You're owning a car for the best years of its life. Leasing offers great payments usually $100-150/per month less than buying. And you get to switch it up every three years or so. Not a bad thing. Pros and cons to every argument. You get to take advantage of the latest and greatest in safety, technology, power, fuel economy, designs, etc.

 

And you don't have equity in that car after 3-4-5 years.

 

Not entirely true. Right now, Pilots are coming back off lease with a few g's in equity. Customer usually doesn't know to ask. Either way, who cares about equity, as you don't own it and aren't responsible for that side of it. Most cars off lease usually are upside down. But again, not your problem. Think about the last time gas was over $4 a gallon. Would you rather own that Lincoln Navigator? Or would you rather have your lease be up so you didn't have to trade it in??

Bank Fact: out of 100% of FINANCED cars... 81% will be traded in within 3 years. Out of the remaining 19%...less than half will see the last payment.

 

That doesn't matter for people that don't keep their cars for longer than 3 years.

 

The person who finances their car for 72+ months usually isn't in an equity position after 36 months either.

 

The problem with most leases in my eyes is the mileage restriction. It's way too conservative for modern society.
I have a 10 mile commute to work and in 3 yrs will still have 36k on the fit. I can't imagine what it'd be like for people with longer commutes and/or kids to tote all around town.

 

That too, can be addressed. Standard Honda leases are 12k/yr...but you can actually go up to 25k/yr. Obviously you pay for it. But in most areas (you included) 12k is plenty.

 

which beats paying for depreciation HOW?

equity in a car is almost a silly idea. your house will probably retain its value for the duration of your life. the 15 year old car in your garage, in most cases, is worth peanuts.

my colleagues transferred here and bought cars. in 2 or 3 years (natural lifecycle for their positions) when they transfer elsewhere in the world, they'd have to sell their car. the money lost on depreciation on a 328i could have covered lease on a 335i.


let's say you really, really like a car, and plan to own it until its wheels fall off.
it cost xxx$. you can:
(a) finance it. at 5 years, it cost you 500$/mo
(b) lease it. for 3 years, it cost you 400$/mo. then you buy it out, it's now 600$/mo for the remaining 2 years.

your total cost is (more or less) the same.
after 3 years you changed your mind. you want a new car. well, for those 3 years, you were paying 500$ instead of 400$. jokes on you.
also, you have to find a buyer.

how long have you kept the last few cars you bought?


youre paying for the car no matter what. that payment is: depreciation + a fee. that fee comes in the form of financial interest, or "cost factor" (interest_rate/2400) in case of lease. at the end of the day, you pay.


the difference? the payment is back-loaded instead of constant.

*IF i KNOW* im going to change cars frequently, why wouldnt i take the scheme thats back-loaded/front-light.

its an OPTION to have. neither is absolutely right or wrong. the lease just allows a bit more flexibility.









(for the record, ive never leased a car in my life. also for the record, the last 3 cars i've bought, starting with the s2000, were held for: 4 years; 6 months; and 1 year [current. will get rid of in 2 months])

 

Buying is the worst thing you can do if you don't plan on keeping the car for years after it is paid off.
Most people are way better off in a well negotiated, subsidized lease on a car that leases well than almost any car financed.
There is a saying... If it appreciates, buy it... If it depreciates, lease/rent it.

 

It simply depends on what floats your boat.


I bought my '03 S2000 back in 2008 for $18,000.

I sold the OEM hardtop for approx $2100.

I likely could sell it today for $13,000.

So for the past 48 months, it has cost me $3,000 in depreciation... $60/mo. If I were leasing for those 48 months, I'd be looking at $24,000 and I'd be paying $500/mo... forever.



Also back in 2008 we purchased a 2005 Odyssey EX-L for $22,000.

48 months later it has depreciated approx $7,000... $145/mo



I'll play devils advocate here and say with the average car on the road now lasting well past 10 years, your best financial bet is to buy a 2-3 year old vehicle and keep it as long as possible.