Seven Minute Video comparing leasing with buying.
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Examples of People Who SHOULDN'T Lease
|What's that rattling noise? It's the sound of all those coins in my pocket that I saved by driving an old hoopty!|
Leasing Benefits for Everybody Else:
Here is Blue crunching some numbers on leasing and buying.
Why don't even more people lease?
The biggest objection most folks have to leasing is that they don't understand it. People tend to fear and avoid things they don't understand, especially when they are in an uncomfortable environment (such as a typical showroom). Here's a quick contrast example between financing and leasing a $20,000 Subaru for a 60-month loan and a 36-month lease:
| \ Bank collects all $20,000
| / from you over 60 months,
$0 / plus interest
$20,000 \ Bank collects $8,000
| \ from you over 36 months,
(residual) \ plus
Monthly payment: $260
When you get a $20,000 loan, the bank pays
us $20,000 for your car and keeps your title
until you pay off the entire $20,000, plus interest.
When you lease, the bank also pays us $20,000, and keeps the title. What's the difference? With a loan, the bank wants back 100% of the $20,000, plus interest. With a lease, the bank only wants you to pay $8000 plus interest (the difference between $20,000 and the residual of $12,000. The "residual" is the pre-determined value of the lease vehicle after 36 months).
Common Misconceptions about Leasing