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Why pre-ordering is dangerous (and often stupid)

 
 
Robert Peirce
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      06-28-2011
In article <iub3i9$kuf$(E-Mail Removed)>,
John McWilliams <(E-Mail Removed)> wrote:

> On 6/27/11 PDT 9:21 AM, Robert Peirce wrote:
> > In article<iu8l39$1li$(E-Mail Removed)>,
> > John McWilliams<(E-Mail Removed)> wrote:
> >
> >> On 6/25/11 PDT 5:17 PM, RichA wrote:
> >>> Pre-ordering is like putting money down on a leased car.
> >>
> >> Virtually all leased vehicles require some upfront money on top of the
> >> first month's lease payment.

> >
> > In many, perhaps most, cases it is possible to negotiate a deal with no
> > upfront money. When this can be done it is often to your advantage even
> > if the monthly payments are higher.

>
> I'm sure it can be done in most cases, but equally sure you're going to
> be forking over more in some way shape or form- either it's give-in
> money they were always prepared to ditch, or higher payments that will
> more than make up the time value of money for a normal range of interest
> rates.


That is easy to calculate.
 
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Robert Peirce
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      06-28-2011
In article <(E-Mail Removed)>,
Rich <(E-Mail Removed)> wrote:

> Leased vehicles only "cost" you if you insist on doing the stupidest
> thing of all-buying out the vehicle at the end.


That's not always true either. Sometimes the buy-out is below market
and you can flip the car at a profit. That doesn't usually happen but
it can.

I haven't checked lately, but with "cash for clunkers" and the recent
problems in Japan, used car prices are moving up in an alarming fashion.
It is possible that some currently expiring leases might make a buy-out
attractive.
 
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ray
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      06-28-2011
On Sat, 25 Jun 2011 17:17:54 -0700, RichA wrote:

> Pre-ordering is like putting money down on a leased car. You'd have to
> be retarded to do it.
>
> http://www.amateurphotographer.co.uk/news/

Online_photography_store_in_trouble_news_308275.ht ml

So, how is it "dangerous"? It isn't going to kill you or physically harm
you in any way that I can see.

Pre-ordering comes in a variety of forms. It's fairly common in several
hobbies for 'special runs'. In such cases, if you don't pre-order you're
not going to get one - period. In some cases it is not binding and does
not require a deposit - it's done to get an idea of the interest.
 
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PeterN
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      06-28-2011
On 6/28/2011 3:20 PM, Alan Browne wrote:

>
> No. Unless you're short cash at the start. But you will be paying them
> that back later on. With interest. So you'd only be winning if you lock
> in the interest rates and then there is sudden inflation and rising i
> rates.
>
> Leasing cars is rarely, if ever, a smart money move for a personal car.
>


Several years ago the price of the car was reduced by about $4k and the
interest rate was 0% if we leased. that one was a no brainier.


--
Peter
 
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John McWilliams
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      06-29-2011
On 6/28/11 PDT 7:56 AM, Robert Peirce wrote:
> In article<iub3i9$kuf$(E-Mail Removed)>,
> John McWilliams<(E-Mail Removed)> wrote:
>
>> On 6/27/11 PDT 9:21 AM, Robert Peirce wrote:
>>> In article<iu8l39$1li$(E-Mail Removed)>,
>>> John McWilliams<(E-Mail Removed)> wrote:
>>>
>>>> On 6/25/11 PDT 5:17 PM, RichA wrote:
>>>>> Pre-ordering is like putting money down on a leased car.
>>>>
>>>> Virtually all leased vehicles require some upfront money on top of the
>>>> first month's lease payment.
>>>
>>> In many, perhaps most, cases it is possible to negotiate a deal with no
>>> upfront money. When this can be done it is often to your advantage even
>>> if the monthly payments are higher.

>>
>> I'm sure it can be done in most cases, but equally sure you're going to
>> be forking over more in some way shape or form- either it's give-in
>> money they were always prepared to ditch, or higher payments that will
>> more than make up the time value of money for a normal range of interest
>> rates.

>
> That is easy to calculate.


Well, sure, if you have the intelligence.....! (and a calculator)

--
john mcwilliams
 
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John McWilliams
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      06-29-2011
On 6/28/11 PDT 12:20 PM, Alan Browne wrote:
> On 2011-06-27 12:21 , Robert Peirce wrote:
>> In article<iu8l39$1li$(E-Mail Removed)>,
>> John McWilliams<(E-Mail Removed)> wrote:
>>
>>> On 6/25/11 PDT 5:17 PM, RichA wrote:
>>>> Pre-ordering is like putting money down on a leased car.
>>>
>>> Virtually all leased vehicles require some upfront money on top of the
>>> first month's lease payment.

>>
>> In many, perhaps most, cases it is possible to negotiate a deal with no
>> upfront money. When this can be done it is often to your advantage even
>> if the monthly payments are higher.

>
> No. Unless you're short cash at the start. But you will be paying them
> that back later on. With interest. So you'd only be winning if you lock
> in the interest rates and then there is sudden inflation and rising i
> rates.
>
> Leasing cars is rarely, if ever, a smart money move for a personal car.


