Never Lease Cars!
A client of mine just left the car dealership. The plan was to go in and purchase the car he’s been leasing for the past 2 1/2 years with cash. Of course, the salesman was willing to work a “deal” out if he would purchase a new car. (they were willing to forgive as much as 5 of the remaining lease payments due) My client plainly explained the reason for his visit was to purchase the currently “rented” car. So here’s how the numbers broke down:
Current Value of Car: $22,000
Number Of Months Remaining on Lease: 8 Months ($5,000)
Original Price Of The Car: $35,000
Total Payments Made Over Past 2 1/2 Years: $20,000
Total Payoff To Purchase The Car Today: $27,000 (Current Value + Balance Of Lease)
Total Cost To Purchase the $35,000 Car: $47,000
This is the absolute worst way to take possession of a car financially. The 2 1/2 years of payments have gone towards zero ownership. Think of it in terms of going to your local Car Rental Company and renting a car for 3 years. Either way the client goes, the dealer wins and the customer loses a ton of money. Be sure to avoid car leasing. It’s bad enough to make payments on a depreciating asset, so at least own the thing!
DW
