Buy vs Lease: The Debate Continues

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Buy vs Lease: The Debate Continues
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At least at my house. Why is this still a topic of conversation?

Because two rational, intelligent beings with the same ultimate goal can view a topic from different perspectives. Uuugh!!!

So this conversation has been ongoing – mainly in joking form – for some time. My husband continues to point out lease commercials on TV, in print, or online. I assume he likes to push my buttons. I’m trying not to react…not always successful.

I have a deep, visceral aversion to leasing cars. I’ve written about it a number of times:

Debt Free Living - Car Options

WonderMan and I have both had the exact same leasing experience, but we respond to it quite differently. So much that I would almost rather have teeth pulled – sans Novocain, yet he’s open to the idea again.

I’ve decided to think this argument out over a few blog posts with the hopes of clarifying my position, honestly exploring his, and gathering some hard core principles from #teamdebtfree to help me put this to bed FOR GOOD! Yep – I’m looking for back up to help me win the argument.

Let’s start with our positions – stated here in the most honest attempt to be objective. I’ll even start with his to ensure that I’m a team player.

WonderMan and the pros of leasing:

  • Low/no maintenance costs (other than oil changes and/or tire rotations)
  • Lost opportunity cost when you purchase a vehicle for cash
  • Access to the latest vehicle technology and safety features available (I twisted my face, but resisted the urge to comment. Hopefully a look is worth a thousand insults.)
  • In the short term, you spend less for a more reliable vehicle (We’ve agreed to restrict the lease value for the purposes of this argument to a no down, $199/month lease program).

While I can see his point, it doesn’t jive (am I from the 70’s) with my approach to finances, our long or short term goals, and my sense of what makes good economic sense.


A Little Background

We have a 10ish year old used car that we paid $10K for back in 2005. The car is a 2003 model. Within a year, we did have to replace the transmission: $3000. Since then, we’ve had break work done ($600), some engine work – another $4000, and at 200K+ miles we’re looking down the barrel of a timing belt change and possibly more transmission work. It’s slipping again.

This car has cost up $17,600 over ten years and that doesn’t include the routine maintenance, a tire here or there, and new batteries. Chicago winters are hard on a car’s life source.

My experience with leasing was $17,000 + a $425 return fee over three years. Can you see why I’m not a fan?

My cons regarding leasing include:

  • Depending on the lease – you pay as much through the lease term as you can for a low mileage used car. However, at the end of the lease term you have nothing to show for it.
  • Mileage restrictions limit car usage – unless you don’t mind paying extra for mileage overage fees. If you don’t, add that to the bottom line.
  • After the lease, you have either have no car or you’ll need to “re-buy” the existing car – paying more money overall for the same car. It doesn’t add up.

Ideally, to avoid this problem, after retiring the car payment, work on building cash reserves to pay cash for your next car. In theory that works well. Practically, life happens and that money may be needed elsewhere.

In our situation, a less than successful business venture (Failing Forward) was tapping all excess funds. While this is finally winding to a close, we find ourselves at the point of deciding to pay cash for a cheaper used car with a questionable maintenance future – one I’m willing to explore, revisiting a lease, or maybe exploring some other financing option.

The alternative is to put more money into maintaining our current car – another option that makes good fiscal sense to me! However, I realize I’m the person that replaced an engine to avoid buying a new car. It worked fine as long as you didn’t run the air conditioner while idling in 1st gear.

Now you have both sides. I’d love your input. How would you proceed? I know what I want to do, but in marriage there is generally a need to compromise. Either that, or dole out the silent treatment! Just kidding … sort of.

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