Doesnt matter if you lease (rent) or buy. Either way you cannot use the Vette with a foot of snow on the ground.

 

That's not the debate.

The question is whether or not you are better off "owning" vs. "leasing" and your comment that because you don't own anything with a lease therefore leasing is not for you.

It's all about the the math which is the same either way. What is your car worth at the end of 3 years and for how much of the balance of it's value have you paid for during that period.

Since they are the same car they will be worth the same. The only difference is all you've paid for with a lease is the depreciation whereas with a loan (assuming it's paid off) you've not only paid for the depreciation, you've also paid the tax on the balance, and you've paid out cash for the remaining balance of the value of the depreciated car at the 3 year mark. You can just as easily buy out the lease and kablammo, you can own the car at the 3 year point regardless of whether you leased or purchased.

In the end if you pay the lease down to zero and pay the loan down to zero the cost of the car is EXACLTY the same (actually the loan costs may be higher assuming same interest rate because you have also paid interest on the taxes vs a lease you defer the taxes and thus don't pay interest on that portion of the total car cost).

So the only real debate is whether or not you want to have the flexibility to modify your car and/or sell it before the lease term is up. If you wish to do neither, leasing is lower cost in the short term and the same cost if you write it down to zero.

 

Unless there is a significant difference in the interest rates or the residual on the lease is below street value there would be no financial difference between the 2.

If however, the rate was different and/or the residual was below the depreciated market value, AND you returned the car at the end of the lease then YES, the lease would cost you more.

It's all in the details.

We leased several Avalanches at work and the retail value of the trucks was less than the buyout by a large margin so leasing for us was a HUGE win and a BIG loss for GM. (it's no wonder GM doesn't lease here in Canada anymore since they had unreasonable high residuals).

Had we purchased the Avalanches on a loan we would have taken the additional depreciation hit so in this case leasing was substantially cheaper than a loan, regardless if whether or not we "like" owning.

 

You have to look at the math in detail to see if leasing is better than buying. I have a financial background so know how to look at them.

I've would never lease a vehicle but have seen a few lease agreements and they all sucked. A huge component of a lease calculation is the value of the vehicle at the end of the lease term. Not sure today, but the average vehicle devalues by 45% over 3 years and it depends on the vehicle.

Another thing is lease agreements use terms that are difficult to understand for a reason....to confuse you and make it difficult to compare directly with a purchase deal. You have to cut through the BS and look simply at the total payments over the life of the lease vs. buy and what you end up with at the end.

Yes, the monthly lease payment will be lower, but the question is by how much? Dealers use to love leases because they would not have to discount the vehicle as much because they were able to simply showed a lower monthly payment.

You have to look at the total cost over the life of the lease vs. buying it. When you buy, of course, a large portion of your payment goes toward the principle. So at the end of 3 years, in most cases you would be better to buy because you would have an asset worth approximately 45% of the original price vs. nothing if you lease.

 

Unless the residual value on the lease was 45% of the original price in which case you are at exactly the same point but you haven't paid the interest on the taxes of the residual through a lease but you have for the loan.

 

you are NOT "borrowing" the car in a lease. you HAVE purchased the car when you leave the store. i don't know of anyone who has left a car store without actually paying for the car. the "lease" is just another form of financing that requires you to return the car after the contractual time period and follow specific guidelines with regard to miles, condition, etc.. F & I guys LOVE to convince you that you are "just borrowing" the vehicle when in fact you own it with a financing method that has specific "rules".

the fact of the matter is that they make MORE money financing your purchase with a "lease" loan. they are not really doing you any "favors" .

 

Then how come the titles on our leased vehicles have GM on the owner portion, not our company name but with our financed vehicles it shows our company name?

Sorry, the ownership stays with the leasing company.

It truly is a borrow or a "rental" as many like to point out. But as my point has always been, whether you own or rent, leasing does not mean you pay more if it is a well structured lease agreement (ie similar rates of interest and a residual that reflects market value at the end of the term).

 

all states have difference title laws and regulations regarding title rules and "commercial" leasing. anyway, what difference does it make who is on the title. you enter into a financing agreement in which the vehicle is collateral - it's your vehicle until the contract is fulfilled. many states will have a "lien" section on the title so that the "lender" has recorded and legal interest. i can guess that you are a fan of leasing, good for you.

