Who leases a car for 15 years?
October 21, 2014 10:28 AM   Subscribe

Back in June I bought a "special interest" car, MY '85. The story from the seller was that it was originally his neighbor's car since new, and when the neighbor passed away, the car was sold to his brother, then to him. Autocheck and Carfax, though, report the car as a leased vehicle as late as 1999. Who leases a car for 15 years? Or, once a lease, it always gets reported as a lease? Original titling state is Ohio.

The seller had the window sticker, certificate of origin, and the first insurance binder showing the original owner's name, which matched his story (and some light Googling), and the leasing company name, so I don't really think he was lying. But why would you keep leasing for so long?

The car cost $50k in '85 (god bless depreciation), and the owner was a surgeon, if somehow that makes a difference.
posted by hwyengr to Work & Money (8 answers total)
Plenty of people. Lump sum payments are hard if you're living paycheck to paycheck.

And possibly (tbh I've never financed a car so don't know how it works) if you've got $X lease rate based on your credit, and then your credit tanks due to some other reason, wouldn't getting a new lease on a new car require a much higher lease rate? Might as well just keep the car you have.

I know plenty of high income earners who are complete dumbshits about money and live paycheck to paycheck even when receiving multiple thousands of dollars per paycheck, so the owner being a surgeon doesn't immediately mean this isn't the case. It happens.
posted by phunniemee at 10:34 AM on October 21, 2014

A lot of small business owners lease cars instead of buying because the lease cost can be written off easier. Note usually they upgrade regularly but continuing to lease is not uncommon.
posted by bitdamaged at 10:42 AM on October 21, 2014 [3 favorites]

Could this be a tax/paperwork thing where the guy leased the car to himself through a small business (say, his surgical practice)? Or is the listed leasing company something obvious like GMAC or Honda Finance.
posted by ftm at 11:43 AM on October 21, 2014 [1 favorite]

Response by poster: I was thinking that might be it, too. The lessor is listed as the Whatever Leasing Company, though, so it wouldn't have been directly through his practice. There are a couple of search results for that name, but nothing that seems big-time, or still in business 30 years later. Is it a thing for people to set up a separate company to lease a car back to themselves?

It's one of those cars that's worth waaaay less than it costs to restore (non-911 Porsche), so I'm still sort of debating whether to sink unrecoverable cash into making it nice, or just maintain it in its current state, and figuring out whether the ownership story makes sense plays a part in that decision.
posted by hwyengr at 12:21 PM on October 21, 2014

Two things come to mind on the leasing story, neither of which necessarily are knocks against the car.

- DMV/titling authorities are lazy - car gets titled one way, some field never gets updated in the title/tag application.
- Medical doctor = self-employed = LLC shenanigans and tax loopholes = ftm's suggestion of him leasing it to himself.

If everything else about the provenance of the car checks out, I wouldn't worry.

Seems like I've heard recently on car auction shows that restoring cars makes them LESS valuable, or at least doesn't help? Or is that only on ultra-rare cars?
posted by randomkeystrike at 12:31 PM on October 21, 2014

I would vote on DMV stupidity basically every time when that's an option. my older car is titled as the wrong model among other things. and i've seen even more egregious stuff. they basically just wave a lot of things through or things get incorrectly transferred from paper through the various generations of arcane and labyrinthine computer systems they get.
posted by emptythought at 3:34 PM on October 21, 2014

As I, a non-accountant, understand it, if you but a car for a business, the business has to depreciate the car. If you lease the whole payment just gets written off. It's much simpler.
posted by wnissen at 7:55 PM on October 21, 2014

Is it a thing for people to set up a separate company to lease a car back to themselves?

I wouldn't be surprised if it is. I work for a small business in Ohio, and the owners have actually set up a separate company that owns our building, and the company that actually does stuff pays that company rent. I'm not sure if this is for tax reasons or liability of owner reasons or some combination. And one college summer I worked for [Giant Engineering Company] (albeit in a different state), and they had a system set up where enormous industrial equipment was actually owned by a subsidiary company, which then leased the equipment back to [Giant Engineering Company].

So nthing the idea that it was some kind of business tax advantage (I do know that actual purchased equipment can only be depreciated for so many years), plus maybe some laziness/not paying attention/not great money skills on the part of the original surgeon owner.

Like I said, I work for a small Ohio business - not in accounting - and I know that when we've come to the end of leases on commercial vehicles, one of the options is to extend the lease, and our accounting department has had to put some brain power into figuring out what our best option is; buying for cash, financing a purchase, continuing the lease, trading in on a new truck, etc. I could see a situation where the owner's original lease runs out and they take the quickest and/or least-cash-out-of-pocket option of just renewing the lease, regardless of whether that's actually the best long-term strategy.
posted by soundguy99 at 7:35 AM on October 22, 2014

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