Quote:
Originally Posted by Delgar
Originally Posted by TimSJ 
the thing that you are forgettting though is that you still have the first option to purchase the car at the end of the lease if it is worth more than the buyout. Think of it as a loss protection.. If the market bottom falls off and the car is worth less than the residual at the term then you turn it back to the leasing company.. If it is worth more you can excercise your option to buy it then sell it and get the equity out.
Again I can't agree. In the recent market cars have depreciated in Canada quickly only because the Canadian dollar became so strong, so fast, that US imports started rolling in, which devalued Canadian cars on lease returns. The auto manufacturers and dealers couldn't react that quickly, but they're catching up now.
This is a phenomenon that we haven't seen in Canada since.... well, since I've been old enough to understand it.
Look at it from the big picture, and you'll spend more money leasing over the course of your lifetime.
There is no way that a dealer is going to lease you a car where they actually expect you "make money" by not buying. They pre-estimate the residual value, based on their own forecasts, and if the price of the used car tanks in that time, the lessee has made money relative to the dealer (lessor). They plan to make money on it, and they're experts on car prices. The dealer doesn't plan for the bottom to fall out of the market, and instead builds enough "leeway" in so they're secure regardless.
If you bought in Canada a few months ago up to a year or so ago, you'd probably have been better off leasing, unless at the time you bought you took advantage of a cross-border purchase. But this is the exception. |
True it is a relativly new phenomenom... but not jsut because of the Dollar issue.. It started with GM putting there 0% leasing/financing on 5 or 7 years ago.. What that did was make it cheaper to buy a new car than a used car payment wise... As a result that was the first start on pushing down used car values.
As for the car manufacturers they would be happy as hell if the cars would be worth there residual at the term of the lease.. They don't want the cars back... and for every car that come back they are taking huge losses.
No question that it does cost a little bit more to lease than to buy a car but in todays and imho going forward vehicle market that downside protection is well worth it.