The Clinton Herald, Clinton, Iowa

Top News

March 26, 2013

The pros and cons of leasing a car

If you've paid attention to car commercials on television lately, you may have noticed there are some jaw-dropping deals on auto leases – or so it seems. Some sharp entry-level sedans carry monthly payments as low as $150.

But the first rule of shopping for any kind of car, whether for purchase or for lease, is to forget the monthly payment and instead, focus on the purchase price, interest rate and the length of time you'll be making payments.

“Unfortunately, I think most people define affordability by how much the monthly payment is,” said Mike Sante, managing editor of Interest.com. A lot of people think, if the check doesn't bounce I must be able to afford it.”

Sante and his team conducted a study in February and concluded that most consumers can't afford most new cars. And that's part of the seductive appeal of an auto lease – it looks much cheaper than buying. The monthly payment is lower and so is the down payment.

Paying for just part of the car

That's because, with a lease, you aren't paying for the entire car, just the part that you're using. In a typical lease, you surrender the car at the end of three years. The car still has a lot of its value left, which the lessor recoups when they sell the vehicle on the used-car market. You are only paying for the first three years worth of value.

But are you overpaying? That's the question you must answer before deciding whether leasing a vehicle is right for you. Often, it depends on the kind of vehicle and the price.

Let's look at two different vehicles and approach them from both a lease and sale perspective.

Before going any farther, let's get business leasing out of the way. Many businesses, both large and small, lease their vehicles because they can deduct the entire lease payment from their taxes. We're ignoring that in this discussion, which is intended striclty for consumers.

A pricey ride

Text Only
Top News
  • Fist bump photo Study: Fist bumps less germy than handshakes

    When it comes to preventing the spread of germs, maybe the president is on to something with his fondness for fist bumps.

    July 30, 2014 1 Photo

  • Sharknado.jpg Sharknado 2 set to attack viewers tonight

    In the face of another "Sharknado" TV movie (the even-more-inane "Sharknado 2: The Second One," premiering Wednesday night on Syfy), there isn't much for a critic to say except to echo what the characters themselves so frequently scream when confronted by a great white shark spinning toward them in a funnel cloud:
    "LOOK OUT!!"

    July 30, 2014 1 Photo

  • Rodden, Danny.jpg Indiana sheriff accused of lying about relationship with prostitute

    The sheriff of Clark County, Ind., faces an eight-count federal indictment that accuses him of lying about paying a prostitute for a sex act and giving her a badge so that she could claim a discount rate at a hotel.

    July 30, 2014 1 Photo

  • Clinton judge hears motion to suppress in drug case

    District Court Judge Stuart Werling will consider a motion of suppression against a warrant that led to the arrest of a Clinton man on drug charges.

    July 30, 2014

  • David Johnson Clinton grad, NDSU picked to lead MVC

     David Johnson, the former Clinton High standout now entering his senior season at the University of Northern Iowa, was named to the preseason All-Missouri Valley Football Conference first team that was announced Tuesday.

    July 30, 2014 1 Photo

  • School supplies offered at events

    With students going back to school soon, Clinton families will have two opportunities to receive free back-to-school supplies.

    July 30, 2014

  • Showboat follies Iafrate set to leave Showboat Theatre

    As the summer season nears its end, the Clinton Area Showboat Theatre on Tuesday honored the past and said hello to the future.

    July 30, 2014 1 Photo

  • Sidewinders photo Debating decibels: Finally Fridays, Showboat at odds over concert volume

    Two events will take center stage at the riverfront Friday. And if it’s anything like the last time these entities shared the same evening, both crowds may want to take note of the decibel levels coming from the bandshell.

    July 30, 2014 1 Photo

  • wd saturday tobias .jpg Stranger’s generosity stuns Ohio veteran

    Vietnam War veteran David A. Tobias was overwhelmed recently when a fellow customer at an OfficeMax store near Ashtabula, Ohio paid for a computer he was purchasing.

    July 29, 2014 1 Photo

  • 20140727-AMX-GUNS271.jpg Beretta, other gun makers heading to friendlier states

    In moving south and taking 160 jobs with it, Beretta joins several other prominent gunmakers abandoning liberal states that passed tough gun laws after the Newtown shooting.

    July 29, 2014 1 Photo

AP Video