Lease Payment....One time payment or Monthly

[bennyhanna]

I was trying to figure out the advantages or disadvantages of making a

1 time lease payment

vs

monthly payments?

Besides the obvious of paying monthly
are there any benefits to making a 1 time payment?

[digi355]

You save the cost of interest if you make a one time payment.

[The Cosworth]

If you saved monthly while making your payments.

I'll use an example because I am not great with words:

Say your buy out is $10,000 after a 3 year lease



Option 1.)
You invest $256 a month for the 36 months you have the car into an investment that gives 4% return.

You have your $10,000 for your buyout.

In the end your $10,000 costs you $9240.00

Also you own your car after 3 years




Option 2.)
You take a loan at 6% (which I think is low for a used car loan) on the $10,000 and you spread it out over the 3 years again.

It costs you $304.22 a month, meaning in the end you pay $10,951.92

and you own your car after 6 years



You save $1711.92 if you invest it now instead of waiting to take a loan out on it. Plus you are done a whole 3 years earlier paying off your car.

[blownz]

^ problem is most people that lease have a lease payment that doesn't leave them with anything left to save so option 2 isn't even an option.

[The Cosworth]

Originally posted by blownz
^ problem is most people that lease have a lease payment that doesn't leave them with anything left to save so option 2 isn't even an option.

Yeah I know. I leased because I was making less money in BC and it was all I could afford. But now with my new job I can afford to save for my buyout.

So that is what I am doing.

I know option two isn't usually feasable (because people would usually just finance then) but that was just more a mental exercise for the OP

[blownz]

Yeah, there are definitely a lot of variables and everyones situation is different. No single answer is right for everyone all of the time.