What are the pros and cons on leashing a car. What circumstances make it financially sound to consider a lease rather than a outright purchase
For an individual , none . The only advantage for an individual is that means they can drive more vehicle than they really can afford.
Edit: There is a member here that does lease and that is their choice and works for them . But seriously George , just put ( should I lease a vehicle ) in your search engine and you will find articles written by financial people so you can have a better chance to make your ( plus who ever is involved in this decision ) mind up.
The cons are clear - it is the MOST expensive way to own a car. It locks you into the car and the payment for 3 or 4 years and is very expensive to exit if your finances change. It puts YOU completely in the hands of some low level leasing employee deciding whether your wear and tear on the vehicle is “excessive” or not. You have absolutely no equity in the car when you turn it in to help pay for the next car.
The pros. If it is a business vehicle, it can be taken as a monthly business expense rather than depreciated over time. It also allows you to drive a more expensive vehicle than you could ordinarily afford payments for and that is not a good financial practice.
Pretty broad topic, but one that Nicole at BestRide did a pretty good job covering. Here’s that article.
The folks I know who lease tend to use the cars for business purposes, or they prefer to drive cars less than 3 years old all the time, and not be bothered with selling their used cars, and are willing to pay a premium for that convenience. Leasing can be a time saver. A businessman might feel they can earn more by focusing their time on the business, even when factoring in the add’l expense leasing may entail. One of my friends is a business exec and he leases his car for business use. Whenever he needs a car for non-business purposes, like to drive to Lake Tahoe for a holiday, he rents another car for a week. If anybody knows how to figure the bottom line of a profit loss statement, he does, and leasing works for him. IMO he’s missing out on the fun of driving and maintaining older cars. But to him that’s not fun I guess.
You are going to lease a used car? I am leasing a 2015 honda. But i got it 3 yrs ago.
Lease a car means you can’t end lease when you get bored. You can sell a car anytime you want. What happens when your no warranty car has a big repair? You have to fix your leased car. Even if you don’t feel like it
I am a serial lessor. I only lease new cars. Why? 1) I won’t lease unless there is cash on the hood. Which is money from the Mfg to subsidize the cost. 2) I require a lower than market interest rate, expressed as a money factor. 3) I require a lease from a mfg which includes a subsidized, (artifically high) residual lowering the cost of leasing. The mfg’s lease often includes damage waiver up to $2500 or so. 4) The car is always under bumper to bumper warranty.
None of these factors apply to leasing a used car. Why do you want an Audi which is now out of factory bumper to bumper warranty?