Originally Posted By: JHZR2
I didnt call HIM a slave to payments. If you know anything about the poster that I referred to from reading his posts, he is a very successful person, involved in real estate and building. He probably has his own business and may well get some advantage from a lease (though I recall also that he mentioned elsewhere about trying to be finanically independent because of rising rates, so also avoiding being a slave to payments, and dropping money for real property vs wasting it paying for car depreciation).
Dont put words into my mouth. Just open a newspaper and look how much the auto dealers try to get people into highly profitable (to them) fleeces. Profit to them, plus people buying cars and paying for depreciation at the absolute worst period is what makes it such a poor idea, except for the few that get a 30%+ discount by "expensing" it as a writeoff.
Leasing/financing IS a consideration in the short and even long term cost of ownership. It just is. And its a poor deal for the normal consumer typically.
Correct I don't currently own a nice car I'm concentrating on other things, ie property.
But when I do get back into the game, and wanting something nice, new, and high end, not a Chevy Spark I will probably lease it.
Leasing is generally a bad idea for most people, however not all. Generally most vehicles are operated with an eye towards keeping operating costs within check, ie low cents per mile. That's fine and why when I need a new work truck I just buy it. Paying interest on a work vehicle increases its cost, although these days with interest rates so low its marginal. But that's another discussion.
Having said that not everyone's goal is to drive as cheaply as possible. Some people want nice cars, fast cars, whatever. So they are not so concerned about what the vehicle costs, its a toy after all. If cost was a concern, well don't buy it.
In that case lets take the car I have my eye on and want in a bad way as an example; an Audi A8L, sticker for these is around $100k so lets stick with that for arguments sake.
Now lets assume I have no interest in keeping it forever, or even much past the warranty really. Because I have fixed and worked on a lot of German cars I have no interest in learning how to work on Audi's or paying the dealer thousands to fix it as it ages. Why would I take $100k of my operating capital, stick it in a car, only to tie all that money up for 3 years than dump the car for probably $50k afterwards? To me that makes no sense, I can take that operating capital and put it to work, in a car it really is dead money.
OTH I could lease such a car for about $6k down and $1,200 a month. The $6k down isn't unreasonable out of pocket so my operating capital isn't nailed. The $1,200 is paid by other people, renters in my case.
So now my $94k is free to be utilized, I can write off a bit of the $1,300 and the best part, is since these things depreciate like a lead balloon I don't get to eat quite all of that.
The icing on the cake is the car is paid for or rented as some people like to call it with OPM = Other Peoples Money.
Now if you want to talk about life cycle costs for work/commuter vehicles I agree with you. The least expensive way to do it is to buy something like a base Corolla for cash and drive it into the ground.(my sister does this) Because unless you have a job that requires you to drive around clients a car has nothing to do with how much money you make, so drive cheap and concentrate on making more money! The same goes for work trucks, I buy $20k base Silverados and drive them until they are shot. I'd love a $60k loaded up pickup truck but I won't make a penny more with one, I'd just have a lot of money tied up in a truck.
