Re: Leasing or buying a car
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Which do you think is better?
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Easy - I just went through this experience.....
Last Friday, I bought a new Infiniti G35. Not to be screwed over by the salesperson, I had already done my research on the invoice price of the exact car I wanted...ended up getting it at about $100 over the Edmunds.com invoice price. Additionally, I came in with laptop and handy loan amortization spreadsheet (one of the other dealers I had visited had given me a good bottom line price, but attempted to hose me on the financing, so I was better prepared this time).
Anyhow, if you buy a car, the amount that you finance works just like a normal loan - take your loan principle, APR, yadayadayada. You would think that a lease would work similarly: you could take the new car price, subtract the end-of-lease residual value (generally, 55-60% of the new car MSRP), and the difference would be the amount you are responsible for paying over the course of the lease. If this amount is financed, it should act just like a normal loan - again, loan principle, APR, yadayadayada.
However, if you lease the car, it does NOT work quite the same way: they tack on a "lease charge" and it can be very costly. In my situation, the "lease charge" was about an extra $85 / month (and, yes, a "lease charge" is standard for all leases). I figured this out when the salesperson showed me his screen - the monthly lease payment amount I had calculated in my loan amortization spreadsheet was a subtotal on his screen; right below it was an added "lease charge", which explained the difference.
When I ran the numbers, I made the startling discovery that by buying the car, over the course of my loan (60 months) I would pay less in loan interest than if I would pay in the "lease charge" plus loan interest over the course of my lease (36 months). Scary.
You would think that the amount you would pay if buying a car outright would equal the amount you would pay over the course of the lease plus the residual value at the end of the lease. This is very much not the case. You pay a very hefty toll for the right to walk away from the car at the end of the lease....
Anyhow, hope this helps...don't lease, if you value money.
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