by STAFF WRITER Published August 25, 2008 Credit Unions Online
The ads from car manufacturers and dealers are very tempting. Lease your next vehicle and significantly reduce your monthly car payment. But Credit Union Member News wants you know that, in almost every instance, a lease is a bad consumer move. It usually costs you more to lease the car instead of buying it outright. At the end of the lease term (usually 24 months), you return the car back to the dealer and have nothing to show for it. You must then lease another vehicle, creating a vicious cycle of car rentals. Alternatively, in some instances, you can buy the car you just leased at its current market value but losing all the money you paid in lease payments and starting from zero.
What's more, most leases are incredibly inadequate in terms of how many miles they allow on the lease. Most leases are restricted to 12,000 miles per year. That works out to about 231 miles per week. Most people exceed that in commuting to and from work and in-city errands. That leaves little or nothing for the weekends and extended trips. You must pay expensive fees for any mileage in excess of those limits at the end of the lease. Leases make sense only in a few instances:
You feel you must have a new car every two years.
You can absolutely afford only a minimal monthly amount for transportation and are certain you can stay below the allotted mileage.
You can deduct your lease payments from your taxes for business purposes.
In most every other instance, it makes more sense to simply buy the car outright. If you are thinking of a lease, please call or visit your credit union first and let us run an analysis for you based on your individual situation. If you decide that buying your next vehicle is best for you, see your credit union for a pre-approved vehicle loan.