It all comes down to how long you want to keep the car. If you only want the car for 3 years, leasing may be the way to go. The large down payment always kept me from seriously considering leasing though. If you want to keep the car for say 10 years, I don’t think a lease would be a good deal at all.
It’s nice to have a new car with new car warranty, but to me the sweet spot in value is buying a 2-4 year old car with low mileage. You can easily save 30-50% off the price of a new car and still get a car with 10+ years of reliability. Plus taxes and insurance are lower.
But the basic lease payment will assume the expected depreciation, ie the lessee is also absorbing that depreciation, just a little each month on the lease payment. You don’t basically get around rapid initial depreciation on new cars by leasing them.
Depreciation uncertainty might still make leasing more attractive indirectly in two ways. As I mentioned above a purchase option has real value if not set far above what the car is really expected to be worth at the end of the lease. If set fairly and depreciation is less than expected, it’s a bargain price. If depreciation is more than expected, you don’t have to buy it at that price. Also with lease you only have to negotiate one deal as it relates to that car. With buy/trade in for the same period you have to do OK against the dealer on the initial purchase negotiation, then they have another chance to get the better of you on the trade in price.
But the specific numbers in this case it’s slightly less money to own the car outright in 5 yrs with lease than purchase. It can be true.
If people want to buy only used cars then obviously lease isn’t (generally, some expensive used cars are leased) the way to go. But as to ‘sweet spot’ some people would argue it’s to buy 5 yr old or even older cars and keep them till 15-20+ yrs old. That depends on the person (what car satisfies them, their risk to car trouble, their skill DIY’ing cars, etc), and car.
You have to hold something constant to analyze, and if what you’re going to hold constant is ‘buy a new car and keep a long time’, it’s not actually always more expensive to do that by leasing then exercising the purchase option on the lease. Depends on the deals you’re actually offered, as in this case lease apparently better.
Your concept is right but your details are wrong. The car is $27m, after financing, or about $25m retail. That is not that far off from your $14m car 16 years ago. It may not be the absolute cheapest car out there but it’s far from a luxury car with all the bells and whistles.
Further, OP states junior has made some recent large purchases (house?) yet should be able to save the $15m in 3 years, which indicates he’s not living up to / over his means.
He’d want to save the difference, not the entire 415 a month - let’s call it 180/month.
At the end of the 3 years, if he can discilplne himself to put that money away, he’s saved 183 a month (412 - 229) times 36 months, or 6588 dollars.
So now he’s got to make up the difference between that and the 14,900 - or about 8300 dollars.
Let’s assume he wants to finance the balance. If my Excel formula is right, at 2.9% that would be a payment of about 350/month for 2 months. At 6%, the payment would be 368 or so per month. A total of around 8800 dollars.
So he’s spent 229 * 36, + 6588 + 8800 + the down payment brings the total to just over 27000. Still lower than the finance cost, somehow.
If he can’t discipline himself to save the 180 a month, then at the end he’s got to come up with nearly 15,000 - with a much larger payment.
Are there any hidden fees associated with the end of the lease? Supposedly there’s often a turn-it-in fee (unless my in-laws got rooked, which is quite possible). If he surpasses the mileage, or the car is damaged, can they charge anything even if he buys the car at the end of the 3 years?
What are the tax laws near you? My state charges a “personal property tax” which is based on the value of your vehicle(s), and I don’t know how lease vs own affects that.