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Leasing Cars Instead Of Buying Used Could Be A $1 Million Decision
The article seems to be comparing leasing a NEW car vs. buying a USED car. That is really an apple-to-orange comparison isn't it?
If you buy all your clothes 2nd hand at the Goodwill store, yes, you will be paying less than going to Macy's. Maybe the author of the linked article could write an article about that too.
The link states: "The late Thomas Stanley, in his book, The Millionaire Next Door, said that 80 percent of millionaires have never leased a car."
Statistics are funny things. I wonder how many of those 80% of millionaires buy USED cars, then flip them after 3-5 years as the article suggests? -- And presumably engage in those transactions without a middelman (used car dealer) which would pocket a fat %age of the alleged 'savings' as their cut, both on the purchase and sales transactions...?
This article gave me a strange sense of 'deja vu' -- like I've read it before. I get the sense some of these financial 'contributors' getting paid for pithy advice engage in a bit of recycling of the same old articles every few years....
I would never buy new, since you are down 20-35% in value the minute you leave the dealership. Whether to buy or lease is a multi-faceted decision: better use of invested dollars, don't drive very far each year, like having a "new car" every few years and don't want or plan to keep a car for 8-10 years. If you work with the same dealer over multiple lease periods, there is a good chance they will waive the down payment altogether. There are pros for buying a car, too, but the crazy prices now make leasing much more attractive financially than it did 10-15 years ago.
ducrow, I was on that exact same program you cite (buy new and HOLD on). --My prior car (a Civic) I bought new (April 15,1999). I just traded it in (Mar 2016).
As for the truism of "instant depreciation"... well, OK, if I wanted to immediately trade in my new car the same day, that would be really important... But who trades in a new car the same day, week, month, or even in a year? If you don't engage in excessive car trading, the "instant depreciation" is really moot, in the overwhelming number of cases.
Having "married" my Civic for 17 years, I decided to "date" my new (current) auto. -- I leased it. Doing an "apples to apples" comparison of buy (new) vs. lease (new), is what some folks (like the guy who wrote that article) don't understand: On the same car, a monthly lease-payment can be about 40% LESS than the purchase-payment (even if 0% financing is offered in the "buy" offer). When my lease is finished, I can either lease again (with a payment ~ 40% less than buying), buy a new car, or buy the car I leased. I've no idea what I will do 2 1/2 years from now. But my options are "wide open". Until then, I've got a very economical monthly payment (even though I certainly could have afforded the larger monthly payment which would have involved buying.)
For many people, especially young 1st-time car "buyers", who may have low incomes, or college debts to service, leasing probably makes sense -- especially if they don't have a big down-payment to toss into the deal. Older lessees may appreciate not having to worry about fixing junk on the car, dealing with (gasp) unscrupulous dealers when trading-in their bought car, or the aesthetics of always driving a new/new-ish vehicle. -- Just like most folks don't buy their clothes at that Goodwill store....
The article assumes that people who lease ALWAYS will lease. That of course is not true. -- One more problem with that article.
Comments
If you buy all your clothes 2nd hand at the Goodwill store, yes, you will be paying less than going to Macy's. Maybe the author of the linked article could write an article about that too.
The link states: "The late Thomas Stanley, in his book, The Millionaire Next Door, said that 80 percent of millionaires have never leased a car."
Statistics are funny things. I wonder how many of those 80% of millionaires buy USED cars, then flip them after 3-5 years as the article suggests? -- And presumably engage in those transactions without a middelman (used car dealer) which would pocket a fat %age of the alleged 'savings' as their cut, both on the purchase and sales transactions...?
This article gave me a strange sense of 'deja vu' -- like I've read it before. I get the sense some of these financial 'contributors' getting paid for pithy advice engage in a bit of recycling of the same old articles every few years....
As for the truism of "instant depreciation"... well, OK, if I wanted to immediately trade in my new car the same day, that would be really important... But who trades in a new car the same day, week, month, or even in a year? If you don't engage in excessive car trading, the "instant depreciation" is really moot, in the overwhelming number of cases.
Having "married" my Civic for 17 years, I decided to "date" my new (current) auto. -- I leased it. Doing an "apples to apples" comparison of buy (new) vs. lease (new), is what some folks (like the guy who wrote that article) don't understand: On the same car, a monthly lease-payment can be about 40% LESS than the purchase-payment (even if 0% financing is offered in the "buy" offer). When my lease is finished, I can either lease again (with a payment ~ 40% less than buying), buy a new car, or buy the car I leased. I've no idea what I will do 2 1/2 years from now. But my options are "wide open". Until then, I've got a very economical monthly payment (even though I certainly could have afforded the larger monthly payment which would have involved buying.)
For many people, especially young 1st-time car "buyers", who may have low incomes, or college debts to service, leasing probably makes sense -- especially if they don't have a big down-payment to toss into the deal. Older lessees may appreciate not having to worry about fixing junk on the car, dealing with (gasp) unscrupulous dealers when trading-in their bought car, or the aesthetics of always driving a new/new-ish vehicle. -- Just like most folks don't buy their clothes at that Goodwill store....
The article assumes that people who lease ALWAYS will lease. That of course is not true. -- One more problem with that article.