Ah, the age-old discussion: “Should I buy a new car or just lease one?” The answer is still the same, “It depends on your lifestyle.” Yet, the question itself takes on a deeper meaning for Baby Boomers in the Fall and Winter of our lives.
Leasing can be a Good Answer for Many Boomers
If you like to drive new cars every three years, leasing may be the answer for you. I say “may” because leasing recently seems to come with gotchas. It used to be that the annual mileage allowance was at least 15,000 miles. Now it seems to be just 10,000 miles before an extra charge of $.15-.20 per mile is added. Fellow Boomers, this could get expensive unless you are just driving around your local neighborhood. Anybody who loves road trips should think twice before signing a lease!
Is Leasing Really Less Expensive than Buying a New Car?
It used to be said also that leasing is less expensive than buying a new car. Now, the upfront payment amount has gotten somewhat larger than it used to be. In many cases, it amortizes to about $100 or so monthly over the lease period. For some cars, this can put the monthly payment in the same range as if one were buying the vehicle. Add in Gap Insurance to cover costs if you crash the car and leasing starts to look like less of a bargain.
Leasing seems to make more sense if you are into luxury vehicles and mostly use the car/truck/SUV/Van for local driving. Otherwise, take a hard look at the math.
So What’s So Good About Buying a Car?
What I like about buying a car (versus leasing one) is that I gain an asset. And if I have a trade-in, I may not have to put any money down either! Moreover, once the payments are complete, I have “extra” money every month. If I take care of the car, at my age I may never have to buy a car again! When I die, my grand kids can have it to to drive to school.
Smart Boomers buy used cars with low mileage that are only 1-2 years old and still under warranty. Since depreciation in the first few years is horrific, they get real bargains. Today’s cars can easily be driven for over 100,000 miles with proper maintenance, typically for much more.
Where can Boomers Find More Information?
These articles offer the Pluses and Minuses of Lease vs. Buy:
- Is it smarter to buy or lease a car?
- Consumer Reports: Leasing vs. Buying a New Car
- Buying vs. Leasing
- Does Leasing a Car Affect Your Credit Score?
The Bottom Line for Baby Boomers
The best choice between “buy vs. lease” depends on your lifestyle and financial capabilities. Leasing may get you wheels for less. Buying means you can eventually lower your monthly bills while gaining an asset. Which is best for your circumstances?
My personal lifestyle involves mostly local southern California driving, about 800 miles monthly. But I plan to start taking some road trips this year, so the mileage will go up.
I had leased a new Hyundai in 2013, using my existing Honda to offset upfront costs. When my lease was up, I liked the car so well that I obtained independent financing and purchased it. Maybe I should have bought the car right off, but who knew? My current monthly payments are a little below what I paid during the lease period. In another few years I won’t have any payments at all. I kinda like that.