Actually, there are quite a few caveats to what is stated below. As with all equations there are variables. As a clear example on my wife's old 3.0, we made out pretty well on it given that we got in .00015 money factor, min driveoff and a BMW's overly pessimistic residual value of 3 years at 59%.
Let's just say at year 2.5 (which is usually the best time to get rid of a leased car since this is right before the flood of 3 year leases end thereby causing a big depreciation if you decide to sell), the actual residual value was much lower then market value of the car. So bottom line is we paid off the car and pocket $6K.
it's all in how you play the number..
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Originally Posted by SARAFIL
Lease:
-Lower monthly payments (usually)
-Keep reasonable payments without requiring larger cash outlay at time of purchase
-Reduced risk of future market value for people that like to get new cars every 2-3 years anyways
-You can drive more car on the same budget
-Great if you like to get "all the options"... these items usually return pennies on the dollar in terms of resale, but in a lease they are residualized and you pay a small percentage
-You might qualify for some tax benefits
-If something happens that sours your relationship with the car, you know you can walk away without risking resale value problems
but,
-Mileage limits with expensive penalities for excess mileage
-Excess Wear and Tear charges... you better take good care of the car!
-You'll pay lots of interest, unless the car has really cheap lease rates
-No ownership interest in the car
-You're paying payments forever (if you keep leasing) and have nothing to "show" for it in the end
----but, you could also convert your purchase price and upkeep on an owned vehicle into a monthly "cost to operate" expense and compare this to your continous lease monthly payments
-If you decide to keep the car at lease end, it will have cost more than to just buy it upfront
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