i've always wondered about which is cheaper, factory subsidized leases vs. buying outright with cash, IF you were to keep the car for maximum of 3 yrs, and drive less than 12k miles/yr.

a lot of companies currently are running some really attractive subsized leases now. for example, Honda Accord LX sedan 36mo special lease - $0 due at signing, no first month payment, and $250/mo for 35 months. 12,000 miles/yr.

so the total for 3 yrs to lease is $250+6% tax MI *35 mo = $9,275


conversely, on the same exact LX with MSRP of $22,565, you can purchase it for $19,047 destination included. if you paid with cash, then it'd be $20,189.92 with 6% tax.

after 3 yrs, would this car fetch at least $22,565-9275 = $13,290? which would save you more money at the end?

i've left out title, tags etc b/c they will be the same for both.

 

Don't forget to factor in the opportunity cost of what your cash could earn (in a risk-free investment) if you go for the lease.

 

7k in 3 years? Especially with a new Honda Accord? I feel as if they would hold their value reasonably well. If you only are going to have a maximum of 36k miles, then I think It would definitely be worth it to pay for the car in cash, and then sell it.

 

KBB trade in value on an Accord LX in "good" condition is $11,200. It might make some sense to lease. On the other hand, there's almost no opportunity cost for risk-free investments these days.

 

I would look at leasing as (on the surface) a lower risk, lower out of pocket, and potentially lower hassle way to buy more than as a smarter financial decision. It's based on a residual, and if the car is worth what they think it will be, you'll pay a grand or two but not have any hassle or risk at the back end--just hand the keys off.

Of course, mileage overage fees, repair for damage ie keyed cars, and the "what if" should you want to keep the car for 4 years or 2 years instead can make leasing less attractive.

But for the term, it's pretty low risk and low hassle for a rather small fee--and the exact fee would depend highly on the market's assessment of value vs Honda's best guess. Historical data is probably the only real way to guess this, but you won't know for sure.

 

The value of money will vary but it is low today with low fixed income rates and low inflation.

Much of it depends upon the residual value estimate and the actual market at the end of the term.

Put together a spreadsheet to look at possible outcomes but you normally will find the lease to be more expensive (they are in the business of moving units without a loss) but deals will vary.

 

also what about getting into a accident with the car? the hassle of selling the car?

accidents will depreciate the value of the car. plus you have to always be so carefuly with the car cuz it is yours.

Leases, you know you will return it back... so a little scratch doesnt break your heart...haha

and in case of total loss,... there is always a gap that the insurance company will cover and the price you paid for the car.