Edmunds: Why some car buyers opt to lease instead
Car shoppers are becoming more impatient to lease than to buy cars, according to latest data. More than a third of all new-car owners leased rather than bought in 2016.
But the statistics don’t tell the entire story. Many car shoppers don’t set out to lease a fresh car, but once they run the numbers, leases look like a much better deal. Here are three reasons why:
1. Car-buying payment shock
Leasing doesn’t even cross some car shoppers’ minds until they see how much it’s going to cost to buy the car of their fantasies.
Here’s an example: Prospective buyers of a Honda Pilot intended to finance the purchase and didn’t want to put any money down. They didn’t want to hear about monthly payments either; they just wished to get the lowest possible out-the-door price (after all fees and taxes).
They agreed on an out-the-door price of $35,000 and the salesperson got began on the paperwork. But when they witnessed the $610 payment that goes along with a 60-month loan for $35,000 at 1.9 percent annual percentage rate (APR), they were stunned. They had no idea the payment “for a Honda” could be so high. That $610 monthly payment was too much for their budget, and it looked like the deal was off.
Before they left, tho’, the salesperson suggested them a lease. Same SUV and no down payment, but with a monthly payment that was far less. After thinking it over for a few minutes, they signed the deal.
Two. Expensive used-car financing
Here’s the script: A shopper walks into a dealership intending to finance a used car in the $Ten,000 price range with the purpose of getting a low monthly payment. Instead, she finishes up leasing a fresh car. What happened? It’s the result of how banks treat used-car loans. Some banks won’t suggest 60-month loans on older cars or cars with lots of miles on the odometer. Such cars also might not qualify for standard financing terms or a low APR.
A shopper wants a $Ten,000 loan for sixty months with a four percent APR, which results in a $184 monthly payment. What the bank will approve, however, is a $Ten,000 loan for thirty six months at eleven percent APR. That results in a $327 monthly payment. Not what she had in mind.
Inject the lease: She could lease a two thousand seventeen Toyota Corolla for three years, paying $159 a month and $1,999 at signing. Compare that to $327 a month on an 8-year-old Toyota Corolla with 100K on the odometer.
Even if she preferred to buy used and might want to own that car free and clear in a few years, the prospect of a brand-new, under-warranty car with low monthly lease payments might carry the day.
Trio. To cure being ‘upside down’
More shoppers than ever are upside down on their car loans, meaning they owe more on the loan than the car is worth. If you owe $Ten,000 on a vehicle that’s worth $8,000, you’re $Two,000 upside down.
A third of car shoppers who traded in their old cars as they bought fresh ones in two thousand sixteen had average negative equity of $Four,913, according to Edmunds research. Unless a shopper starts a fresh deal with a down payment that’s big enough to cover that negative equity, he will need to fold the balance into the selling price of the fresh vehicle. That, of course, makes it even more expensive.
A lease can spin the picture for a car possessor who is upside down. Here’s an example, based on a real two thousand sixteen “mystery shopper” experiment Edmunds conducted.
The shopper contacted a large Honda dealership in search of a fresh two thousand sixteen Honda Odyssey. He reported that he had excellent credit and wished to put $Trio,000 down. Unluckily, the shopper said, he also was $Four,800 upside down on his current car. To make the deal, he planned to trade in his car, put $Three,000 down, and fold the $Four,800 he still owed into the financing for the Odyssey.
The dealership laid out these possible purchase terms: On a 48-month car loan, the payments would be a steep $711 a month. For a 60-month loan, the payment was better but still high: $572 a month. It would have taken a 72-month loan to get the payments to a more palatable $493 a month.
Leasing was a different story: With the same $Trio,000 out of pocket, the 36-month lease would only cost him $438 per month. And the negative equity would go away.
The lure of leasing — and its downside
Leasing isn’t a cure for high monthly payments or upside-down car loans. Leasing’s mileage thresholds can put a damper on spontaneous road trips. Excess harm charges loom over every spilled soft drink or parking-lot ding. And in the long run, leasing cars over and over will cost more money than buying a fresh or used car and keeping it.
What Edmunds says: As sticker prices keep rising, it’s likely that leasing will proceed to be popular. It’s not necessarily because people want to lease, but because buying might not make as much financial sense for them.
