:22:27 -0400, Alan Browne wrote: I recently sold a 1977. If I lease them I have to get rid of them. I currently lease a car. It would have been cheaper to buy it, but now I know I have to replace it. OTOH, I just bought a car I expect to own for the next ten years. Every car I buy is for 9 - 10 years. A guy recently gave a presentation on fireworks photography at my camera club. He uses a technique where he sets the camera to bulb, holds a black card over the lens, removes the card when the firework blossoms, re-covers the lens, and repeats. He gets several blossoms in a frame. Pretty, if you like that sort of photograph. When asked how long he keeps the shutter open, his reply was "Until I'm done". You can go quite a while if you think about it. Since it really is separate exposures (in the dark, with the shutter open there is no exposure - not enough to worry about, anyway). So each rocket sets its own exposure in that area of the film. The way I recall it is f/8 @ ISO 100. I did it a couple times using a ball cap for a shutter and a remote to hold the shutter open. After getting a feel for the "scene" I would typically allow 3 "sets" of shots into the frame while it was open and then close the shutter and move on. If it's a calm evening and the smoke builds up, then you do have to reduce the shutter time as the smoke reflects other light sources and rocket exhaust which reduces the contrast somewhat. The handout he gave after the presentation says he uses a tripod, cable release, ISO 100, and exposure of f/8, f/11, or f/16. He usually uses f/8. Also, manual focus is important or the auto focus searches around too much. I rarely use AF (the other night at a wedding reception I had no choice to use it. Dim and my eyesight ain't that sharp in dim light anymore). Here's a couple (of the very few) I've done: http://gallery.photo.net/photo/642698-lg.jpg http://gallery.photo.net/photo/642676-lg.jpg Much better if you can have a city or waterscape to shoot them with, of course. But much easier with a camera........:-) Nice shots. |
#32
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Why pre-ordering is dangerous (and often stupid)
On 2011-06-29 18:33 , John McWilliams wrote:
On 6/29/11 1:30 PM, Alan Browne wrote: On 2011-06-28 23:15 , John McWilliams wrote: On 6/28/11 PDT 7:15 PM, Alan Browne wrote: The only smart (money) way to acquire a car is to pay the most you can in down payment, to pay off the car as quickly as possible and finally to use that same car as long as economically possible. The "only way", huh?? You presume the choices are lease or finance. What about self finance? Opportunity cost of funds lost in downpayment? The cheapest (smart money) way to buy a car is to pay for it quickly at the best negotiated price. Best price- no argument. But cheapest way? Until you grasp that there are conditions under which and outright cash purchase (which, will you not concede, is the quickest way to pay for it?) may not be the smartest choice for an individual not named AB, the rest of your argument is baseless. Prove it. Give me an actual case that shows end value better in a lease vs. an outright purchase for a car at a given price. Don't forget all the T&C's and the end states. As you say, it's an individual choice. And those of us who buy our cars with as much of a down payment as we can spare, then pay off the loan quickly and then run the car until it starts to cost a lot to maintain know how to ride without paying to the hilt. That frees up cash for other things (investments, paying down the mortgage quickly, etc.). -- gmail originated posts filtered due to spam. |
#33
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Why pre-ordering is dangerous (and often stupid)
On 2011-06-29 18:37 , John McWilliams wrote:
On 6/29/11 1:53 PM, Alan Browne wrote: On 2011-06-29 16:40 , tony cooper wrote: On Wed, 29 Jun 2011 16:22:27 -0400, Alan Browne wrote: I recently sold a 1977. If I lease them I have to get rid of them. I currently lease a car. It would have been cheaper to buy it, but now I know I have to replace it. OTOH, I just bought a car I expect to own for the next ten years. Every car I buy is for 9 - 10 years. A guy recently gave a presentation on fireworks photography at my camera club. He uses a technique where he sets the camera to bulb, holds a black card over the lens, removes the card when the firework blossoms, re-covers the lens, and repeats. He gets several blossoms in a frame. Pretty, if you like that sort of photograph. When asked how long he keeps the shutter open, his reply was "Until I'm done". I feel the same way about trading cars. No set number of years, just "When I'm ready". It's a way to do it. I don't like cars and I despise maintaining them. So I buy a reliable brand (Honda) which needs minimal maintenance over 10 years and ~180,000 km. After that the rust starts up (Quebec uses a lot of salt on the roads) and other things begin to fail. So then I buy a new one. I believe the above formula is about as stingy as I can get and have a reliable, always starts at -35°C car that handles well and is efficient. If I bought a 1 year old Honda and drove it for 9 years I'd avoid the initial steep depreciation too. I just dislike not knowing how a previous owner treated the car. This makes sense. But it doesn't support your "smartest way is to always purchase outright for cash" as a rule for everyone. You're right. So many people are such vain idiots when it comes to car purchases that they are also subscribers to the "Jumbo Mortgage" plan that has turned the US taxpayer into the bailout resource of Wall Street. -- gmail originated posts filtered due to spam. |
