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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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your cons are a little off
- extra miles cost .16 a mile, if you go over your alloted mileage it's not expensive to purchase the extra miles as long as you do it before the lease is up.
- lease rates are usually 1/2 of a finance rate. Current traditional finance rates are ~ 6%, lease rates are ~ 2%.
- i'm not sure what you mean by "ownership interest"...
- "you're paying payments forever" - i don't understand that one either. Sure if you ALWAYS lease, you'll have a payment, but those who get a new car every 3-4 years and fianance/trade in have the same issue.
- if you decide to keep the car it will cost more - that's not necessarily true, considering a lease rate is much lower than a traditional finance rate, and that a smart leasor will NEVER put any money down on a lease, this scenario is close to being a wash.
That being said, I think that the most important point that hasn't been made yet is that leasing is for someone who can predict their driving habits and life situation for the duration of the lease. Someone who is in the position of having their driving habits drastically altered during the course of a potential lease, well, leasing is not for you. Leasing is also not for someone who has the mod bug. Leasing is not for someone who does not take care of their vehicle.
Leasing IS for someone who wants a better car than they could/choose to comfortably buy through traditional financing. Leasing is for someone who flips cars every 2-3-4 years and is comfortable with having a monthly car payment every month. Leasing is for someone who owns a business and can take advantage of tax breaks. Leasing is for someone who wants to "test" a high end car before potentially buying one. Leasing is for someone who wants a lower monthly payment than they would realize compared to traditional financing.