Reader Question: Leasing vs. Buying?

Here’s the latest reader question, along with my reply!

Charles asks: Eric, if you have published article on pros and cons of leasing cars could you do so again?

My reply: I devoted a chapter of my ebook – Don’t Get Taken for a Ride! – to this very topic! I will mail you a copy of it (it used to be possible to download it directly from the site but that broke and – not being computer “hip” – I have no clue how to remedy it.

In the meanwhile . . .

Each has its pros and cons. Among the pros of leasing:

You always drive a new car; you only pay for routine maintenance (and sometimes not even that). You can drive a nicer – more expensive – car because the monthly lease fee is lower than it would be if you bought the same car. You may be able to “write off” some of the cost of the lease as a business expense.

Among the cons:

You have perpetual payments – but you never own the car. You may get hit with a huge bill at the end of the lease if you exceed the mileage allowance or they claim the car is damaged.

As far as buying pros:

You will eventually have no payments – and still have the car. Since almost any new car should run reliable for at least 10-15 years and most new car loans are 5-6 years, you stand to have several years without a fat monthly payment. You also own the car and the equity you have in it – which is fungible, meaning t can be converted to cash if you need to.

Among the cons of buying:

The monthly payment will generally be higher and the payments (i.e., the loan) will be longer. Assuming you keep the car after it’s paid off, you will be on the hook for any repairs it ends up needing. You will also have a not-as-seamless transition from your old car to a new one, as is usually the case with a lease.

So, a lot to think about!

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Got a question about cars, Libertarian politics – or anything else? Click on the “ask Eric” link and send ’em in!