Hello guys

I have my own business, but never lease a car before.
I heard from some friends, if you lease high end cars it would make most financial sense(due to the deduction).
But I also heard that there might be hidden cost, and money factors these days are not good``. Mileage limitation is not a big concern for me btw.

Let me know what you think!
Thanks

 

I would suggest to buy with CASH or finance since rates are so low. Suggest that you finance no longer than 36 months. After the lease is up you own nothing, unless you agree to buy the car.

It might make sense only if it's leased under the business. Speak to your accountant/bookkeeper about leasing under the business.

If it's personal, I not wouldn't suggest leasing it.

 

Best financial sense to me is financing a 2-3 year old model. When you lease, you are also paying property tax of the first 3 most expensive years. I don't think the deduction for a business car is as high as you think or hope it would be. I deduct repair and maintenance costs only.

 

How on earth do you take business deductions for an XK or XKR? What possible legitimate business use could it have?

I never understand why so many people are able to deduct leased luxury cars as business expenses.

That being said, I did lease a brand new 2011 Honda Insight once. The lease was only $205/month with zero down, 36 months, 15k miles a year. This was the day before the tsunami/earthquake that devastated Japan. 6 months later, supply of Japanese cars had dried up, and I was actually able to trade it in to a dealership without owing anything. Pretty amazing for a lease!

That being said, leases are too darn complicated for me to consider doing again. For me, the big unknown is all of the things they will deduct when you turn the car in (dings, curb rash, etc.). That could easily turn leasing into a losing proposition.

 

leasing vs financing is a tale as old as time. It all comes down to personal preference and financial standing. No one can tell you which is better...it all depends on the type of car and the situation

for example: I went to look at an Audi A5 coupe a few months ago....they wanted damn near $700 a month for the car with about $5k out of pocket. This isnt the first time ive heard an outrageous lease number from an Audi.

If you're the kind of person that switches cars every 2-3 years...financing may not be the best. You will end up losing big time on depreciation.

If you travel more than 15k miles per year....leasing is not an option.

You can use a lease as a business expense, i know i do. If you finance, you can only use mileage and gas as an expense (i believe its about 55 cents per mile traveled for business reason)

If you get into an accident, you dont have to worry about value loss when you lease.

 

On some leases, the money factor over the course of the lease is the same as financing. BMW does a good job with that. Not sure about Jaguar.

Do you have some leasing options you can share, and we'll break them down for you?

 

For me, CARZADDICT summed up the pros and cons quite well.

I am usually a cash purchaser of cars and the XJL is my first ever lease. While I am able to deduct it from my "self employed" business expenses, that was not the primary factor for selecting the lease.

I simply figured that in 3 years I would be ready for a new car and did not want to bother with trade-in values and negotiations. Much more convenient to just drop the car off and drive off in a new one. In the back of my mind was the fact that I had been trading cars too often and the 3 year-lease would at least lock me in for the period and prevent me from spontaneously trading .

Of course, there are drawbacks, like now that I'm actually having an ongoing and unsolved issue with my leased car. The dealer thus far could not fix it and if it was not for the prohibitive breaking of the lease, I would likely have traded this car for a 2013 already. Thus, I am now forced to drive the car with its negative issues, potentially for 2 more years.

Not sure if, given the totals of my lease experience, I would do it again.

Albert

 

Are you deducting the whole lease price as an expense? I thought there were classes different cars fall into and only a certain percent of the lease could be deducted per class.

With the pre 2013 Range Rovers, their weight put them into class that accelerated depreciation could be used (considered like a work truck or something like that).

Not trying to get into your finances or anything, but my accountant has always shot me down when I was going to lease a car for business and expecting 100% deductible... That is why I have stuck with purchasing and deducting maintenance and repair costs only.

 

I lease some of my daily drivers every few years and I have NEVER, not one time, turned my car into the dealer I leased it from. You just trade it in about 1 or 2 months before the lease is up, and the dealer you trade it to will either pay the last two bills or buy it for the pay off. Every time so far they have bought it for the pay off, and then applied the full tax savings toward my next vehicle. This has happened three times with three different cars, three different dealerships.

Never ever had to pay for any repairs, in fact on the RAV4 limited I just turned in for my wife, she had a huge scratch where it rubbed a metal pole and it needed new tires very soon. They still paid it off, gave me the full tax savings against the price of the car, and I got her a new SUV for invoice (bought that one).

