Lease or not lease?
One of the most commonly asked questions I get is: should I lease or buy a car?
As I sit here staring at my wife’s lease (which we are way over the mileage), I thought this might be an opportune time to make the case for and against it. As you’ll find, there isn’t a one-size-fits-all answer, but hopefully, this article can help steer (pun absolutely intended) you in the right direction.
Currently, my wife and I both lease our cars. This is drastically different from the Andrew Rosen of ten years ago. Then, I always bought used cars–that is until the Toyota Prius came bursting onto the scene. It was the first new car I ever purchased.
My wife, on the other hand, has always leased cars–beginning before we met and continuing until the present day. I was always a big fan of her leasing and my owning.
This week, I will highlight the case for leasing. Next week, you’ll see the other side.
The Case for Leasing:
Having a lease means you are “renting” a car for a certain period of time. During, you are paying the dealership the depreciated amount that renting will have on the car. That way when they get the car back and sell it, they haven’t lost a thing.
The following reasons are benefits to leasing a car:
1. Finances are tight – Typically, leasing a car is much cheaper than purchasing. Of course, you don’t own anything when you lease, but for some that’s OK. If you need to get a car and don’t have a lot saved, leasing is a great way to go. It will allow you to get a car while saving up to purchase one in a few years.
2. Transient lifestyle– As a planner by trade, I recognize not everyone has mapped out the next 30 years of their life as I have. Plenty of people aren’t sure what city they’re going to be in over the next few years. If you don’t want to commit to purchasing an immediately depreciating asset, then leasing might be right for you. I see it all the time. An individual is living in Philly and is trying to get to New York City. They may need a car now, but want to remain flexible for when the big job comes knocking.
3. Safety- This is the main reason my wife leases her car. She practically lives in that car, schlepping three kids all around town. The last thing I want is that call about her car being broken down. Leasing does not guarantee that I won’t get that call, but it does mean she’ll always be driving a car three years old (or newer). Thus, the probability is that fewer issues will arise. Also, the car will always be in warranty. So, if something does go wrong it’s on the dealership to fix. She’ll also always have some of the newest safety features on the market, a big plus.
4. You don’t drive a lot– An argument can (and will) be made for both sides here. Today, however, I’m speaking to the lease side. If you don’t drive that much, you can get a minimum mileage lease. This can provide you with a pretty decent car at a low price.
5. You’re unsure what you want– This is exactly the reason I decided to lease my current car. I’m not a car guy. But when we had our third child, I knew I needed something bigger than a sedan. Not only that, but with all the deer running around (literally my greatest fear in life) I wanted something bigger and safer. Although, I didn’t want to commit to some big expensive payment and end up hating the car. I also didn’t think a few test drives around a dealership could seal the deal. This is why I made the conscious decision to lease. It’s allowing me to test a car and see if it’s something I want to buy. Looking back, I would 100% lease this vehicle again.
6. Personal life changes– Life can change in different ways. My wife has had three leased cars since we got married. The needs of our family since then have changed drastically. We first had a small little crossover which was perfect for one child. However, that car wouldn’t come close to satisfying our needs today with three children.
7. Because you can– Not every decision in life is about what’s financially best. I have many friends/clients that are well-off and are big into cars. They love getting a new car every few years, as they get sick of their latest toy quickly. It’s as much a hobby as anything else for them. Let’s be honest, who doesn’t spend a little more than what is “advisable” on their hobbies? I know I do, as my red wine collection is getting out of hand. For this person, why not indulge and lease? It beats getting crushed constantly buying and selling vehicles.
Should I lease a car?
If you live a transient lifestyle, have tight finances, aren’t sure of what you want, or have some life changes coming up, it may be a good idea to lease.
Do any of these items seem like they fit your story? As you know a few of the reasons are why I currently lease. Will it be a forever thing? Probably not for me, but I have time to figure it out without a lot of pressure. Now don’t go rushing to a decision, as next week I’ll follow up with my argument for purchasing a vehicle. If you can’t wait the extra week, give us a ring, and we’ll do our best to steer you in the right direction (there I go again)!