Quote:
Originally Posted by ken0042
No, he has paid $4944 more that "A", and has a few hundred in equity. Keep in mind he still owes around $12K for the car; and it is only worth $500.
Leasing really makes sense if you plan on getting rid of the car in 3,4, or 5 years. Because you are only financing the difference between the price of the car and the trade in value, you end up paying a lot less in interest.
One major downside of leasing; if your circumstances change it is a lot harder to get out from under your payments. I have a 2 month old vehicle which we bought; and if something happened where we couldn't afford it; I could sell it a lot easier than trying to get out of a lease.
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I know he still owes $12,000, but we're talking about the value he has at 4 years. Anyway, until one of us goes to the effort of researching the depreciation of a car, we're both making up numbers to suit our argument.
Another obvious fact seemingly lost on the leasing crowd is cars don't implode after 4 years. So while you'll be paying monthly leasing costs until you're 80, the financing crowd will spend a lot less - I think - over their life by owning their cars longer and paying less. It would be nice to see somebody unbiased take the time to calculate the average costs of these things over a lifetime, which is actually what matters, instead of taking a four or five-year snapshot.
Basically if we're strictly talking about the economics of driving, buying or leasing, a brand new car makes no financial sense whatsoever. It's used two minutes after you drive it off the lot, and most of the depreciation occurs in the first 2-3 years so you're much better off buying a used car.
I'm also not buying into the
my wife and kids will get stranded story for needing a new car. You could easily buy a better used low-miler car for way cheaper than a new car. I mean seriously, what is a loaded Mazda3 worth (I'm using that as an example because I know a lot of people here drive that car)? I just priced one out on mazda.ca for over $30,000. For a friggin' economy car. There are four-year old used
Infiniti G35xes for $8,000 less with less than 70,000 kms which is nothing for that car with twice the safety features, including AWD.
Also, you can extend the warranty on any car
and you can buy an AMA membership for peanuts if you're that concerned about it. It's highly doubtful many modern cars would leave you stranded on the side of Deerfoot, however.