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What are the advantages or disadvantages of leasing a car instead of paying cash for it when in retirement? We are in our early 70's and have the cash but are wondering if leasing would be a better option. We are planning on purchasing a mid-price auto.
I'd appreciate hearing your opinion and/or experience.
My mother in law leased a new Camry every 24 months until she stopped driving.
Advantages: Camry's never fail, they are cheap to lease because they have excellent re-sale value and cost only about $24K new. Her car was always in warranty so no worries about getting screwed having a car fixed. She only drove 5K miles per year so the dealer loved her.
Disadvantage: Costs more than buying. However, it was worth it for her piece of mind.
Driving only 5,000 miles/year makes it nuts to lease a car. As you said a Camry is so reliable they should be worry free up to 80,000 miles easlily, I drive them way longer but I'm not an older woman.
As a rule I don't see any advantage to leasing regardless of age.
If you are a low mileage driver and plan to keep your car for many years, then buying is much cheaper. I recently bought a Honda CRV. I expect to drive it well under 10000 miles/year. I hope to keep it at least 10-15 years.
BTW, I had planned to pay cash thinking I would get a better deal. Wrong. The dealer makes money and really pushed us to finance. We were happy with a rate under 3% and saw no reason to pay cash. My wife is a great at car deals and was able to get the dealer to throw in some all weather floor mats if we signed up for financing. The loan app only required a couple of minutes and it was approved instantly.
There is only a tax advantage to leasing the car that businesses can get. Else wise the reasons people lease a car is to drive a new one every couple of years. The latter is more expensive.
However, for some people who have a guaranteed income and want to put nothing down, leasing turns a car expense into a utility payment. Some people like it that way.
However, for some people who have a guaranteed income and want to put nothing down, leasing turns a car expense into a utility payment. Some people like it that way.
Apparently you have not bought a car recently. I financed with nothing down. I believe that is typical.
Driving only 5,000 miles/year makes it nuts to lease a car. As you said a Camry is so reliable they should be worry free up to 80,000 miles easlily, I drive them way longer but I'm not an older woman.
As a rule I don't see any advantage to leasing regardless of age.
This comes up all the time on the automotive forum, and invariably, the same comments are made. Interestingly over there, the people who have the strongest anti-leasing opinions are invariably the people who have never leased a vehicle and have no idea how it works apart from the basics.
As for the question and comments on this forum, rather than compose yet another defense of leasing, I'll just C&P one of my earlier posts that demonstrate how leasing can be a superior decision:
"Let's say you are going to either purchase or lease a car that costs $85,000. Let's also say that you know you will want to get rid of this car in 3 years and buy another new vehicle. The leasing company has set the residual value of this vehicle in three years at $40,000 and has set a money rate of .00001. So now let's examine your choices:
1. You purchase the car either taking $85,000 out of your assets, thereby losing the ability to earn money by investing same, or you make a down payment and then pay interest for three years. (Side note: you also must pay sales tax on the entire $85k purchase price.) Let's also say that you know that at the end of a three-year period, you will want to sell or trade in the car for whatever it is worth at that time. If it is worth $35k, that is what you will get. If it is worth $40k or $45k, that is what you get. You then buy another car, paying the difference between another $85k vehicle and your $40k trade-in. Net new purchase: $50k, $45k or $40, depending upon what you're old car is worth after three years.)
2. You lease the vehicle making basically all-principal monthly payments for three years, paying sales tax as you go only on the amount of the car's value that you consume. Your financial assets remain unaffected. At the end of the three-year period, you examine what your car is now worth. If it is only worth $35k, well that's just too bad for the leasing company, because you're giving the car back to them and they will have to eat the excess depreciation and then still try to sell the car. If it is worth the $40k that the leasing company thought it would be worth, you give them the car so that they can try to sell it and get their $40k out of it. You then decide if you want to lease a new vehicle, again making monthly payments just as before. However, if the leasing company was wrong in estimating the residual value and the car is actually worth $45k, then you just buy it outright from them at the already negotiated price of $40k, and go sell it yourself for $45k, pocketing the difference. Or alternatively, you can "trade in" the leased car for $45k; the dealer to whom you traded it to pays off the lease value of $40k; and you still pocket the extra $5k toward the purchase or lease of your next vehicle.
It appears to me from the above example, that most if not all of the risk is with the leasing company, not the lessee. Feel free to try to convince me otherwise."
How's about a redo at $25-$35K with 15 years ownership. Retirees (ie: this forum) aren't likely to pay more than that on their fixed incomes. (Some very well off will, but most won't)
No need to lease a Toyota or Honda, unless you absolutely want the greatest and newest. Otherwise, buy Japanese, lease Germans.
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