While there is a certain panache that comes from being a person that can just cut a check for whatever he wants, there are others who see savings in leasing and can find better uses for that upfront cash. It is not all about holding the title to the car as much as it is having the keys.
A recent article in the New York Times discussed some of the advantages of leasing exotic cars that those who could still afford to do otherwise are choosing over that cash purchase. Luckily there are a few companies now specializing in providing those leases once the leaser has plunked down 20-25% of the purchase price for a down payment.
The first advantage to leasing exotics would be a tax benefit. While that reason is dependant upon the state in which you live in, in some states it can mean the difference between $130,000 car tax or a monthly .6% monthly tax on the leaseÂ payment. The money saved in taxes directly correlates with the second reason to lease: other appreciating investments.
If you lay down your $1.4 million on day one for a new Bugatti Veyron that money is gone and so is the $130,000 in car taxes in some states. However, if all you put down is the $400,000 down payment you still have $1million in “play” money that is now available for other money making investments. Thus, you now have the chance for multiple investments that may both appreciate to make more revenue for the lease holder.
By the end of the term of the lease the purchase price agreed upon for the close out sale of the car may be less than the market value or appreciated value of that exotic. Meaning that in 5 years there is the chance that the $1.4 million Bugatti Veyron of today may be worth $2 or $3million at the end of the lease.Â Hence, now you can choose to profit from the smallÂ down paymentÂ you put into your exotic by selling it for a gain.
While a $20,000 a month payment is nothing to sneeze at (or on… that would be offensive), as in the case of the Bugatti lease, it is small potatoes compared to a $1.4million cash deal. And for some, those small potatoes can reap a very rich harvest.