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Originally Posted by The_Jazz
Often the manufacturer will give you incentives to stay in their leasing program.
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The incentives are bit misleading... they will offer you a "reduced" buy-out after the lease, but it's a bit of a shell game. A 3-year lease on a $20,000 car assumes you will use up $10,000 of the car's value, leaving the leasing company still "holding" $10,000. However, the car's market value is perhaps $12,000, and they will then offer to let you buy-out the lease for $11,000, a full $1,000 less than they plan to offer the car to the public. But you've already given them $10,000 through the lease payments, so they're getting $21,000 for a $20,000 vehicle.
Quote:
Originally Posted by The_Jazz
This makes no sense at all to me. They're not going to charge you higher liability rates, so you have to mean the physical damage aspect. Assuming that you're fully insuring the vehicle, why would lease vs. own be an appreciable difference in rates. More importantly, how would an insurance company justify those rate differences to the state insurance departments who have to approve those rates? What am I missing?
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Sorry... I explained that poorly. If you normally carry only minimum insurance, the leasing company won't like that. They will insist on full coverage, a higher priced insurance package. A bank won't necessarily require that on a loan (it may). So the extra cost is that you might have to carry more insurance than you really want, not that the insurance is higher priced. If you, like I, carry full coverage, then there is no extra cost, except that you are always insuring a new car, as opposed to the slightly reduced cost of insuring an older vehicle when you purchase & hold on to the vehicle.