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Leasing is less expensive than buying a new car every few years. But it's more expensive than owning a car and maintaining it.
Leasing is a luxury. It offers the benefit of having a new car every few years, at a premium. Buying is better for someone who just wants a functional car at a lower acqusition cost in the mid to long-term.
(A possible exception is if you're able to write a lease off as a business expense on taxes)
Cars improving over the years further improves the value of buying over leasing. If a car decades ago lasted 9 years before it needs serious work, a 3 year lease is 1/3 of the lifespan. But if some of today's newer cars can drive well for 15 years, then it's less attractive to pay 40-50% of the car's value just to own it for 20% of it's lifespan.
The correct answer is...it depends. You've touched on many key factors such as business deduction...which also applies for used vehicles as well. Then there's the rare occurrence when the residual value of the car after the lease term is higher than originally calculated, and of course the rare occurrence when a vehicle appreciates in value (mostly due to supply/demand issues, utility value, special editions, or performance restrictions on proceeding models). One other factor in owning is that you can customize and modify the vehicle to your heart's content...or in the case of the 2006 Credit Bubble/lifted pickup trucks era in SoCal...until the Repo man takes it back.
I've never leased a vehicle and bought both new and used. I live in a mild climate that really sees rain and never sees road-salt. Cars last a lot longer here but perhaps I would consider leasing if I lived elsewhere.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I would never lease either, but because I like to own a car so that I can make modifications on them. For example, add a towing package or running boards on a truck, a better stereo Cat-Back exhaust system or nicer wheels on a car.
I would never lease either, but because I like to own a car so that I can make modifications on them. For example, add a towing package or running boards on a truck, a better stereo Cat-Back exhaust system or nicer wheels on a car.
You must have loves the 90s...I know I did. Didn't have to deal with CANBUS and complicated computers/software.
You must have loves the 90s...I know I did. Didn't have to deal with CANBUS and complicated computers/software.
It's easy to modify cars that have CANBUS electrical systems and computer controls. I've done it on a number of cars. in fact, it's often EASIER. Especially getting more power out of simple tunes.
But I wont' do any of that to a leased car (and I like to lease new cars for the wife so she can have the latest safety features AND *I* don't have to work on it if it does break. Send it back to the dealer and get a loaner. Easy peasy.)
Leasing isnt always cheaper in my opinion. It all depends really on the down payment and then multiplying by teh number of months in the lease to get a true monthly cost of the vehicle. You may be able to purchase the same car for not much more a month with no money down and have unlimited miles as well as equity if you were to trade in in a few years, whereas at the end of a lease you start from scratch all over again. I dont like leases because to me its just a rental car and if I cant afford to purchase it, I shouldnt be driving it in the first place. Just my 2 cents.
Example; A dealer near me has a 2023 BMW X5 lease deal for $899 a month for 36 month with $6755 down. Figuring in the $6755 over 36 month is roughly $188 a month which brings the monthly cost to $1,086. The price of the X5 is $67,700 and with no money down you could finance this for 72 months at 4.5% for $1,074.67 a month. You could still trade up in 36 months with some equity and be further ahead than if you leased.
Leasing isnt always cheaper in my opinion. It all depends really on the down payment and then multiplying by teh number of months in the lease to get a true monthly cost of the vehicle. You may be able to purchase the same car for not much more a month with no money down and have unlimited miles as well as equity if you were to trade in in a few years, whereas at the end of a lease you start from scratch all over again. I dont like leases because to me its just a rental car and if I cant afford to purchase it, I shouldnt be driving it in the first place. Just my 2 cents.
Example; A dealer near me has a 2023 BMW X5 lease deal for $899 a month for 36 month with $6755 down. Figuring in the $6755 over 36 month is roughly $188 a month which brings the monthly cost to $1,086. The price of the X5 is $67,700 and with no money down you could finance this for 72 months at 4.5% for $1,074.67 a month. You could still trade up in 36 months with some equity and be further ahead than if you leased.
I do zero down leases. A $25k car can lease at $299 a month and have a great residual value, while that same car would be $500+ a month to buy with a typical loan rate. And if you didn't put money down, you'd be upside down in it for years.
Leasing is just another form of financing. You have to look at the specific terms on each and then run the numbers to determine which is the better deal. There is no one size fits all best option.
You must have loves the 90s...I know I did. Didn't have to deal with CANBUS and complicated computers/software.
I find the newer vehicles makes it EASIER to do these sorts of modifications. So much data at your fingertips, and the ability to enable/diable features just by turning them on/off in the software.
I do zero down leases. A $25k car can lease at $299 a month and have a great residual value, while that same car would be $500+ a month to buy with a typical loan rate. And if you didn't put money down, you'd be upside down in it for years.
A $25K loan at 60 months is around $466 a month at 4.5% with zero down. Id prefer to purchase the vehicle if it was only an extra $167 a month. Thats just me though.
My wife leased a Nissan in 2017 and literally only put about 15k on it in the 36 months. The buyout was more than what used ones were going for and we did not get any kickback for the ultra low mileage. Turned it in as if i just returned a rental vehicle and didnt even get any incentives from teh dealer if we wanted to purchase or lease a new one. Complete waste in my opinion (at least that transaction).
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