Quote:
Originally Posted by quakerroatmeal
Is it even possible to make out with profit/cash on a lease? Even if the car is worth more during turn in time? Isn't it basically a rental unless you purchase it out right at the end of lease?
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I agree with many of the salient points/notions you mentioned above.
Well I think there is 2 perspectives in this situation. At the end of a lease, if your car is worth more than the residual value of the car (aka what you owe on it), you can opt to sell it for a higher price as opposed to turning it back in. Then just pay off the residual amount and you get to keep the difference. Now there are new rules in place that make this process a little harder - for instance, BMW financial may make you outright buy the car first, before allowing you to flip it.
The notion of a rental is similar to a lease, yes. You can look at it as you’re “borrowing” the car for X amount per month.
The other perspective is to define “profit” - when you lease a depreciating asset, such as a car, and you pay interest (in the form of money factor), taxes, registration, gas, lease payments, insurance, maintenance, accessories, etc you are 100% losing money. Making the little extra on the equity you may have over the residual is not profit in a financial sense. Turning $30000 dollars into $3000 at the end of 3 years is not profit, it’s money lost/spent on a car.