Leasing vs. Owning - Page 2

jsatek · 12-11-07, 10:27

Multiply the money factor by 2400 to get the interest rate.

.00331=7.94%

bert31 · 12-11-07, 10:29

Quote:

Originally Posted by Darren F

when you buy a car unless you pay for it in cash you are making monthly payments, so in essence the bank owns the car and you are making payments that include higher interest rates than if you were to lease a car..So you are paying interest on something that is depreciating....and every month you do that you are losing money...If you lease a car the lease payment is based on 2 things, 1- money factor, which includes interest and partial depreciation, and 2- residual value, which is what the bank has determined the car to be worth at the end of the lease. Take a currnet example of a lease that is currenly running at Mercedes Benz on a new C Class....MSRP $35265...Lease payment for 39 months is $399 with 5k down at the lease start....Over the 39 months you are paying $20,561.. if you want to buy the car after the lease ends you will pay 21,865 so the car will cost you a total of $42,426 for the car....If you were to purchase the same car and finance it for 60 months @ 7.9 % your monthly payment with the same 5k down would be $706...So this way you would pay $47,360 for the same car....Plus you dont know what the car would be worth at the end of the 60 months....Do the math

You forgot to calculate the interest on the monthly payments on the $21,865 to buy the car after the 39 month lease. If you would like, I can do the math to figure out what the monthly payments would be to purchase the car after the lease. To be consistent, I would stick with your 7.9% interest rate (which I believe someone with decent credit would be insane to agree to) and extend the payment over 21 months so the total months equals 60 to make the two examples comparable.

bert31 · 12-11-07, 10:30

Quote:

Originally Posted by jsatek

Multiply the money factor by 2400 to get the interest rate.

.00331=7.94%

Hence my quote that leasing companies make a ton off of you in interest.

That is why I always buy cars that are 3-5 years old and pay cash. With all that I have learned about detailing, I can make a 3-5 year old car look as good as it did off the lot (assuming it has no dents or bad scratches).

Darren F · 12-11-07, 01:13

Never said the money factor was .00331 on the lease....Second if you want to buy a car other than a domestic, average interest rate for someone with average credit is 7.9% good credit right now is around 5.9%, check with your banks and you will see....Either way when you look at the majority of people that come in to buy a new car, they Lease....

jsatek · 12-11-07, 01:49

I am educating the less fortunate that do not comprehend what a money factor is and how it effects the price of a lease.

People lease for many reasons, low monthly payment being the most obvious.

HansB · 12-11-07, 02:50

Quote:

Originally Posted by jsatek

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People lease for many reasons, low monthly payment being the most obvious.

You hit the nail on the head!

03TLS · 12-11-07, 03:06

Leasing is where the dealerships make most of their money along with the extended warranties and the most expensive way to own a car.

Buying a 1-2 year old used car in cash is the way to go for me. Not having payments is GREAT!

jsatek · 12-11-07, 03:35

We used to pay our F & I team $150 per lease, just for submitting the credit app and processing the contract, $50 per car more than a salesman earned on a mini. There was nice back end money from non-manufacturer funding institutions back then.

(mini was the least a salesman could make on a car. Selling for $500 or less over invoice)

bert31 · 12-11-07, 04:06

Quote:

Originally Posted by jsatek

People lease for many reasons, low monthly payment being the most obvious.

That and not doing their homework to find cheaper financing in the long run.

bert31 · 12-11-07, 04:08

Quote:

Originally Posted by 03TLS

Leasing is where the dealerships make most of their money along with the extended warranties and the most expensive way to own a car.

Buying a 1-2 year old used car in cash is the way to go for me. Not having payments is GREAT!

Well, I do 3-5 years but I still agree with your concept.

bert31 · 12-11-07, 04:10

Quote:

Originally Posted by Darren F

Never said the money factor was .00331 on the lease....Second if you want to buy a car other than a domestic, average interest rate for someone with average credit is 7.9% good credit right now is around 5.9%, check with your banks and you will see....Either way when you look at the majority of people that come in to buy a new car, they Lease....

As low as interest rates are now, if I couldn't do better than 7.9% I would be pulling my credit report to see what the heck is on there that I do not know about.

J.J. · 12-11-07, 05:35

I currently don't have a lease but I'm not at all opposed to them. Some of the deals you see on TV are pretty good... but a deal is sort of like beauty, it's all in the eye of the beholder.

I will likely lease a BMW in the near future. That 1 series is looking mighty good.

I currently finance my car at 0.9% for 36 months.