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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]People (other than business owners) who lease cars like to waste money[/quote]
Not really. Or at all.

People who buy new cars outright pay the lease too. Only for them it's called depreciation and comes out of their net worth instead of their income. Leasers pay the depreciation too and have the benefit of tens of thousands of dollars being tied up in  a depreciating, non productive asset.

There are a[b] lot[/b] of people, here especially who really have no clue about finance (you included)[/quote]

Your math falls apart once I own the vehicle outright and you're still paying for a car you'll never own.[/quote]

Hint: your asset has lost half of it's value and will continue to lose value until its only value is as scrap metal. Not paying it as a lease so all right though   :roll:

[/quote]

Strange place for an eyeroll, given that you don't even have an asset in this scenario.  But sure, feel superior to PP because the depreciating asset that they own is losing value, while the depreciating asset that you rent is also losing value.  Makes sense.[/quote]

Nope, wrong again

I invested the price of pp's car. Worth 4 times that now. [/quote]

So the cost of your lease is ... free?  Yes, that's probably a good deal.  It's also a lie, but okay.  You're not just spending the money PP spend on his car, you continue to spend it when PP's loan is paid off and you're on to your next lease.[/quote]

OK, I'll explain very slowly for you

PP has $50,000. PP brought a car with it. 10 years later it's worth $20,000 (a charitable amount). $30,000 loss
[b]I had $50,000. I invested it. 10 years later it has grown to $103,052. Lease payments $65,000. I'm ahead $37,000.[/b]

I'll continue to be ahead of PP forever because I chose to take advantage of compounding and because I bothered to look at opportunity costs instead of parroting advice from a personal finance book from 30 year ago that was written for people with 1/10 of my income.[/quote]

You can't "take advantage of compounding" by putting $50k in the market and immediately, and monthly, drawing down from it.  Also you don't get to credit yourself the value of ten years of compounding on $50k and then take imaginary lease payments out of the backend like you drove the car for free for a decade while compounding gains and can then pay out of capital gains after you've made 10 years of gains.

In the more traditional scenario, PP makes payments for 4 years, and then has 6 years to invest more than you're investing because their car payment has ended and *you're still making lease payments.*  Meanwhile you have the option to invest the delta between a lease and car payment, which gives you more money for the market than PP in the first 4 years and significantly less money than PP to invest in the next 6 years.[/quote]

I didn't draw from the investment  :roll: I paid it out of my income. Maybe in your "traditional scenario" (no one I know takes it) may have a few thousand more dollars, would it realllly be worth it though? Especially if you are a high income earner the difference is academic anyway[/quote]

in your original example you are counting  gains on the 50k that the PP used to buy the car, but not accounting for the gains the PP would make if investing your monthly lease payment (which they do not have) for  10 years.  So say you have 50k, you buy the car outright instead of leasing.  Then you invest  monthly the $500 that you now have as “extra” since you have no lease payment. This will also yield ~$100,000. And you have a car worth 20k as well.[/quote]

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