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I find the replies to this topic interesting. It seems the majority keep their vehicles a long time. I sure see a lot of people around town driving new vehicles. Many are younger and I always wonder how they afford them.
In what situation is leasing ever a better financial decision than buying?
ETA: Before anyone gets bent out of shape, I honestly don't care how they spend their money. But if we're talking sound financial decisions, leasing isn't usually one of them…
Easy.....when the cars are subsidized leases from the manufacturer! The manufacturer inflates the resale expectation so the car lease price is cheaper than if you really factored the true value at the end of the lease.
For example:
I leased an Audi A8L in 2004. $83,000 car for 39 months/48K miles for $1054 a month including tax. So I agreed to spend $41,000 to borrow their car for 3.25 years. The lease end value was expected to be 52-53K (I can't remember specifically) so the payment and the interest was the 41k I paid.
Reality hits 39 months later, car is worth 30K in real value. So if I bought it I would have lost $53,000 buying that car vs. the 41K I spent leasing it. Car was great, I paid the lease and put a set of tires on it....that's it!
Maybe. Assuming you buy brand new…
But even then, there are better options, from a financial stand-point.
Mostly, leasing is convenient. That's why most people are willing to take the financial hit to do it. Well, for those that understand the math, anyway. (Like I said before, a lot of people are just bad at math and haven't really calculated this stuff out.)
People often don't want to do their "homework" when it comes to buying used cars - that's the issue.
If I like the vehicle 10 years, if I don't I sell it pretty fast. My current car is an Audi A4 with 125,000 miles on it and I still love this car, so I expect to keep it for two more years. It still drives as new and has given me no issues other than one A/C issue that was fixed pretty cheap. I plan on getting another used Audi A4 or A5 if I can find one with a manual tranny.
The cheapest car to own is the one which is already paid for. Older cars without a note to pay can also be driven without expensive comprehensive and collision insurance, just liability.
I don't know why people think they need to be paying monthly on a vehicle, and get antsy for something new as soon as the bank mails them their title, if not sooner
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