This story was provided to The Associated Press by the car-shopping website Edmunds. Matt Jones is a senior consumer advice editor at Edmunds. Twitter: @supermattjones
Edmunds: Why some car buyers opt to lease instead
Edmunds: Why some car buyers opt to lease instead
Car shoppers are becoming more impatient to lease than to buy cars, according to latest data. More than a third of all new-car owners leased rather than bought in 2016.
But the statistics don’t tell the entire story. Many car shoppers don’t set out to lease a fresh car, but once they run the numbers, leases look like a much better deal. Here are three reasons why:
1. Car-buying payment shock
Leasing doesn’t even cross some car shoppers’ minds until they see how much it’s going to cost to buy the car of their fantasies.
Here’s an example: Prospective buyers of a Honda Pilot intended to finance the purchase and didn’t want to put any money down. They didn’t want to hear about monthly payments either; they just dreamed to get the lowest possible out-the-door price (after all fees and taxes).
They agreed on an out-the-door price of $35,000 and the salesperson got began on the paperwork. But when they spotted the $610 payment that goes along with a 60-month loan for $35,000 at 1.9 percent annual percentage rate (APR), they were stunned. They had no idea the payment “for a Honda” could be so high. That $610 monthly payment was too much for their budget, and it looked like the deal was off.
Before they left, tho’, the salesperson suggested them a lease. Same SUV and no down payment, but with a monthly payment that was far less. After thinking it over for a few minutes, they signed the deal.
Two. Expensive used-car financing
Here’s the script: A shopper walks into a dealership intending to finance a used car in the $Ten,000 price range with the objective of getting a low monthly payment. Instead, she finishes up leasing a fresh car. What happened? It’s the result of how banks treat used-car loans. Some banks won’t suggest 60-month loans on older cars or cars with lots of miles on the odometer. Such cars also might not qualify for standard financing terms or a low APR.
A shopper wants a $Ten,000 loan for sixty months with a four percent APR, which results in a $184 monthly payment. What the bank will approve, however, is a $Ten,000 loan for thirty six months at eleven percent APR. That results in a $327 monthly payment. Not what she had in mind.
Come in the lease: She could lease a two thousand seventeen Toyota Corolla for three years, paying $159 a month and $1,999 at signing. Compare that to $327 a month on an 8-year-old Toyota Corolla with 100K on the odometer.
Even if she preferred to buy used and might want to own that car free and clear in a few years, the prospect of a brand-new, under-warranty car with low monthly lease payments might carry the day.
Trio. To cure being ‘upside down’
More shoppers than ever are upside down on their car loans, meaning they owe more on the loan than the car is worth. If you owe $Ten,000 on a vehicle that’s worth $8,000, you’re $Two,000 upside down.
A third of car shoppers who traded in their old cars as they bought fresh ones in two thousand sixteen had average negative equity of $Four,913, according to Edmunds research. Unless a shopper starts a fresh deal with a down payment that’s big enough to cover that negative equity, he will need to fold the balance into the selling price of the fresh vehicle. That, of course, makes it even more expensive.
A lease can spin the picture for a car holder who is upside down. Here’s an example, based on a real two thousand sixteen “mystery shopper” experiment Edmunds conducted.
The shopper contacted a large Honda dealership in search of a fresh two thousand sixteen Honda Odyssey. He reported that he had excellent credit and wished to put $Trio,000 down. Unluckily, the shopper said, he also was $Four,800 upside down on his current car. To make the deal, he planned to trade in his car, put $Three,000 down, and fold the $Four,800 he still owed into the financing for the Odyssey.
The dealership laid out these possible purchase terms: On a 48-month car loan, the payments would be a steep $711 a month. For a 60-month loan, the payment was better but still high: $572 a month. It would have taken a 72-month loan to get the payments to a more palatable $493 a month.
Leasing was a different story: With the same $Three,000 out of pocket, the 36-month lease would only cost him $438 per month. And the negative equity would go away.
The lure of leasing — and its downside
Leasing isn’t a cure for high monthly payments or upside-down car loans. Leasing’s mileage boundaries can put a damper on spontaneous road trips. Excess harm charges loom over every spilled soft drink or parking-lot ding. And in the long run, leasing cars over and over will cost more money than buying a fresh or used car and keeping it.
What Edmunds says: As sticker prices keep rising, it’s likely that leasing will proceed to be popular. It’s not necessarily because people want to lease, but because buying might not make as much financial sense for them.
