Should You Lease or Own a Car?

Ray’s Take: According to the Lease Market Report by Edmunds.com, lease volume has doubled in the U.S. in the last five years and the automotive market is on the verge of a fundamental shift in consumer behavior about the value of owning a new vehicle – particularly when the purchase has to be financed.

Deciding whether to lease or buy a car is a personal decision that is usually based on how many miles you drive per year, your credit history and lifestyle.

Leasing is a good option for those who want a low monthly payment, prefer to have a new car every few years and want to avoid repair costs.

Keep in mind that you must have excellent credit to lease and when you do, a portion of the car’s depreciation and financing costs can be deducted on your taxes if you use the car for business purposes.

But leasing can be tricky. Ignoring the fine print can cost you dearly, like early termination penalties, excess wear fees and other hidden costs. Make sure you are clear on the financial commitment you are about to make by getting a detailed written estimate from the dealership with all fees, including monthly payments, down payment, title and registration and delivery charges. Add your insurance cost to that to see the big financial picture.

I recently suggested that a client go a year on Uber rather than buying or leasing. When we did the math at the end of the year, she was better off and loved not having to deal with parking! Transportation is changing. Buying and owning a car was a significant part of the American culture for a long time, but this may soon go the way of the landline.

On a recent family vacation to Chattanooga my son and I took an Uber to Rock City while Dana and our daughter used the car for a show in another city. All went well until I opened the Uber app to go back to the hotel. Nothing. No cars available – at any price. We got a taxi – and I still own a car – for now.

Dana’s Take: I know folks who have leased cars and have not enjoyed or repeated the experience. The additional charges for bumps and scratches were just too annoying and costly.

Searching for a gently used car is one money-smart option. My college friend and I have been looking at electric cars, so we were green with envy when a colleague scored a 2-year-old electric car with only 11,000 miles for about a fourth of the cost of that luxury model new. We will keep looking for a deal like that.

Whether buying new, used or leasing, choose a car plan that fits into your financial goals.

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