Originally posted by: mugs
Originally posted by: Nutdotnet
Originally posted by: mugs
Originally posted by: forfor
Ok, I need some opinions here... is there a reason that I shouldn't lease this car? I know with leases you lose money if you keep the car for more than 3-4 years but here is my situation:
I'll be based in the U.S. for the next 2 years, but I'll keep travelling internationally 40-50% of the time. I looked over the lease options at bmwusa.com and I can get a 24 month lease with 10,000 miles annually. I don't think I'll drive any more than 6-7k miles a year, but 10K is good safety. And I know that once you buy a brand new car and drive it off the lot, it depreciates automatically. Is leasing a good option for me? I don't want to buy a car and hassle with selling it in 2 years...
Cars lose very little value just because you "drive it off the lot." It is true that the most depreciation happens at the beginning of the life of the car, but that's not a great reason to lease a car. Actually it's a terrible reason to lease a car, because what you're paying for when you lease a car IS the depreciation. A much better idea would be to buy a 1-2 year old used car.
But I'm guessing you didn't REALLY want anyone to convince you not to lease the car, so go ahead and lease it.
While I agree with you on some points, I also disagree with you on others.
For some people, leasing a vehicle makes PERFECT sense. The OP sounds like a true candidate for a lease. Low mileage is key here. If the OP is confident that a 10,000 mile lease will work for the next 2-3 years then why not go for it?
Many believe leasing is bad because the person does not have ownership. Sure, but, why is that so bad on a DEPRECIABLE asset? Vehicles are rarely "smart" investments, so, why invest at all? Pay the depreciation and rent charge and be done with it.
A car is not an investment (well, most cars). But you can still make smart financial decisions regarding cars. With a lease he's basically paying for the first two years of depreciation on the car. Those two years are when depreciation is greatest. It would make more sense to either
- buy a 1-2 year old car and sell it when he's done with it (in 2 years)
or even
- lease a 1-2 year old car for 2 years
Either way, he's not paying for the most expensive years of depreciation on the car.
I also disagree that it's a "horrible financial decision" to lease a car one would normally not be able to afford to buy. Again, why place all that money down and/or have a large monthly payment when you can be garaunteed that your vehicle is going to be worth less then the day you bought it? Wouldn't it make more financial sense to take that extra money & invest it where you can actually make some $$$?
That's exactly why I said it's a bad financial decision to lease a car you couldn't afford to buy. One way to justify leasing is the reasoning you just gave - if you take the money you save on the monthly payment and invest it, you can come out ahead. But many people don't invest the money they save on the monthly payment, they use that money to lease a more expensive car. So what money is left over to invest?
No, a lease is not for everyone. People who need to drive lots of miles, who like to modify their vehicles, piss-poor drivers, etc...should never lease.
I'm not against buying, but, I have yet to see a valid arguement why leasing is "so bad".
It's just not a terribly wise financial decision in most cases. You can justify it by comparing it to purchasing the equivalent car and investing the difference, but that's just comparing two roughly equally bad financial decisions. Buying a new car is rarely a good move
financially.
But some people want a new car every 2 years - that's fine, it's their money, they can do what they want with it. But it's still not a great thing to do financially. The OP came here looking for opinions, and that's what I gave him. Leasing the car is not something I would do, but I handle my money differently from other people.
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