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re: Own vs Lease
Posted on 4/24/13 at 9:45 am to TthomasJR
Posted on 4/24/13 at 9:45 am to TthomasJR
quote:
What are the pros and cons?
Pro's:
Lower monthly payments, little to no down payment, less maintenance to deal with (never lease a vehicle longer than its warranty), less taxes to pay and you can get a new car every two to four years.
Cons:
“Leasing is nothing more than a long term deal with Hertz.” – Dave Ramsey
Leasing provides a good deal for four parties - the sales person, the F & I guy, the dealership’s owner and the finance company (leasing company). It is a lousy deal for the customer. You owe something, but you own nothing. Leasing adds a layer of complexity to the deal that allows the salesman to hide or misrepresent the true purchase price.
Leasing has become an incredibly effective tool for dealers to sell their product at a significantly higher price and profit margin and is often “pushed” or “encouraged” through the sales process.
• Leasing makes the car more affordable and therefore easier to sell. The buyer gets focused on being able to drive a nicer vehicle for a lower monthly note than what they most likely could not afford to buy.
• It allows the customer to afford a more expensive car, and the more expensive the car, the larger the profit.
• Leasing allows the dealer to legally hide the true cost/price of the vehicle and charge you a higher price than you would normally agree to.
• A leasing customer is more likely to return to the same dealership to get their next vehicle and next vehicle and next vehicle. Even though your original sales person will be long gone, the dealership is able to maintain customer retention and that’s where it pays off in the long run.
Leasing is the equivalent of throwing a $100.00 bill out of your vehicle’s window every week for 3 years in terms of depreciation. The bottom line is this … any way you look at it, leasing is a convenience that you’ll pay for in the end. Put another way, if you can’t afford to buy your next vehicle with a four-year loan or less, then you really can’t afford it.
Posted on 4/24/13 at 10:43 am to Will Cover
quote:
Leasing is the equivalent of throwing a $100.00 bill out of your vehicle’s window every week for 3 years in terms of depreciation. The bottom line is this … any way you look at it, leasing is a convenience that you’ll pay for in the end. Put another way, if you can’t afford to buy your next vehicle with a four-year loan or less, then you really can’t afford it.
I respect what you're saying here (entire post) and agree it's generally good advice due to the average consumer not understanding the variables associated with leasing. However, this statement is absolutely no different than financing/paying cash for a vehicle. That vehicle is going to depreciate no matter how you choose to pay for it. Obviously, the majority of that depreciation is taken in the first few years. If you are planning to replace this vehicle in the next few years, leasing can actually work out to be a cheaper option, even in the "long run".
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