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Author: ToddTruby Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 71160  
Subject: Re: Advantages/disadvantages of car leasing Date: 3/12/2013 7:01 PM
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A lease is an excellent way to finance a car if you know with a high degree of certainty how many miles you will drive in a year and want to be know exactly what you are paying for the use of the car. Most leases would probably not go lower than about 10,000 miles per year minimum, so an elderly around town driver would probably be paying for many miles she will not use over the lease term with no credit at the end (unless the car is purchased). As most lease terms are no longer than a typical new car warranty, there is very little if any repair expense, so you will only make your payment and pay for maintenance and insurance (not included in the lease)

It is still important to negotiate the discount or purchase price as the lease payments will be based on the sales price. Based on the miles and term a predetermined depreciation (not negotiable) will be calculated and there is the cost of money often called the money factor (sometimes APR) that is usually not negotiable either.

As a VERY basic example, a car with a $30,000 sales price would depreciate 50% over 3 years at 10,000 miles per year. Essentially, you are only paying for $15,000 plus the cost of money and turn the car in at the end of the lease.

Do your homework and understand leasing before considering. You need much more information to make an informed decision than you can get on a message board.
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