Quote:
Originally Posted by Delgar
I've "done the math" many times over. The only way leasing benefits you is if you write the lease payment off on a significant income tax bill, or if you can't afford the down payment without taking away from something where you need the money, like your personal investment plan.
A personal example from last year when I sold my 2002 Xterra --- I put 10K down on a $34K purchase in 2002. Payments were about $525 a month for 4 years with 0.9% financing. I sold it with 40K kilometers last year for $23K.... money that went straight into my pocket. Cash outlay: $35,200. Return: 23,000. Cost over 5 years: $12,200
I could have leased for something like $2000 down with $400 monthly payments, and I'd have had nothing at the end of 4 years. Lease payments would have been $19,200, plus the downpayment of $2000, I've spent $21,200, and after 4 years I still would have needed to get a vehicle for another year.
These are round figures, not exact, but pretty close.
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so when you made this decision, you must have been completly free of all debt? otherwise, why would you invest 10k upfront to save .9%? why not use that 10k on more expensive debt?
did that 34k include the 7% GST?
so how much interest did you pay out on other debt while you invested 10k and 525/month into your car?
if you had leased, you would be ahead.
you spent 35, you sold for 23, your cost is 12k (as you said)
lease, you would have spent only 19k and you would have saved 16k!
i would rather be the guy at year 4 with 16 extra cash and no car, then the guy who spent 35 and now has to sell a declining value asset to get my cash. not only that it was an ineffecient use of your capital to pay down a 35k loan at .9% (unless you had no other debt).
not only that, what if your car had an accident over 4k but not written off? your asset is seriously devalued as you must declare this. what if its a lemon and everyone knows it?
i dont see how you were ahead. thats me.
why carry the risk and the extra expense?