Owning vs. Leasing

[SearchMaster]

Originally posted by: spidey07
Naustica, if I could lease a 3 year old car I would do it in a heartbeat provided the rate was like 2-3% and the residual was realistic.

There is no equity or growth with a depreciating asset, that's why you lease and make your money make more money for you elsewhere.

I suppose your HDTV (1080p, natch) is leased as well?

There are situations where leasing is more appropriate than buying, but the fact that automobiles are depreciating assets is not justification in and of itself. Otherwise you should just rent everything except perhaps your house, and own nothing.

 

[TheKub]

Originally posted by: spidey07
Correct. Buy things that appreciate, lease things that depreciate. That's financial common sense 101.

So you rent your clothes\furniture\appliances\etc?

 

[Fern]

Originally posted by: Juked07
What are pros and cons of each?

Technically, I don't find much difference between the two.

A lease is just a fancy financing technique with a purchase and and guaranteed resale (back to the dealer) at the lease termination (or you can opt to keep it - essential buying a used car for a predetermined price).

I get the purchase info. Price and interest rate

Then get the lease info - monthly payment and buyout option amount at lease termination.

Then solve for any difference using one of my amortization programs.

I did it last year and found no measurable difference (If I purchased, my principal balance at the end of 4 years was the same amount as my buyout value at the end of the lease) so I took the lease - it's as if I have a guarnteed sale should I decide to switch vehicles.

Mileage is not a concern for me.

Fern