This story was provided to The Associated Press by the car-shopping website Edmunds. Matt Jones is a senior consumer advice editor at Edmunds. Twitter: @supermattjones
Edmunds: Why some car buyers opt to lease instead
Edmunds: Why some car buyers opt to lease instead
Car shoppers are becoming more impatient to lease than to buy cars, according to latest data. More than a third of all new-car owners leased rather than bought in 2016.
But the statistics don’t tell the entire story. Many car shoppers don’t set out to lease a fresh car, but once they run the numbers, leases look like a much better deal. Here are three reasons why:
1. Car-buying payment shock
Leasing doesn’t even cross some car shoppers’ minds until they see how much it’s going to cost to buy the car of their wishes.
Here’s an example: Prospective buyers of a Honda Pilot intended to finance the purchase and didn’t want to put any money down. They didn’t want to hear about monthly payments either; they just dreamed to get the lowest possible out-the-door price (after all fees and taxes).
They agreed on an out-the-door price of $35,000 and the salesperson got began on the paperwork. But when they witnessed the $610 payment that goes along with a 60-month loan for $35,000 at 1.9 percent annual percentage rate (APR), they were stunned. They had no idea the payment “for a Honda” could be so high. That $610 monthly payment was too much for their budget, and it looked like the deal was off.
Before they left, tho’, the salesperson suggested them a lease. Same SUV and no down payment, but with a monthly payment that was far less. After thinking it over for a few minutes, they signed the deal.
Two. Expensive used-car financing
Here’s the screenplay: A shopper walks into a dealership intending to finance a used car in the $Ten,000 price range with the purpose of getting a low monthly payment. Instead, she finishes up leasing a fresh car. What happened? It’s the result of how banks treat used-car loans. Some banks won’t suggest 60-month loans on older cars or cars with lots of miles on the odometer. Such cars also might not qualify for standard financing terms or a low APR.
A shopper wants a $Ten,000 loan for sixty months with a four percent APR, which results in a $184 monthly payment. What the bank will approve, however, is a $Ten,000 loan for thirty six months at eleven percent APR. That results in a $327 monthly payment. Not what she had in mind.
Inject the lease: She could lease a two thousand seventeen Toyota Corolla for three years, paying $159 a month and $1,999 at signing. Compare that to $327 a month on an 8-year-old Toyota Corolla with 100K on the odometer.
Even if she preferred to buy used and might want to own that car free and clear in a few years, the prospect of a brand-new, under-warranty car with low monthly lease payments might carry the day.
Three. To cure being ‘upside down’
More shoppers than ever are upside down on their car loans, meaning they owe more on the loan than the car is worth. If you owe $Ten,000 on a vehicle that’s worth $8,000, you’re $Two,000 upside down.
A third of car shoppers who traded in their old cars as they bought fresh ones in two thousand sixteen had average negative equity of $Four,913, according to Edmunds research. Unless a shopper starts a fresh deal with a down payment that’s big enough to cover that negative equity, he will need to fold the balance into the selling price of the fresh vehicle. That, of course, makes it even more expensive.
A lease can roll the picture for a car holder who is upside down. Here’s an example, based on a real two thousand sixteen “mystery shopper” experiment Edmunds conducted.
The shopper contacted a large Honda dealership in search of a fresh two thousand sixteen Honda Odyssey. He reported that he had excellent credit and desired to put $Trio,000 down. Unluckily, the shopper said, he also was $Four,800 upside down on his current car. To make the deal, he planned to trade in his car, put $Trio,000 down, and fold the $Four,800 he still owed into the financing for the Odyssey.
The dealership laid out these possible purchase terms: On a 48-month car loan, the payments would be a steep $711 a month. For a 60-month loan, the payment was better but still high: $572 a month. It would have taken a 72-month loan to get the payments to a more palatable $493 a month.
Leasing was a different story: With the same $Three,000 out of pocket, the 36-month lease would only cost him $438 per month. And the negative equity would go away.
The lure of leasing — and its downside
Leasing isn’t a cure for high monthly payments or upside-down car loans. Leasing’s mileage thresholds can put a damper on spontaneous road trips. Excess harm charges loom over every spilled soft drink or parking-lot ding. And in the long run, leasing cars over and over will cost more money than buying a fresh or used car and keeping it.
What Edmunds says: As sticker prices keep rising, it’s likely that leasing will proceed to be popular. It’s not necessarily because people want to lease, but because buying might not make as much financial sense for them.
