Should I buy or lease my next car?
I have an 11-year-old car with less than 50,000 miles. It has been paid off for years. It is in great shape but I'm thinking of upgrading next year to a newer car. I don't want to buy a brand-new car because they depreciate so quickly, so I'll likely be looking into a certified used vehicle. Should I lease a vehicle, or buy it via monthly payments? Going over the allotted mileage would not be an issue because I probably drive three miles or less per day.
Keep in mind that you are posing this question to a committee of financial advisors. If any of us tells you to get a new car, they deserve to be defrocked. A 2008-model car is not an old car unless it has been abused or driven into the ground, and yours hasn't. (The last three cars I owned had an average of 130,000 miles.)
Most cars average about 8-10,000 miles per year. Thus you have a car that is effectively six years old and can easily run for another 100,000 miles (though you don't say what kind of car, and some are more reliable than others.) Save your money. Put it into you investment portfolio. Build your savings. Then when your car starts to cost money or be unreliable, you can revisit this issue -- and buy another car you can keep for 20 years. Rise above the notion that a car is a status symbol.
Congrats. You're on the right track. Buy don't lease. Get a certified used vehicle, not a new car. Returning a lease car with mileage far below the cap means you left money on the table. Also, the interest cost embedded in a lease exceeds that on a car loan.
Sounds like you would be crazy to lease a car, you don't drive much, you want to make a smart money move, and you keep cars a long time.
The smartest money move would be to buy a good used car, and just keep driving it for a long time.
For more check out this post - How much is that car payment really costing you.
Cost-wise it makes more sense to buy if you plan on getting a car and using it for the longer term, but if you are interested in having newer cars more frequently, leasing might make sense.
Since you don’t have a preference for a new car, I’ve found that a cost-effective way to go is to get a lease return at a dealer, about 2 years old at about half the sticker price of the new model and certified by the dealer, or a pre-owned car older than that also certified by the dealer. I don’t think the time and effort shopping around for a used car not held by a dealer is necessarily worth it, unless that activity is something that might be enjoyable for you. I would also recommend that you try to bargain them down no matter what the offered price is, and pay cash up front. Even though interest rates on loans are low and you can get a long term if you have good credit, with a mid-range car purchase it is generally better to pay cash if you have it available.