Lease or Buy?
 

On some of the forums i read a lot of villagers lease their vehicles. At our ages 60-? does it pay to lease over buying? Especially for people who have the money and wish to have a new vehicle every 2-3 yrs. I know financial advisors always stress not to have debt but, if you really don't care and have no heirs why not spend your money!!

None of our financial guys ever stressed no debt. Especially when buying a car with zero % interest that has been offered on our last 6 cars.

Everyone will have to do the financial and situational calculations for themselves to determine if leasing a vehicle is "worth it" to them. We decided to lease as we can afford it, like the ability to choose a new car every 3 years, and most importantly shouldn't have to worry about any maintenance outside of wipers and oil changes. Something goes wrong, let the dealership handle it.

In my opinion, if you can pay cash for a vehicle, buy it. I never borrow money for anything, and I don't lease vehicles.

Leasing has always been a more expensive way to buy a car.

The only time it becomes a less-expensive way to buy a car, is when a manufacture convinces a 3rd party insurer, that the residual value of the vehicle, is going to be higher than expected.

Unless you have a tax situation that's going change the dynamic, "buying" is cheaper than "leasing", 99% of the time.

That said, if you figure you're going to be making a auto-loan payment for the rest of your life, "leasing" will get you more car for your monthly payment. You can drive a Buick, for a Chevrolet payment.

"Cash outlay" is different than "expense" (or "cost").

I agree. I have never made a car loan payment or lease payment in my life. When I couldn't afford a new car, I bought a used one. Like some car guy used to say, "drive a used car, everyone does".

I like just paying cash for new cars. Keeps the transaction simple and I don't like monthly payments.

Leasing may be a more expensive way to buy a car, but paying cash seems to be a more expensive way to drive a new car every 36 months.

The details are going to matter a lot but:
- If I purchase a $50K car today and then trade it in for maybe $30K in Jan. 2028 it has cost me $20K + tax
- If I lease a $50K car at $500/month then in 36 months it has cost me $18K

There will be other fees for both leasing and purchasing
If I purchase a car I will likely keep it more than 36 months
I drive too many miles for a lease at this time, but when my high-mileage years are over I will be looking into a lease

IMO leasing is like credit card debt you never get rid of it. IMO same can be compared to renting house or buying it. Renting always cost more but with less headaches.

You have to ask yourself if you drive enough miles (to need a nice car) and if it matters that you arrive at the new Hooters being seen in a newer car or not? I have a 2010 foreign model purchased in 2015 now it’s 2025 so 15 years old. I only change the oil once a year now due to synthetic oil and lower miles driven. Most cars today only need brakes and oil changes (1 year or ~10,000 miles) as most fluids are high mileage or not changeable (some transmissions). IF I really needed a car to go to the Midwest or any long distance I might rent one for piece of mind. If you have extra cash put it in the house it won’t depreciate as fast. With all the posts about people dealing with “stealerships” (see the current Kia thread going) I have little desire to interact with any dealership.
Edit: I rent a car a few times a month for work and the new(er)cars are IMO packed with too much distracting technology. Putting the HVAC in the infonet screens is way to much distraction to just turn up/down the air. When I come home and get in the 2010 I do not miss the new car.

Counting only depreciation, tax, title, dealer's fees, etc., it typically costs us $2000 - $2300 per year to own a mid size SUV, trading it anywhere from 4 years to 10 years. Between up front costs and monthly costs, I don't believe you can lease a similar car for that.

Your 4-year cost is $9,200
Tax on a $50K vehicle is $3,000
If dealer fees and others come to $200 then your depreciation over 4 years is $6,000 or 12%.
You would buy the $50K vehicle, drive it for four years, then sell it for $44K.

12% is really good. A couple of makes I checked had 4-year depreciations of 24% and 36%

I refuse to pay any dealer fees. Never have, never will.

2 different animals, IMO

Houses typically appreciate, automobiles don't.

When you buy a car, you're purchasing the ice cube and if you keep it frozen, it will continue to do its job.

When you lease a car, you're paying for the melting + the premium that goes with managing the process.

Same maintenance and Warranty when you purchase so that benefit is a push.

If you are getting a new car every three years, the difference between buying and leasing is you know what the cost to drive the car for three years is when you choose to lease it but you don't find out this cost until you sell (or trade-in) the car when you choose to buy it.

Getting a new car every three years seems very often. My newest car is a 2023, and it still feels brand new to me. I would not want to trade it in in 2026. But I understand; buying a new car is fun.

Everyone has to do what is best for themselves.
At my age I personally prefer paying cash and purchase a car every 3 years.
The way I see it, how much time do I have left.
As the old saying says "You can't take it with you".
If I drop tomorrow my daughter has just gain another asset to sell.

Unless you’re writing off the car for business, leasing always costs more. When I see calculations above like $500 a month, they don’t include the down payment of $5000 which amortized over 39 months, the payment is north of $600.
With a lease, you can get dinged by big charges for going over the allotted miles, dings in the paint, unusual wear, etc.

Houses go up in value, cars depreciate the minute you take it off the lot (most cars).
I usually trade in our cars before you have to buy tires or every 2 years. I buy new cars because of the new technology and get rid of the older car because the lack of new technology. There are so many new features on the newer cars that they can almost drive themselves, even if they aren’t a Tesla. Our 2019 Nissan had the feature that it would steer the car in the lane within the lines, and with it adaptive cruise control, if it came up on a car, it would slow down or even stop based on the car in front of it, and then it would climb back up to the set speed when traffic allowed.
Also the backup cameras with vehicle braking if it sees an object in its way, blind spot monitoring, on and on

I remember my parents being told that it was better for them to lease a car when they got into their 70s while they had owned their whole life.
My car is now 22 years old (but doesn't look it) and still only has 88,000 miles, so I'm assuming I may only need one more car for the rest of my life if this one conks out! Leasing is a huge waste of money IMO and you may live way longer than you think!

