Quote:
Originally posted by Porsche-O-Phile
Never.
Leasing is for suckers and new cars are for even bigger suckers. Maybe if I win the lottery or similarly end up in a situation where I have money to blow I'd consider it, but to dump that much money into a rapidly-depreciating item is even more financially suicidal than "investing" in the current housing market, IMHO.
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Quote:
Originally posted by DonDavis
VERY solid advice! A car lease is silly and costs more than buying a car. Don't think its true? Why do car dealers push leases so much? You think its because they care about your bottom line? Puh-leez!!
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Leasing obviously has its misconceptions.
'Leasing' is only good or bad when compared to 'purchasing' the same car. Everyone has valid points about driving a paid-for used car over a long period of time. For the people who would rather have a new or newer car, leasing may have benefits.
The simplest positive point about a lease is that, all else equal, you have a guaranteed buyer and you know your worst case scenarios.
Had you leased a Suburban three years ago you would be ecstatic that GMAC were 'buying' your Sub today for $25K. If you were 3 years into a 5 year loan (with higher payments), you would owe the same $25K, but with no guaranteed buyer and a $20K market value. It would cost you $5000 more for the pleasure of being able to say I 'owned' it.
The manufacturers and their finance arms are happy to assume these risks. Why? They sell more cars the first time, AND the second time. The first time: Lower payments and shorter commitments. The second time: Shorter commitments mean higher customer satisfaction and therefore higher retention / repurchase. The manufacturers usually throw more money at lease incentives than purchase incentives because of this.
The biggest benefit besides guaranteed future value is opportunity cost on cash flow. If a purchase payment is $400 and a lease payment is $250, what could you do with $150/month? Invest it in an appreciating asset (rather than a depreciating car), or even 'invest' it by putting the extra toward your mortgage, credit card balance, or some other debt.
If you wanted to keep your new car forever, it still might be cheaper to lease. Most states have different tax language for leasing that defers tax on the residual until the end of the lease, and some even tax based on 'use' that allows you to pay tax each month, skipping the interest charges of 'carrying' tax. In any case, the tax can be a benefit.
Give me almost any scenario on a new car, and I can tell you why leasing may be better, certainly no worse, than buying one.
E