When people make blanket statements like "buy a used car" instead of leasing a new car, they obviously don't understand why leasing can be a good thing. First, when you pay cash to buy a used car, you're locking your money in a depreciating asset. I'd rather lease with no money down and keep my money in a savings account, money market account or something where I can have access to it in case of an emergency. Yes I know that with a leased car you're essentially renting it but your payments will be much lower than buying it with a loan. Second, the term of the lease is usually less than the length of the car's warranty so if anything breaks, you're covered. I know you can get a certified pre-owned (i.e. used) car which comes with a warranty but you'll pay more for those cars than an equivalent used car at a used car dealership. Third, interest rates on leases can be extremely low, like 2 or 3%, and when you factor in inflation, it's a pretty inexpensive loan. Fourth, when you lease a new car, you're getting a car with all the latest safety improvements not found in older cars. I'd rather have a newer car with additional airbags and improved side impact protection than an older car with less safety features. Lastly, at the end of the lease you don't have to deal with the headache of trying to sell the car. You can just give it back to the dealer and lease a new one. Obviously if you bought a new or used car you can trade it in for another one a few years later but you'll lose just as much money trading in a used car as you would leasing a new one. Just look at the price difference on kbb.com between the "trade-in" value and the retail price on a used car and you'll see a pretty large difference.

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Years ago, if car manufacturers had followed the data, leasing would probably be about 25% of a healthy and profitable market. Instead, manufacturers used the fact that payments are the primary consumer motive to propel the market from time to time, screwing both them and themselves.

If you are a lessor there are only two ways to err: (1) extend credit to unworthy consumers, and (2) set the residual values too high to achieve a payment target. If you are a consumer, there are only two ways to screw up a lease: (1) lease longer than you realistically expect to keep a vehicle, and (2) buy fewer miles than you really need.

In the 1980's and 1990's, we saw both parties commit all these errors again and again. Along the way, most of the real experts ... independent lessors who focused on service ... were driven out of business. Go figure!

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The author of this article is an idiot, and needs to be fired.

There is a lot of evidence to suggest that if manufacturing of vehicles were totally separate from consumer financing of them, that 20 - 25% would be leased.

The article was dumb, dumb, dumb!!!!!!!!!!!!!!!

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Pretty blanket statement referring to all leases as being dumb! You obviously must know everyone's driving habits and payments they have. Often times it is in the best interest of a purchaser to lease. And many times this is true for people who drive more than your typical miles per year. Factor in three years depreciation on a new Tahoe at 30,000 miles a year? What's it worth $15k, maybe 18k? So you lose what 35k or so? If you can lease it for $650 a month you are better off. I have done this personally and as with the case with most things, sometimes all things are not the same with each individual. To use words like always or never you better be 100% sure of what you are talking about. It is very apparent that in this case you are not sure of your facts. By the way I bought a 2006 Jeep (msrp: $31,500) at 0% for 72 months and I also lease a 2008 Silverado (msrp: $39,000). Jeep payments are $402 and Silverado payments are $302. If you need even more examples of leasing being a better deal I have many!!!

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A lease is just financing depreciation. If you pay cash for a slightly used car, someone else (a person who leases) pays for the huge depreciation in the first couple of years. You still have a car with some factory warranty and there have not been that many significant safety advances in the past couple of years.

If you study millionaires lifestyles, they don't lease cars and many of them purchase used cars. When you lease a car you have payments forever. I have no car payments and it is incredible how much money you have when you can save what used to be a car payment.

Anyone wonder why car companies push financing and leasing? It's how thay make money. I'm sure someone will respond back and say they are wealthy and lease cars. There are exceptions to the rule but most people who say they are wealthy are not. Remember, this is posted on teh internet so anyone can say anything about their finances. Research has been done, millionaires don't lease cars. People who can't afford the car they want, lease cars.

Broke is normal........be wierd, live debt free!

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What you forget to mention is with a lease you have a downpayment and a early termination fee if you want out. You are also constantly locked into a monthly payment with no end in sight. Leases work for the right people, but for 85% of the people out there purchasing makes the most sense.

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Hey Conic,

I don't want to drive a car for more than five years! I also don't want to drive a $16,000 sticker price car. These are my choices, but also the choices of alot of other people. So like I said in my post, blanket statements about leasing being dumb is basically poor language. Even if you keep a nice, new truck or SUV for five years and have financed it for five years you will often times come out ahead leasing. It obviously becomes a better financial decision the longer you stay in your vehicle (10-15 yrs.) than if you would have leased for that same time period. All my point is that it is not for everyone. I don't just consider my vehicle as a mode of transportation. I like to drive a nice vehicle and that is important to me. My post also states I purchased one vehicle at zero percent and leased another. Whatever works for the consumer is what I say.

