Is there anything smart about auto leasing?

If you know you will want a car every few years

I don't, so I won't lease

quote:

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financing

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Leasing is a way of financing, if you want to think of it that way - you pay a chunk (normally) to drive away, potentially lower payments than through a financed purchase and you walk away from the residual value at the end.

I does make sense to people who want to drive new cars for 36 - 48 months then trade up. They don't have to worry about negotiating their trade value, and the only real hits they take is the big payment up front (or, potentially high monthly payments - one of them will be out of proportion compared to purchase financing) - essentially prepaying the depreciation they are willing to incur to drive a new car every 3 to 4 years - and having to be in the new car market every 3 to 4 years.

It does not make sense if you like to find good condition, lightly used cars, at a good price and drive them for years and years (like me.)

But, it's not financially crazy for the suitable market, described above. Unfortunately, for a while there, it was a vehicle (sorry, a "method") to get people with good credit scores into cars they couldn't afford. That has settled down, some.

I know people that will always have an auto loan. They never put any money down, therefore are always upside down on the vehicle and replace it before they have it paid off. I don't condone this type of reckless financial behavior, but for that one particular person, I think leasing is no less a worse decision than buying/financing.

Say you are getting a $100k BMW 750li, and deciding between leasing and buying.

The pros of leasing are:
-not having the large capital outlay at the start. If you think you can make more in in your investments of that $100k in 3 years of paying a lease (prob $35kish in lease payments) it makes sense not to buy.
-not having the risk of losing the equity value in the car in the event of a wreck. A $100k car could become worth $50k instantly in the event of a wreck (even after repairs are paid for by insurance).
-if for a business there can be tax advantages.

Cons:
-if you typically drive a car for 10 years before getting a new vehicle it doesn't make sense.
-you have no equity in the vehicle.
-mileage can be an issue if you drive more than 15k miles in a year.

Everyone's situation is different, there are situations in which buying makes sense and others in which leasing does.

Expense vs capitalizing it. I am also going to add a pro that if you don't want to deal with cars going out of warrant leases are appealing.

very few people will tell you leasing is a good idea

best advice

don't lease

Sorry I meant expense VS capitalizing.

Leasing can be beneficial if you drive fairly low mileage, and want to buy a new car every 3-5 years. It's not the most financial savvy decision since you will always have a car payment and will never build equity. However, you'll also be driving a new car more often, and, from a monthly payment only perspective, a more expensive car than you could typically afford. You are basically financing the depreciation, or simply paying for your use of the vehicle.

Each situation should be reviewed carefully and honestly. It can often make sense if certain conditions are understood.

Own vs Lease Thread

You owe something, but you own nothing.

I am curious just for curiosity's sake:

How many of you that have posted a reply own a business or interest in a business?