This story was provided to The Associated Press by the car-shopping website Edmunds. Matt Jones is a senior consumer advice editor at Edmunds. Twitter: @supermattjones
Edmunds: Why some car buyers opt to lease instead
Edmunds: Why some car buyers opt to lease instead
Car shoppers are becoming more anxious to lease than to buy cars, according to latest data. More than a third of all new-car owners leased rather than bought in 2016.
But the statistics don’t tell the entire story. Many car shoppers don’t set out to lease a fresh car, but once they run the numbers, leases look like a much better deal. Here are three reasons why:
1. Car-buying payment shock
Leasing doesn’t even cross some car shoppers’ minds until they see how much it’s going to cost to buy the car of their fantasies.
Here’s an example: Prospective buyers of a Honda Pilot intended to finance the purchase and didn’t want to put any money down. They didn’t want to hear about monthly payments either; they just desired to get the lowest possible out-the-door price (after all fees and taxes).
They agreed on an out-the-door price of $35,000 and the salesperson got embarked on the paperwork. But when they eyed the $610 payment that goes along with a 60-month loan for $35,000 at 1.9 percent annual percentage rate (APR), they were stunned. They had no idea the payment “for a Honda” could be so high. That $610 monthly payment was too much for their budget, and it looked like the deal was off.
Before they left, however, the salesperson suggested them a lease. Same SUV and no down payment, but with a monthly payment that was far less. After thinking it over for a few minutes, they signed the deal.
Two. Expensive used-car financing
Here’s the script: A shopper walks into a dealership intending to finance a used car in the $Ten,000 price range with the objective of getting a low monthly payment. Instead, she completes up leasing a fresh car. What happened? It’s the result of how banks treat used-car loans. Some banks won’t suggest 60-month loans on older cars or cars with lots of miles on the odometer. Such cars also might not qualify for standard financing terms or a low APR.
A shopper wants a $Ten,000 loan for sixty months with a four percent APR, which results in a $184 monthly payment. What the bank will approve, however, is a $Ten,000 loan for thirty six months at eleven percent APR. That results in a $327 monthly payment. Not what she had in mind.
Come in the lease: She could lease a two thousand seventeen Toyota Corolla for three years, paying $159 a month and $1,999 at signing. Compare that to $327 a month on an 8-year-old Toyota Corolla with 100K on the odometer.
Even if she preferred to buy used and might want to own that car free and clear in a few years, the prospect of a brand-new, under-warranty car with low monthly lease payments might carry the day.
Three. To cure being ‘upside down’
More shoppers than ever are upside down on their car loans, meaning they owe more on the loan than the car is worth. If you owe $Ten,000 on a vehicle that’s worth $8,000, you’re $Two,000 upside down.
A third of car shoppers who traded in their old cars as they bought fresh ones in two thousand sixteen had average negative equity of $Four,913, according to Edmunds research. Unless a shopper starts a fresh deal with a down payment that’s big enough to cover that negative equity, he will need to fold the balance into the selling price of the fresh vehicle. That, of course, makes it even more expensive.
A lease can roll the picture for a car proprietor who is upside down. Here’s an example, based on a real two thousand sixteen “mystery shopper” experiment Edmunds conducted.
The shopper contacted a large Honda dealership in search of a fresh two thousand sixteen Honda Odyssey. He reported that he had excellent credit and desired to put $Three,000 down. Unluckily, the shopper said, he also was $Four,800 upside down on his current car. To make the deal, he planned to trade in his car, put $Trio,000 down, and fold the $Four,800 he still owed into the financing for the Odyssey.
The dealership laid out these possible purchase terms: On a 48-month car loan, the payments would be a steep $711 a month. For a 60-month loan, the payment was better but still high: $572 a month. It would have taken a 72-month loan to get the payments to a more palatable $493 a month.
Leasing was a different story: With the same $Trio,000 out of pocket, the 36-month lease would only cost him $438 per month. And the negative equity would go away.
The lure of leasing — and its downside
Leasing isn’t a cure for high monthly payments or upside-down car loans. Leasing’s mileage boundaries can put a damper on spontaneous road trips. Excess harm charges loom over every spilled soft drink or parking-lot ding. And in the long run, leasing cars over and over will cost more money than buying a fresh or used car and keeping it.
What Edmunds says: As sticker prices keep rising, it’s likely that leasing will proceed to be popular. It’s not necessarily because people want to lease, but because buying might not make as much financial sense for them.
