Date: Tue, 22 Feb 2000 18:19:06 -0500
From: "James H. E. Maugham" <>
Subject: Re: leasing a saab

"Kalman Rubinson" <> wrote in message news:vLys4.11$ > qqq <qqqnopsamcom> wrote: > > I don't mean to jump into this discussion when I wasn't part of it, but I > > just wanted to correct this leasing explanation. > > > Actually, what happens in a lease is the leasing company decides how much > > the car will be worth in a given period of time. For example, you lease a > > 30,000 (the capitalized cost) car for three years, they may decide that > > after three years the car will be worth 15,000 (the residual value). > > > So, now you're responsible to pay 15,000 for your "rental" of the car, plus > > interest (money factor in lease terms). So, you're essentially financing > > 15,000 over three years, instead of say, 30,000 over five years. > > Actually, you are still financing $30K over 3 years but only amortising $15K. > Does anyone think the bank is letting you 'borrow' the other half of the value without > paying interest? Not in a lease. You, the person leasing the car, are only concerned with the difference pre-determined by the leasing company between what they paid for the car and what it will be worth at the end of the lease. There are many variables involved in leasing, from how much the car actually costs, to the mileage allowed annually before punitive charges are levied. Some leasing companies use the MSRP as the starting point for leases. Others aggressively shop for the best price and base the lease on the actual price paid, hoping to therefore offer a better lease rate. Your explanation pertains more to the leasing company or a vehicle purchase than a person leasing a vehicle. Regards, James

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