Quote:
Originally Posted by Msmall143
not necessarily. it could actually be cheaper to lease then buy, than just buy.
1) calculate what the money factor gives you in terms of interest rate..it may be lower than the buying finance rate
2) you may be making higher payment over the first 3 years which means you are reducing principal quicker and in turn means you are paying less interest over the life of the loan.
over the course of 5 years it can absolutely be cheaper to lease for 3 and finance for 2, rather than finance for 5 from the start.
havent run the numbers on this but its absolutely a possibility.
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Bingo. Despite the occasional short-sighted person thinking that leases are stupid, there's really not much difference between financing the car or leasing it in practice. Sure, the details are handled differently, but a lease is basically a 7 or 8 year two part finance job with the option to give back the car half way through with no strings. It's a boon for liability purposes (say you nearly total the car and insurance repairs it, you can unload it), but the lower the residual the worse the deal is, should you choose to exercise your option. The converse is also true though, a high resitual and money factor and you'd be stupid not to lease. My wife's money factor is basically 0%... Buy a car interest free for the first three years with the option to give it back half way through for any reason, why not?
It's surprising how many people don't like leases without even knowing much about them. I was talking to a guy the other day who was shocked that you can trade in a lease or call up and get a payoff amount like any other finance.