We find it amazing that financial analysts persist in making blanket statements that the best way to finance a car is to buy and not to lease. For a portion of the population, this is true, but as far as blanket statements go, this advice is incomplete.
Obviously, we are advocates for leasing, and we promote it heavily. Never, however, would we insist that this is the only option, and that you should not consider other alternatives. That would be irresponsible.
Why Our Advice is Different?
We consider the “human factor” when dispensing our advice. Financial analysts who suggest that buying/financing is the only feasible option are looking at the numbers in a “Wind Tunnel” meaning controlled environments, not a real-world environment.
Wind Tunnel Analogy
No one who knows anything about vehicles ever takes seriously the manufacturer fuel efficiency ratings. Why? Because this analysis is recorded outside of the real world. In the real world, you will have variations in
- Weather conditions
- Wind speed and direction
- Traffic conditions
- Weight loads
in your vehicle use. All these factors will cause you to experience different results than the controlled “wind tunnel” manufacturer results.
Same with the “controlled” financial projections. Not everyone entering a 60-month finance contract will finish that contract in its entirety. Life gets in the way; everyone is subject to experience changes in
- Family dynamics
- Work commutes
- Model dependability
not to mention contract interruptions due to
- Total loss accident
that routinely occurs. Any of these factors will necessitate an early termination of the 60-month contract and essentially puts you into the “lease category” even though that was not your intention.
We know from decades of experience that less than 50% of the people that enter 60-month finance contracts will reach the end, therefore, it is our position that if you are paying attention to the national ownership averages it will be worth your while to consider setting up a shorter commitment. This can only be a financially feasible option by using a lease product — and not just any lease product. You must know what you are agreeing to.