Anyone who makes a blanket statement that leasing is “getting screwed” clearly does not know his math.
So let’s start this off as basic as possible so everyone can understand this.
There are 3 ways that you can purchase a car.
1st you can purchase a car for cash
The 2nd way you can purchase the vehicle is by taking a loan & paying interest. So if the going rate is about 3% and you ended paying about $1000 worth of interest after five years would you say you got ripped off?
Now the 3rd way you can purchase the car is by leasing it and then purchasing it at lease end for a pre determined price at the end of the lease, which is about 1000 more than financing.
So let’s explain how we come to these numbers
Now when you lease a car there are 2 parts to the payment. 1 part is interest and 1 part is depreciation you put the two together you have a monthly payment.
Now once you take the sum of your total monthly payments & add the bank fee & add the buyback you will be within $200 of the total of payments of the finance amount. The only extra cost would be the finance charge if you decide to purchase the vehicle at the end of the lease and finance it, which would typically add $800 to your cost. So if you’re total cost of ownership after all the financing is about $1000 more there are a lot of advantages
1. More affordable monthly transaction.
2. A 3 year test drive that gives you the option to just walk away if you don’t want the car and not have to deal with the dealers taking advantage of you at trade in time.
3. No risk of accelerated depreciation which can happen if the car gets a bad rep. (Anyone remembers Toyota gas pedal issues? Those cars lost $2500 per car)
4. No risk of accelerated depreciation which can happen if the car was in an accident
5. No risk of accelerated depreciation which can happen if the car looks like a real Brooklyn car J
6. No risk of accelerated depreciation which can happen if you’re an EMT doing chesed
The biggest misconception stems from people leasing an apartment. You have this landlord who bought this house for $500,000 and rents you an apartment for $2000 per month now in 10 years this landlord goes ahead and sells this apartment for $500k or more and all the while the lessee has been helping the landlord pay his mortgage.
Now take a car you purchase it for $20,000 the very next day with only one extra mile on it you lost money. So why would paying interest which is acceptable & depreciation which is inevitable mean that you are getting ripped off?
By the way there are some cases where leasing is actually cheaper. When a manufacturer will sometime give extra rebates towards a lease that would not be available towards a purchase such as the current town & country deal Chrysler is actually giving 3000 extra in rebates which means a net 2000 in savings.
can anyone else chime in on this? I would like to know what the general consensus is on buying right away with financing vs leasing and then buying out with financing.
