[akhter]

The way the sales guy explained to me was that:

Leasing is 2.5% and hire purchase is 3.5% APR. Under both conditions the car is in your name.

However at the end of the lease term, you can buy the car from BMW Financial for HKD500.

Also for hire purchase you need to put 10% downpayment.

If the above is true, why would anyone do hire purchase instead of lease?

In the US, leasing works totally differently in the sense that after the lease term, you return the car to BMW. You have the chance to refinance the remaining price which is usually not worth it. Also the monthly payments are much lower in the US for leasing. In HK lease payments are about the same as hire purchase, but you end up owning the car at the end.

Can some one tell me if I am understanding it or not?

[wakuwaku]

Originally Posted by akhter

The way the sales guy explained to me was that:

Leasing is 2.5% and hire purchase is 3.5% APR. Under both conditions the car is in your name.

However at the end of the lease term, you can buy the car from BMW Financial for HKD500.

Also for hire purchase you need to put 10% downpayment.

If the above is true, why would anyone do hire purchase instead of lease?

In the US, leasing works totally differently in the sense that after the lease term, you return the car to BMW. You have the chance to refinance the remaining price which is usually not worth it. Also the monthly payments are much lower in the US for leasing. In HK lease payments are about the same as hire purchase, but you end up owning the car at the end.

Can some one tell me if I am understanding it or not?

In business terms http://tutor2u.net/business/finance/...asingintro.asp

Quote from other website - HIRE PURCHASE (HP)： 利率比Lease為高，但由於HP是以每期供款計算，在提早贖會時亦會減回利息支出， 所以較多人選擇。 LEASE： 利率比HP為低，但供款人需先預繳約四期的尾數供款，在計算第一期供款實際比借貨總額為少，而且提早贖會時 亦不會減回利息支出，所以較少人選擇。

[akhter]

I understand what leasing means. The part that I am confused about is that in Hong Kong it seems after the term of the lease you own the car (and the lease payments cover the full cost of the car). In the US at the end of the lease you return the car (and the payments are a lot lower because you only pay for the depreciation of the lease term).

[css]

Originally Posted by wakuwaku

In business terms http://tutor2u.net/business/finance/...asingintro.asp

Quote from other website - HIRE PURCHASE (HP)： 利率比Lease為高，但由於HP是以每期供款計算，在提早贖會時亦會減回利息支出， 所以較多人選擇。 LEASE： 利率比HP為低，但供款人需先預繳約四期的尾數供款，在計算第一期供款實際比借貨總額為少，而且提早贖會時 亦不會減回利息支出，所以較少人選擇。

thats my favourite website for business and finance LOL

[little_croco]

The financial institutes started doing leasing here is mainly their twist to guarantee better their profits, over the old way doing HP.

[akhter]

Originally Posted by little_croco

The financial institutes started doing leasing here is mainly their twist to guarantee better their profits, over the old way doing HP.

To me it seems better than HP only because the APR is usually 1% lower. Any caveats/risks to doing a lease instead of HP?

[trekker]

I think getting a personal loan from banks maybe cheaper?

[little_croco]

Originally Posted by akhter

To me it seems better than HP only because the APR is usually 1% lower. Any caveats/risks to doing a lease instead of HP?

as oda mentioned already, u would need to put a bigger sum of initial payment, as well as no advantage on early pay-up. well, if you have no plan to clear up the loan early, the difference is not really there.

[stevensonleehk]

I think there is a bit of confusion here.

The main difference between leasing and HP is that if you plan to sell your car before you complete all your installments, you will have to pay the remaining outstanding interests if you are on a lease whereas you won't have to if you are on HP. Hence the interest rate is 0.5 - 1% higher for HP instead of a leasing.

Also, with leasing, you will have to pay up ~ 4-6 months of installments upfront in the beginning whereas with HP you really pay month by month.

Originally Posted by akhter

The way the sales guy explained to me was that:

Leasing is 2.5% and hire purchase is 3.5% APR. Under both conditions the car is in your name.

However at the end of the lease term, you can buy the car from BMW Financial for HKD500.

Also for hire purchase you need to put 10% downpayment.

If the above is true, why would anyone do hire purchase instead of lease?

In the US, leasing works totally differently in the sense that after the lease term, you return the car to BMW. You have the chance to refinance the remaining price which is usually not worth it. Also the monthly payments are much lower in the US for leasing. In HK lease payments are about the same as hire purchase, but you end up owning the car at the end.

Can some one tell me if I am understanding it or not?

[akhter]

Originally Posted by stevensonleehk

I think there is a bit of confusion here.

The main difference between leasing and HP is that if you plan to sell your car before you complete all your installments, you will have to pay the remaining outstanding interests if you are on a lease whereas you won't have to if you are on HP. Hence the interest rate is 0.5 - 1% higher for HP instead of a leasing.

Also, with leasing, you will have to pay up ~ 4-6 months of installments upfront in the beginning whereas with HP you really pay month by month.

Thanks.

Eventually that is the conclusion I reached. It took me a while because I kept trying to compare it with US style leasing and it just didn't make sense.