Quote:
Originally posted by ThrashersFan
To be honest, I never understood car leasing -- blame it on my desire to own things but I just can't get comfortable with renting a car. Post 9/11, with the new car interest rates hovering around 0%, I don't know why anyone would lease rather than buy. I got a $40k car at 0.9%, will pay less than $1,000 interest over 4 years and have something of value at the end that I can drive for another 5+ years for "free" and still be able to make a few grand in resale or trade-in.
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Congratulations --- heck of a deal. This has been Timmied to death on the Gadgets board, but I'll put in a pitch for leasing (about which I'm ambivalent, because it depends on the role your car plays in your life, which varies by person).
The 0.9% purchase financing you obtained stands in place of a dealer rebate that you could successfully negotiate into the purchase price under a lease and obtain the same benefit, assuming you're getting a competitive money factor by shopping for leases (
e.g., looking to credit unions you're eligible to join). If you can recapture the hidden dealer rebate into a lease, you might choose to lease anyway if you can negotiate the best possible a purchase price at the front end of the lease (including the rebate), and the highest possible depreciated value at the back end, that has the bank bearing the risk that the
actual depreciation winds up being greater than the parties anticipated at inception. You're then putting the bank on a market risk that, as an owner,
you'd be bearing. But you have to be smart about it.
Sure, you're riding the steepest depreciation curve by financing only the first two, three, or four years' worth of depreciation, but you're also bearing that depreciation if you buy and buy again in the same timeframe. Which some of us (not me) do, because our car needs change that quickly. I have a GA friend leasing an M3 which he'll be able to dump when he gets married this fall --- not perfect timing, but close --- and gets something more practical as he settles into married life. Leasing lets you drive the topless roadster for the brief window of life before you start thinking, "Hey, that Honda Odyssey isn't so bad . . . ."
Leasing
can be a better financing option for people who drive less than 15,000 miles a year, who keep their cars in good shape, and who tend to get a new car every two or three years anyway, if you can get the bank to bear the risk of steeper-than-anticipated depreciation.
But I suspect when you say you "never understood car leasing," you really meant you don't fall into the above description.
