The accountant on Entourage in season two told Eric not to lease a car because it is better to own it, so you can sell it if you need money.
That is the absolute advice Spencer offers when he said "if it drives, flies or floats LEASE it."
Interesting that different money guys have different insight.
Leasing always costs more in the long run.
That's why there are leasing companies. They make a nice profit on the deal.
The upsides are probably:
1: Less headaches. (maybe)
2: More of your money stays liquid, for things like investments. If you make more on investments then you lose on the leasing deal, then you come out ahead. That might make sense for rich guys with fancy investment advisors.
It makes a lot LESS sense for us working stiffs, who rarely see the kind of returns that rich "insiders" make.
The smartest advice would be to buy a $10,000 car and drive it into the ground, to be honest with you...
These guys are buying new cars all the time. They're idiots.
Another point:
If you are self-employed, or have your own business, there are tax benefits when you lease.
There shouldn't be, but such laws exist, specifically to save the rich guys (and corporations) even more money.
Welfare for the rich. It's everywhere.
I loved how Marvin dealt with the guys on Entourage, particularly Drama.
shareWhy shouldn't the self-employed get tax benefits? I'm self-employed and I use EVERY loophole I can because if I didn't I might as well not work.
shareYou miss my point. (I'm also self-employed.)
Those laws exist for the super-rich. The percentage they save dwarfs the percentage "regular" self-employed folks save. It's one of many ways the government give breaks to the rich without making it too obvious to the voters.
The point is never own a depreciating asset.
share"The point is never own a depreciating asset."
Indeed.
- but that's only if you work for someone else.
If you're a contractor, or have even an s-corporation, that depreciation is deductible.
And so this is another reason the advice would be different for a football player (paid by the team) vs a movie star (self contractor.)
Except it gets complicated when either guy starts doing commercials & other endorsements. the correct answer always comes down to tax issues, and has to be calculated on a per-person basis.
The buy or lease decision largely hinges on how often you plan on getting a new car/boat/plane. If you are a guy who wants a new car every couple of years, you should lease, because the first couple of years of paying off a car loan is mostly paying off interest and more expensive than a lease. If you are a guy who drives the same car until you run it into the ground, then buy. I bought my first car back in 1992 and still have it. It's been nearly 20 years since I made a car payment.
shareSteve, that's a good point.
Of course, rich guys don't need car loans, they can buy straight up with cash, so that reasoning doesn't really apply here.
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I'd say that Spencer was correct in this situation. I can see where Marvin (Vince's accountant) was coming from. Exotics, left with low milage/usage do in fact appreciate over time and can sometimes be sold for a major profit. These guys on the other hand were using these vehicles recreationally (decreasing their value) and buying them at high volume. Let's be honest, you can only drive one at a time.
shareLease Women
Buy cars
rent a boat for the weekend, no need to lease or buy one.