Quote:
Originally Posted by Burrcold
I don't know where you are shopping but the interest rates are not 12-15% higher. In some cases the lease rates are on par or even lower than a standard finance.
If you really did mean "internal rate" I don't even know what you're talking about then...
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The internal rate is real and is often higher, sometimes much higher than the interest rate on a loan. The PAYMENT is lower, but not the interest rate. Do not confuse the payment with the interest rate.
You won't see it because it's buried in the calculation of what the lease payment is, but there are roughly 14 line items that have to be calculated to determine the lease rate. In every instance I've seen, leasing costs more in the long run.
The biggest advantage for a business owner to lease equipment or car is they don't have to do a large (or sometimes any downpayment). Most importantly, a business owner can write off 100% of the cost of the lease as an expense. That can help reduce taxes.
If you finance that same car, equipment etc, you cannot write of the entire expense the year you bought it. You must depreciate it over a 3,4 5 year schedule based on what the IRS deems to be the correct depreciation schedule, thereby losing some of the tax advantage.
Hands down the cheapest way to buy a car is to do it cash and hang on to it for 10 years, all the while saving for the next car.
Of course, if you are on this forum, you are clearly the lunatic fringe, because let's face it, we are all nut jobs for buying these cars and modding the crap out of them.