Buy or Lease: The Eternal Question
Deanna Oxender Burgess Journal of Accountancy April 1999, Volume 187, Issue 4, p.25ff. (7 pages)
Category: Leases
URL Address: http://proquest.umi.com/pqdweb?Did=000000040162502&Fmt=3&Deli=1&Mtd=1&Idx=2&Sid=1&RQT=309

Executive Summary:

Although one in three new cars on the road today are leased, consumers often still view going to a car dealership with the same dread as a trip to the dentist. The CPA is in a unique position to develop and provide a new assurance service in helping clients with the lease/buy decision.

Questions:

  1. What makes leasing so attractive to today's consumers?
  2. If leasing requires lower payments and allows consumers to drive newer, more expensive automobiles than they otherwise could, why do not the other two-thirds of new car drivers choose to lease?
  3. Although the lease payments will generally be lower than the payments to buy a vehicle, what other factors need to be considered in determining if the amount of the lease payment is a good deal in a given situation?
  4. The lease payment will usually include both a depreciation charge and a lease charge. To what components in a loan payment do these two payments correspond?
  5. Why should a consumer negotiate a purchase price first economicsore considering the lease/buy decision?
  6. Why are the consumer's needs in terms of miles of annual usage and length of time economicsore switching vehicles important to consider economicsore signing a lease?
  7. Why should a consumer take the car to several other dealerships prior to returning it at the end of the lease term?