When it comes to financing cars, there are two kinds of people: Those who lease cars and those who have never tried it. I have leased over a dozen cars in the last 25 years and not once have I experienced any justification for some of the bad reputation car leasing receives from non-leasing car owners. Personally, I love to lease cars. However, it never fails; if I even bring car leasing up to a non-leasing car owner, he/she will usually scoff at the mere mention of the term and act as though I am infected with the flu or plague. Unarmed of any facts, experience or knowledge, these leasing skeptics will spread lies and misinformation to friends and relatives who are shopping for cars. Sadly, these people will take their advice and dismiss leasing as a bad car financing option before they’ve ever had a chance to learn about and consider it. I realize that leasing isn’t for everyone. There are certainly situations when it doesn’t make sense to lease cars, but there is a significant percentage of the car-buying population where car leasing is a viable and attractive option if they can get past some of the myths of the detractors, then educate themselves about how it really might make sense for them.
Car Leasing is Car Fleecing
“Yikes. Don’t lease a car, you’ll get fleeced!” I’ve heard the panic in the voices of many people who have never leased a car in their lives about how dangerous and risky it is to lease a car. There is one thing that distinguishes these car-leasing, horror-story mongers. They have never leased a car before. It only makes sense, that those who have never tried something are only going to know and remember the worst things they’ve ever been told about it. While my boss was visiting from out of town a couple of years ago and we were walking out to my car to drive to lunch, he commented on how new my car looked. When I informed him that it was actually three years old and I would be turning in the lease soon, he said, “Oh, you leased! Car Leasing is Car Fleecing” I asked him why he thought that, to which he had no answer. He had never leased a car before, and was just repeating what he had been told by other people who had never leased cars before. The reality of car leasing is simple, it’s a financing option, just as buying a car is a financing option. There is the possibility you can get fleeced whether you buy a new car or lease a new car. In fact, I would say the odds are slightly greater of getting fleeced if you buy a used car due to the uncertainty of the car’s condition and potential lack of warranty. When you lease a new car every 3-4 years with a warranty, you can be certain you won’t be paying expensive repair costs. Leasing is only fleecing if you make a bad deal. You have to watch out for the same thing when you buy a car, particularly a used one.
My Accountant Says Leasing is Bad
It amazes me how many of us take take our advice from those in the wrong occupation. While, being an account makes you good at counting money, it doesn’t make you an expert in financial advice or planning. On the other hand, there are a few things an accountant must know about car leasing: One, is that it does offer some tax benefits for business purposes. Two, a car is the most depreciating asset you will ever buy. The typical car loses 50% of its value in just 3 years; over 60% in 5 years. So, the $30,000 car you bought is worth only $12,000 in five years, which is typically the amount of time it took for you to pay off the loan, assuming you’re among the majority of Americans who cannot afford to pay cash for a new car. ...
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