This story was provided to The Associated Press by the car-shopping website Edmunds. Matt Jones is a senior consumer advice editor at Edmunds. Twitter: @supermattjones
Edmunds: Why some car buyers opt to lease instead
Edmunds: Why some car buyers opt to lease instead
Car shoppers are becoming more anxious to lease than to buy cars, according to latest data. More than a third of all new-car owners leased rather than bought in 2016.
But the statistics don’t tell the entire story. Many car shoppers don’t set out to lease a fresh car, but once they run the numbers, leases look like a much better deal. Here are three reasons why:
1. Car-buying payment shock
Leasing doesn’t even cross some car shoppers’ minds until they see how much it’s going to cost to buy the car of their fantasies.
Here’s an example: Prospective buyers of a Honda Pilot intended to finance the purchase and didn’t want to put any money down. They didn’t want to hear about monthly payments either; they just desired to get the lowest possible out-the-door price (after all fees and taxes).
They agreed on an out-the-door price of $35,000 and the salesperson got began on the paperwork. But when they witnessed the $610 payment that goes along with a 60-month loan for $35,000 at 1.9 percent annual percentage rate (APR), they were stunned. They had no idea the payment “for a Honda” could be so high. That $610 monthly payment was too much for their budget, and it looked like the deal was off.
Before they left, however, the salesperson suggested them a lease. Same SUV and no down payment, but with a monthly payment that was far less. After thinking it over for a few minutes, they signed the deal.
Two. Expensive used-car financing
Here’s the script: A shopper walks into a dealership intending to finance a used car in the $Ten,000 price range with the aim of getting a low monthly payment. Instead, she finishes up leasing a fresh car. What happened? It’s the result of how banks treat used-car loans. Some banks won’t suggest 60-month loans on older cars or cars with lots of miles on the odometer. Such cars also might not qualify for standard financing terms or a low APR.
A shopper wants a $Ten,000 loan for sixty months with a four percent APR, which results in a $184 monthly payment. What the bank will approve, however, is a $Ten,000 loan for thirty six months at eleven percent APR. That results in a $327 monthly payment. Not what she had in mind.
Come in the lease: She could lease a two thousand seventeen Toyota Corolla for three years, paying $159 a month and $1,999 at signing. Compare that to $327 a month on an 8-year-old Toyota Corolla with 100K on the odometer.
Even if she preferred to buy used and might want to own that car free and clear in a few years, the prospect of a brand-new, under-warranty car with low monthly lease payments might carry the day.
Three. To cure being ‘upside down’
More shoppers than ever are upside down on their car loans, meaning they owe more on the loan than the car is worth. If you owe $Ten,000 on a vehicle that’s worth $8,000, you’re $Two,000 upside down.
A third of car shoppers who traded in their old cars as they bought fresh ones in two thousand sixteen had average negative equity of $Four,913, according to Edmunds research. Unless a shopper starts a fresh deal with a down payment that’s big enough to cover that negative equity, he will need to fold the balance into the selling price of the fresh vehicle. That, of course, makes it even more expensive.
A lease can roll the picture for a car proprietor who is upside down. Here’s an example, based on a real two thousand sixteen “mystery shopper” experiment Edmunds conducted.
The shopper contacted a large Honda dealership in search of a fresh two thousand sixteen Honda Odyssey. He reported that he had excellent credit and dreamed to put $Three,000 down. Unluckily, the shopper said, he also was $Four,800 upside down on his current car. To make the deal, he planned to trade in his car, put $Three,000 down, and fold the $Four,800 he still owed into the financing for the Odyssey.
The dealership laid out these possible purchase terms: On a 48-month car loan, the payments would be a steep $711 a month. For a 60-month loan, the payment was better but still high: $572 a month. It would have taken a 72-month loan to get the payments to a more palatable $493 a month.
Leasing was a different story: With the same $Trio,000 out of pocket, the 36-month lease would only cost him $438 per month. And the negative equity would go away.
The lure of leasing — and its downside
Leasing isn’t a cure for high monthly payments or upside-down car loans. Leasing’s mileage thresholds can put a damper on spontaneous road trips. Excess harm charges loom over every spilled soft drink or parking-lot ding. And in the long run, leasing cars over and over will cost more money than buying a fresh or used car and keeping it.
What Edmunds says: As sticker prices keep rising, it’s likely that leasing will proceed to be popular. It’s not necessarily because people want to lease, but because buying might not make as much financial sense for them.
