Car Leasing is Cheaper – Why Isn’t It Better?
The auto industry is not alien to the statement that leasing a car is always the cheaper option as opposed to buying the same vehicle. Some even argue that the feel of driving around a new make and model every couple of years is incomparable. But there has always been another side to this story. A few financial experts believe that leasing a car might be cheaper but it does not necessarily mean that it is better. The confusion naturally still remains among consumers. As it turns out, the latter group is right. The overall bargain of leasing a car is not financially sustainable.
Why isn’t car leasing better?
There are two approaches to this point. One, financing. And two, depreciation. Let’s delve into them one by one.
The average cost of leasing a car in 2019 was $461. Depending on the model you took on the lease, that per-month figure could go higher or lower. Compared to that, the average monthly credit payments for buying a new car stood at $554 in that same year. This distinction makes leasing a car cheaper. Gurus argue that you pay almost $100 less a month if you opt for a lease.
But if you bought a dealer’s car (used car), the per-month financing cost in the US was around $391. In the top used car lots in Greer, SC, you will find a comparable model that is fairly new and returns the same service. From this angle, leasing a car is not cheaper anymore. In fact, the cost of leasing has gone up continuously since 2014 and the cheapest rate in the past decade ($408) was still higher than the rate at which used cars came.
New cars are known to depreciate at a rate of 50% in 5 years. This means that you are paying a sum of nearly $33,200 for that period and losing nearly $15,000 more due to depreciation. Against that, leasing a car for that same span will cost you $27,500. This is again cheaper given that there is no depreciation factor in this case.
But here again, used cars make a better case. If you search for the best used auto dealers near me, a current used vehicle will come at a price anywhere around $13,000 with credit payments and depreciate at a far slower rate than a new car. You will lose a maximum of $5,000 in that span and the net sum is comparable to the lease value. The best part? The car remains with you after 5 years. You can claim resale. With leasing, these do not work.
The aforementioned factors combine to dethrone the popularity of car leasing. So, without any further doubt, look for the best used car lots near me and buy a used vehicle. This is the option that is both better and cheaper.