June 7, 2007

Re-Thinking Leases

In the 1980s, leasing a car was actually a smart investment move. You could actually MAKE money on a re-sale, because rising inflation caused your initial lock-in price to be a steal when you bought out your lease at the end. Since then, leases have turned into a financial joke, with common knowledge being that leasing is stupid. But, I was investigating some leasing opportunities the other day. I can lease a $25,000 car for 2 years for $5,000 total, including sign-on costs. Why is that such a bad deal? I get a new car every 2 years. The only way I lose is that if I buy, I could hope that after 10 years, my car is worth more than 0, which it probably would be. But, how much more? And is that a better value than getting a new car every 2 years?