Lease VS Buy A Car Always Lease It First And Save Money

Lease VS Buy A Car, Always Lease It First And Save Money
By Ralph Hoffmann

Lease a Car First and Buy it Later
Save lots of money. Analysis about buying or leasing a new car isn't necessary as long as cars are a glut on the market.

To own any car for the least possible price and dread doing a lease vs. buy analyses, don't buy the car; lease it then buy it later and save a lot of money.

Exploit the Glut of Cars for Sale
As long as car production is greater than consumption, and big discounts are available for several years to come, just read the market trends and lease it first and ignore all those lease vs. buy programs.

In the past, car manufacturers moved cars by subsidizing leases. The monthly lease cost was lowered by increasing the residual value, which lowered the monthly lease payment, thereby selling (leasing) more cars.

Lease Residual Values are Inflated in your Favor
But the value of the vehicle at the end of the lease was almost always less than the contracted residual and each of the off-lease cars then had to be sold in the wholesale market at a loss of several thousand dollars.

Some of the big backers of lease financing, Chrysler, some New York banks, and others, each lost several hundred million dollars in each of the past two or three years because they had to sell the off-lease cars on the open market for less than the residual value.

Take Advantage of Too Many Cars for Sale
Therefore the buy or lease a new car decision is moot as long as manufacturers are subsidizing leases because they have too many cars to sell; a one-time opportunity is present, namely:, lease it now and buy it at a discount the end of the lease and save thousands of dollars.

Having to make a lease vs. buy decision is no longer necessary as long as supply exceeds demand and the old rules are now dictated by a surplus of cars< on the market, this is the time of opportunity for an car buyer.

Compounding the problem for the heavily unionized manufacturers is that their labor contracts are so juicy that those car manufacturers are better off continuing to give away cars rather than to close a plant and pay unaffordable health and welfare and pension benefits to laid off employees.

This Opportunity will only last for Two or Three more Years.
This situation will not change for several years until consolidation, plant closings, or bankruptcies have cured the problem. until the. Plant closings will be a last resort.

Therefore the glut of new cars will likely continue for a few years. Now is the prime time to consider taking advantage of a declining resale value of most cars. The subsidized lease will continue to be offered

Should I Buy or Lease a New Car
By initially leasing a car, the maker is essentially offering a price that cant be beaten. It may actually approach or be lower than the employee cost widely advertised. Then buy the car at the end of the lease.

At the end of the car lease the company financially backing the lease most likely will sell the car on the open market at a loss. Why not intervene at that point and buy the car for less than the residual value and put that loss into your pocket as money saved?

Check out your Car's Used Car Value Prior to Lease End
About three months before the end of the lease, cruise the used car lots and notice what your car is being offered at. Note tha the used carprice is always higher than the resiudal value to allow for dealr costs and profit. A ten percent cushion is not unreasonable.

Then compare the asking price on the used car lot with the residual value in your lease contract. The residual value may be larger than the asking price for a similar model on the used car lot. That means that the company owning your leased car will have to sell it at a loss when you turn it in.

Now you put in the knife and buy the car (no commissions paid to anyone on this transaction) at the end of the Lease and keep several thousand dollars in your pocket.

Bypass the Dealer to make your Buyout Offer
From your dealer, get the phone number of the company that owns the car you leased. Call them and offer to buy your leased car for the asking price on the used car lot less about 10% at least.

If they object, point out that they will have to sell the car at a loss because the residual value is more than what the car is worth on the used car lot. They know that, but hate to admit it.

So lease the car of your dreams today and forget about excess mileage charges.

A true-life example
A business friend of mine had a three-year-old leased car with a contract residual value of $28,000. Looking at the used car lot he found he could buy one just like it for $24,000. He assumed the company that financed the lease would loose at least $2,000 in selling it for less than the contracted residual value.

Through the dealer he offered $22,000 to buy the car as is and his offer was promptly accepted, including 3%, 3 year financing. His dealings, all by phone (no face to face negotiations needed) were with the company financing the lease. To buy any car, or Van or SUV or Light truck, by all means consider the idea of lease vs. buy as your answer.

Ralph writes automotive articles for people wanting to save money when leasing or buying a new car. Visit his web site on this subject at Lease vs Buy a Car or get Tips on Leasing or Buying Car or on Do-it-Yourself projects at DIY Repair Guide

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