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Lease-Buy?
Which is Better?
Every
article or book I've ever read about leasing addresses the question, "Is it
better to lease or buy?" Although the authors often go into great financial
detail and rigorous analysis, the answers are always the same-though often
presented with a slant that reflects the author's particular viewpoint.
Let's simplify the answers
and summarize them here: 
- The monthly cost of leasing
is always less than the cost of buying. For the same car, same price, same
term, and same down payment, monthly lease expenses will always be 30%-60%
lower than loan payments. That's a fact.
- The short-term cost of
leasing is about the same as the cost of buying. The total cost of leasing
compared to buying, over the same lease/loan term, is approximately the same,
more or less, assuming you sell your vehicle at the end of the loan. Comparisons
sometimes show buying to cost a little less due to fewer fees and the assumption
that a purchased vehicle will return full market value if it were sold or
traded (often a bad assumption). However, if you factor in the benefits of
wisely investing your monthly lease savings, the gross cost of leasing can
easily be less than buying.
- The long-term cost of
leasing is always more than the cost of buying, assuming the buyer keeps his
vehicles. If a buyer keeps her car after her loan has been paid off and drives
it for many more years, she spreads her cost over a longer term. It doesn't
take rocket science to figure out that the cost of leasing five different
cars, on two-year leases, over a period of 10 years, is greater than the cost
of buying one car and driving it for 10 years. If long-term financial benefits
were your only interests in acquiring a new car, you would always choose to
buy, preferably with hard cash, and keep the car for years. more
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