Exactly. Thats why I dont get how it can be cheaper to lease?
But the numbers seem very close. Even from 5 years. Unless Im missing something.
I don't see it the same way as you are sinking money into a depreciating asset. You pay a cost to 'use' it based on what you paid minus what you eventually sell it for. Not alot unlike a lease.
When you drive a new car off the lot it instantly loses around 11% of it's value. After that it loses like 10% each year. Therefore, if you buy a new car often, you are taking that big depreciation hit too many times. In addition, as was mentioned earlier, when you buy it you pay around 7% tax on the entire price of the car.
If however you keep it for a long time, you can better absorb the depreciation and tax because you are not just buying and reselling -you are using it for a bunch of years. How much it's officially depreciating doesn't bother you because you are getting use out of it. In an extreme case where you keep it over 10 years (Gasp!) you really save a lot. People are still driving 2002's and many are in great condition with plenty of value left on them. The longer you keep it, the more you save on the buy vs. lease calculations.
Another alternative is buy the car used - and let someone else absorb the 'driving off the lot depreciation'!
Right now used cars happen to be very expensive which is why for the first time ever people are saying that it may be a better deal to buy new over used.
