<prompt> Human: I dont understand why leasing is financially a bad idea. From what I can see, monthly payments are often around 25 cheaper whilst I dont have to pay for maintenance which could be a several hundred to a couple thousand dollars per yearLets consider a Tesla Model S P75D.Using cash for a depreciating asset is out of the question, its a financially terrible idea - because even if I was wealthy enough to buy the 63,000 car outright, after 3 years Im virtually guaranteed to lose at least 50 of the initial purchase price as standard for luxury cars plus the opportunity cost of not investing it elsewhere.So a 60 month loan on a very low 2.5 APR with 5,000 is 1,225 per month using their calculator.You can only get a 36 month lease at the longest and that is 900 a month.If I financed it and sold it after 3 years and lose 50 of the value, that would be equivalent to losing 875 a month. So effectively its 2,100 a month to finance a car? But I get the other 50 best case scenario I can then use that 31,500 as a down for the next car and have a much smaller monthly payment next time?I just want a new car every couple years, less hassle and a lower monthly payment. Why dont most people lease?  <response>: It seems you have a basic misunderstanding here. When you lease, you simply pay for the amount the vehicle depreciates during your agreed period of use. Thats it. So a vehicle that depreciates quickly is every bit as bad a lease as it is a purchase. Roughly, in calculating the lease, there are four important factors. The MSRP of the exact model you are looking at including options. The residual value how much the vehicle is estimated to be worth at lease end - set by the manufacturer. The money factor aka, the interest rate. Again, generally set by the manufacturer. And your negotiated sale price. Your lease payment is simply a calculation of the difference between your negotiated price, the residual, and the money factor. Since the money factor is the smallest influence, we can exclude it to make a simple example. Your 63,000 Tesla. Your assumed 50 residual value after 3 years. Your lease payment is simply that 31,500 residual divided by the 3 year term, or 882month.The only difference when you buy is that you pay for the full value of the vehicle over your loan period - and you keep the residual value as your equity. You havent lost 875month if you purchase - youll notice that number is the exact same value as we came up with above - either way - lease or buy - you are simply paying for the loss of value of the vehicle during your use period. 