Quote:
Originally Posted by DementedReality
i am not arguing about whether or not they make a profit, or how much of a profit. they are in business to make a profit, so its not a surprise
|
The thing is, a leasing company borrows money to buy the asset, leases it to you, and then sells it at the end of the lease. They'll sell it to you if you want it, or to someone else if you don't. Often, they will sell off the cash flow of your payments, which reduces the amount of money they have to borrow. The residual value they use is conservative, so that the chance of them taking a loss on the sale is quite slim.
You could do the exact same thing as them. Finance the vehicle, then sell it at the end. You would be ahead of the game nearly every time. You seem to be quite averse to selling a used vehicle on your own. I think you make it out to be more complex than it really is.
Quote:
Originally Posted by kevman
Perhaps my math was wrong but my NPV calculations showed a SIGNIFICANT cost advantage to purchasing. However they were based on long term vehicle ownership.
How about factoring in insurance? Can you neglect the fact that if you're leasing you MUST cary full coverage where as if you're driving your own car you can dictate your insurance level.
Over the last 5 years (years 10-15 of my vehicles life) I've averaged about $1,000 a year in maintenance. My insurance premiums are about $700 a year. Perhaps my costs in years 1 through 5 were more but my low costs now easily make up for it.
|
What about the NPV comparisons if you sold the car after the same timeframe as a lease ending? As an estimate for what you could sell the car for after the end of the lease, use the buyout amount for the lease, since they are reasonably conservative. The finance yourself method should end up better.