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Dave,

You do have a choice to lease a car forever and pay 0% on another for 6 years(!!! almost as bad as the eternal lease payment you pay until the day you die). I hope that works out for you financially.

I don't understand your example of the Jeep and the Silverado. Are you saying leaseing is a better deal because the payment is lower on a more expensive vehicle? If you pay off the Jeep in 6 years and have 2 Silverado 3 year leases in the same time frame at least you own the Jeep. All you have done with the Silverado is rent it for 6 years. You can probably buy a 2008 Silverado for 15,000 cash right now and keep it for 10 years. Could you explain why you think your example is valid. It sounds financially ignorant to me.

If you are trying to say the monthly dollars is less than you are correct. This only works for people who shop for cars based on the monthly payment not total outlay of cash.

Leaseing doesn't work for the vast majority of America. Americans keep spending themselves into the poorhouse. A big part of the housing debacle is people used their houses like a bank and took all the equity out of them to buy stuff they don't need. When the housing market tanks, and people lose their jobs, they are stuck with a house they owe more on than its worth and hundreds of dollars each month spent on cars.

Choice is what makes America great and the choice to be stupid is not illegal.

Leasing is dumb for people. It's the most expensive way to operate a car. Again, this is America and people have the right to choose how they want to buy cars. Just don't justify your bad decision by saying you don't want to drive a car with a $16,000 msrp. You are not what your drive. Broke is normal and broke people lease cars they cannot affor to buy. With $70,000 worth of vehicles in your house I certainly hope your household income is over $140,000 and your net worth is over a $1 million. If not, you cannot afford those trucks.

Please keep doing it because I need a good supply of 2-3 year old cars I can pick up cheap (for cash) when I need to replace one of my cars. If everyone made good finacial decisions, people like me would not be able to become finacially independent.

I love living debt free (except the 23 months I have left on my house) and I drive nice European cars (4 of them all paid for). For the majority of Americans, leaseing will not give them finanacial peace.

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I am a professional economist and I completely agree with this guy. You need to chill out though, people are dumb, what are you going to do about it?? If you are that stressed out go start a leasing business and make money from these dumb people!

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I'm going to repeat this point for those who keep talking about how much money they save on car payments by buying a car and keeping it 5, 10 or even 15+ years. Cost shouldn't be the only part of this decision. Every new generation of car comes with improved safety features. A car that's 5+ years old probably won't have those improved safety features such as better side impact protection, side curtain airbags etc. Car accidents kill a lot of people every year and I'd rather spend a few thousand extra dollars by leasing a new car every few years so that I have a car with better safety features in case I'm in a car accident. If you really want to save money, you could buy one of those "Smart" cars but you'd have no room for anything but passengers and god help you if you're in an accident with anything bigger than another "Smart" car.

I know many people would say, if you like to have a new car every few years, instead of leasing why not buy your cars and trade them in every few years for a new one. My answer to that is it can cost just as much money to buy a car and then trade it in a few years later as it would be to lease a car. When you buy your payments are much higher so if you like to get a new car every few years, leasing is less expensive. Go buy a car and then trade it in or sell it yourself a few years and see how much money you get versus the book value or what dealers get for used cars. The money you lose on a trade in or selling it yourself will be about the same as the extra cost of leasing. In the past I tried selling 2 used cars that I owned and it took a lot of time and I ended up having to drop the price a couple of thousand dollars below the "book value" to sell it.

@ Martin who talked about how millionaires don't lease cars they purchase used cars, that's a silly argument against leasing. Millionaires aren't going to be concerned with saving a few thousands on the cost of a car every few years whereas saving a few thousand dollars to a middle class person is important.

@ Matt who said "What you forget to mention is with a lease you have a downpayment and a early termination fee if you want out." People who lease cars should not be putting a down payment because they're not the legal owner of the car so if the car is stolen or totalled they don't get back any money of the down payment because the insurance company pays off the legal owner of the car (i.e. the leasing company). When I leased my current car, I paid only $160 on top of my monthly payment to drive off the lot with my new car. The $160 was to cover DMV fees. It's true that leases have an early termination fee but I'd rather not buy a car an lock my money in a car that depreciates in value. I'd rather have the money easily accessible or invested in something that makes money. If I need to terminate my lease early, then that's the penalty I'll have to pay. If you bought a car and then later you needed money quickly in an emergency, you'd have to go out and sell it quickly so you'd have to price it low enough to make it sell quickly and you'd probably lose just as much money in that situation as any lease penalty.

@ m.lilienthal who said "Leasing is dumb for people. It's the most expensive way to operate a car." Again that's a blanket statement that doesn't apply to everyone. It can be just as expensive to buy and later sell/trade in a car as it costs to lease a car every few years.

For the record I have zero credit card debt and enough cash in the bank to buy a nice luxury car but I choose to lease.

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I also think, same to your thoughts, our thoughts are very matching.
Thanks for putting this Post...



Car Rent

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