Advice on When to Sell

[butchdave]

Well, speaking as the CFO of a leasing company...



Leasing companies on the whole, make money. The cars are serviced at Dealers, so no attempt to save money and are sold off ex-lease without too much attempt at maximising the value (too much time to sell one by one). They will often borrow the money to purchase the car (at better rates than you will get).



But even after this, they make money. Doesn't take too much to figure out that leasing is not the cheapest option. Don't get me wrong there are some very good reasons to lease - but money isn't typically one of them.

 

[Nikon]

reevis, I've found the same advice about keeping a vehicle for 8 years to get ahead of the depreciation curve. Buying used is also good advice based on the first couple years of depreciation. Of course this depends on the vehicle and its particular rate of depreciation. For example BMW, Honda, Lexus and some others have slower than average deprecation.



As for financing given the same rate leasing is indeed more expensive and this I believe is because of the security deposit typically chaged as well as the fact that a lease payment and interest is calculated as an annuity due (paid in advance) and not an annuity in arears as purchase finance. Lease rates also tend to be higher than purchase finance rates. The case where interest rates are lower than purchase finance may even out the lease vs buy given the interest rate spread and the depreciation rate of the vehicle and of course the lease residual.