LEASE VS. BUY

[1990LS400]

Everybody likes Lexus cars. Right? Here is how you can have more of them.

A solution that can work very well is to adopt a "staggered purchase" stategy.

The scenario: Your family is like most in my neighborhood and you have an average of three cars. And you prefer to have a nice new car every three years or so.

Action: Buy (i.e. save in an investment account and then pay cash) a quality car (Lexus, Toyota, etc.) every three years. Keep each car nine years - quite close to the current U.S. average. (Or buy a low mileage car off a short term lease, let the lessee take the worst of "the depreciation bath" and keep it almost as long.)

Result: Your family will always have a quality car to drive and which is no more than three years old. You will save a substantial amount of money by keeping each car past its depreciable life. And you will have a variety of fun and interesting cars to drive.

A quote from the book "Management", by Robert Kreitner (available at Amazon.com) relates to the information I have been providing:

"Studies of middle-class families have shown that, overall, the best influencer and indicator of total accumulated assets over a lifetime is how long people keep their cars. Those who buy new cars every few years had a much smaller total worth at retirement than those who kept cars for five or more years. So, in a way, the quality focus of today's cars may be contributing to the total wealth of today's middle class."

I know a lot of this seems complex and "not fun" but it really isn't and can provide you with real economic power. By planning purchases carefully and avoiding debt and leases for depreciating assets, most people can vastly improve their economic situation - and have nicer, fun cars too.

By participating in this forum, I'm not just trying to help with what we have learned from 14 years of Lexus ownership. I am also providing information we gained from life. And yes, I am probably very senior in age compared to most forum participants - but I love cars!

[SW03ES]

Interesting way of looking at it...