Originally Posted by
BimmerBreaker
Yeah, you can buy it at the end of the lease for the residual value. If you buy you finance 100% of the vehicle cost. Lets say 5% interest. So your total cost is the vehicle - lets say $100K for easy math, and 5% interest. Total when bought = $105K When you lease, you pay the amount of value the car depreciates from new until the lease is up, lets say it was a 100K car new, its worth 70K at the end of the lease. The three years you lease it you pay the 30K difference. But you can't buy it for 70K at the end of the lease. When you go to buy it you'll pay 80K and then you'll be financing the 80K. So thats 4K interest off the $80k plus the $30k you already paid Total when leased then purchased = $114K Thats how the numbers end up although in the real world they get to those numbers in a slightly different way but the concept is the same. If you buy a car based on the payments you are a sucker; exactly the kind the dealership wants on their showroom because thats exactly the kind of person they make money on. I know because I used to work at a car dealership. Thats also why I know leases are a terrible deal. Can't count how many people came in to buy out their lease after the 3 year period, only to realize that after all the various insundry fees and everything that if they bought it they'd end up paying the equivalent of $50k for a base model Honda Element... when they could have paid $30k new. The $9k price difference I illustrate above is in all likelihood a fraction of the real price difference you'd experience if you leased vs. bought and took into account all the related fees and costs. You should ask yourself this types of question in these types of situations to help you realize the predicament here: If it was cheaper to lease, why would ANYONE buy?
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