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Comment by tatsuke95 | Hacker News Reader

>"Whoa. Why so many on leases?"

Because leasing is a pretty efficient system that can be economically superior to buying an asset that depreciates like mad the instant you sign the papers?

Leasing isn't reserved for people who can't afford to buy a car, just like renting isn't reserved for people who can't afford to buy a home.

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Even more fun is when you buy a car for $17k cash new, 11 years later it's still "worth" north of $4k, but you own it outright, it's reliable and doesn't break down, and costs you basically gas (money/miles) + oil changes to operate it and statistically for the make and model has about another 80k miles before it's expected to start needed expensive repairs. At my rate that's 8-10 more years.

What car is worth 25% 11 years later? Honda civic?

don't know why you got downvoted, but yeah, I drive the most humdrum Honda civic imaginable. Other than tires, brakes and oil, the only thing I've had to fix was a $100 air mix sensor that broke after 10 years.

I do wish I drove a nicer car, but then I remember that extra trip to Europe or Asia I take every year instead and it more than makes up for it.

I seem to get downvoted all the time here though. :-/

I buy cash nice german cars that are three or four years old: that's during these years that they lose the most of their value.

Low mileage and I know they're good to go for at least 50k miles or so with only oil and tire change.

Then I resell them and rince and repeat.

Very good bang for the bucks.

You can probably score a just out of lease 3 series BMW for what, $18k (i.e. a new mid-level civic)? Get it certified for maybe $22k? And drive it for 4 or 5 years, it'll still be worth maybe $10-12k? So really your out of pocket expense is only about $10k once you kick start it.

It's not a bad idea, and the 3 series are pretty dependable.

Leasing might beat buying new, but if you buy used the depreciation works in your favor.

You can write off leases as a business expense. You have to track depreciation and many other things, if you buy it outright. Leases go right into monthly expenses and reduce your taxes immediately.

I agree I worked for companies who had the expense budget but not the purchase budget. So I suggested they lease their PCs instead of buying them, store all data on a server, and every three years get new leased PCs. It saved them money and gave them a tax break. Every three years technology changes anyway and instead of buying new PCs they just return the old leased ones and buy new leased ones.

The PCs companies leased, usually get sold very cheap by a liquidator. Then companies and people on a limited budget can buy the used PCs.

Cars are basically the same way.

I have doubts about depreciation playing any significant role here (Edit: in profitability of lease vs buy.) No free lunches - who covers the depreciation when you lease?

You do. That's what you are paying for in a lease, the depreciation that occurs over the term of the lease, plus interest and whatever other spread the finance company/manufacturer/dealership takes. They sell the car at the lease end for the value of the car less the depreciation you "used".

Lease/buy in an efficient market should be equally profitable. Most of the lease benefits are from taxes.

What about wear and tear charges at the end of the lease?

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