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I put cash on down payments for houses and I like new cars. So lease works for me.
Either way it’s hard to justify taking debt and paying relatively high rates if interest for a car loan / lease. D1 has it right. 2-3 year old car with high mileage (60-100k) is the sweet spot. Cars will usually look new with most of the latest features but will also be depreciated about 50%. Modern cars/engines last forever, don’t worry about the high mileage...
If you lease or trade in your car at the dealer, you’ll save some hassle but you’ll pay handsomely for that service. Keep in mind. Car dealers make almost no profit from a new car sale. Their profits are in financing (and leasing), trade-in/used car sales, and service.
If you like cars and like having a new one every few years despite realizing that’s expensive, leasing may be for you.
I personally buy 3-7 year old cars. Prices are close to bottom dollar, still newish, and not as unreliable as cars much older
I would say no not always, but it greatly depends on the car
I would personally never lease a car either
The only real pro is that you don’t have to worry about resale, in most cases the lease cost will end up being higher
Unless used car prices crater killing residual values (may happen) then leasing is significantly more expensive than finance.
If you own the vehicle you may be entitled to a diminished value claim from your insurance. If you lease the lessor typically gets the claim payout. Leasing rates are typically so high you could also eat the diminished value and still come out on top vs finance.
What about for someone young who may be moving every 2 years?
If you’re not super materialistic.. buy a car and pay it off. No car payment is the way to go. Even now I drop the cash I save from not having a car payment into investments every month.
Leasing is better if you don’t drive a lot, take good care of your vehicles, and want to put the maintenance cost burden on someone else (you still have to get it done as scheduled, but most lease contracts now include scheduled maintenance costs for the life of the lease). Buying is better if you plan to keep the car past the warranty period and you’re OK with putting $$ into an asset that depreciates. Worst option financially is leasing and then buying the car at the end of the lease.
If you’re financing a car for more than 3% interest, you’re doing something wrong, it’s literally cheaper for me to finance than if I were to pay cash.
I think there is a big misunderstanding of the lease here. When you lease, you pay a % of initial price (IP) in installments and have a residual value (RV) . RV= IP - # of payments*monthly payments (MP). You don’t pay any interest. So at the end if you decide to buy the car, you pay off RV and can think of MP as an equity build up. In case you decide not to buy you just spend IP-RV for having a new car. So leasing is a deferred option to own a car in 3 years without paying interest. So if you know upfront you not going to buy, your goal is to minimize MP. If you are not sure then same tactic. If you know you will buy it then it doesn’t matter.
In my case i leased car with IP of 30K. Paid 36 MPs of $416, and now have an option to buy it for RV of 15K. If i buy it, i still pay 30K in total with no interest ( unless i decide to finance 15k) without no interest and other maintenance crap.
So i think financing is worse than leasing, cause i would’ve have to pay interest.
There is interest in the form of money factor as previously mentioned but it’s usually pretty low as they get to sell the car twice once new and once as a cpo