Quote:
Originally Posted by pylon
Most of the truly wealthy in this city, lease new cars. Rule #1 of most wealthy people, is never use your own money if you don't have to, always borrow it. Especially on depreciating commodities, which cars are. The typical rich guy mentality is, pay $40k to lease a brand new $90,000 S-class for 3 years, than to buy a 3 year old one for $50k and sell it for $20k in 3years. The leasing option only costs him another 10k, which is probably 1 or 2 weeks salary for that type of client. Over 60% of our clients in our luxury lines lease, that is fact, and if you saw some of those credit applications, your eyes would bulge out and touch the paper.
I can assure you, most working millionaires in Calgary aren't driving an 07 Camry. Drive through Mayfair, Pumphill, Bearspaw, Mount Royal and Springbank where all the real money in this city is, and it is a train of Benz's, BMW's, LandRovers, and Lexus's going into those posh areas.
That little Ross Perot / Warren Buffet created myth where all rich people drive Jalopies is BS. Even the stat where Toyota is claimed as the best selling millionaires car, doesn't take into account more than 60% of those Toyotas, are actually a Lexus.
The other piece of BS in that stat are people like my folks. Who yes are technically millionaires on paper, but it is due to a paid off home, and a bunch retirement investments accumulated over decades. They drive a Tiguan, and a 12 year old Dodge truck. They may be worth a couple million on paper, but they are an entirely different breed than some hot shot oil exec pulling down 500k/yr.
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I agree with your post pylon but I wasn't talking about the truly wealthy millionaires. I was talking about the people being well off. Sure the millionaire in Pump Hill isn't driving around an 07 Camry but the guy who owns a Roofing company in the NE pulling in $150k might be.
So you are talking about something totally different in your post. My point is you have too many people living outside of their means. And I'm sure you get a lot of people who are making $40K buying a brand new vehicle who really can't afford to. If you are counting on your cheque at the end of the month to pay off your car loan that is a truly stupid financial move. What happens when you lose your job? That's how you get so many vehicles at Regal and other Auctions that are Repos.
And the option isn't either A) buy a brand new vehicle cash or B) buy a brand new vehicle by financing.
About 4 years ago my friend fresh out of a crappy job and a big career move made a purchase of a Dodge Ram. Brand new cost him $45K. At the same time I had a Pathfinder I bought for about $6K. He'd be lucky to sell his for $15K now so that is a $30K loss no questions asked. I recently sold mine and in 5 years I spent $3k on driving a vehicle while he spent $30K. What did he gain that I didn't? Having a nice vehicle? Well the money I saved I put it else where and invest and probably tripled that difference.
In the end it's everyone's own money but you can at least come out and not deny you're making a bad financial decision. If you don't have at least the cost of the car in your bank, financing it is a dumb decision and I'll always believe that.