Quote:
Originally Posted by desertfox73
Sort of. Single-pay lease rates are extremely low, close to a zero percent interest. I ran a calculation for my M3 comparing the lowest finance rate I could get from BMW (1.9%) against a lease-purchase scenario using a single-payment lease. The money factor for single-pay lease was so low it actually does wind up cheaper to lease for three years then buy the car, rather than to buy the car outright. And if I decide to return the car in 3 years, I'll have spent less over the three year lease than I would have over three years of a 5-year financing term.
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Nice to meet someone else who understands what the cost of financing is
My axioms were focused primarily on the typical 36-month amortized lease scenario. There are many in this thread who would choke on their biscuit at the suggestion of a single-payment lease. Personally, I don't do them because of the loss risk in the event of a total loss accident. You can insure against that, but it offsets the finance rate savings. Still a viable option though.
Quote:
Originally Posted by desertfox73
In a lease transaction the company is guaranteeing the residual, true, but they are also still financing the risk that the lessee won't make payments. That doesn't go away with a lease, it just gets layered on top of the residual risk. Maybe that's what you meant, just clarifying.
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Yeah, that's exactly what I meant
Leases represent
additional risk to finance companies, which pushes the rate up.