At what point does leasing a car become more economically sound than financing?

[Pulsar]

Originally Posted by spidey07

Again. You fail to realize that increasing ones net worth allows one to absorb set backs.

Make your money make more money for you.

I'm losing my job in 8 years. I'm retiring before age 50.

How can I do this? It's by making my money make more money for me. Free money.

Suit yourself. Just trying you make y'all richer.

Whatever.

Your so myopic you can't even see the trees. Most people don't HAVE money to invest. When you're counting your dollars every month so you can make sure you can make your car, mortgage and insurance payments, investing doesn't come into the picture. Making ends meet is hard enough as it is.

Of course, like I said, keep preaching on high. You simply make yourself look ignorant as you refuse to even attempt to understand the difference between people with disposable income and those without it. Unfortunately for the vast majority of society, disposable income is a luxury that simply doesn't exist.

[nerp]

Retired before 50. Walmart greeter by 60. Ha ha.

[Doppel]

Depends on the car. The last three vehicles I got were new and leasing was a no-brainer. I'm quite capable at identifying the true cost of a vehicle and it was simply cheaper with leasing them.

BTW most of the generalities you'll read about leasing are irrelevant when you look at specific examples that are often available in the newspaper at rates that make even lease-haters have pause.

[the DRIZZLE]

Originally Posted by OutHouse

pro tip; car companies NEVER want you to pay off your car. once you make that final payment you are no longer a monthly revenue stream for them. So they made leasing "attractive" to the masses and the masses have fallen for it.

Nonsense. Many car companies offer promotional financing below their own cost of capital in which case they absolutely want you to pay off the car early.

[halik]

Originally Posted by spidey07

Meh, I've been on top every time I lease.

Sample size of? I would be surprised if you come out on top in terms of residual, unless we're talking getting money back for miles not used or something. It's their job to price and model that stuff so that on average they come out on top.

[halik]

Originally Posted by spidey07

You fail to take investment income in you calculations in the difference. But you guys go ahead and loom at the short term money and not the long term. I'll keep leasing.

You probably think paying down a mortgage or doing 15 year is a good move as well. Good luck.

I can lead you to water. But you'll never drink. At these rates it's free money.

So you'll keep on continuously paying the highest depreciation rate while leasing a vehicle and somehow make up for it on investment income? There's essentially no way you can recoup that, mathematically as you'd have to have more investment return than the residual value of the car you bought instead of leasing (~35% compounded across 3 years)

Buying a car for $20,000 versus two 3year leases at $10,000 each (50% residual).

Buying: -$20,000 at the end of 6 years with 35% residual of $7000 = -$13,000
Leasing -$10,000 + $10,000*(1+Y)^3 - $10,000 =-$20,000 + ($10,000)*(Y)^3

Y~=10-11% annually

[Ichigo]

Originally Posted by halik

So you'll keep on continuously paying the highest depreciation rate while leasing a vehicle and somehow make up for it on investment income? There's essentially no way you can recoup that, mathematically as you'd have to have more investment return than the residual value of the car you bought instead of leasing (~35% compounded across 3 years)

Buying a car for $20,000 versus two 3year leases at $10,000 each (50% residual).

Buying: -$20,000 at the end of 6 years with 35% residual of $7000 = -$13,000
Leasing -$10,000 + $10,000*(1+Y)^3 - $10,000 =-$20,000 + ($10,000)*(Y)^3

Y~=10-11% annually

So many problems with this model.

The proper equation is:

-20000 + 7000/(1 + y)^6 = -10000 -10000/(1+y)^3

y = 0.13824

So it's worse, but we're not considering that you pulled those numbers out of your ass. Also, I wouldn't take advice from someone who doesn't understand time value of money.

That being said, leasing is usually worse for most people, but not *always*.

[halik]

Originally Posted by Ichigo

So many problems with this model.

The proper equation is:

-20000 + 7000/(1 + y)^6 = -10000 -10000/(1+y)^3

y = 0.13824

So it's worse, but we're not considering that you pulled those numbers out of your ass. Also, I wouldn't take advice from someone who doesn't understand time value of money.

That being said, leasing is usually worse for most people, but not *always*.

I pulled the 6 year residual from this:
http://www.money-zine.com/Calculator...on-Calculator/


But yeah, it should really be (10000*(1+Y)^3-10000)*(1+Y)^3=7,000, aka the year 6 future value of 10K invested for 3 year and then the proceeds invested for another 3. Didn't proofread the above