can you guys tell me about the concept of leasing? Is it so you can get a tax deduction or something? why not just buy the car?
I lease cars for just a couple of reasons... I don't want to drop $100k on a car all at one time... I put it under my company name so I can write it off as a business vehicle.. I get a new car every 39 months (which is always fun) haha..
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Quote:
Originally Posted by wolverine0723
I lease cars for just a couple of reasons... I don't want to drop $100k on a car all at one time... I put it under my company name so I can write it off as a business vehicle.. I get a new car every 39 months (which is always fun) haha..
i see...that is a good idea...so do you do it through the dealership or a 3rd party agent?
I'm not sure it's a legitimate lease on a $100K+ car with no money down for $1500/mth. The math just doesn't work out. I think they're trying to rip you off; the only thing I can think of is if they charge a balloon payment at the end of the lease. Did they say what the capitalized cost is (what you're paying over the life of the lease) or the residual value (the value left on your car at the end of the lease)? Also, how much was the selling price?
By the way, the benefits of a lease is that you can get into a more expensive car for the same amount of money (since you're only paying for the depreciation over the time you own it). Most of the depreciation on a car is in the first two years. And, you don't own it, so you can turn it back in with no wories about selling it and being upside down on what you owe at the end of the lease term. If you only keep cars for a few years, then leasing is the way to go. If you keep cars longer term, then you'll likely make some money on it when you sell, if you take good care of it, etc.
The downside is you don't own it and you have to turn it back in as you took receipt of it. If you're a mod freak, then you need to buy. But if you just want to look like a baller because you're driving a more expensive car, then lease that puppy.
By the way, the benefits of a lease is that you can get into a more expensive car for the same amount of money (since you're only paying for the depreciation over the time you own it). Most of the depreciation on a car is in the first two years. And, you don't own it, so you can turn it back in with no wories about selling it and being upside down on what you owe at the end of the lease term. If you only keep cars for a few years, then leasing is the way to go. If you keep cars longer term, then you'll likely make some money on it when you sell, if you take good care of it, etc.
The downside is you don't own it and you have to turn it back in as you took receipt of it. If you're a mod freak, then you need to buy. But if you just want to look like a baller because you're driving a more expensive car, then lease that puppy.
Assuming it is used substantially for business, you are limited to a "capped" depreciation schedule of under $40k, spread over 5 years. So, a $100k car can only be deducted up to an IRS predetermined deduction table:
Depreciation Limits for Cars 2006
Depreciation on cars and light trucks and vans is limited. For 2003 and later years, the IRS has created two different limits--one for cars and one for trucks. (Special tables, not reproduced here, apply to pure electric vehicles.)
Depreciation Limits
Passenger Automobiles
Tax Year
First $2,960
Second 4,800
Third 2,850
Subsequent 1,775
Under the same business circumstances, a lease payment is viewed as an expense, without need for a depreciation schedule, since it is not an "owned" asset. Accordingly, the entire payment is deductible, up to the amount used for business. As an example, take a $2000 per month lease payment, with the vehicle used 75% for business. The deduction would be $1500x12 months or $18,000 for EACH year. Do the math and you'll see the results.
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