Car Leasing

Leasing is just an awful model for ‘having’ a car.

Sure, leasing is great for the industry. If you can convince the buyers of any product to want a brand new one every two years then you will be in business for a long time. Keep the manufacturing up, keep adding new perks and features, keep selling the dream. Dealers can make much more money from the secondary market by ensuring a higher level of quality control defined in the lease terms (low mileage, guaranteed service, etc.). As a warrantor you can even limit manufacturer’s warranties to less years if you can manage to make most of your money from leases. The car companies clearly win.

But when did people get tricked into thinking leasing was a good investment?

The sales pitch is that, under certain circumstances, leasing a car is more financially viable than buying one. The numbers get run and it can turn out to be true, but what exactly are these special circumstances that make leasing attractive?

Essentially, if you are going to buy a new car every two or three years then it makes absolute sense to lease. Besides the lower financial burden and worry that you need to bear as a title holder, you can end up spending less in the long run than if you buy, devalue, sell, repeat.

However, buying a new car every two or three years is absolute financial mismanagement. Cars are built to, and meant to, reliably last much longer than lease terms. If you get caught up keeping up with the Jones’s and always need the next best thing then at least admit that you are paying a premium for status. That is fine if you have a lot of money but don’t spin it into thinking that you’re making a sound financial decision.

So leasing is good if you want to always have a new car but constantly upgrading is not financially beneficial and thus a mismanagement of money. By the transitive property of mathematics, leasing is a stupid waste of money. Don’t listen when people say buying cars is a waste. Cars are never a good overall investment, sure, but if you need one, get one, and keep it for at least five or six years. You won’t have any hassles in that time, you’ll have good resale value, and you’ll get much more coming back to you when you do need to upgrade.

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