A line from a short-lived cable TV series offered some advice to young pro athletes that was truly offensive but factual … if one can drive it, fly it, float it, or (fornicate with) it, don’t buy it, just borrow it for a while then give back (to the owner? to the streets?) when done.

So cars, jets, boats, and women, basically, are considered recreational items only, not to be purchased and kept, but borrowed and used then returned.

We, as a species, are the problem.

Anyhoo, to corral these random cats, Mr. Edelman poses the question of whether it is better to buy or lease a vehicle, because public transportation in this country is intentionally awful … buses, trains, bicycling … all discouraged because the profit margins are too thin.

Nice.

The example given is purchase price, financing charges, and maintenance costs are all incurred when buying a vehicle, whereas only the financing charges and minor costs re maintenance are included in the lease. 

Leasing > Buying IF
              drive less/low annual miles AND
                             like to switch cars every few years AND
                                           ok with perpetual car payments … otherwise better/smarter to buy

Dealerships like leases because they, in effect, get to sell the car twice.  The consumer rents a vehicle for a period of time then gives it back, with nothing to show for the expense except a history of convenience. 

Typically, lease payments are way lower than purchase payments because the vehicle is expected to have some residual value at the end of the lease. 

The lease payment is based on the residual value, or the dealer’s hope&dream for the likely purchase price for the vehicle at the end of the lease, and the higher the residual value (think: luxury cars) the lower the lease payment. 

Few cautious takeaways when leasing:
       1.    Gap insurance, or the difference between the residual value and market value
(works the same way in a purchase; wreck the car but insurance will only pay market value?  Gap insurance covers the difference between the balance due and the value of the car)
       2.    Avoid the cap(italization) cost reduction
(like a down payment on a car, the cap cost is a lump sum paid at the beginning of the lease to secure lower monthly payments BUT since do not own/not buying the car, kinda pointless)
       3.    Rent the options
(some leases will offer an initial lease price then try to get the lessee to actually purchase options like an upgraded sound system, higher-end wheels, fancier floor mats, etc. … but those items get returned with the car.  Better idea?  Negotiate those items as part of the overall lease price and rent the upgrades along with the ride)
       4.    Lease only for length of the warranty
(if a two-year warranty, then two-year lease … four-year warranty, then four-year lease … otherwise, if lease extends beyond the warranty period, could get stuck paying for costly repairs on an unowned vehicle that ultimately must be returned/purchased for residual value = +$$$)

Everything over here is owned outright, which is a major flex. 

Methinks life without a car payment is fairly sweet BUT with vehicle age comes more maintenance costs.  Mestillthinks better than a newer car with fewer probs … rather just drop in the shop for the occasional repair … but YMMV (hah!)