Posted by jimg.allentown on January 13, 2015 at 10:12:44 from (98.115.105.174):
In Reply to: To Lease or To Buy posted by spudm on January 12, 2015 at 16:10:40:
Leasing is a losing deal when the final tally is in. How do you think leasing companies make their money??? They buy the car, you pay it off, and then the residual is clear profit for them.
First let me comment on a few "myths" about leasing:
1) Leasing is advantageous for BUSINESSES because they can write of the ENTIRE expense. If a business purchases, tax laws require them to depreciate the cost over time.
2) Up front costs - usually a couple of thousand or more. This "buys down" the cost of the financing, and defrays some of the initial loss of value.
3) Maintenance. Many leases will require the lessee to pay for maintenance items like oil changes and brakes that are not covered by warranty. They may also require the lessee to pay for any warranty deductibles. Minor parking lot dings, chips in the windshield, and the like will usually be billed to the lessee.
4) Residual value. This is a predetermined number that is the projected value of the vehicle at the end of the lease. In the end, it is an imaginary number only relevant to the lessee that wants to purchase the vehicle at the end of the lease.
5) Total cost of the lease: Add up the total of payments, up front cost, maintenance cost (as applicable) and any other fees. This is what the lease really cost. Does it add up to the value of the car as new? Now add in the ACTUAL value of the car at the end of the lease. Keep in mind that leasing companies get huge up front discounts on the cars they buy.
6) Leasing does allow a customer to upgrade to a car that they could not otherwise afford. For example, if a customer can afford to buy a new Buick, a lease may allow that customer to upgrade to a Cadillac for a comparable payment. So, if you are on a Focus budget, leasing may allow you to get the Taurus instead.
In the end, you make the choice that makes the most sense to you.
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