#34
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Why pre-ordering is dangerous (and often stupid)
On 6/29/2011 8:53 PM, Alan Browne wrote:
Prove it. Give me an actual case that shows end value better in a lease vs. an outright purchase for a car at a given price. Don't forget all the T&C's and the end states. I'm not sure what you mean by "end value," but I can give you an example where the lease had better value at the beginning and the end of the lease term. In 1990, I took such a lease deal on a Nissan Maxima SE. The terms were such that if I exercised my right to buy at a fixed price at the end of the 48-month lease, my effective interest rate worked out to just over 5%. At that time, the yield curve for 3-5 year U.S. treasuries was over 8%. The car price was around $22,000 and had been negotiated before working out financing. The extra registration fees were $115, and I had to pay a refundable up-front fee to Nissan of around $300. Interest on the treasury was subject to Federal Tax, so effectively the lease + end purchase was just a little bit better. However, that doesn't count the value of the put option that's inherent in such an arrangement. As it turned out, I was involved in a major accident with the that car. The other driver was 100% at fault, but there was about $6000 of damage to the Maxima including frame repair. While it was repaired (and I believe it was repaired well,) that made it worth less than the residual value. So at the end of the lease, I exercised my option, returned the car to Nissan, and ended up buying a new Mazda. As usual with finance, it works out to an exercise in numbers and risk. While a business calculator makes doing present value calculations a breeze, pricing the implied option still requires some work and skill. And realistically, the 1+ hour I spent running numbers and negotiating with the business manager is time I'll never get back. If you're not willing to invest that effort, I suggest you don't even consider a lease for a personal vehicle. -- Mike Benveniste -- (Clarification Required) Its name is Public opinion. It is held in reverence. It settles everything. Some think it is the voice of God. -- Mark Twain |
#35
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Why pre-ordering is dangerous (and often stupid)
On 6/29/2011 8:53 PM, Alan Browne wrote:
On 2011-06-29 18:33 , John McWilliams wrote: On 6/29/11 1:30 PM, Alan Browne wrote: On 2011-06-28 23:15 , John McWilliams wrote: On 6/28/11 PDT 7:15 PM, Alan Browne wrote: The only smart (money) way to acquire a car is to pay the most you can in down payment, to pay off the car as quickly as possible and finally to use that same car as long as economically possible. The "only way", huh?? You presume the choices are lease or finance. What about self finance? Opportunity cost of funds lost in downpayment? The cheapest (smart money) way to buy a car is to pay for it quickly at the best negotiated price. Best price- no argument. But cheapest way? Until you grasp that there are conditions under which and outright cash purchase (which, will you not concede, is the quickest way to pay for it?) may not be the smartest choice for an individual not named AB, the rest of your argument is baseless. Prove it. Give me an actual case that shows end value better in a lease vs. an outright purchase for a car at a given price. Don't forget all the T&C's and the end states. I gave you an example. Yes, zero interest is not common. discounts for leasing are not common. Here are the actual numbers Negotiated cash price 32,225 Monthly lease payments (36 @298 ) Buy back 17,550 You do the rest of the math. Leasing was a no brainer -- Peter |
#36
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Why pre-ordering is dangerous (and often stupid)
On 2011-06-30 08:46 , Michael Benveniste wrote:
On 6/29/2011 8:53 PM, Alan Browne wrote: Prove it. Give me an actual case that shows end value better in a lease vs. an outright purchase for a car at a given price. Don't forget all the T&C's and the end states. I'm not sure what you mean by "end value," but I can give you an example where the lease had better value at the beginning and the end of the lease term. I didn't say end value, but end "state". To compare you have to bring both cases to a close if not equal end state. In 1990, I took such a lease deal on a Nissan Maxima SE. The terms were such that if I exercised my right to buy at a fixed price at the end of the 48-month lease, my effective interest rate worked out to just over 5%. At that time, the yield curve for 3-5 year U.S. treasuries was over 8%. The car price was around $22,000 and had been negotiated before working out financing. The extra registration fees were $115, and I had to pay a refundable up-front fee to Nissan of