Many people lease for the pease of mind a new car provides, most people I know lease get the serviced on time and give it back and get another new car ,they figure auto expense like a utility an on going expense to satisfy their lifestyle.

Here living in The Villages bubble, do one even need a vehicle. A friend of mine who is visiting and considering moving here has an electric bike and is going to buy a Villages kart.. With both of those he can rent a car when he needs to go out of town.

A very descriptive ‘visual’ of the process; I like this a lot. Thank you.

Buy a car that's three years old and keep it for ten years or till you die, whichever comes first.

- If I purchase a $50K car today and then trade it in for maybe $30K in Jan. 2028 it has cost me $20K + tax+investment loss over 3 years (aprox $6k)

Since many warranties have been extended to 5-6 years, I still choose purchasing over leasing. The depreciation amount of the vehicle lowers significantly after 3 years and I keep the vehicle until the warranty expires.

I always buy my car, I never lease. When the lease is up in three years, you have Nothing! Buy your car and if you decide five years down the road, you want to get something different you have some equity to trade in. My suburban is 10 years old and I really don't plan on buying another vehicle. I hardly use it now anyway. Also, the new vehicles have so many bells and whistles, especially your speeds and your stops can be monitored by the government. If things got really ugly, the government probably has the ability to turn it off. Insurance companies are already monitoring your driving skills if you want a discount. Not worth it to me.

It's nice sometime to visit Leesburg or Inverness or to go to Tampa or Orlando.

He doesn't need anything more than a bicycle and cart but he might find he wants a car more often than he thought. But if it works for him, great!

So, borrowing from another post, the ice sculpture will look good for three years and is guaranteed to look acceptable for 5-6 years. Leasing means your ice sculpture always looks good. Running out the warranty means getting a new ice sculpture when it becomes more difficult to make out the features. Others insist that wet mound over in the corner is still a sculpture and the ice will last a few more years.

Think of the lease payments at the end of three years to be roughly equal to the depreciation if you bought the car, but you don't have to pay the entire cost of the car up front and negotiate on the remaining value when you want to replace it. If you want to be in a new car every 3 years and want to know your costs up front, then leasing might make sense.

This seems right. I think they have the numbers figured so that you pretty much get what you pay for, either way. Some advantages to one vs. another depending on your situation but if you aren't driving too many miles, want to drive late model cars, and don't have much financial pressure to squeeze ultimate value from every dollar, leasing is probably a decent way to go.

One thing is for sure, cars are expensive, no matter how you do it!

Joe

With leasing it is more difficult to determine if you are getting a good deal. The interest rate is hidden in the money factor. Depreciation is predicted at signing (residual value). Cash is generally required in the form of a security deposit and down payment. This gives the dealership more ways to sweeten the deal for itself.

That said, one can get good lease deals on some models and sometimes. It just takes more work on the buyers part.

My father used to say “Buy a used car, buy another man’s problem.”

A lease is just another loan, just without the down payment and with no prospect of acquiring equity.

There's really no right or wrong here. We leased a new Honda Accord about 18 years ago and it worked out fine for us. Staying under the mileage limit and taking good care of the car is key when leasing.

I just bought a new Chevy Colorado. But If I was planning on getting a new vehicle every 3 years I would probably lease.

It can be a very good option for the right situation.
One last thing, make sure you really like whatever car you lease and will be happy with it for 3 years. Trading out of a lease is difficult and can be expensive.

Good luck!

I hear you. But, paying cash is difficult when NEW vehicle prices are anywhere from $35,000 and up. You can invest that money. In 2024 my portfolio made 23%. Returns are not going to happen like that every year but it is something to consider when deciding to buy or lease.

For the same term, say 3 years, a loan payment will be higher than a lease payment. This is because for the loan payment you are essentially paying for the depreciation and the residual value of the car at the end of the term. With a lease payment, you are only paying for the depreciation at the end of the term. Yes, you will acquire "equity" with a loan but you have paid extra each month, over leasing, to acquire that "equity" (aka residual).

Bought a new car in April 2018 have thirteen thousand miles that’s less then two thousand a year. The car still has that new car smell. Buy it probably will be your last car

Bottom line, at least for me, is that leasing gives me the opportunity to drive a much more luxurious car than I could afford to buy outright.

Always way ahead of the game if you pay cash for the vehicle and then keep it for at least 8 years. Car/truck purchases are the worst investment one can make. Our 2017 Toyota is a fantastic vehicle and will keep it for years to come. We would rather spend money on travel.

Owning a vehicle inexpensively:

rule # 1
vehicles are always future junk, so the only way to own a vehicle inexpensively is to buy a used car with low mileage within three years old.

rule # 2
keep it until the maintenance is more than oil and tires. These days, 10 years plus is easily doable.

rule # 3
no one cares what kind of car you have, as long as its safe when you are driving in some else's car.

Its always amazing to me what people pay and what people buy when dealing in future junk

Likely in an era where the average lifespan of a car was well under 10 years.

Average lifespan of a new car in 1985: 7.5 years

Average lifespan of a new car in 2023: 12.5 years

These are just averages. If you stick to brands like Toyota you're going to get 15+ years.