You're good up to that last sentence. Sometimes it is, sometimes it
ain't. Each deal has to be examined in some detail.

 
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John McWilliams
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      06-29-2011
On 6/28/11 PDT 7:15 PM, Alan Browne wrote:
> On 2011-06-28 21:12 , John McWilliams wrote:
>> On 6/28/11 PDT 12:20 PM, Alan Browne wrote:
>>> On 2011-06-27 12:21 , Robert Peirce wrote:
>>>> In article<iu8l39$1li$(E-Mail Removed)>,
>>>> John McWilliams<(E-Mail Removed)> wrote:
>>>>
>>>>> On 6/25/11 PDT 5:17 PM, RichA wrote:
>>>>>> Pre-ordering is like putting money down on a leased car.
>>>>>
>>>>> Virtually all leased vehicles require some upfront money on top of the
>>>>> first month's lease payment.
>>>>
>>>> In many, perhaps most, cases it is possible to negotiate a deal with no
>>>> upfront money. When this can be done it is often to your advantage even
>>>> if the monthly payments are higher.
>>>
>>> No. Unless you're short cash at the start. But you will be paying them
>>> that back later on. With interest. So you'd only be winning if you lock
>>> in the interest rates and then there is sudden inflation and rising i
>>> rates.
>>>
>>> Leasing cars is rarely, if ever, a smart money move for a personal car.

>>
>> You're good up to that last sentence. Sometimes it is, sometimes it
>> ain't. Each deal has to be examined in some detail.

>
> 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?

> Leasing has the car devaluing while you are on a fixed payment schedule
> and having put down a minimal (if any) down payment. The car usually
> devalues quickly. At the end you have either rented by paying too much
> per month or can "buy out" the car at a premium over its used value.


The car depreciates whether you own it or lease, whether you buy it out
of pocket, via loan, or via lease. The buy out may be more or less than
the then current market value. Each deal needs examining in light of
one's personal situation.

 
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John McWilliams
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      06-29-2011
On 6/28/11 PDT 9:42 PM, Eric Stevens wrote:
> On Tue, 28 Jun 2011 18:10:24 -0700, John McWilliams
> <(E-Mail Removed)> wrote:
>
>> On 6/28/11 PDT 7:56 AM, Robert Peirce wrote:
>>> In article<iub3i9$kuf$(E-Mail Removed)>,
>>> John McWilliams<(E-Mail Removed)> wrote:
>>>
>>>> On 6/27/11 PDT 9:21 AM, Robert Peirce wrote:
>>>>> In article<iu8l39$1li$(E-Mail Removed)>,
>>>>> John McWilliams<(E-Mail Removed)> wrote:
>>>>>
>>>>>> On 6/25/11 PDT 5:17 PM, RichA wrote:
>>>>>>> Pre-ordering is like putting money down on a leased car.
>>>>>>
>>>>>> Virtually all leased vehicles require some upfront money on top of the
>>>>>> first month's lease payment.
>>>>>
>>>>> In many, perhaps most, cases it is possible to negotiate a deal with no
>>>>> upfront money. When this can be done it is often to your advantage even
>>>>> if the monthly payments are higher.
>>>>
>>>> I'm sure it can be done in most cases, but equally sure you're going to
>>>> be forking over more in some way shape or form- either it's give-in
>>>> money they were always prepared to ditch, or higher payments that will
>>>> more than make up the time value of money for a normal range of interest
>>>> rates.
>>>
>>> That is easy to calculate.

>>
>> Well, sure, if you have the intelligence.....! (and a calculator)

>
> HP-12c is what you want.
> http://en.wikipedia.org/wiki/HP-10C_series


Well, yeah, esp. after I read this
Often referred to as a tool for "Old-ie Time-ies," critics of the HP-12C
claim its early 1980s technology and style are antiquated......

Give me a Bowmar Brain!
 
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PeterN
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      06-29-2011
On 6/28/2011 10:15 PM, Alan Browne wrote:
<snip>
> 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.
>
> Leasing has the car devaluing while you are on a fixed payment schedule
> and having put down a minimal (if any) down payment. The car usually
> devalues quickly. At the end you have either rented by paying too much
> per month or can "buy out" the car at a premium over its used value.
>
> That may fit some people's needs, but it is far from the best money deal.



I did not expect such a generalization from you. Each proposal has to be
looked at individually.
In addition to cost you must figure whether one can use the money to
earn more money than the out of pocket cost. You also seem to have
missed the example where leasing was less expensive, from a total out of
pocket perspective.


--
Peter
 
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Robert Peirce
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      06-29-2011
In article <(E-Mail Removed)>,
Alan Browne <(E-Mail Removed)> 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.


Cash is better, if you can do it.

> Leasing has the car devaluing while you are on a fixed payment schedule
> and having put down a minimal (if any) down payment. The car usually
> devalues quickly. At the end you have either rented by paying too much
> per month or can "buy out" the car at a premium over its used value.
>
> That may fit some people's needs, but it is far from the best money deal.


That's true but I have leased and owned cars. I lease because I tend to
hang onto cars forever. 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.
 
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