Car lease

jeremymarcinko

Derf wrote: »

There is a reason dealers push leases--they make way more money on the "fleece" than if you buy a quality used car outright.

With a lease, as many have said, you will have payments the rest of your life. So let's figure out what that lease REALLY costs you. If you invest the $400.00 per month you might pay for a typical lease over the next 20 years, at an 8% rate of return, that $400 per month turns into $237,179.00 at the end of the 20 years. So those leased cars not only cost you the lease payments of $96,000.00 you paid out of pocket, but also the additional $141,179.00 you gave up because you didn't have the use of the money. You can buy A LOT of cars for $200k!

So, as Tony said above, why not buy a good quality, used car (pay cash--another discussion), and use it with the mindset you will take care of it and squeeze as much out of it as you can. The key here is, you also should invest that $400.00 for the next 20 years. At the end of the 20 years, you will have an asset worth something, and you will have $200k in the bank. Even if you have to replace the car after 10 years, you are still WAY better off.

If you lease, you can sleep quietly knowing you made the leasing company wealthy.

Under the opportunity cost logic your using here, it isn't taking into consideration the fact that the individual still needs a car. You have to account for the cost of buying the vehicle outright new or used plus interest and maintenance costs and consider the equity left in the vehicle.

Its undoubtedly more expensive to lease over the long haul but the difference isn't as great as you make it out to be. If the extra expenses justify the privilege to drive a dependable vehicle,have it replaced every few years, and not be responsible for failed components then it may be the way to go for some folks who don't need to drive many miles.

badchad

Derf wrote: »

There is a reason dealers push leases--they make way more money on the "fleece" than if you buy a quality used car outright.

With a lease, as many have said, you will have payments the rest of your life. So let's figure out what that lease REALLY costs you. If you invest the $400.00 per month you might pay for a typical lease over the next 20 years, at an 8% rate of return, that $400 per month turns into $237,179.00 at the end of the 20 years. So those leased cars not only cost you the lease payments of $96,000.00 you paid out of pocket, but also the additional $141,179.00 you gave up because you didn't have the use of the money. You can buy A LOT of cars for $200k!

This is true, but a better comparison might be to compare leasing to buying a new car outright.

For example, if you paid $500/month for 20 years that's 120k. Over those 20 years, you might buy two, brand new Lexus' vehicles at 45k for a total of 90k. So the difference (versus buying outright) would be 30k, and it doesn't include any repairs OR finance charges. So I'm of the opinion that leasing isn't THAT much more expensive, but it depends on how long you own the car, treat it etc.

lightman1

20 years? I'm doing three.

tonyb

lightman1 wrote: »

TonyB.....I submit for your approval....

She's a looker Russ, though I'm not a big Caddy guy. Kinda doesn't fit the persona though. I'm thinking a slightly rusted pick-up truck, raised about 5 feet , with mudders the size of a Volkswagen. Converted to run on moonshine, Gun rack, and confederate flag optional. lol

Seriously, I've heard nothing but good things about the new Caddy's, just not my cup of tea.

daboyz

Sticker shock set in. We were going to find out what we could write off, etc. but she likes a vehicle with all the bells and whistles. I think a lease could be possible on a entry level vehicle.

tonyb

daboyz wrote: »

Sticker shock set in. We were going to find out what we could write off, etc. but she likes a vehicle with all the bells and whistles. I think a lease could be possible on a entry level vehicle.

It always does bro, sticker shock that is. The lady needs a nice car though for real estate and entry level vehicles don't project successful brokers. Think of it as an investment.