vehicle leasing - pros and cons?

[Irving]

I think automobile leases are a bad idea. Here's the basic point: do leasing companies lose money? If not, where did their profit come from?

That logic applies to any business not just automobile leasing companies.

He's simply suggesting that the Plymouth Prowler is the wisest vehicle purchase, on account of Chevrolet losing money on every one of them.

[itaos]

You can find lease deals that are cheaper than buying, but it is not common. Since the lease deal lists the residual value you can make a rough estimation if you would come out ahead vs buying the vehicle and selling it 3 years later. You would also have to account for potential cosmetic damage on lease turn in. A lease is convenient but usually you are paying for the convenience.

[spqrzilla]

That logic applies to any business not just automobile leasing companies.

No, not at all. When you buy a car and finance it, the finance company makes money on interest and everyone hopefully knows that. A leasing company borrows money to buy the car, pays the lender interest on the borrowed money, and then charges you monthly payments. By leasing, you have introduced another party into the deal, and their profit into your costs.

[spqrzilla]

He's simply suggesting that the Plymouth Prowler is the wisest vehicle purchase, on account of Chevrolet losing money on every one of them.

The Canyonero is better.

[ColoradoTJ]

Best advice? More like "most biased advice". He's one of the few people here who has something to gain by "selling" a lease as a good product. It's not. It's an awful product. Sorry Rooski.

Ouch. That's a painfully expensive strategy. Think of all the thousands of dollars you wasted while doing this... Instead of buying low and selling high, you were buying high (at the absolute top of the item's value potential) and selling low. If you buy a $30k car brand new and sell it 4 years later for $15k, that's a loss of FIFTEEN THOUSAND DOLLARS every four years! If you do that your whole life, that is hundreds of thousands of dollars that you could have invested instead of flushing away if you had just bought a cheap, used car and drove it until the wheels fell off a few times throughout your life.

Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".

Don't forget the money due at signing.

[MED]

Ouch. And yes, the same principle applies to leases. A $300/mo lease is $3600/yr. Over four years, that is $14,400 that you have nothing to show for. That's a very expensive "luxury".

Depending on the vehicle and market conditions, a person can easily lose that and more between depreciation and trade-in loses. When I purchased my 6yr old Yukon Denali, it lost 64% of its MSRP value so I got a steal on it...would have sure sucked for the original owner who dumped it on trade.

[MED]

Pretty obvious to me then that for my personality and lifestyle, leasing ain't for me. I want to own my things free and clear and not resign myself to "well, gotta make payments on something anyway, might as well always drive something nice". No, I'm a COB and I don't want to make payments forever. I'd rather keep my old Chevy and put those payments towards finishing my old Willys and my old Harley and buying a few old guns here and there. And improvements around the house. And around our yard.

For no more often than I need 4wd, it's not worth going into debt over. I've had this truck for 11 years and it was paid for when I drove it off the lot. Wife's SUV is paid for too. Think I'm gonna stay right where we are for as long as possible. Both are in great shape, and there's lots of good used ones out there when the time comes.

Thanks all!

You might want to look at 5-10yr old trucks. Depending on what you want, you can find great deals on them as well as great financing. However, the low fuel prices keeps the market high on them right now; next crash...that won't be the case and you can pick one up cheap.

[rondog]

You might want to look at 5-10yr old trucks. Depending on what you want, you can find great deals on them as well as great financing. However, the low fuel prices keeps the market high on them right now; next crash...that won't be the case and you can pick one up cheap.

Yeah, that's the basic plan in the back of my mind. Got my 2000 Silverado in Dec 2004, just under 100k miles. Was owned by a district judge in OK that did a lot of highway driving, so it was in pretty good shape. Most used trucks in OK are farm/ranch or oilfield trucks and beat to hell from dirt roads. The selection around here seems pretty good.

Like I said though, I could put 2k into fixing my truck up a little at a time and get a lot more life out of it. It's been fully paid for since I first put my ass in the seat. Long story, but I got a helluva deal on it. And I'm cheap enough to squeeze every last mile out of it.

[OctopusHighball]

In a lease, you are literally purchasing the depreciation.

As stated by Uncle Dave, possibly fine as a business decision. Perhaps not from a personal finance decision.