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Discussion Starter · #1 · (Edited)
i have always believed if you're gonna keep the car financing is always better than leasing... but after playing with some numbers... it seems like that's not always the case...

this is just one example but i'm sure there's a lot of variations of down payment and monthly payments option... but it seems like if you put the maximum allowable down for lease (on anything but a Honda) at the end you'll still pay less than financing plus you get more time to get your money together...

eg. from subaru website

with $23200 down (since it's max for a 36 months lease)

monthly payment = $123.32 x 36

buyback value = $23281.50 (confirmed with subaru)

total money paid = 23200 + (123.32 x 36) +23281.50 = $50921.02

if you were to finance with the same down payment, same 36 months with same APR interest rate

monthly payment = $781.27 x 36

total money paid = 23200 + (781.27 x 36) = $51325.72

so where's the benefit of financing?? :confused: you end up paying more plus you're forced to pay a much bigger amount each month... that and the amount that you weren't paying while leasing you can just put it in savings and get some interest out of it too... the only benefit is you can call the car "yours" the whole time that you might be leasing... if someone disagree please explain...
 

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Discussion Starter · #3 ·
Assuming you can put 23,000 down, and save 23,000 cash in 3 years after that.

Most people don't finance for only 3 years.
well it's just an example tho cuz i'm looking at the STi.. haha... if i use the base 2.5i 4 door at $20695

down payment at 10500

monthly at 63.45 x 36

don't have an exact number for buyback but over estimating it at 12000 (based on the numbers the website gives me)

total would be ~24784.2

financing monthly payment = 386.18 x 36

total would be 24402.48

i just can't see the benefit... :dontknow::confused:
 

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what about km's restrictions when leasing.. could be a factor as well...
If you're planning on buying back, then it doesnt really matter.

I think most people that finance don't have all the money up front for the down payment and buy back. Like for me I could finance $700+ a month, but if you're telling me to put up 23 grand up front, I couldn't do it.
 

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Discussion Starter · #6 ·
haha.. okay my bad for using a $45k car as an example...

i dunno how to explain this anymore... it just seems like leasing isn't as bad as i had thought...
 

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Discussion Starter · #8 ·
okay let's try this again... $0 down for honda Si.. 48 months... according to honda website...
(forget what i said about honda before... hahaha)

lease = $373.57 / month
buyback = $13340
total = $31271.36

finance = $698.31 / month
total = 33518.88

so you pay more in advance AND more in total... just for the sake of being able to call it 'your' car for the 4 years??? okay lease is 1.5% and finance is 2.9%...

but if you use 36 months so that lease is still 1.5% and finance is 0.9%...

lease = $422.85 / month
buyback = $15474.40
total = $30697

finance = $890.34 / month
total = $32052.24

so STILL leasing is cheaper...
 

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Discussion Starter · #9 ·
Present value of money vs future value of money!
but either way you can put that difference in money away in a savings and just gain interest and still be better off... plus Future value is almost always less than Present so isn't it even better to pay later as in leasing??
 

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its cheaper if u have "buyback = $15474.40" at the end but if u finance that then its probably not cheaper?
 

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Discussion Starter · #12 ·
its cheaper if u have "buyback = $15474.40" at the end but if u finance that then its probably not cheaper?
yes... but over the course of time that you're financing the conventional way... if you had self control to put the difference in a savings or something... you'll end up getting interest on that value plus in the long run pay less in total...
 

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Discussion Starter · #13 ·
you have to add the $1000 you have to pay to take the car out of hte lot on a lease.. if you add that, you are even..
but my point is that even if you're even... you were still better off leasing cuz your money wasn't tied up for the 3-4 years...

anyone agree with me or am i totally missing something??
 

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^ that sounds reasonable. i think most ppl lease because they want to drive new cars every 2 to 3 years and not buy it after the lease is done.
 

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key assumption in either case is that you're saving the buy out. if factoring borrowing costs for the buyout amount (currently on a used car is 8.xx if you're lucky) there go your savings and now you;re making payments for 36 months plus whatever the financed buyback time frame (another 36??).

so total 72 months of car payments?

plus i got tired of my monthly car payment so i just paid it off within 27 months.
 

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Discussion Starter · #16 ·
key assumption in either case is that you're saving the buy out. if factoring borrowing costs for the buyout amount (currently on a used car is 8.xx if you're lucky) there go your savings and now you;re making payments for 36 months plus whatever the financed buyback time frame (another 36??).

so total 72 months of car payments?

plus i got tired of my monthly car payment so i just paid it off within 27 months.
but my argument is that if you can make the finance payment... you can definitely save the buyback value cuz the difference in payment makes up for that... plus you have the freedom to invest it or something...
 

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just ride ur fit for another year and ur STI will have depreciated by 10k next year lol
 

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Arent you guys forgetting the 13% tax on the buyback when choosing to lease. Either way whether you lease or finance depends on the rates for both. With the lease rate so low for new civics (1.5%) I chose to lease.
 
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