Originally Posted By: Wolf359
Originally Posted By: lovcom
Leasing is nearly always a disastrous decision. Leasing almost makes no financial sense.
At the end of a lease, you have no equity. Then to make matters even worse (if that is possible) one buys the car at the end of the lease.
Leasing is really dumb.
The only time it might make it good financial sense is if one can run their leased vehicle through their corporation and get the write-off.
Otherwise you will not find a good financial planner in America that will tell you leasing makes good financial sense.
There are good new car purchase deals, there are bad ones. There are good used car deals, there are also bad ones. There are also good lease deals and there are also bad ones.
A good financial planner will look at the terms of the deals to say whether it's a good deal or not.
Check leasehackr.com. Their latest deal was on a Hyundai Sonata. Residual was 55% and there was a 3k incentive for the lease plus an additional $750. There were also additional incentives of a military bonus and recent grad that some may have qualified for. With just the basic incentives and a negotiated 9% discount off MSRP, you end up paying 75% of MSRP for the car and with a 55% residual, that means on a 3 year lease, you paid 20% of MSRP. The key point is that if they offer discounts on the lease but not the purchase, the lease can be a better deal.
Lots of people are just bad at doing math. Do the MATH! Do not dismiss them out of hand.
Originally Posted By: JeffKeryk
If a car has low residual value and you can get into the lease at a low price, then you are bucks ahead.
For example, Fiat electrics were offered at a great lease.
At the end of the 3 years, the vehicle was worth like $8K.
If you had purchased the car outright, you would be left holding the bag.
In this case, the leasing company was.
I'm not sure you worded this right. It's better to lease a car that has a high residual value relative to market value. For instance in the quote above, if 55% is above market value, the manufacturer is in essence subsidizing the lease by an additional method of having a high residual value. If the lease deal has a car with a low residual value, then in essence you are paying more for the lease.
Your math is exceedingly flawed. That is what Dave Ramsey would tell you. You know Dave, the self made multi-millionaire who gives advise on his nationwide radio show.
Your math only "works" if these flawed premises are true: "I will always have payments", and "I want to stay in new cars for ever", and "I get bored with my cars fast".
Nothing wrong with wanting a wonderful car. This is why its exceedingly important for one to do their homework, choose a great car that fulfills all their needs, and will last one for the LIFETIME of that car, is very dependable, reliable too.
The problem with people that think they made a good financial choice by leasing is that they worry way, way too much about residual value. Residual value should never matter when one buys the car, if they want the car for its entire life, and understands that flipping in and out of "awesome leases" is no way to build wealth.
Now of course, if you are a multi-millionaire that might be different.
But must middle-class act like millionaires and since 1960 when I was born, every single downturn should millions of middle class trying desperately to get out of their Mercedes, BMW, Cadillac leases.
You see, they suffer from a lack of Delayed Gratification. This is why you can drive through millions of apartment complexes all over the nation and see $50,000+ vehicles parked there. Middle-class RENTING, and ACTING like the RICH.
Bad.
