How to get over the psychological block I have for leasing?

Maybe it was on someone’s tombstone, I am not sure… Maybe that’s why I used quotes? In reality nothing is set in stone including the stone itself. The fact that this issue bring such a wide range of opinions on the matter suggest a lack of simple answers.
If someone wants to read a little more specifically as it relates to leasing and Paul Getty -

I felt kind of the same way but there’s some huge advantages with very little downside. First of all the tax advantage is HUGE. Rather than paying your greedy state 10% or whatever it is on the entire value of the car, you’re only paying for however much you use. This is generally thousands in upfront costs.

You also are paying down the value of the car and you will only pay the residual amount for the car in 2 or 3 years should you decide to keep it when the lease ends. However, if your needs change and you decide you want another car, or the car has issues, you can simply turn it in at the end and not take a huge loss unless you’re the type of person who drives a TON of miles.

Also, unless you’re leasing a Range Rover or something your costs should be more around 10k for 3 years. Then there’s also the fact that you’re only paying interest for the cap cost and not the entire value of the car so the money you’re giving to a bank is cut in half or more. There’s also often more rebates and incentives for leases further bringing down the price of the car.

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At various points in time I’ve looked at cars for myself or on behalf of friends/family and the numbers pointed towards buying over leasing (eg certain Porsches and BMWs, Odyssey, Sienna, Wrangler, etc). Even on those cars it’s not a blanket statement because it depends on what the RV, rate, etc were at that point in time.

And of course the opposite can be true as well. As with most things in life, it’s good to look at it one a case by case basis.

I’ve considered the buying CPO route with a BMW, Audi or MB but since I live in TX I think the risk of getting a Houston flood car, even with the CPO coverage, is still too high (im risk averse!). Also, leasing allows me to buy a car far away and not have to worry about an in person inspection and/or PPI. Downside is in TX, I pay all the tax on the value of the whole car.

Consider another aspect, and that is risk. With a lease the bank makes a prediction on the future value of a vehicle if the are wrong and it worth less you walk away they take the hit. If they are wrong and it’s worth more you can trade it or buy it and you get the upside.

I have a BMW that had an MSRP of 130k (every option 750 xdrive) the residual is around 80k. I drive a ton of miles for real estate and will turn it in with over 65k miles. I will pay around 8k in over miles but that many miles on a 750 it won’t be worth 40k, so I get to pay 8k and BMW takes the hit for 32k plus. I am SOOOOO happy I don’t own that car :wink:

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Do you know if BMW limits the amount of slightly discounted miles you can buy before the end of your lease?

Another risk issue to consider is of diminished value on a wrecked, but not totaled, owned vehicle when you are ready to part with it. If leased, you just hand your keys in when lease is over, if owned, it will never be worth the same and you as the owner are taking on that risk.

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The other thing to consider is that certain ease friendly manufacturers will sometimes offer huge incentives to lease (e.g. Volvo S90 at end of 2017 where lease cash was 4k+) where even if you wanted to buy it, you would get a better price by leasing first and then buying it thr next month. [The opposite scenario exists in the full size SUV space now where purchase incentives are much higher than lease ones for most manufacturers.]

SGTR275 They do but that limit is it can’t exceed 100,000 total so not a concern for most.

It’s a math equation. All variables are known or easily estimated… no need for psychology!

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Here’s a real life example of how leasing is actually cheaper than ownership if you plan on only owning the car for a few years.

Leasing enabled me to pay <$20,000 over 39 months for a $90,000 F-Type, which will depreciate to $48k by lease end.

Here’s a quick best case scenario if I’d opted to buy rather than lease. I could have maybe got it for $70k OTD. Now if I wanted to take on the enormous challenge of private selling in 3 years, I could. Let’s say I get lucky and find a local buyer to pay me $48k, then my total cost of ownership would have been $22k. I also would have to pay tax on the $48k private sale. So my total cost of $22k plus income tax on private sell is best case scenario for ownership.

The alternative is to lease. Where I pay under $20k to lease it and get to wipe my hands completely upon lease turn in.

Sure, you could argue that it’d be better to keep the car and run it into the ground. But then I’m having to front all maintenance costs on an expensive car, and will be making the same payments on a now dated car, rather than putting that money against another new vehicle.

If anything, leasing is actually a hobby that gives me the opportunity to splurge, but do so frugally.