around $300. Interest on the treasury was subject to Federal Tax, so effectively the lease + end purchase was just a little bit better. However, that doesn't count the value of the put option that's inherent in such an arrangement. As it turned out, I was involved in a major accident with the that car. The other driver was 100% at fault, but there was about $6000 of damage to the Maxima including frame repair. While it was repaired (and I believe it was repaired well,) that made it worth less than the residual value. So at the end of the lease, I exercised my option, returned the car to Nissan, and ended up buying a new Mazda. In the end you bailed on the car because it was damaged goods and you had a perception of lower value. That was accidental serendipity. As usual with finance, it works out to an exercise in numbers and risk. While a business calculator makes doing present value calculations a breeze, pricing the implied option still requires some work and skill. And realistically, the 1+ hour I spent running numbers and negotiating with the business manager is time I'll never get back. If you're not willing to invest that effort, I suggest you don't even consider a lease for a personal vehicle. I'd bet the vast majority of people who lease personal vehicles do it because they do not have much (or any) cash to put down but are willing to pay a fixed amount every month. They do not make a financial analysis of any deep kind. If one leases a car for 3 years for $400 per month and returns it, he has paid $14.4K and has nothing. And if he decides to buy it he pays a premium over the used value at that point. If I pay $600 a month for 5 years I've paid $36K. Then I drive the car for another 5 years (yes a little more maintenance, but not much). That comes to $300 a month on average - and that $300 is worth less every month that goes by in any case. Then I sell it for $4000 bringing the average down to about $270 / mo. Leasing cars is a rubes game. -- gmail originated posts filtered due to spam. |
#37
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Why pre-ordering is dangerous (and often stupid)
On 6/30/11 PDT 6:00 AM, PeterN wrote:
On 6/29/2011 8:53 PM, Alan Browne wrote: On 2011-06-29 18:33 , John McWilliams wrote: On 6/29/11 1:30 PM, Alan Browne wrote: On 2011-06-28 23:15 , John McWilliams wrote: On 6/28/11 PDT 7:15 PM, Alan Browne wrote: The only smart (money) way to acquire a car is to pay the most you can in down payment, to pay off the car as quickly as possible and finally to use that same car as long as economically possible. The "only way", huh?? You presume the choices are lease or finance. What about self finance? Opportunity cost of funds lost in downpayment? The cheapest (smart money) way to buy a car is to pay for it quickly at the best negotiated price. Best price- no argument. But cheapest way? Until you grasp that there are conditions under which and outright cash purchase (which, will you not concede, is the quickest way to pay for it?) may not be the smartest choice for an individual not named AB, the rest of your argument is baseless. Prove it. Give me an actual case that shows end value better in a lease vs. an outright purchase for a car at a given price. Don't forget all the T&C's and the end states. I gave you an example. Yes, zero interest is not common. discounts for leasing are not common. Here are the actual numbers Negotiated cash price 32,225 Monthly lease payments (36 @298 ) Buy back 17,550 You do the rest of the math. Leasing was a no brainer I've pretty much given up. Alan seems to think that all leases have higher buy-ins at e.o.l than market value. If I were to provide a specific example, Alan would apply just his own time value of money to it. as well as the assumption that the car would be kept an addtional 4-6 years. |
#38
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Why pre-ordering is dangerous (and often stupid)
On 6/30/2011 5:14 PM, Alan Browne wrote:
I didn't say end value, but end "state". To compare you have to bring both cases to a close if not equal end state. Read your own post. The phrase "end value" clearly appears. I'm used to people misquoting others, but you're misquoting yourself. In the end you bailed on the car because it was damaged goods and you had a perception of lower value. That was accidental serendipity. No, it was a real and foreseeable risk. In effect, Nissan Motor Acceptance Corporation was insuring me against that risk by granting me the option at the end of the lease. Note that I would have been slightly better off even without the accident. And it wasn't just _my_ perception of lower value, it's the market's as well. Major accidents show up in histories such as those sold by CarFax. I'd bet the vast majority of people who lease personal vehicles do it because they do not have much (or any) cash to put down but are willing to pay a fixed amount every month. They do not make a financial analysis of any deep kind. Their loss. It ain't exactly deep -- you plug the following into your business calculator or spreadsheet. -- The price of the car plus the additional fees you're paying. -- The lease amount. -- The end price you'll have to pay. -- The term of the lease. You