Mastering Car Leasing in 2023: A new car costs around $48,000, which is quite expensive. But don’t worry, leasing is a good choice. This year, 21% of recent car sales were leased.
Leasing can reduce monthly costs by $139 on average compared to a car loan.
Consumer Reports’ Keith Barry advises caution when leasing due to travel limits and potential fees for wear and tear.
After finding the desired car, negotiation becomes crucial.
You can negotiate over more than just the car’s base price, including the “capitalized cost” in lease terms. Barry claims this move can reduce your monthly costs significantly, aligning with your financial plans.
As negotiations progress, the lease interest rate, known as the “money factor,” becomes crucial to discuss. This rate dramatically impacts your total payment. Consider your mileage allowance, especially if you expect to exceed the usual limit.
Are you considering an electric car (EV)? A $7,500 tax credit makes it more appealing. When renting an EV, you don’t need to worry about its origin, cost, or battery source.
In this case, the buyer can receive the full tax credit of $7,500. Barry advises negotiating the best price upfront and ensuring the dealer deducts the bonus from the car’s total cost.
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Our Reader’s Queries
Does leasing a car make sense in 2023?
In the first quarter of 2023, Experian data shows that new car loan payments averaged $725 per month, while car lease payments were lower at $586. On the other hand, used cars had the most affordable monthly payment of $516.
What is a good money factor on a lease 2023?
A desirable money factor for a lease is about 0.0025. But, only individuals with excellent credit meet the requirements for this advantageous money factor. The majority of money factors are higher than 0.003 for lessees with an average credit score.
What does Suze Orman say about leasing a car?
Renting a car is a huge money drain. Orman believes it’s smarter to own a car and maintain it well for long-term use. This belief is widespread, but not universally applicable, as Wallace boldly noted.
Is it ever smarter to lease a car?
Leasing often means a lower initial cost and cheaper monthly payments. It also means no worries about selling the car later on. Buying, on the other hand, means owning the car outright, having control over mileage, and a clear idea of expenses. Most experts agree that, in the long run, buying a car is the smarter financial choice.