Quote:
Originally Posted by Ace01
Buying a new car is like burning money. You take a 25% hit right when you drive it off the lot. Better off leasing and the let the lease company take the hit at the end of the lease.
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Not sure I follow. The same depreciation happens when you lease as well and that is exactly what you pay for in a lease plus the interest (money factor) to the bank. For example, you buy a Camaro for 40k, the residual value after 36 months is 25k so you need to pay for the 15k plus interest and tax over the term. So there is no hit the bank. The hit is on the person paying the lease payments. The banks that figure the residual values typically use companies like AIG that are in the business of forecasting residual values of vehicles. Even if the market for a car tanks the banks usually have gap insurance to protect themselves anyway.