Leasing can be GREAT if you find the right deal and don't drive to many miles each year.

 

Albert, you can trade it in anytime! You are not forced to drive it for 2 years. It has a payoff just like any other car. You wont be breaking anything, there is no extra penalty to trade it in anywhere you want.

Of course trading it in too soon is going to probably cost you some money, but it might not...just depends on what you can get for it and how bad the next dealership wants to sell you a car.

Also you should be happy that you leased that car if there is something wrong with it...its not yours! lol

Good luck with it.

 

Interesting comments. I have and am successful with a leasing option. Typically, I lease the vehicle down to $1. My approach has always been to keep the cars I like, and get rid of the cars I don't.

Cheers!

 

If it is for business use, lease is most always the better method. I just leased a 2013 XKR a few weeks back. The money factory portion of the lease was so low that my payment is virtually depreciation only.

 

I simply enter my lease payment values as requested by TurboTax. Really do not know what portions of the total costs and payments it actually deducts. TurboTax at times does mysterious calculations that I do not quite follow.

Albert

 

Matt

Thanks for the advice. I got and appraisal from the selling dealership for my 1 yr old XJL that was around 84K stickered. The estimate was for $48K. The car had only 8K miles. So, I dropped the idea of trading it. Looks like that breaking the lease after only 1 year is prohibitive.

So, I just have to work on fixing the issue. Today I just completed a wheel/tire swap between my XF and the XJL. The short, 20 miles, test drive seemed to indicate a definite improvement in the XJL ride and a degradation in the XF ride. But, a longer test drive is in order, hopefully will be done this week to determine how the car rides over long stretches of varying pavement surfaces. Keeping my fingers crossed...

Albert

 

Hi guys

Thank you for all the comments!
The main reason I am afraid to step into a luxury lease is the hidden cost. One dealership does charge my friend heavily when he turned in his car.
To my knowledge, the leasing expense is pretty much 100% deductible as long as it's 100% for business use. So if you use the car for 90%, then it's 90% deductible.
Yes, there is a bonus depreciation for truck or suv which is more than 6000 pounds!

Could anyone recommend some sports car around $800 per month?
Xkr is like $1100/month, a bit too much for me.

Appreciate all the inputs!

 

Also I have a stupid question, what if you run into a accident?
Do you pay extra for the extra depreciation when you turn your car back?

Thanks!

 

Just got this email from my local Jag dealer:

$799/mo. 2013 JAGUAR XK TOURING COUPE LEASE OFFER*

36 MONTH LEASE, $4,995 + TAX, TITLE AND FEESDUE AT SIGNING, $0 SECURITY DEPOSIT*


Enjoy the first month, compliments of Jaguar***.

To make the transaction even more gratifying, Jaguar will make the first month's payment for you, up to $1,200***.

Lease a 2013 XK Touring Coupe and enjoy these elegant and innovative standard features:
•Sport-style 10-way power-adjustable front seats, with three stage variable heating
•Jaguar Premium 525W surround sound system
•Aerodynamic Pack
•Jaguar Smart Key System? with Keyless entry and Keyless start
•Power-fold auto dimming heated mirrors
•Bluetooth® phone connectivity1
•19-inch Tamana alloy wheels
•Jaguar Platinum Coverage**

* For well qualified lessees as determined by approved lender. All amounts shown are estimates, retailer sets actual amounts. Residency restrictions apply. 2013 Jaguar XK Touring Coupe, 36 month lease, $4,995 due at signing includes $3,401 down, $0 security deposit, $795 acquisition fee and first month's payment, excludes retailer fees, taxes, title and registration fees. Actual rates and payments of closed-end lease may vary. Take new retail delivery from retailer stock by 9/30/2013. Lessee responsible for insurance, maintenance, excess wear and excess mileage over 30,000 miles at $0.30/mile. Based on MSRP of $79,895 (includes destination and delivery) with a residual value of $43,942 as of 7/2/2013.

 

Last week at my dealer they had a beautiful base F-type displayed with a lease deal of $749. Do not recall the details.

Gap insurance coverage for accident caused depreciation. Mine was included in my lease deal.

Albert

 

Most leases include gap insurance. Instead of turning the car in, just drive it off a bridge!

 

Thanks!
So I did a little bit HW, it seems BMW does have better leasing program overall?
Any one disagree?