Q&A: To Lease a Car or Buy New ?
Automotive journalists aren’t ever supposed to say something like this, so lean in close: maybe you shouldn’t buy a new car right now.
What? With gas prices spiking, shouldn’t you be looking to trade down for something more fuel-efficient? Shouldn’t you consider that $2.99 gas guarantee Chrysler keeps advertising? We’ve all seen the stories about record low auto sales this year. Isn’t this a buyer’s market?
Well, yes. Those are all reasonable arguments. But you still might not want to buy a new car. Hold onto what you have for as long as possible — and if you absolutely must replace your daily driver, lease a new car while you still can. It could make a lot more sense to buy in a few years than to buy now, and a good lease on a 2009 could give you the freedom to do that.
Why Leasing Makes Sense
#1: You don’t want to be stuck with a 2009 car in 2014
Because the design process for a new car takes about two to three years, the new 2009 model-year cars reaching dealership lots this fall were conceived on drawing boards in 2005 or 2006, when gas prices were just over two dollars a gallon. These cars weren’t designed for a world of four-dollars-a-gallon gas. Cars that fit today’s reality are still in the design stages and coming to dealerships in 2010 or later.
The smallest car Ford could sell you today (a 2008 Focus) would net an EPA-estimated combined fuel economy rating of 28 mpg. The most fuel-efficient mass-produced car on the road today, the 2008 Toyota Prius, is rated for 46.
But in just a year or two, you’ll see a much more impressive set of stickers on new car windows. Ford could sell you a Fiesta, a subcompact that wowed the automotive press at the Geneva Motor Show last spring and reportedly gets almost 40 mpg. According to Toyota engineers, the next generation of the Prius could win an EPA rating of 94 mpg.
2009 Ford Fiesta RSAccording to the U.S. Department of Transportation, the average new car buyer will hold onto their purchase for eight years. Edmunds estimates that the term of the average new car loan has stretched to over 62 months. So if you were to buy a 2009 model-year car, you’d probably be paying for it until 2014 and driving it until 2016 — when automakers will have had years to improve on the already-impressive fuel economy numbers of 2010 models.
Oh, and when you decide to get rid of that 2009 car at last, you’ll be left trying to sell an old car with poor fuel economy in a market that long ago passed it by. Most leases, on the other hand, last three years. Lease a 2009 today, and in late 2011 you’ll be able to give it back to the dealer and get one of those post-2010 cars.
#2: Leasing protects you from unexpected depreciation
Millions of drivers who bought SUVs in the world of cheaper gas have learned a harsh truth this year: depreciation is a big risk. SUVs have lost value much quicker than anyone predicted, thanks to soaring gas prices. Some dealerships won’t even accept SUVs as trade-ins anymore, and owners hoping to sell them on the private market are forced to accept offers thousands of dollars below what they thought the car would be worth.
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