But that means that many workers who rely on their cars for their livelihood can’t afford truly reliable transportation. Even buying used cars in the 50,000-100,000 mile range can be very expensive, relative to a worker’s wages. Going above the hundred-thousand mark can lower the price of a used vehicle significantly, but the rate of breakdowns for cars in that category is high enough that buyers can expect to be frequently dealing with repairs, some of which will, such as blown head gaskets or transmission failures, will end the vehicle’s useful life.
So what can a consumer who needs reliable transportation do? Many people are unaware of just how much more affordable a new car can be when leased versus being purchased outright. We break down a few reasons that leasing a vehicle can make a ton of sense.
1. Leasing can save you a ton of money in up-front costs
All things being equal, you will be able to get a given car for a lot less money by leasing than you would with buying. One of the largest differences is in the drive-off costs. A typical bank-loan purchase of a $30,000 car may require an initial cash outlay of up to $8,000. When leasing a similar vehicle, the up-front costs will rarely total much more than a few hundred dollars. Leases typically require prepayment of the first month’s rent as well as a small security deposit. Whereas buying a car on a bank loan often requires 20-25 percent down, a large sales tax and a number of other fees associated with the loan.
2. Leasing saves even more money in the ongoing, monthly payments
If the up-front cost savings sound like a lot, they’re often less than the amount saved over the course of a lease. Using the typical $30,000 car example above, a bank payment will often be between $700-$900 per month, depending on credit. A lease on a similar vehicle may be as little as $400 per month. Over the course of a 36th month lease, this can add up to low five-figure savings versus buying.
3. With a lease, you don’t have to worry about selling the car
The major drawback to leasing over buying is that you won’t own the vehicle. However, this is much less of a problem than it may, at first, seem.
The truth is that, unless you have a shop, mechanical experience, sales experience and are willing to take 50-100 hours of your time, where you could otherwise be earning your normal wage, to sell your car, it is unlikely that selling your own vehicle will be worth your time. Dealerships are experts at selling cars, and they have many highly trained and talented specialists to allow them to ply their trade. Most people underestimate how much can go into selling their cars. The truth is, most people will be better served spending their time doing what they’re expert at, rather than trying to play amateur car dealer in a competitive field that requires years of experience to learn.