If you’ve been following money expert Clark Howard for any length of time, you know that when it comes to leasing a car, he is not a big fan.
Clark says if you compare the money you’ll spend leasing vs. owning, the results are pretty clear. “For the most part, leasing is a disaster for you,” he says.
“I know you may be lured by the prospect of driving a late model vehicle with all the newest technology and bells and whistles, but that long-term rental never becomes yours! That means to get from Point A to B, you’re locked in a perpetual cycle of debt,” Clark says.
Clark cites numbers from vehicle listings and review site Edmunds.com that show that if you lease a car that sells in the mid $20,000 range, it will cost you $6,000 more than buying the car new.
To make matters worse, when it comes to buying a used version of that same car, you could end up losing more than $10,000, according to the site.
However, the rise of millions of “gently-used” vehicles on the market continues to make dealerships adopt aggressive leasing strategies to get cars off the lot and into residential driveways.
Clark’s take: Leasing is OK only under these 2 circumstances
Despite Clark’s strong feelings on the subject, he does, however, see benefits to leasing a vehicle — but only under two conditions.
- You are a person who feels like you must drive the latest & greatest vehicle
- Your lease is heavily subsidized
When it comes to the first point, there are certain drivers who see their car as a status symbol. They lease because they like to stay in a fresh set of wheels every few years. That makes sense — as long as it’s only every two or three years.
To the second point, Clark is never one to pass up a good deal. Some luxury automakers improve the terms on their vehicles through generous leasing deals. It’s a way for car manufacturers to save face when models don’t sell as quickly as they would like. One thing to beware of in such cases, though, are the smaller mileage allowances, which are usually part of the deals. You don’t want to get stuck paying ridiculous money for driving more than is allowed in the terms of your lease.