metroplex

I was reviewing this article:
http://www.edmunds.com/advice/leasin...9/article.html

and while it seems that buying a vehicle outright (not financing) seems economical based on bottom line figures, the author didn't seem to include the time value of money with leasing. Wouldn't the actual cost of leasing be less if you have enough money to keep it in the bank (generating interest at 3-4% APY) while paying the monthly payments?

My calculations show that for an average $28,000 car, after a 36 month lease I'd still have less than $10,000 in the bank with 4% APY interest compounded quarterly. Essentially, leasing when you could afford to buy the car outright. Am I missing something? I've never leased a car before but I drive only 3000-6000 miles a year and co-workers are telling me that I'm crazy to not consider leasing.

Von Bek

Eh, I just have a problem paying all that money and then giving the car back. I don't rent my condo, I don't want to rent my car.

metroplex

Yep, after doing an analysis for a 6 year period using a car with a $28k MSRP, leasing 2 cars for 36 months each would result in paying about $40k out of pocket. Buying the same car for 6 years (not financing it) and then selling for residual value resulted in paying $27k out of pocket. If you were to buy it for 0% APR for x-months, then you'd pay less if you're re-investing the remaining payment in a bank account. Bottom line is that I ended up with the same conclusion as the article.