It's apparent from your posts and those of others that you all looked into the various aspects of leasing and negotiated great deals. So there is without question circumstances where leasing is superior.

However, I'm still concerned that there are lots of buyers out there who aren't nearly as savy as the posters on this Board and the stealers expolit them. They exploit them by using terms such as money factor and expressing it in decimals that confuse the average joe. So let me get off my soap box. I enjoyed the exchanges. .

 

Fast1, it hit me sometime in my mid-30s. I decided that I didn't want to work forever and wanted to retire with assets so my wife and I could basically do whatever the hell we wanted to do. It took conciously living beneath our means, saving/investing whatever we could. Still, I don't we really wanted anything we decided not to get. It worked. We retired at 52 and can't imagine working again.

 

Much respect to you sir .

 

Everyone knows how the finance option works because it is dead simple so I'll focus on leasing.

With a lease your exchanging low monthly payments for less flexability and more cost. The lease agreement basically tells you how many miles you can put on the car each year and how long you can keep the car. If you want to trade that 2004 three year lease for a 2006 your going to get taken to the cleaners. If you want to buy the car out at the end of the lease your going to pay more overall than you would have if you bought it from the start.

The most common logic used to justify leases is the rational that your only paying for the depreciation on the car. If this were true then the leaser would lose money if you depreciate a $36K car to $21K and only pay $15k in lease payments. My understanding from other posts is that most 2003 coup leases had a residual around the 21K mark. 2003 leases are hitting the three year mark about now and getting turned back in. Yet I can't seem to find a coup in decent condition with 45K miles for less than about $26K. So if you bought at $36K and sold at $26K you lost $5K less than the guy leasing.

Anyone correct my residual if I'm wrong as I got this number from the other leasing discussions.

 

I've voiced on similar thread months ago, but to reiterate my opinion, I'm a believer in leasing, given that the interest rate and the leasing terms are within my requirements and the financial situation at the time.
Basically I don't believe in working to gain equity on an asset, like car, that depreciates rapidly (unlike realestate). Either way you will have monthly payments, so put it a side as cost of having a car, and lease. Every 3 or 4 years you get new one. But yes, make sure to do the math and that it meets your situation.

 

jgainnm: The best advice I ever received was that our life isn't a practice for the real thing; this is it. So congratulations on getting it together at such a young age.

 

スカイライン: I agree with your assessment. There are some posters here who have negotiated great lease deals but my guess is that most people don't and fall into the " how much can I afford to pay a month trap " that stealers like to set. And as Grok42 points out, there are downsides to leasing in terms of flexibility.

Grok42: Someone leasing a car can sell it at the end of the lease or before lease termination, but of course as you point out there are draconian penalties for early lease termination, so selling it at the end of the lease makes the best financial sense. Therefore, even if you chose to sell you have the lack of flexibility factor that you discussed as a leasing downside.

 

This is why Social Security is going to run out of money. There are too many people thinking about now and not the future. If there are so many people here who are worried about how much they can afford, they probably should have bought a 3 year old car. I know not everybody wants to be rich and just wants to live life to its fullest, so keep on leasing.
Everybody should read the book "The Millionaire Next Door". Of course I didn't listen to it also, but I am not a millionaire.
One last thing, if you have a lease your payments are probably high (> $500/mo) and this will affect getting a mortgage loan to buy a house. If you are trying to buy a house, you probably don't want to get a lease. If you already have a house, then it doesn't really matter. I seem to be buying a lot of houses these days, so I can't afford to have any high monthly payments.

 

You're completely wrong on this. Lease payments are always lower than purchasing unlesss if you throw down a very large downpayment on the purchase.

 

VERY good book, it will change the way you look at money. It's one of those books that will change your life.

However, I disagree with a LOT of what the authors say/believe. Makes me almost NOT want to be a millionaire, but I still can't recommend this book enough.

 

I hated that book too. Gave a lot of advice but it really boiled down to live below your means and be incredibly cheap. For our discussion, we all should have 1995 Civics (no mods) and bank the rest of the money. And we'd all still be wearing our Members Only jackets. Damn that book was bad...

John

 

I hear you. I think the key is to find the happy medium.

 

If you are considering leasing, here's a good site that I found recently:
http://www.leasecompare.com/