This continues to be a huge debate. I’m closing in on 15 years working in the car bizz and, as someone who dishes out advice, I’m continually asked whether one should lease or buy.
Let me start by stating that leasing a used car without a manufacturer-backed warranty is a seriously bad idea. In fact, unless you intend on getting an insanely thorough inspection to get an idea of upcoming maintenance and repairs needed, you will not escape a brake job or some other type of expensive work throughout the course of the lease.
As a consumer counselor working at the Automobile Protection Association (APA) a few years ago, I must have faced this question thousands of times.
The short answer was always to look at the Big Picture. And this is what it was: Picking the right new car and maintaining it properly would ensure a solid 10 years of service from said car. After the five-year financing period, only average wear and tear would need financial attention. After 10 years, the car would still be worth a few grand (a 2004 Corolla goes for $6,000 on average) and its value could be applied to the purchase of a new car.
In the case of a 48-month lease on a new car, the principal advantage is lower monthly payments. That’s it. At the end of the lease, you are left with nothing, so you lease again. At the end of the second lease, you are once again left with zero. Add both leases (or 96 payments) along with the “nothing” at the end and you’ll have saved nothing in the long run. If anything, your out-of-pocket spending will have been greater than an outright purchase.
So, the bottom line is that leasing is far less advantageous in the long run. And that’s the current state of affairs. Leasing continues to be a very popular avenue for consumers getting behind the wheel of a new car because the long run is no longer applicable. Millennials (born 1977-‘97) stay an average of 4.4 years at a single job, whereas a generation ago lifers were commonplace.
This could explain the continued trend, but either way when I see a brand new study that states leasing is the greatest deal ever, I can’t help but get a little upset. Factor in the countless lease-return nightmare stories and I continue to wonder why people pay for continuous headaches.
My best piece of advice reads like this: If you can afford to purchase a car with cash, you can afford to lease. If not, finance a new car or, better yet, finance a used one. Make sure you get it inspected prior to signing anything!
Let me start by stating that leasing a used car without a manufacturer-backed warranty is a seriously bad idea. In fact, unless you intend on getting an insanely thorough inspection to get an idea of upcoming maintenance and repairs needed, you will not escape a brake job or some other type of expensive work throughout the course of the lease.
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As a consumer counselor working at the Automobile Protection Association (APA) a few years ago, I must have faced this question thousands of times.
The short answer was always to look at the Big Picture. And this is what it was: Picking the right new car and maintaining it properly would ensure a solid 10 years of service from said car. After the five-year financing period, only average wear and tear would need financial attention. After 10 years, the car would still be worth a few grand (a 2004 Corolla goes for $6,000 on average) and its value could be applied to the purchase of a new car.
In the case of a 48-month lease on a new car, the principal advantage is lower monthly payments. That’s it. At the end of the lease, you are left with nothing, so you lease again. At the end of the second lease, you are once again left with zero. Add both leases (or 96 payments) along with the “nothing” at the end and you’ll have saved nothing in the long run. If anything, your out-of-pocket spending will have been greater than an outright purchase.
So, the bottom line is that leasing is far less advantageous in the long run. And that’s the current state of affairs. Leasing continues to be a very popular avenue for consumers getting behind the wheel of a new car because the long run is no longer applicable. Millennials (born 1977-‘97) stay an average of 4.4 years at a single job, whereas a generation ago lifers were commonplace.
This could explain the continued trend, but either way when I see a brand new study that states leasing is the greatest deal ever, I can’t help but get a little upset. Factor in the countless lease-return nightmare stories and I continue to wonder why people pay for continuous headaches.
My best piece of advice reads like this: If you can afford to purchase a car with cash, you can afford to lease. If not, finance a new car or, better yet, finance a used one. Make sure you get it inspected prior to signing anything!