Edit: In short, leasing isn’t always better than buying, and it varies by car and circumstance. But the goal is to always lease in the most cost effective way possible, to make it more advantageous than buying.

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The same concept holds true on our Tesla Model S P90DL. Someone once said to me. You know, if you go over by 10k miles on your 2 year lease that is only $2,500. Looking at it another way, it is just an extra set of tires, or 2 payments.

$0.25/mile on the Buick Encore I have would be brutal.

I have had a lot of cars in the last 20 years. I did not lease until the last 2 years. We were following the Dave Ramsey plan, and he is 100% against leasing. He calls it the most expensive way to own a car, and has a ton of other things to say about it. Overall he has good advice, but I have not found this one to match up for us.

I have bought cheap old cars in good condition (Hondas). I have bought new cars that have great resale value. I bought 1 new Dodge and learned about residual value after that fiasco. I have tried many different brands, but have not done MB or BMW.

Recently I had a $10k Lexus SC430. I could have sold it for about what I paid for it a year later. Would have lost about $1500 ($100/mo) on maintenance and repairs and taxes. Instead the top broke as I was trying to sell it. I ended up taking a $5k hit on the car. It cost me $400+/mo to own even though it was paid for in cash.

Last month I leased a 2018 Buick Encore for 2 years. One pay all in, maintenance included, only need to worry about anything, just needs gas. It was $3600. ($150/mo).

I would be hard pressed on any of the past cars I owned to find one that only cost me $150/mo even with the power of hindsight.

For the foreseeable future, as long as manufactures keep making aggressive incentives to get my business and I can get 0.5%-1% lease deals I will keep leasing!

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So true, it’s just math. Quantify your risk tolerances and then run the numbers. Some vehicles lease well, others don’t, be flexible in what models you are willing to drive and leasing will work out best in many cases.

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I have a different “block”, mainly because I have no experience with leasing. Do I need to get the wear and tear insurance or are a lot of the leasing companies flexible with a few marks? I keep my cars nice, garage them, park far away but of course small things are inevitable.

leasing company knows that a car is driven and can’t be in showroom condition when you return it so they allow for what they call “normal wear and tear”. Which differs from brand to brand. BMW for example sends you a little wheel that is made of see-through plastic that you can hold over any scratch or dent you have and it has markings on it as a guide. If the scratch exceeds the guide then you will be charged for it. BMW is pretty lenient, I’ve returned some cars with a good amount of damage and they didn’t care, other brands are not as lenient. Tires also need to be returned with a minimum amount of thread left etc.

My philosophy has always been that if you street park in a city environment or park where there is a likelihood of damage, then the protection plan should be considered. If you garage park and are a careful person, it’s usually more cost effective to “take the risk” of nothing happening and if something small happens, the cost to fix would usually be less than if you summed up the total cost of the dent protection plan you paid over the course of the lease.

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I had a BMW that was coming up on lease return. It was missing the tow eye cover on the front bumper. When I got a “pre-inspection” the dealer said, “Those are always missing, we don’t charge for that”. They also didn’t bother with minor scraps and bumps. My wheels had some serious curb rash and they didn’t bat an eye at that. Told me if I wanted to turn it in there would be no charge beyond the disposition fees.

What they were very concerned with was tread depth on tires. I had replaced all four a few months before because when I was in for service they told me they would have to be replaced before lease return. I understand they treat brakes the same way.

the best candidates for leasing are those that don’t put a ton of miles on their car and would like something new every few years.

some people don’t give a crap about their car, buy the cheapest thing available, and drive it til the wheels fall off.

also, not all leases are the same. some cars lease better than others. certain cars make no sense to lease.

different strokes for different folks. there’s no one right way.

I can understand the desire to buy instead of lease. My other car is a 2006 Accord, and my wife is driving a 2008 Odyssey…

But, I have been wanting to move to an electric car. Going electric, at this point, would probably make for a bad purchase decision, since they are depreciating so quickly (because technology is advancing pretty rapidly, I guess).

So, from that perspective alone, leasing makes sense. If you can get a great lease deal at the same time, you’ll be even better off.

Here’s a tip for road trips if your worried about mileage and leasing, or if you have an older car and don’t want to worry about it breaking down. You can always find a cheap rental car, especially if you plan ahead. I’ve done this numerous times over the summer, nothing like renting a car for a week and a half and putting a couple thousand miles on it, and it still costs less than one months lease payment or the headache of breaking down in your older car far from home.

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