My Plans Have Been Wrecked

wing_zealot wrote:

sayoung wrote:

Trackrig wrote:
I've never understood leasing a vehicle. You never pay it off - you're always making a payment just like this going from one lease to the next lease and you never have anything you can sell or trade in, in the end????????

I don't think you should be leasing a new truck in retirement.

Bill

They are better known as a " FLEASE "

That's because you don't understand how a lease works.

When you lease a vehicle, you pay for the depreciated value of that vehicle over the term of the lease.

For example, let’s say me and you obtain a vehicle worth $60,000. Also, let’s assume the depreciation on that vehicle over 4 years is 40%. Now let’s say you buy the vehicle over a 4 year period and I lease it over a 4 year period.

When you buy the vehicle, you’re financing the full $60,000 over 4 years. When I lease I am financing the depreciation $24,000 ($60,000 x 40%) over 4 years. So at the end of the 4 years you have financed and paid for a $60K vehicle that is now worth $46k. At the end of the 4 year lease all I financed and paid for was the $24,000 that was used up (the depreciation). That’s why a lease is always cheaper than buying.

But at the end, no one got fleeced, we both paid $24,000 to use the car for 4 years. You can now sell the car and get your $46,000 that you already paid for back if you want. And at the end of the lease, I can still buy the car for $46,000 if I want to.

You don’t Have to take my word for this, look up how a lease works on the internet.

And most important, and almost always overlooked, is the fact that a lease gaurantees that three years in the future value. Gas goes to $8.00 a gallon and your gas guzzler becomes valueless, the bank takes the additional loss. If it goes the other way, and your AMC Gremlin becomes an instant collectible, you can still buy it for the residual value and then resell it to a museum for an instant, massive profit. Leasing removes the risk of excessive depreciation from the cost analysis of a new vehicle purchase.