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Posted: 11:40 a.m. Friday, Dec. 27, 2013

Should you lease a car right now?



By Clark Howard

ClarkHoward.com


Most manufacturers go on a blitz with their "End of the Year" sales events between Christmas and New Year's Eve. But is it a good idea to lease right now or should you wait?

There are essentially 2 times in every calendar year when you can get a deal on a car: During a change of model year in August and during a change of calendar year in December.

At this time of year, there's a particularly big push for leasing. But leasing makes sense only in certain circumstances:

  • You plan to lease for less than 4 years
  • You have good credit
  • You drive fewer than 20,000 miles each year

For the most part, leasing is a disaster for you. Edmunds.com has new numbers that tell the story. Basing their calculations on a car that sells in the mid $20,000 range, they've estimated leasing will cost you $6,000 more than buying the car new. That loss goes up to over $10,000 vs. buying a gently used version of that same car a couple of model years old.

When you get on that lease treadmill every 2-4 years, each time you're taking on an obligation and you have nothing to show for it at the end. Each time you take on 100% of the loss in value of the vehicle for the time you drive it. That's why I'm never keen on leasing a car.

There are only two exceptions to my "no leases" rule. The first is if you like new wheels every two or three years. The second has to do with fancy luxury cars, electric cars, and some other alternative fuel vehicles. These kinds of cars don't get discounted, but you will find factory-subsidized leases that can be a deal. (You'll know it's a factory-subsidized lease when you see a manufacturer's ad on TV or a website telling you it's such.)

With increases in car reliability, it's entirely possible that you might keep a car 10 years without breaking a sweat. So buying and holding onto a car is a far better strategy. Of course, that's not good for automakers and dealers!

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