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Is Leasing a Car All That Bad?

  February 10

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lease a carI mentioned in a previous post that my sister in law just got a new car. For a while there, she was talking about leasing a car, and like any good PF blogger big sister, I was all “Whoa…hold up!”

It turns out, there could be some good arguments for leasing even though I’d never do it myself (and even though she didn’t do it either.)

Leasing

It starts off with a very low or no down payment, which extends to lower monthly installments and different warranties. For people who regularly like to change their cars (e.g. in 3 to 5 years), leasing is the perfect opportunity. You can try out a nicer car than you would have bought without it, anything from BMWs to Ford SUVs. If you work in sales or real estate and use your car to drive clients around, you could possibly make an argument for that.

Or, if you know you will be leaving the country soon, like we did when we moved to Grenada or if you have a spouse in the military, leasing could be a good short term option (but it also locks you in, so you have to time it just right.)

Getting a car on a lease is relatively easier than getting a car loan and allows you to enjoy any car’s optimal years of performance and later move on to another, better or an upgraded car. However, let’s not forget that, even if you have been leasing a vehicle for ten years, you will have nothing to show for it the moment your payments stop. Also, there are terms and conditions that limit the car’s use, starting with the fact that every extra mile beyond the agreed mileage costs extra, so it wouldn’t work for big time commuters.

Ultimately, leasing could work for many different living situations and lifestyles, and it is particularly ideal for those who move around a lot for work or pleasure, or don’t want to worry about the hassle of upkeep.

But, since I don’t fall into any of those categories and I don’t mind driving an old car, I won’t be worrying myself with a lease (although I’m now less skeptical of those who do if it’s for a legitimate reason.)

I know this is a hot topic in the pf community, so what do you think? Are there any redeeming qualities when it comes to a car lease?

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16 responses to “Is Leasing a Car All That Bad?

  1. I agree with you to a point. Please go to DaveRamsey.com before giving advice out about “Fleecing,” as he calls it. It is NOT a good idea no matter your situation and he’ll tell you why. Do the math.

    1. Hey Kymberly! I’m a big Dave Ramsey fan so I always appreciate the input and love doing the math. 😀 I hope a re-read of the post will show that I just tried to explain the ins and outs of leasing, make sure my readers knew that I personally would never do it, and mention that I don’t judge others who do. Hope that makes sense and illustrates that I’m not pushing for anyone to lease a car! No ma’am – not me. 😉 Thanks for taking the time to comment!

  2. While the math is against it, I can make a good case for it when you run a business and use a car. You can use the car during it’s optimal years and then get a better one when you are done. Now, I have leased before and wouldn’t do it again, but I also know people that run businesses and that is all they do.

  3. We’ve leased 2 or 3 cars in the past and while Dave Ramsey would disapprove, at the time it worked out ok for us. My husband especially is a fan because it hates having a vehicle that is not under factory warranty. We purchased our two current vehicles. We got our truck new and have had it for 10 years. The other car we got from a family member who kept it in pristine condition. I personally don’t care for leasing because it means we have to go through the whole car buying ordeal more frequently.

  4. My life changes quite a bit so leasing would be a good option to get flexibility and avoid losing money on a short sale. Once you are established it gets harder to justify unless the rate is low.

  5. Leasing makes sense if you get a new car frequently. The payment on leasing is generally lower, so if you’re going to get a new car every couple of years leasing it is less expensive than buying it and then trading it in. Now, as a frugal PF blogger i would never advocate such behavior, but….. 🙂

  6. There’s no problem for me with regards to leasing a car. The only problem is that if you always lease a car why not try purchasing a new one! There you can have a car and save money.

  7. I lease my Toyota RAV-4. I’m not sure if it’s the best decision I’ve ever made, but I did it for a few reasons. I like new cars. There you have it! I could lease one for 3 years for $250 a month, then at the end of three years I can buy it for $15k. Since I drive about 4k miles a year, it should be worth more than $15k when I’m done with my lease, so I will have a few thousand dollars to put towards a new car. If I ran the numbers, I’m sure i lose out leasing, but since I can afford it, it seems to work for me.

  8. Leasing is usually more expensive than just purchasing a good used vehicle. I can see where leasing might be a reasonable choice for some people, but I want to get my full money’s worth. I try to buy a good used car, or sometimes a new car, and then drive it until it can no longer go without a complete engine rebuild. I make sure to keep the vehicle well maintained and typically get around 250k miles out of them. That’s called driving it into the ground.

  9. I guess things must be a bit different over the pond here in UK. My Hubby is always going on about leasing, and told me recently with our new car he saves at least £150 ($220?) a month by leasing… And my Dad always said, if it depreciates, borrow it, if it appreciates, buy it (hence we ‘borrow’ cars, and bought our house.

    Just my 2 cents 🙂

    Lou

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