EXACTLY! My boss, each lease, negotiated a good buy-back at the end, instead of the lowest monthly payment.

Lots of people I know took the "$299/month for 36/48 months" or whatever and got crushed at the end. The car wasn't worth what the buy-back was, and if they went over-mileage or damaged the car in anyway, they wound up paying through the nose.

First lease was my '96 t-bird, at just over $400 a month, for 2 years. Ford Red Carpet. $400*24=$9600. Car was $23K. $23K-$9K=14K. Buyback was $14K. Something like a $1K down or so. Loss? $1K?. Not a bad deal, actually, figuring interest over 2 years.

 

PLEASE! Depreciation is a very large item in a business tax statement. Writing off the entire cost of a $35-40,000 pick-up in one year, vs deducting the yearly lease payments is a no brainer. Also a lease on a financial statement is looked as a liability.

Kewat's paragraph stating "Lots of people I know took the "$299/month for 36/48 months" or whatever and got crushed at the end. The car wasn't worth what the buy-back was, and if they went over-mileage or damaged the car in anyway, they wound up paying through the nose" is the norm. People go upside down on those leased vehicals the minute they sign on the dotted line especially when the used market is dropping like it is...

His (Kewat's) experience with his T-Bird works out great. His buy out at $14k along with his added lease payments for 2 years make the final purchase cheaper than borrowing the money and buying the car outright...........But.......What if..... at the end of 2 years he was sick of the Bird and wanted out......and furthermore the marketplace would only value that vehical at $8k instead of $14k. Now he is upside down.

Be careful of leases. They are long term liabilities and obligations to pay, and do little to help your balance sheet, or add to your owner equity. Just ask any banker. Where they help is if a person is in a desperate cash situation and can't qualify for the loan or make the higher loan payments to buy the vehical outright, but can make the smaller monthly lease payments, but that is exactly the person that is facing andupside situation after completing the lease as his buy out probably will be higher than market value..Welcome to the upsidedown world of lease/finance.

And It doesn't take much of a head to figure that!

 

I've owned my truck for a little over a year now and not once have I been upside down in the payment/vehicle worth department. I paid 26,700 for the truck (which was 6 k below book price, nothing more than a good deal, no fantastic, but good), laid down 3k so I ended up with a 24k loan, he!!, after a year of payments the truck is at a min. 24K, more like 25-26K and I am down under 20k in my payment book, so I now have 6k of equity and it only cost me 3k out of pocket. tell me how much down you had to put on those leases, I no back a few years it wasn't much but now they area getting a little greedy. on top of this that 96 tbird was costing 400+ per month and I'm only paying $450 to have a lot more vehicle.

I did have a couple of advantages, 1st I bought the truck as a 1 year old used truck so I let somebody else eat the big initial depreciation. 2nd I got a good deal considering the 3k of wheels tires, chrome and extras that somebody already put on and got nothing when selling the truck to me. all those goodies do nothing for the resale price except help make the truck look a little more apealing. the last advantage I have is I own 3 vehicles, my wifes car, my work car (good gas mileage old peice of junk I paid $350 for), and of course my SD. since I only use the Sd when I need a truck or for the pur enjoyment of driving it I only put on about 6K per year, this helps on the deprieciation side. I bought the truck with 21,500 on the ticker and it just turned 27k about a week ago. I'll still get a full 2 years of warrenty from my purchace date (now down to a year) but I personally like buying vehicles this way, heck I just looked at trading for a new one a few weeks ago and they offerd me 22k on trade site unseen so I know for fact I could have gotten another 1-2K out of them so in the worst case senario I still have 3-4K of equity which is no more than mydown payment and I'll own the vehicle in a few years. to all there own but this way of vehicle purchacing sure seem attractive!!

 

As long as the car is in good condition and under-mileage, no problems, give it back, who cares what it's worth? It's the bank's problem if they can't get $14K for it at auction.

Actually, my '97 Cougar was almost the same thing, except 36 months. Buy back at the end was $11K, the bank OFFERED ME a loan for $9500 because "we couldn't get that at auction anyway" - I neglected to mention it only had 9K miles on it, otherwise that offer would have never happened

I don't do the books for the business. If my partner/boss wanted it this way, that's the best way (for him) to go.

Again, I ain't saying leases are for everyone, but they do make sense sometimes.

 

purchased at 48 months. cant lease a used truck,

 

PLEASE!!!! Not everyone that leases is doing it for a business.

Are you honestly saying that a purchase is NOT a liability??? In all actuality, the lease number on a spread sheet WILL be lower than the FULL financed amount. You are only responsible for the total of payments.


What part of "upside down" don't you understand? If you bought both vehicles at the same price.......they will depreciate the same. If you are upside down at the end of a 3 year lease...........YOU WALK!!!!! If you're upside down in 3 years of a 5 year purchase..........What do you do???

I'll agree about being careful about long term liabilities.............THAT WOULD BE THE 5 or 6 YEAR BUY...........not the 24/36 month lease.

 

Why are you bring a used truck purchase into a "Lease vs Purchase" thread?

Just curious.

 

Not to get my only supporter upset..........

Back in the day, I'd get my residual up as high as it possibly could be. Which in turn would lower the payment..............I knew I wasn't keeping the car anyway, might as well have the lowest payment possible.

Most notable leases for me;

'93Taurus SHO...........$299 a month for 24 months!!! Car stickered for $25,000

'95 F150 4WD........residulized the lift kit, tires, wheels etc....$400 payment @36 months. Swapped the lift back to stock, dropped the truck off. (so much for not being able to mod your leased vehicle) FYI, I still have the WELD rims on my early Bronco from that leased F150!!!

'02 Lexus ES 300.....$600 @ 36 (would have been closer to $800 on a buy) traded it in on the Marauder with a year left on the lease.