Lease Or Buy: The Automobile Question

To help you gain clarity for your decision-making, I'd like to suggest my flowchart, “Should I Lease Or Buy My Next Automobile?”. You’ll find this guide helpful whether you have an immediate, unplanned need or you're navigating the emotional or philosophical issues involved in leasing versus buying your next vehicle....
David Roberts
September 6, 2022

It’s a common question I hear folks asking: “Should I lease or buy my next vehicle?” The decision to lease or buy can have both an immediate and long-term effect on cash flow and emotions. Beyond make, model, and body type, the evolution of automobile technology is changing the motives and philosophy of car ownership. This adds nuance to the decision, making it more than just a financial matter.

Basic comparison of car leases and car ownership

Buying and maintaining a vehicle is a significant expense for folks. Leases are usually the cheaper option in the short term. However, the fees and ongoing nature of the arrangement make leases the more expensive option over time when comparing them with outright purchases for cash or through bank/dealer financing.

With lower monthly payments, it follows that you can lease a nicer, more expensive vehicle than you could otherwise finance. Plus, the leased vehicle will stay under warranty throughout the term of the lease – regular maintenance is all that’s required. When you own your car, you’ll be paying for your repairs out-of-pocket once your warranty expires.

With an outright purchase or a financing arrangement, there is always a point at which you own the vehicle. Alternately, a lease is like an ongoing rental agreement where you get to change to a new(er) vehicle every couple of years without ever owning any of them. This is the point where ownership philosophy and emotions start to weigh in and complicate the matter.

For many, the lower monthly payments, exchanging for a newer car every 2-4 years, never having to worry about major repair costs, and regular technology upgrades all add up to real value in a vehicle lease. A more expensive option for sure, but more desirable given their circumstances and feelings.

DECISION POINTS TO CONSIDER and a resource to help

To help you gain clarity for your decision-making, I’d like to suggest my flowchart, “Should I Lease Or Buy My Next Automobile?”. You’ll find this guide helpful whether you have an immediate, unplanned need or you’re navigating the emotional or philosophical issues involved with the leasing versus buying argument.

Click here to download this resource

Use this flowchart to go over important decision points including:

  • Costs and cash flow
  • Mileage and use
  • Safety and technology
  • Depreciation
  • Flexibility
  • And more

You’ll be able to weigh many of the competing factors that will bear various degrees of importance given your situation.

What does Dave Ramsey think about leasing?

Dave Ramsey – whose advice I’m very fond of – says that you should never get a car lease. In fact, Dave calls it “car fleecing,” a rip-off you should avoid like the plague. His premise is basically:

  • Over time they cost more than buying your vehicles outright
  • They are a form of debt – “debt is dumb”
  • You never own anything; you’re perpetually renting your vehicles

If you cannot invest the time needed to get familiar with all aspects of car leases so you can make a smart money decision, then Dave’s advice will serve you well. However, this is an issue which is not strictly financial. Given your own unique situation, there will also be philosophical and emotional nuances affecting your decision.

Final thought

I would like to discuss this topic with you and help you to use the “Should I Lease Or Buy My Next Automobile?” flowchart so you will be able to make the best decision for yourself.

Click here to download this resource

What Accounts Should You Consider If You Want To Save More?

What Accounts Should You Consider If You Want To Save More?

Investors often ease into their savings strategy with small investments into their 401(k) plans. Later, as their finances allow, they “graduate” into other investment vehicles for their retirement nest eggs, such as IRAs and taxable accounts. As their financial lives become more complex, many investors will ask, “If I have a fixed sum of money to invest every month or every year, what accounts should I consider if I want to save more?”

Will Your Social Security Benefit Be Reduced?

Will Your Social Security Benefit Be Reduced?

Choosing the optimal time to start receiving your Social Security benefit is an important step toward ensuring that your retirement income and savings will last throughout the rest of your life. No one wants to leave benefit dollars on the table due to a poor timing decision, not even those who have adequate savings and pensions and are not relying upon Social Security to fund their retirement. The problem folks are facing, though, is that choosing an optimal time to claim their benefit is neither simple nor straightforward.

A Guide to Setting Goals for Your Retirement

A Guide to Setting Goals for Your Retirement

Are you wondering how to set yourself up for retirement? Thinking you've reached the retirement age? It's important to take the time to make sure you can enjoy the next phase of your life. Ensuring you do the right financial planning for retirement is essential, and...

Get in Touch

Plan For Your Goals Logo

Many have no financial plan for retirement. At Plan For Your Goals, my mission is to help both the newly retired and the nearly retired take control of their finances with an evidence-based plan so they can retire with confidence.

Contact

Branch Office: 5954 E Bay Blvd, Gulf Breeze, FL 32563

(850) 786-3400 ext. 101

david@planforyourgoals.com

Check David's background on FINRA's BrokerCheck

Plan For Your Goals, LLC is a state registered investment adviser. Plan For Your Goals, LLC may only transact business in those jurisdictions in which it is registered or qualifies for an exemption or exclusion from registration requirements. Plan For Your Goals, LLC’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of Plan For Your Goals, LLC’s web site on the Internet should not be construed by any consumer and/or prospective client as Plan For Your Goals, LLC’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Any subsequent, direct communication by Plan For Your Goals, LLC with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of Plan For Your Goals, LLC. A copy of Plan For Your Goals, LLC’s current written disclosure statement discussing Plan For Your Goals, LLC’s business operations, services, and fees is available at the SEC’s investment adviser public information website or directly from Plan For Your Goals, LLC:  Click here to download a PDF copy.

This website and information are provided for guidance and information purposes only. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy. This website and information are not intended to provide investment, tax, or legal advice.

Plan For Your Goals, LLC throughout this website has provided links to various other websites. While Plan For Your Goals, LLC believes this information to be current and valuable to its clients, Plan For Your Goals, LLC provides these links on a strictly informational basis only and cannot be held liable for the accuracy, time sensitive nature, or viability of any information shown on these sites.

Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

 Copyright © 2022 Plan For Your Goals, LLC. All rights reserved.

Retirement Readiness Score Quiz Icons

What's Your Retirement Readiness Level?

Take This FREE 60-Second Quiz To Discover How 'On Track' Your Savings Are For Retirement