Originally Posted by Humble_Bear
I always pay cash for my cars. Let me do the exercise and see:
1) I ordered a X1 with only paddle shifters and dealer promised to give me $1000 discount, so the cost before tax would be $30665 + tax & license (8.75% + 2%?) = $32,965 OTD. I hate California's high tax!
I plan to pay cash and sell my beloved 11 Sorento V6 which I paid $23,500($3300 below MSRP) + tax = $25263 and should be able to sell privately for $20K (only 20K miles). $5263 is the cost in 21 months = $250/month less 30% tax deductions = $175/mo for driving the Sorento V6.
2) That means I will fork out $13K for the 2013 X1 and get drive for 3.5 years of free maintenance & full warranty. After 3.5 yearsw, my 2013 X1 might be worth $20K (@ 39K miles still under warranty). My expenses over the 42 months: ($32,965 - $20,000) divide by 42 months = $309/mo -30% tax break = $216/month.
3) In 2016 assume I then get a newly designed X1 for probably $35K + tax & lic = $37,625.
The difference between the new/old X1's would be $17,625. I drive another 3.5 years and sell it for $23K. The cost for driving the 2016 X1 would be ($37,625 - $23K) divide by 42 months = $348/mo - 30% tax break = $244/mo
*I keep the cars <3.5 years so all maintenance & warranty are covered.
*I am a real estate investor and agent so I get to deduct a good portion of the auto expenses against my income.
*I keep all of my cars in the garage and in pristine shape.
Right, now lets show the math after you had a major accident that cost 2/3 the value of the car to repair. Plus, take into consideration that the car doesn't feel right when driving and you have complained to the body shop ten times and now you have given up. What's your math look like now?
The point is you don't know and can't tell us how much value you will lose.
With leasing, everything is known for the most part. You will not have any unexpected repair costs. If you total the car in the USA, and the car is worth more than what the insurance company will pay then you will be covered with gap insurance that is included with a lease.
If you buy a new car every 3 years and trade in the old, then leasing might be safer (less risk) than financing.
But, the guy who has leased a new car every 3 years for the past 20 years probably spends more money on his car than the person that purchases cars over the same timeframe.
So, for this reason, any argument that leasing is for chaps that can't afford the car is utterly defeated by the fact that in the long run leasing is more expensive than purchasing.
To the contrary, purchasing is for the poor chap that can't afford to lease a new car every two or three years.