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Leases typically require lower upfront costs and have lower monthly payments (than buying the same car). Overall ownership costs are lower due to the car being under the factory warranty. Essentially, all a senior citizen needs to think about with a leased car is the lease payment, gas costs and car insurance.
Retirees can simplify by leasing their cars. Leasing allows lower upfront costs, allowing seniors to keep more of their money in their accounts. They don't have to worry about repair costs: virtually all are covered under the car's warranty in the early years. At the end of the term, leases just hand the car back.
But monthly lease payments are, on average, lower than car loan payments. For people living on a fixed income in retirement, lower monthly payments could make financial sense. But if you don't drive an excessive amount and would appreciate lower monthly payments, then a lease could be for you.
Drawbacks of Leasing The biggest drawback of leasing is that you aren't building up any equity in your vehicle. If you can't do that, the lease rate will go up, or you'll be stuck paying expensive mileage penalties at the end of your lease. Drivers who lease will also have to take very good care of their leased cars.
Monthly lease payments cover depreciation and taxes only for the time you have the vehicle. That means the payments will be lower than if you were to buy the car and take out a loan for the same number of months as the lease. You can afford more car a big reason luxury cars are leased more often than purchased.
Whether you buy or lease depends on whether you intend to keep driving the vehicle for many years or not. If so, then buy. If not, then leasing might be a good option for you, assuming you only drive a normal amount of miles each year about 10,00012,000 miles. No, leasing is not a waste of money.
Comparing the two major finance choices The choice between buying and leasing has often been a tough call. On one hand, buying involves higher monthly costs, but you own something in the end. On the other, a lease has lower monthly payments, but you get into a cycle where you never stop paying for a vehicle.
Drawbacks of Leasing The biggest drawback of leasing is that you aren't building up any equity in your vehicle. If you can't do that, the lease rate will go up, or you'll be stuck paying expensive mileage penalties at the end of your lease. Drivers who lease will also have to take very good care of their leased cars.
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