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Comment by brandonmenc | Hacker News Reader

> Then 1995 happened, and any doofus with five thumbs and a keyboard could get invoice prices for free all over the Internet.

My uncle was a top car salesman in his area at that time. He said guys would come swaggering in with a printout from the internet, and he'd be like "so what - go somewhere else, then" because it didn't matter - no one was going to sell you the car at zero profit.

If they "secretly" raised the "invoice" price it was almost certainly so they wouldn't have to deal with boneheads constantly coming in and demanding to buy the car at cost.

Anyways, his advice today? Lease. And if you're trading in, wait until the day you're supposed to pick up the new car, then call in and say, "you know, I think my trade-in is worth more than that" - they will always negotiate at that point.

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I hear people say leasing is the way to go, but I don't understand the math. Cars easily last 10 years now, and I drove my last car for 18 years. Please explain! Is it about always having a newish car at an optimal price?

Leasing wins against having a new car every few years. It fails badly if you keep your cars longer or buy when they're a few years into the depreciation curve.

Personally I decided buying cars a few years old made far more sense.

Leases are literally the option to purchase a car at a much later date at a predetermined price. You’re betting you can keep the value of the car above the price difference of the vehicle at that later date. The manufacturer is just raking it in - they’ll rarely not be able to fix a vehicle up for a great profit. I wouldn’t be surprised to learn the lease contract price (Ie sum total of downpayment and monthly payments) more than covers the manufacturers per vehicle cost.

> Personally I decided buying cars a few years old made far more sense.

I think it absolutely does. I actually go for older than that, Typically 6-8 years or even more. Right now my newest car is a 2006 which I bought last year.

So leasing wins if you've already decided to pour money out the window? I see that you said buying used and older makes far more sense; which means we are probably on the same page. However, is that really the only selling point for leasing? If so, how in the world do so many folks get suckered into doing it?

Pretty much, along with the fixed and known cost per month with fewer possible surprises.

I can understand the appeal of new if you are buying to keep for a long term, or something exotic. Outside of those I don't know why anyone would buy new a thing that loses half its value in the first two or three years. Still it provides plenty of choice in the secondhand market. :)

Lots of people like new cars and being able to have the latest year's model every 3 or so years is a big bonus for people. Same a majority of people like having the latest iPhone or Android flagship phone.

Not everyone places value purely in the monetary realm. Some people view cars as a status symbol. There is also less hassle with leasing.

Saying people don't place the value in the monetary realm is amusing, since money is supposed to be fungible for all value. :)

That said, I get it. Some people place a ridiculously high value on having the latest. I think I used to be in that population, to an extent. Nowadays, I confess this mentality leaves me ridiculously confused.

If you are buying fancy cars, it always makes sense, as the emotional buzz from having a fancy car fades with age.

The dealers will sell the car for next to nothing because they owe money on the car, and get stuck with inventory they don’t want. Your Toyota dealer doesn’t get his high margin 4Runner unless he takes a view Yarii (or whatever the tiny Toyota is). This is the same reason bars sell well liquor at a loss.

Do bars really sell well liquor at a loss? I've never heard that and I can't imagine that being true just from my experience as a customer in bars.

Even if a Rum & Coke is 5 dollars (I'm used to it being more around 8-10$ on average, but being conservative), the unit economics still seem extremely profitable to me. I would think the coke from the fountain costs pennies, and the shot of (well) rum would be max one dollar.

The going rate for a cocktail in Sydney Australia is somewhere between $16-20 at the bars I would frequent a few years ago. Take a martini, with 3 shots (total) of gin and vermouth - 35mL shots for the math to work out. 750mL bottles of gin and vermouth will set you back about $30 each (retail), depending on the brand. With 22 shots per bottle it works out at about $1.40 per shot, and therefore $4.20 per drink. You're looking at $100 bottles of spirits before you start reaching the $16 mark for price of spirits alone.

For comparison, with beer you're looking at about $2 per beer retail ($50/24 bottles) and likely to pay $8 or more at a pub. This suggests a similar markup on beer to spirits, at least here.

Note however that a proper martini (or manhattan, old fashioned, etc) is likely to get you the best bang for buck as a consumer - all the 'fancy' drinks marketed toward women like frozen margaritas etc usually contain less alcohol but retain the same price tag.

They price all this into the lease payment and down payment. You aren’t getting any sort of deal. All you are doing is saving yourself hassle when you return the car back at the end of the lease instead of selling it yourself at that time.

Leasing is a bad arrangement, if you have a car you get get rid of it, but if you are leasing a car they can make it near impo$$ible for you to get out of it.

I know one guy who had his own vehicle. But right before breaking up with his girlfriend she took out a car lease with his name on it. After they broke up he not only never needed the second vehicle, but also couldn't get out of the payment, so he had to get a second job just to cover the payment on a car he didn't need or want.

For some brands, it's about needing to be under factory warranty coverage for the entire ownership period.

Nothing wrong with a warrant, but that is a good indication it is time to look at a different brand.

It's less about the brand than the feature set. Any brand that pushes the limits of performance and technology will tend to be less reliable. Toyota is at the top of the ratings partly due to engineering skill, but mostly because their designs are conservative and take few risks. The V6 engine in the Toyota Camry has been in production since 2002 with only minor improvements so they've had plenty of time to work out the bugs.

If you just need a transportation appliance, you should only even be considering used Honda/Toyota. If you're buying an image or a driving experience, touchy maintenance and expensive repairs tend to come with the territory.

Maybe it's incentive-caused bias from a person who makes more money selling leases?

People who don't want to get ripped off are "boneheads"?

There are bad people on the both sides of the equation. As a consumer, my experience is that plenty of sellers are greedy, and many will gladly screw you over. And car salesmanship has its bad reputation for a reason. But my SO worked a lot in customer support and can tell from first-hand experience that there are many customers who are stupid, or inconsiderate arseholes, or just plain trying to defraud the seller.

So yeah, there are people who want to negotiate a fair price, and then there are inconsiderate boneheads.

People who think you should sell them something at cost or a loss "because that's what you paid for it" are.

I guess I'm just going to keep being that "bonehead" and paying at most invoice, if not invoice minus holdback, for all cars I buy in the future, just like any car I've gotten in the past.

Leasing is not feasible for people who commute. I know plenty of people who got into leases and then got jobs where they would end up going over the mileage.

If the alternative is buying a new car instead, leasing is no different. If your situation changes and you'll go over the lease mileage, buy it out instead.

If the alternative is buying a used car, then leasing is definitely different, but that's orthogonal to the mileage issue.

I’ve assumed the invoice price now also includes the cost of 0% financing. This would mean it’s carrying a lot of extra cost, and the dealer can hold the price up.

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