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Classic arguments.... Posted by Mike Lynch [Email] (#81) [Profile/Gallery] (more from Mike Lynch) on Sat, 23 Aug 2008 14:32:26 In Reply to: Turbo X: buy vs. lease?, JMR, Fri, 22 Aug 2008 20:59:09 Members do not see ads below this line. - Help Keep This Site Online - Signup |
Say you had leased a car 2-3 years ago and your lease was ending soon. You would be miles ahead as the used car market is rather depressed now and the residual/end of lease purchase value probably far exceeds the actual value. So that's depreciation that you're not responsible for. Turn the car in the the lease company, walk away, and lease another.
If you had purchased the same car instead of leased and your were 2 1/2 to 3 years into a 5 year loan you would likely owe quite a bit more that the actual trade in value or even the retail value. Which means if you wanted to trade it or sell it you'd have to pay the difference between the selling price and the loan value. Another word track for this is being "upside down", owing more than your trade in is worth in car sales lingo.
Other classic arguments are the new car thing every 3 ish years. Some folks feel guilty enough buying even one new car every 10-20 years so the thought of getting a new leased car every couple of years is just too much. For others it's a welcome perk of success and a relatively modest indulgence as you need a nice car anyway so why not stretch your car dollars by lesing. For the same payment you get way more car on a lease.
I've had folks who lease whine that one of the downsides to leasing is that you have to car shop every couple of years. One fellow was upset that his leases always came due in around the Holiday Season and he already had enough to do. Of course you can always buy your leased car at the end of the lease if you decide you like it well enough and it's a decent value for the residual/end of term purchase price.
Indisputably a lease cost less per month and conserves cash and cash flow if you have some better place to put your money to work.
In my experience whether you lease or whether you purchase it cost roughly the same total amount for the same period of time either way, short term or long term. The lease is shorter term, but you have to do something like lease another or buy your current lease when the term is up. With a purchase after you make the last payment you don't have to do anything, just wait for the title from the lender and put it in the drawer.
Sometimes with Saab it's worth mentioning that the lease or the purchase will have and extra artificial advantage caused by Saab incentives or subvented rates. You mentioned $3,000 for purchase buy only $500 for lease, but often an incentive advantage is offset or nullified by a rate advantage.
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