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Re: bmw-digest V5 #222

> 
> Jerry Stadulis wrote:
> 
> Barthe wrote:
> 
>  > While I do not advocate the leasing of vehicles as I believe that
>  > leasing is not very cost effective.  If you really wanted an Audi
>  > I would highly recommend you lease the car in order to make a
>  > clean get away in two to three years if things such as resale
>  > value are important to you.
> 
> I don't think leasing alone can compensate for poor resale value.  If the
> lessor knows the car will depreciate badly, you can bet the cost of the
> depreciation will be included in the cost of the lease.  Otherwise, the
> lessor would take a bath when you turn the car in.  The only way you
> would have the advantage is if the lessor is ignorant and/or overestimates
> the future resale value of the car.
> 

In a lease contract, your lease payments is determined based on the
difference between the car's current market value and the estimated
market value of the car at the end of the lease term.  The greater the
difference, the greater will be your lease payments.  Therefore, it is
not an advantage to lease a car that is subject to high depreciation. 
On the contrary, if you do not buy the car at the end of the lease term,
say, 3-5 years, you have paid for the accelerated depreciation with
nothing to show for it.  Hence, it is actually a disadvantage to lease a
car that you don't intend to purchase, if that car is subject to high
depreciation.

Steve C. Young