Should you buy or lease a car?

Hey Frugal Friend! 

Today’s email is inspired by a listener question we recently received asking our thoughts on whether they should purchase a car OR consider leasing. We thought it was an important question, with an answer that could benefit the rest of the class :)  

We recognize how important vehicle decisions are, AND the reality that transportation costs represents one of our top 3 biggest spending categories. Which is why a whole section of Buy What You Love Without Going Broke is dedicated to how to make good car purchasing decisions.

Making just 1 optimized car buying choice could save you thousands. If this sounds like the deep dive you need, pre-order the book! But until then, here’s our take:

🚙 Buying Vs. Leasing: What’s the Difference? 

Leasing a car is similar to renting an apartment. You have the vehicle on loan from a dealership and the rules that apply with that. Some companies limit the amount of miles you put on the car & where you get maintenance done, for example. At the end of your lease you may have to pay a fee & turn the car in. Another option, depending on the place, is to buy it outright. 

Buying a car means that through cash or an auto loan you purchase a car, and when you drive off the lot, that car belongs to you. You can get the maintenance done anywhere, and you can drive the car as much as you wish. Of course still recognizing that a car is a depreciating asset.

✅ What we Recommend 

🚗 For most people, buying a car is going to be the better financial option. The only reasons we see to getting a car lease is if you have a job where the type of car you drive truly does impact your ability to earn or the way you’re perceived in the industry. OR if you own a business where you drive a lot, don’t want to use your personal car and want to save on car rentals for the biz.

We think the best option for most is buying a pre-owned car. You always save more money in the long-term when you buy used. But we don’t mean old, 3 to 5 years seems to be the sweet spot.

Now for some people, this may come as a shock, but we really do support low interest auto loans. We even have a best practices episode on taking out car loans (EP 289).

And as far as finding the right car for you, we recommend checking out carcomplaints.com because even great brands can have certain makes, models, and years that are worse than others so funnel any car you’re looking at through that database to make sure you’re getting a reliable one.

Pro tip: When buying from a dealer, inspect your contract, especially on new cars, for shipping fees, designation fees, & dealer prep fees. These are negotiable. 

Kindly,
Kim

⭐️⭐️ P.S. Want to share all this goodness with your friends AND earn cool Frugal Friends merch?

**Means this is a sponsored or affiliate section. We may earn a small fee or commission when you choose to try one of our sponsor or affiliate partners. But opinions are still 1000% our own.