Quote:
Originally Posted by AustinV
I want to jump into this whole lease vs. buy conversation. I was about to get into my first ever lease but still decided to stick with buying as I've always been doing, and here's why. Let's say total car price P = A + B where A is price at the end of lease and B is differential car value lost over the lease term.
1. When leasing, you still pay interest on whole A + B amount (at least where I live) even though you are paying off entire B amount. So pretty much the same interest as finance, although lease interest is generally higher, for example currently 2.99% finance vs. 4.49% lease on X5 in Canada. Yes you can do MSDs, but it's still temporarily giving away your money while making you more dependent at lease return time.
2. Yes you are paying more monthly when financing, but at the end you are building yourself "trade-in" capital that's going to work for you all years ahead. This is also why I don't want to lease because I can't now use this trade in value effectively for my lease.
3. Leasing adds some more fees. One of them is lease return insurance of ~ $1,500 where they turn blind eye on some extra wear and tear / "damages". You can skip it though but it adds some risk of ending up with car return fees, which can be rather high on the luxury car. Plus you need to put brand new tires on it so add here another ~ $1,500. Trading in you can just have "some" life remaining on your tires.
4. Of course mileage limitation where you always need to watch for how much you can drive "your" car, always reminding you it's not really your car after all.
5. At lease return you are pressured by time to get a new car and can't really have a freedom of making a sound financial decision of for example waiting for a new model year couple more months, or simply do some extra shopping around. THEY know it, and THEY will take advantage of it! With the trade in, you can just walk away at any moment during your negotiation. With lease return if you don't lease again, they will likely penalize you with some extra damages payments.
6. So basically with lease you are "on the hook" for a lot of things, and I hate this feeling.
7. You can still drive new car every 4 - 5 years while owning vs. leasing. And end up having more money in your pocket. If you want even "more" money, just own it for extra few years. It's your decision after all. If the new car sensation is so much burning you, go ahead after 4 years, at this point you still save on lease fees + interest + car return fees + tires + negotiation leverage. It's at least $10k - $15k in my estimate combined, if not more.
8. ONLY two things that's giving me concerns with this lease vs. own thing - 1) If I get into some serious accident, even after fully repaired my car will lose trade in value while lease will just go back to the dealer. Well, I guess it the risk you need to accept for the better financial decision. 2) If the new car has issues or you don't like it, you just get rid of it at lease end. Of course you can still trade it in, so it's less of an issue. It's just easier to live with it, knowing it's not your car after all.
So at the end I see owning as a better financial decision. Now if let's say you can charge lease back to your business it's whole another story, but generally owning is still better.
|
Also if you drive the car , at the end of the lease to lets say 95000 kms. Im sure your car value will also take a hit