Leasing makes more sense if one does not want the burden of upkeep, and also the opportuity for a new model every three years or so. Woth the rate of new models appearing so often, why should one get stcuk with something obsolete and out of trend after a few months of ownership? The mpth;uy rate are much the same as installments towards owneership. Now, if one were to facotr in the depreciation of the car (higher for somem high - end models), then it make more sense to lease a car. And some models may be difficault to dispose of after a while. Obviously the intangible value of the car is quite difficult to count (sentiumental, purists value) but this again is personal (eg. some people value a DeLorean as priceless, but to others, it is a piece of junk., just like a DeTomas Pantera) Owning a home is different. The value of the land it sits on is likely to hold its own, even in recession or inflationary times).
Am now in Toronto for short break.
Cheers!
Leasing is for those who want to drive a NEW car that they cannot afford and plan to change to NEW models every 1-3 years.
The comparison between owning vs leasing is usually made between getting a loan for a NEW car vs leasing a NEW car. However if you buy a 2nd hand car that has already had the bigger hit of depreciation, the numbers may convince you otherwise. Of course if the desire is to always be driving a NEW car aged 1-2 years old then of course leasing makes sense. However bear in mind that those monthly leasing fees with the higher interest rates will be forever.
http://www.consumerreports.org/cro/2012/12/buying-vs-leasing-basics/index.htm
Understanding leasing
To decide whether or not to lease your new car, it’s important to understand how the financial mechanics of leasing compare with a loan. In some ways, leasing is just like taking out a loan. When you lease, you borrow the entire value of the car (minus any trade-in or down payment). For example, when you drive away in a $36,000 leased vehicle, you’re immediately tying up the entire $36,000 that the finance company gave the dealership, the same as if you had bought the car with a loan. And just as with a loan, you’ll be charged monthly interest on that amount, minus what*ever you pay back along the way.
And it’s the amount you pay back that’s the biggest difference between a lease and a loan.
With a loan, your payments are based on the entire cost of the vehicle. For a 36-month loan on that $36,000 car, for example, the principal por*tion of the payment averages $1,000 a month. But with a lease, you pay back only the vehicle’s decline in value—the depreciation—while you’re using it.
Since that $36,000 vehicle might depreciate about $18,000 over that same 36 months, the principal portion of the monthly lease payment would be based on $500, about half as much as for the loan. Of course, at the end of the lease, you have to return the car (unless you come up with the remaining $18,000 of the residual value to buy it).
Note that in both cases, the net principal you pay back is $18,000.
Add finance charges
In addition to the principal portion of the payment, there are also finance charges, the interest rate to borrow money. These are much higher for a lease because you’re paying back the cost of a leased car more slowly, $500 a month compared to $1,000 with a loan. That leaves a greater unpaid balance that’s subject to that finance charge month after month.
Put another way, in exchange for those lower monthly payments that come with a lease, you pay significantly higher finance charges compared to an equivalent loan, about $1,435 more for that $36,000 car. That additional cost would be partly offset by the sales tax break lessees get in most states. Also, lessees can invest the extra amount that otherwise would go toward a monthly loan payment.
Taken together, those benefits might offset the higher lease finance charges. But even then, lessees often have to contend with various fees and other extra costs, including lease initiation and disposal fees, which can add hundreds more to the total cost.
All these additional costs are multiplied if you keep leasing whenever your old lease runs out, although some may be waived through lease-loyalty programs
