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Leasing vs. buying, and resale.....(long)
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Posted by Mike Lynch [Email] (#81) [Profile/Gallery] (more from Mike Lynch) on Tue, 1 Oct 2002 20:22:21 Share Post by Email
In Reply to: how many of you are buying your Saab?, Scott Hanson, Tue, 1 Oct 2002 16:06:51
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No right answer here for everybody, just generalities skewed by Saab.

The more expensive the car the more popular leasing is, as in order to afford the more expensive car, the better understanding of the value of a dollar and it's other uses other than holding a depreciating asset.

Normally leasing or buying cost the same in the long run for any given time period. Saab Fiancial, GMAC, Chase or whomever will all sell or lease you a car. Smaller payments for the lease, less equity (if any) gained, but for the same period of time, the total costs are about the same, usually.

EXCEPT WITH SAAB. Saab stacks lease incentives, although somewhat less than purchase incentives, with a subvented or low lease rate. Where as the low finance rates aren't availible in combination with any incentive, it's rate or incentive, with a Saab lease you get both. So on a $30-40k car the deferred payment price on a Saab can be a couple of thousand less for the lease and you'll have lower payments along the way.

This is only valid if monthly payments make a difference to you. Saab owners have very high demographics, they can afford any car. So the subtleties of leasing may not matter.

Leasing does take the mystery out of resale. The trade in value is already established at lease inception. Even if you plan on keeping your car longer than the lease term, you could lease and then purchase it at the end of the lease, or not, depending on your experience with the vehicle and your life. One disadvantage of leasing is that you will have to do something, buy your car or a different car, at the end of the lease. You can't just make the last payment and do nothing as on a finance deal.

Saab resale value has been upgraded to average by Consumer Reports, a conclusion I agree with as the other cars on our lot, Cadillacs, Buicks, and Olds do alot worse. Especially when you consider the huge incentives on Saabs and that the actual selling prices are far below MSRP. 50% depreciation in the first 3-4 years is normal on any vehicle. 10% better resale in the first 3-4 years isn't a better deal when the equivalent vehicle costs 20% more, what I call German arithmetic. And Saab combines competitive lease payments with low residuals, that is pay less per month for a Saab and buy it at the end of the lease for substantially less too.

Leasing is not well understood by general public. So I suppose that's why there's alot of postings about leasing on these BB's. It's easier to get in over your head with a lease, but my family motto is "A man who lives within his means, shows a lack of imagination."

Saab and GM aren't consistent though. Different programs on different models at different times, it can be really difficult to navigate through the best "deal". The 0% that just expired, skewed the deals again. But ultimately it's not what you pay, it's how happy you are with your purchase/lease. And we all love our Saabs!

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