[QUOTE]Originally posted by Radster
[B]

 

[QUOTE]Originally posted by S2Kguy
[B]You guys are confused about leasing, but I'm not surprised, the general public can get taken to the cleaners with leasing.

 

[QUOTE]Originally posted by S2Kguy
[B]You guys are confused about leasing, but I'm not surprised, the general public can get taken to the cleaners with leasing.

 

[QUOTE]Originally posted by ironwedge
[B]
I'm quite certain that I could drive my YM2000 S2000 for three years, at which time it will paid for, and sell it for more than $6000 (barring damage, etc.).

 

I know a guy who owns a 2000 Rolls Royce, 2001 Porsche Carrera, and a whole bunch of other exotic cars. He Leases all of his cars because he say's that the money he saves on a monthly basis can be re-invested and bring a much greater return. He made his money in the stock market and says that owning a car has no financial benefit. If buying a car is your way of having something to show for your money, then I suggest you re-think your decission. If you want something to show for your money, you don't "Buy" something that is worth less in re-sale the day you take it off the lot. A car is "Not" an investment. This talk about buying a house as opposed to renting has no relation to leasing an automobile. Realestate "Appreciates" in value over time and cars in general "Depreciate". Leasing a car can be a smart choice for those who value the investment potential of their money. Buying can be right for those people who just want to finance for 5 years and not plan on getting rid of the car for 7 or 8 years. If you like to have a new car every 3 or 4 years, and value the investment potential of your cash flow, then leasing is the way to go.

 

This may be a very simplistic view, but the lease company must be making money out of leasing the car to you..... otherwise they wouldn't do it! There is only one person paying money, and that is you. Therefore it MUST be more expensive to lease the car than to buy it!!!!

I agree that there may be cashflow/tax reasons and the like which would make leasing more attractive than buying for certain people, but you can't hide the fact that when you lease a car there is another company taking profit from the transaction which can only come from you.....

 

The reason the leasing company is in the business and making money is because they can afford to buy the car outright. For example, they buy an S2000 for $32,000. They lease it for 3 years for $600 a month. So they get $21,600 and the car back after 3 years. The car probably has a value of at least $15,000(probably more). My lease actually declares the estimated residual value at about $19,000. The leasing company can sell the car and make a total revenue of $36,000 - $40,000 and total profit of $4,000 - $8000. When you multiply this profit times the number of cars they sell, this is how they make money.

Leasing is for people who drive low miles, like to trade in their cars every few years, and aren't interested in major modding. Many people think it is stupid to pay for something you will never own. This is a simplistic and deceiving way to approach the problem. Mathematical calculations show that for those who like to get a new car every 3 years or so, leasing is a better option.

 

I understand this perfectly, which is why I said that, for some people, leasing was more attractive, but as you state, they will make US$ 4-8,000 profit. This MUST come from the person leasing the car, no one else is paying anything, therefore, it MUST be a more expensive way of owning a car.

The cost difference though is obviously dependant on how much money you would have to borrow to buy the car in the first place, and what interest rate you would be paying to borrow it...

 

[QUOTE]Originally posted by tokyo_james
[B]

I understand this perfectly, which is why I said that, for some people, leasing was more attractive, but as you state, they will make US$ 4-8,000 profit.

 

When a dealership buys cars at invoice, the quickest way to make Money on their Money is to SELL THE CAR..... and then obviously get another car and turn it over too, and over and over and over. Sure, they make money on leases too, but the preferred method (at least from salesman I know) is the slam-bam out the door sale. Leases were created as another way to move cars for the dealers.....for people with cash flow problems, or if they just plain want to do something else with their money. Some cars depreciate more than others, and some have a better reliability/popularity record than others......items that factor into the pros/cons of leasing versus not. As far as someone thinking that they are automatically going to save/make money by leasing.....just depends what you do with your money, because investing isn't as much a sure thing, or as predictable as some might think. I'm comfortable financially, and I didn't get there by leasing automobiles......