Should I lease or buy isn’t as age-old a question as which came first, the chicken or the egg, but it undoubtedly has more application to your everyday life. As vehicles get more sophisticated, complicated and expensive, leasing is increasingly seen as the right solution by those acquiring a new car. These days one of every three vehicles is leased, and the key reason is very simple – leasing a vehicle enables you “to drive more car” for your monthly expenditure.
The divide between the monthly payment on a vehicle lease compared to the monthly payment when financing a vehicle continues to widen, particularly as manufacturer’s suggested retail prices (MSRPs) and transaction prices continue to grow. The contrast is most stark in case where the carmaker puts the vehicle on sale by offering a promotional lease that it subsidizes. These “subvented” leases are the offers you usually see advertised on TV and online. Choosing a vehicle with a low-cost lease is the best way to reap the advantages of today’s heavily competitive marketplace.
Swapalease.com, the nation’s largest online lease marketplace, analyzed monthly payment terms on some of today’s most popular leased vehicles and compared them to the monthly payments in a 60- and 72-month finance programs. The 60-month loans carried a 3.50% interest rate and the 72-month loans were at 3.75%. The payment analysis reflects average down payment terms already baked into the deals for both the lease and finance offers.
The results are pretty stark and offer compelling evidence as to why so many consumers are opting to lease rather than buy. For example, if you leased a Volkswagen Passat 1.8TS you'd pay $149 per month for 36 months. However, if you bought that same car and financed it for 60 months, your cost would be $360.94 each month. If you financed it over a longer period of 72 months you'd still pay $308.16 each month.
The Volkswagen Passat is just one of more than a dozen vehicles Swapalease.com analyzed to point out the current monthly cost advantages of leasing instead of buying. Among luxury cars, the monthly price differential is equally telling. A Mercedes-Benz E300 4MATIC, a truly amazing luxury sedan, will cost $902.40/month over the course of a five-year (60-month) loan or $770.44/month over 72-months, but in a special 27-month, low-mileage (10,000 mile/year) lease, the monthly payment is just (?) $589.00.
The reliable Toyota Corolla is now being offered at $199/month on a 36-month, 12,000 mile-per-year lease. That same car is financed over 60 months would cost 301.36/month and over 72 months would cost $257.30.
Looking for a luxury SUV? The Acura MDX is currently being promoted with a 36-month, 10,000-mile-per-year lease with a monthly payment of $409. Should you buy that same front-drive vehicle it would cost you $741.60 over 60 months or $633.16 over 72 months.
While the monthly payments are startlingly lower in the lease scenarios, it should be noted that leases bring with them no equity for the payer. At the conclusion of the finance process (e.g. 60-months) the driver owns the vehicle. That is why obtaining a vehicle with a promotional lease deal is especially valuable to people who like to drive a new car every three years or less.