This story was provided to The Associated Press by the car-shopping website Edmunds. Matt Jones is a senior consumer advice editor at Edmunds. Twitter: @supermattjones
Edmunds: Why some car buyers opt to lease instead
Edmunds: Why some car buyers opt to lease instead
Car shoppers are becoming more antsy to lease than to buy cars, according to latest data. More than a third of all new-car owners leased rather than bought in 2016.
But the statistics don’t tell the entire story. Many car shoppers don’t set out to lease a fresh car, but once they run the numbers, leases look like a much better deal. Here are three reasons why:
1. Car-buying payment shock
Leasing doesn’t even cross some car shoppers’ minds until they see how much it’s going to cost to buy the car of their fantasies.
Here’s an example: Prospective buyers of a Honda Pilot intended to finance the purchase and didn’t want to put any money down. They didn’t want to hear about monthly payments either; they just dreamed to get the lowest possible out-the-door price (after all fees and taxes).
They agreed on an out-the-door price of $35,000 and the salesperson got commenced on the paperwork. But when they spotted the $610 payment that goes along with a 60-month loan for $35,000 at 1.9 percent annual percentage rate (APR), they were stunned. They had no idea the payment “for a Honda” could be so high. That $610 monthly payment was too much for their budget, and it looked like the deal was off.
Before they left, however, the salesperson suggested them a lease. Same SUV and no down payment, but with a monthly payment that was far less. After thinking it over for a few minutes, they signed the deal.
Two. Expensive used-car financing
Here’s the script: A shopper walks into a dealership intending to finance a used car in the $Ten,000 price range with the objective of getting a low monthly payment. Instead, she finishes up leasing a fresh car. What happened? It’s the result of how banks treat used-car loans. Some banks won’t suggest 60-month loans on older cars or cars with lots of miles on the odometer. Such cars also might not qualify for standard financing terms or a low APR.
A shopper wants a $Ten,000 loan for sixty months with a four percent APR, which results in a $184 monthly payment. What the bank will approve, however, is a $Ten,000 loan for thirty six months at eleven percent APR. That results in a $327 monthly payment. Not what she had in mind.
Come in the lease: She could lease a two thousand seventeen Toyota Corolla for three years, paying $159 a month and $1,999 at signing. Compare that to $327 a month on an 8-year-old Toyota Corolla with 100K on the odometer.
Even if she preferred to buy used and might want to own that car free and clear in a few years, the prospect of a brand-new, under-warranty car with low monthly lease payments might carry the day.
Three. To cure being ‘upside down’
More shoppers than ever are upside down on their car loans, meaning they owe more on the loan than the car is worth. If you owe $Ten,000 on a vehicle that’s worth $8,000, you’re $Two,000 upside down.
A third of car shoppers who traded in their old cars as they bought fresh ones in two thousand sixteen had average negative equity of $Four,913, according to Edmunds research. Unless a shopper starts a fresh deal with a down payment that’s big enough to cover that negative equity, he will need to fold the balance into the selling price of the fresh vehicle. That, of course, makes it even more expensive.
A lease can roll the picture for a car holder who is upside down. Here’s an example, based on a real two thousand sixteen “mystery shopper” experiment Edmunds conducted.
The shopper contacted a large Honda dealership in search of a fresh two thousand sixteen Honda Odyssey. He reported that he had excellent credit and wished to put $Trio,000 down. Unluckily, the shopper said, he also was $Four,800 upside down on his current car. To make the deal, he planned to trade in his car, put $Trio,000 down, and fold the $Four,800 he still owed into the financing for the Odyssey.
The dealership laid out these possible purchase terms: On a 48-month car loan, the payments would be a steep $711 a month. For a 60-month loan, the payment was better but still high: $572 a month. It would have taken a 72-month loan to get the payments to a more palatable $493 a month.
Leasing was a different story: With the same $Trio,000 out of pocket, the 36-month lease would only cost him $438 per month. And the negative equity would go away.
The lure of leasing — and its downside
Leasing isn’t a cure for high monthly payments or upside-down car loans. Leasing’s mileage boundaries can put a damper on spontaneous road trips. Excess harm charges loom over every spilled soft drink or parking-lot ding. And in the long run, leasing cars over and over will cost more money than buying a fresh or used car and keeping it.
What Edmunds says: As sticker prices keep rising, it’s likely that leasing will proceed to be popular. It’s not necessarily because people want to lease, but because buying might not make as much financial sense for them.
This story was provided to The Associated Press by the car-shopping website Edmunds. Matt Jones is a senior consumer advice editor at Edmunds. Twitter: @supermattjones