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post #3 of (permalink) Old 01-14-2004, 02:31 AM
Le Mans: GT Class
Join Date: Dec 2003
Location: Calgary, AB Canada
Posts: 882
Leasing: Pros and Cons

Well I lease and even though I don't use it as a tax write off I enjoy the flexibility it gives me. Knowing how I am in that I am a fickle car owner (I never own cars for more than 3 years on average it seems) leasing made sense. Since I knew that I would be changing cars regularly I picked up my last three cars through a lease.

The nice things about leases.

1. Lower payments. For instance in my case my car would have been $550cdn per month or so to finance over 5 years. My lease is currently only $438+Tax per month

2. You only pay tax on the amount you pay per month. Because of this you only pay for the taxes on the car you "buy/rent" which is typically around 50%

3. If you decide at the end you don't like the car or want something else you simply hand the keys back to the dealer. If you own the car you are generally stuck with worrying about trade in value or having to sell it privately, which I hate.

4. If you do own a business or work in a profession such as sales you can write off a portion of your lease costs as expenses and get a tax break on that.

Now for the cons.

1. You never really own the car. You can in most leases excercise a buyout option (at any time you like though you may incur penalties if it's early). You could pay for the car with cash or finance out the balance. In my case I determined that I would pay the same amount to finance out my remaining balance of my Protege5 over 3 years that I would leasing a new vehicle. So basically since I was doubtfull I'd want the Pro5 for a total 6 years I dumped the PRo5 and got the 3 and my payments only bumped up a slight bit (mainly because the 3 is more expensive a car). If I had bought it out though I would have had about 55% of the car balance left which was a little less than what the car was worth (The car was currently worth $1500 more in trade than the lease balance).

2. doing mods is hard to do. If you lease and plan to turn in your car it's often impossible or difficult to do any drastic mods to your car. For instance bolting on body kits would be a big no no. Basically anything that cosmetically alters your car (outside of regular accessories) is considered bad. You can do performance mods but don't do any that are drastic or non reversible since you'll just be really throwing money away at that point in time.

3. As cited you are required to have a minimum insurance level on a leased car. In my case the insurance requirements were actually a smidge less than what I have by default for the last 6 years anyways so it didn't affect me.

Now rather than putting money into a car I wouldn't want I can simply continue to rent the vehicles I want for the time being. Is it necessarily the fiscal way to go? Probably not but a car is rarely ever an investment, you'll always loose money so whether you throw it away now or then is up to you. Perhaps when I get a bit older and more likely to stick with a car long term (or get a Mustang or Lightning) then I might purchase because I will probably enjoy and modify those vehicles. For now the 3 is a great car and I'll enjoy it a lot. I'll do some minor mods that I can reverse easily and enjoy my $120 smaller payments every month which I can use for insurance, gas and taking my wife out to dinner.

2004 Velocity Red Mazda 3 Sport GT
Auto, Air, Sunroof
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