Saturday, October 27, 2007

Why you shouldn't lease a car?

The thing that really helps us when evaluating purchases is that we now look at the price instead of the monthly cost. When we used to look at vehicles we would decide whether we could afford the payment. It's easy to look at a brand new car and think "Wow, I can easily afford $300 a month or$400 a month payment ".

Now we look at the price. A recent vehicle we looked at was about $300/month over 48 months plus a couple thousand down. Total cost after 48 months with the down payment was $14,000. At the end of the lease I would own nothing.

For us, looking at driving for4 years and then needing to buy or lease something else for $14,000 sounds ridiculous. I can buy a vehicle for $14,000 and after 4 years I still have a very good car that depending on the vehicle, is still worth several thousand dollars. Plus I can drive it for another 5-8 years.

Leasing is great for driving a car outside of your price range, but in the long run it will catch up with you. I strongly disagree with those who say it doesn't matter since you'll have a car payment for the rest of your life anyway.

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