Quote:
Originally Posted by TylerSVT
Leasing cars makes no sense IMO.
While the rates are lower you are effectively renting a vehicle because often the buyout is more than the value of the car. I couldn't justify spending 300+ dollars a month on a car that i technically do not own.
|
Leasing is good for people who want something newer all the time and don't know much about repairing. It also costs substantially less money. If you want to upgrade a car every three years or so, leasing would be cheaper as the monthly payment is smaller (assuming you financed either the purchase or the lease). At the end of three years you'd likely have to take a loss on a car if you had purchased it and wanted to sell or trade it, since the majority of the value depreciates in the first few years. With a lease you can just walk away with less money spent on the vehicle and no future money to spend. If you are going to keep the car longer than five years it makes sense to purchase. The longer you intend to own the car, the more it swings the decision to the purchase side.
Just because you are renting a car doesn't mean you are throwing money away. It means you are paying less money for the flexibility to not have to keep the car for a long period of time. Since the buyout can be more than the value of the car, you don't have to buy it out.
If you bought a car and take it to the shop for all repairs and maintenance, like I do since I don't know how to fix vehicles, the repair bills will be much higher after year five when parts need replacing. You won't have this problem with a leased vehicle, since it is new and should be under warranty the entire time you are leasing it. Since vehicles are depreciable assets, many times it is advantageous to lease them, especially considering the time value of money.
Leasing is great for tax purposes as the expense (tax/accounting, not necessarily cash) is usually much higher than purchasing. You can usually expense the full lease payment for a car, whereas with a purchased car, you can only take CCA.