Need to get a new car. My financial planner says I should lease, but what happens at the end of the 3-yr lease term if I want to buy it? And why is this ever the right move if I plan on keeping the vehicle until it dies? I just don’t get it, ergo this question to this sub. Thanks in advance!
In: 4
Leasing, at least here in Canada, has some tax implications if you use it for business so all the sales guys where I used to work leased their cars to write part of it off. Plus the buy out can often be less than the used sale price so most of them would then buy it out and immediately privately sell it before leasing a new car.
Leasing, at least here in Canada, has some tax implications if you use it for business so all the sales guys where I used to work leased their cars to write part of it off. Plus the buy out can often be less than the used sale price so most of them would then buy it out and immediately privately sell it before leasing a new car.
What reason did financial planner give for leasing? Because in general it costs more in the long run to lease, as you’re either always paying for the highest depreciation period of car ownership or paying unnecessary additional lease fees (acquisition fees and such) if you plan to buy it out at the end anyway, plus paying higher used car financing for the purchase at lease end.
Only way I could possibly see it being beneficial is if you own a business and lease the vehicle through the business.
Except today, lease rates are sky high since vehicles are selling at or even above MSRP and interest rates are high. It’s not like you can lease a BMW for $399/mo. anymore.
What reason did financial planner give for leasing? Because in general it costs more in the long run to lease, as you’re either always paying for the highest depreciation period of car ownership or paying unnecessary additional lease fees (acquisition fees and such) if you plan to buy it out at the end anyway, plus paying higher used car financing for the purchase at lease end.
Only way I could possibly see it being beneficial is if you own a business and lease the vehicle through the business.
Except today, lease rates are sky high since vehicles are selling at or even above MSRP and interest rates are high. It’s not like you can lease a BMW for $399/mo. anymore.
What reason did financial planner give for leasing? Because in general it costs more in the long run to lease, as you’re either always paying for the highest depreciation period of car ownership or paying unnecessary additional lease fees (acquisition fees and such) if you plan to buy it out at the end anyway, plus paying higher used car financing for the purchase at lease end.
Only way I could possibly see it being beneficial is if you own a business and lease the vehicle through the business.
Except today, lease rates are sky high since vehicles are selling at or even above MSRP and interest rates are high. It’s not like you can lease a BMW for $399/mo. anymore.
It depends on the initial value of the vehicle and the depreciation. If you are talking about getting a luxury German car new, that will depreciate significantly during the lease period. It might make financial sense to lease and the buy the lease on the depreciated value after three years. You know the car’s history and maintenance so you aren’t buying someone else’s problem, you got to drive a brand new car, and your payments were never as high as a loan on a $80,000 car would be. There are other benefits, if the car was a turd you don’t have to worry about selling it, you just give it back to the dealer. If you don’t like it anymore, you don’t have to sell at a loss, you can just give it back to the dealer.
The benefit, particularly with German cars, of riding the depreciation wave, is that they depreciate because rich people want new cars; not because the cars themselves are bad. People misinterpret why luxury cars depreciate, the demand for new cars is because people like them shiny. So if you are coming off the lease of a $76,000 vehicle you treated well, and the residual value is now $39,000, you can now buy a 3 year old full sized German SUV for only $4k more than a new Rav4.
Obviously there are risks to these schemes, but your financial advisor isn’t necessarily shooting you wrong here. New cars are much too expensive, and used cars are too damned expensive!
It depends on the initial value of the vehicle and the depreciation. If you are talking about getting a luxury German car new, that will depreciate significantly during the lease period. It might make financial sense to lease and the buy the lease on the depreciated value after three years. You know the car’s history and maintenance so you aren’t buying someone else’s problem, you got to drive a brand new car, and your payments were never as high as a loan on a $80,000 car would be. There are other benefits, if the car was a turd you don’t have to worry about selling it, you just give it back to the dealer. If you don’t like it anymore, you don’t have to sell at a loss, you can just give it back to the dealer.
The benefit, particularly with German cars, of riding the depreciation wave, is that they depreciate because rich people want new cars; not because the cars themselves are bad. People misinterpret why luxury cars depreciate, the demand for new cars is because people like them shiny. So if you are coming off the lease of a $76,000 vehicle you treated well, and the residual value is now $39,000, you can now buy a 3 year old full sized German SUV for only $4k more than a new Rav4.
Obviously there are risks to these schemes, but your financial advisor isn’t necessarily shooting you wrong here. New cars are much too expensive, and used cars are too damned expensive!
It depends on the initial value of the vehicle and the depreciation. If you are talking about getting a luxury German car new, that will depreciate significantly during the lease period. It might make financial sense to lease and the buy the lease on the depreciated value after three years. You know the car’s history and maintenance so you aren’t buying someone else’s problem, you got to drive a brand new car, and your payments were never as high as a loan on a $80,000 car would be. There are other benefits, if the car was a turd you don’t have to worry about selling it, you just give it back to the dealer. If you don’t like it anymore, you don’t have to sell at a loss, you can just give it back to the dealer.
The benefit, particularly with German cars, of riding the depreciation wave, is that they depreciate because rich people want new cars; not because the cars themselves are bad. People misinterpret why luxury cars depreciate, the demand for new cars is because people like them shiny. So if you are coming off the lease of a $76,000 vehicle you treated well, and the residual value is now $39,000, you can now buy a 3 year old full sized German SUV for only $4k more than a new Rav4.
Obviously there are risks to these schemes, but your financial advisor isn’t necessarily shooting you wrong here. New cars are much too expensive, and used cars are too damned expensive!
Latest Answers