 

I don't care leasing or buy either way (I prefer to pay cash) except the concept that leasing is unilaterally higher cost or that somehow by having a "loan" and therefore you "own" is fundamentally a flawed basis on which to make a non-emotional decision.

There is a big difference based on who is on the title. If your name is not on the title you don't own the car, somebody else does and you are "renting" it.

Furthermore, the liability under a traditional lease is ONLY for the lease payment amount, not the whole value of the car which can be critical for the purchaser/user of the vehicle for debt/obligation calculations.

Cheers.

 

Gentlemen,

It is all about the NPV of after tax cash flows. Every Lease vs Buy needs to be evaluated according to the specific terms. In general, if you plan to hold onto a vehicle for the life of the vehicle, you are better off buying the vehicle. And don't forget about mileage restrictions.

 

HOLD ON!!

Never thought a simple question would lead to this!!!!

I am loving this forum. Just wanted to know about others lease experiences. In the end a rather spirited debate.

My final take is as follows:

If I get lease quote and loan quote and I do simple math (monthly payment x 36) see how i fare better.,

I know, i know I will own nothing after 3 years, and the point is what. I got to drive a nice Vette for 3 years and now give it back and drive a C7.

However I believe I can now get 0% on a loan through GMAC so really I think the purchase will in the end be better.

Why:
1. what if I get a ding or two? $$$
2.what if my mileage allowance is exceeded: $$$
3.What if there is a wear mark in the leather that they deem not normal wear and tear, $$$$
4. what if...

See where Im going. I have never treated my vehicles like garage queens but do keep them nice. But, I do not want to take the chance of being hit with huge fees at lease end.

Yeah, I know just buy the Vette at lease end if this is a concern. Possible but I just don't have that warm comfortable feeling about the lease. And what beats 0% financing. Dont get that rate with a lease.

Im not saying its a rip off by the dealer Im just saying I'm having second and third thoughts.

So Im buying a GS!!!

Not to hijack my own thread but your thoughts on gray wheels in a cyber gray car?

 

Its a little more complicated than just multiplying the payments x 36 months. The correct math involves NPV and interest. But there is a quick and dirty way to look at this.

I took a look at a car a family member financed recently.

Type: A Purchase.

New car amount $40,000
Less trade-in -5,500
--------------------------------------------
The amount finance was $34,500
The interest rate was 4.99%
The length of the loan was 48 months.
The monthly payment was $795/month
The total interest paid over the life of the loan was $3630 or $75 a month.

So, over the life of the loan, the total interest was only 10.5% of the amount financed.

Assuming the value of the car at the end of 48 months is 45% or $15,500. You then divide that by 48 equals which equals $325/month of the total $795/month payment toward the $15,500 value at the end of 48 months.

Ok, that does not include the time value of money on the $15,500 so use the same 10.5%. So take off 10.5% off the $320 and round it to $288 or rounded to $290.

So now, you have a rough approximation of the $795/mo. payment split between the value of the car during the 48 months and the value you are paying on the residual value of $15,500 at the end of 48 months.

Now, do you really save $290/ month if you lease it? If you convert that to %, that is 36% savings if you lease. Even if you round it down to 30%, is the lease 30% less monthly?

 

That's a terrible example. You paid in total 50k$ (as an example) for the car that you own, but the guy who leased only paid 25k$ or maybe 30k$. So you forked over more money for the rights to own it.

 

Its not who owns what. In the metephysical sense, none of us really own anything. We are just temporary care givers.

Its really a simple cash flow problem.

 

I'm leasing now, When I sold my C5 I got sh%$#t money for it, at the end we have a Chevy, they don't hold the value. At the end of my lease I can buy it for way, way below market value.
I did the normal mods, wheels, air intake, lowered, exhaust. Just keep the original stuff in your garage, when is time to return the car swap everything back.

 

leasing - no thanks

 

Clark Howard who is the consumer advoicate on WSB radio and on Television calls leasing a four letter word. In other words unless you want a new car every 2 years or can write it off its DUMB.
z51vett

 

some of us want a new car every 3 years.

I dont want to buy cars anymore, every time i sell one, i get way less than i should and I have to keep them longer than I wanted not to be upside down.