then set the annuity flag and let the calculator or spreadsheet compute the effective interest rate of the lease. If it's less than your effective finance rate (self-financed or not), the lease is a better deal. It was in my case. If it's close, you have to decide if the option to return the car is worth the difference. If it's not close, and it often isn't, you don't lease. If one leases a car for 3 years for $400 per month and returns it, he has paid $14.4K and has nothing. And if he decides to buy it he pays a premium over the used value at that point. Wrong. He's had use of the car for three years at a lower cost and at less risk than if he had bought it. Leasing cars is a rubes game. No, not understanding basic finance makes one a rube. -- Mike Benveniste -- (Clarification Required) Its name is Public opinion. It is held in reverence. It settles everything. Some think it is the voice of God. -- Mark Twain |
#39
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Why pre-ordering is dangerous (and often stupid)
On 2011-06-30 18:01 , John McWilliams wrote:
I've pretty much given up. Alan seems to think that all leases have higher buy-ins at e.o.l than market value. If I were to provide a specific example, Alan would apply just his own time value of money to it. as well as the assumption that the car would be kept an addtional 4-6 years. But that's the key to smart money car ownership. Owning it for the economical life of the car. That ain't 5 years no matter what Detroit thinks. So boys and girls, how do we buy cars and save money? -Max downpayment on a good reliable car (usually not designed in the US). -Short loan period (4 - 5 years MAX). -Pay it back faster than the loan (3 year goal) -Use the car as long as reasonably possible after that. -Sell it while it still holds some value (part of downpayment for the next car) Leasing does not lead there. -- gmail originated posts filtered due to spam. |
#40
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Why pre-ordering is dangerous (and often stupid)
On 2011-06-30 18:13 , Michael Benveniste wrote:
On 6/30/2011 5:14 PM, Alan Browne wrote: I didn't say end value, but end "state". To compare you have to bring both cases to a close if not equal end state. Read your own post. The phrase "end value" clearly appears. I'm used to people misquoting others, but you're misquoting yourself. My point of reference was this paragraph: " Prove it. Give me an actual case that shows end value better in a lease vs. an outright purchase for a car at a given price. Don't forget all the T&C's and the end states." I was referring to the last sentence obviously. In the end you bailed on the car because it was damaged goods and you had a perception of lower value. That was accidental serendipity. No, it was a real and foreseeable risk. In effect, Nissan Motor Acceptance Corporation was insuring me against that risk by granting me the option at the end of the lease. It's always the option on a lease. That's the point, you don't own it so you can walk away from it. But it is not something one computes as a likely event unless one is a really bad driver or statistically unfortunate. Note that I would have been slightly better off even without the accident. And it wasn't just _my_ perception of lower value, it's the market's as well. Major accidents show up in histories such as those sold by CarFax. I'd bet the vast majority of people who lease personal vehicles do it because they do not have much (or any) cash to put down but are willing to pay a fixed amount every month. They do not make a financial analysis of any deep kind. Their loss. It ain't exactly deep -- you plug the following into your business calculator or spreadsheet. -- The price of the car plus the additional fees you're paying. -- The lease amount. -- The end price you'll have to pay. -- The term of the lease. You then set the annuity flag and let the calculator or spreadsheet compute the effective interest rate of the lease. If it's less than your effective finance rate (self-financed or not), the lease is a better deal. It was in my case. If it's close, you have to decide if the option to return the car is worth the difference. If it's not close, and it often isn't, you don't lease. If one leases a car for 3 years for $400 per month and returns it, he has paid $14.4K and has nothing. And if he decides to buy it he pays a premium over the used value at that point. Wrong. He's had use of the car for three years at a lower cost and at less risk than if he had bought it. He has nothing in hand. 0. You conveniently deleted the other paragraph of course which shows a much lower overall cost of using a car. I guess that was inconvenient, huh? Fact is, since a car loses so much value in the first few years, but still provides reliable transportation for 10, one is a fool not to take advantage of the low cost of the last 5 years. If one only sees having a car for 3 or 5 years, that is another story, and a fool of another kind: those who adore cars. Leasing cars is a rubes game. No, not understanding basic finance makes one a rube. So you're a rube. Too bad. -- gmail originated posts filtered due to spam. |
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