So far I have killed the New car myth, lets look into the leasing myth. Well actually I am not going to say Leasing is bad or good. I think its both. Or is it? I think if you want to own the vehicle then don't lease it. If you are planning to own a car then leasing is not for you. If you would wish to own a car then read my post above. Leasing is not for owning, but is owning what you really want? And is your lifestyle fit for leasing or owning? Did those same people that said Leasing was a sorry ass investment take in consideration the different types of people out there? Did they study into everyone and their differnt lifestyles? Of course not.
Lets look at the Chevy Silverado Pickup C1500 P/UP V-8 Sportside Ext cab.
In the year 2000 brand new it sold for $35,000.
Lets say you leased it for a 4 year term. The payment was $350 a month (about the normal lease)
You are allowed to put on 15,000 miles a year.
In 4 years, you have put on 60,000 miles exactly. You did good that year, you didn't go over your limit. Plus you kept the truck clean, great.
Whats it worth:
According to N.A.D.A. (which is what every bank in the southeast, and I am 100% sure the whole country, uses for retail< not no bullshit Kelly blue book)
Retail, w/ the 60,000 mileage hit is $18,825. And that is if the truck is in great shape. So if you leased it, its still worth what it would be right now, only difference is, you don't have to pay out that other money you owe to own it. Your in the clear my friend. Plus about this time is also when the warranty is up. Your looking into putting money in the truck as soon as something simple like the alternator or a few "simple" sensors go bad. Simple, yes, costly? Of course. Add that back to your balance on the truck, haha.
Ok, so what does that mean? It means your good to go. After 4 years your tired of it. You can give it back, its no longer a problem. Remember, you don't own it. After 4 years things start happening, remember your warranty is up by then as well. But the great thing is you get to stay up with the times. You get to go right back up to the dealer and Lease a brand new one. That is the great thing about leasing.................................
OR OR OR OR OR
You would have been smart them 4 years and saved up enough money and bought something for cash, Something brand new for cash, its all about the warranty remember?. Ok, now do you see where the plot thickens????????? HAHAHAHA
When you buy something for cash and only put so many miles on it per year you can always add $2-4,000 cash with it and buy the new version every 1-2 years, right? But wait, why have to add that kind of money? Now your gettting smart. Now your starting to see it. Lets review.
When you buy a car for cash you have no payment therefore you avoid interest plus a bump in full retail.
When you lease, you don't own the car, but you don't own all the problems that might come with that car down the line, nor do you pay full retail. Also you are driving something brand new once again.
Lets say you bought the 2000 truck. Lets say you paid it out in 2006. Of course everyone knows the payments are $100-150 more for purchases then leases. Of course depending on the situation, but your a fool for giving the dealer $3-4000 down on a lease. But anyway, you pay the truck out, and over the last two years you have had to do 3-4000 worth of work to it, not at once, but at one time. So that just set you back what you had in it. Now when you get ready to trade it in, the truck is only worth hardly nothing because you have so many miles on it now. Oh and lets don't forget the thousands in finance charges over the last couple of years you had to pay.
So do you really come out? Hell no.
So after taking REAL LIFE in to consideration, is it better to lease or buy? I say go with Lease all day long. When you buy, you have so many years and such a high payment to make on the vehicle you will neve come out in the end.
This is the smart thing to do. Think about renting an apartment and buying a house. Remember when you was just getting started? Your credit was limited and your funds were weak. So therefore, you rented. But after 3-4 years of living in an apartment you could eventually buy a house? Remember those days? Ok a car is the same thing, except a little different. Out of all of the examples I laid out above the best one was paying cash. That is were your going to get the best deal. If you can write a check to the dealer for the amount of the car then your going to save $5-9000, depending on the sale and the car, possiblly even more in some situations.
But when you lease you have all the time to save up. That is for when you can not afford it at the time, but your credit will allow you. Go with the lease.
WHy does no one complain like this, "Oh I shitted $950 a month down the drain on an apartment for 4 year, now I live in this house and I am happy". They don't. See what I am saying? Lease a car long enough for you to save up $20,000-30,000 or more, depending on your style, then trade it in every year or two. If $20,000-30,000 is to extreme, or if you have better places for it to go, then just do $7,000-10,000 and since you have better credit now, the payment is less and your closer to owning it.
No matter what, a car is going to cost you somewhere here and there. I would rather have one paid for in the long run and add a thousand or two to keep getting new ones year after year then be stuck with the same thing, plus have to do work to it, for 6-7 years. Get my drift?
In my opinion the best thing to do is Lease, save, and pay cash, then trade year or every 2 years and pay the diference which should only be a couple of thousand.
Peace,
VG
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