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Should I Lease or Purchase a Car?

Dave Ramsey preached on his radio show last week to never lease a vehicle.  He said it was so-o-o-o-o much more expensive!  He said to always buy a quality used car, a few years old and do all the repairs yourself, the best you can.
I am going to compare my 50-year car-buying experience to Dave’s (of which I have no idea how long he’s actually been doing it). First, I purchased a very used 1936 Chrysler Royal Deluxe when I was 14 years old (I could drive at that age because I grew up in the outskirts of Boise, Idaho, where a lot of farming was done, so the legal driving age was two years lower than in most states). It was a 4-cylinder, 4-door with a 3-speed stick shift on the floor.  It also had an over-drive handle to pull out when I was going top speed, which allowed me to save gasoline.  The fastest I ever got my speedometer to was 53 miles per hour.  This is funny when compared to today’s freeway speed limits.
I paid $120 for that car, fixed any problems it had as I went along, and drove it all through high school.  So Dave Ramsey was right in this case: it was cheap transportation and I was able to do all the repairs myself (simple combustion engine with no on-board computer!).  I sold that car for $200 after three years and recaptured all my money.  I agree with Dave Ramsey, that back in the day it probably made great sense to buy a reliable used car and drive it for everything it was worth — but not anymore.
First of all, the days of doing your own auto repairs are over. They wentDriving out in about 1995 when new cars were being built with fuel injectors and computer systems and lots of advanced technology.  Nobody can do their own repairs anymore. When you open the hood of your car and look down into the engine compartment, you no doubt cannot see the ground below. Take a glass of water and pout it all over the engine block and I’ll bet you not one drop will reach the ground — that’s because there is so much going on under the hood now that they can barely fit everything in there — talk about complexity!!! On the other hand, when I opened the hood of my 1936 Chrysler I could see the ground all around the engine — the basics were there and nothing else.
Second, I have tracked all my automobile expenses for all these years.  For the last ten years, all my older used cars have cost me far more than a lease payment.  I promise you that I have tried not to lease a vehicle.  I have hoped that my used car would not need repairs but that failed (it will probably fail for you too, unless perhaps you drive a used Toyota or Honda…maybe). In addition I have hired a neighbor who is happy to get the work and will only charge half of the cost to put on new shocks, or brake-pads, for example.  Still my figures show that had I leased, I would have saved money and not had to worry about breaking down on the freeway somewhere and need to be towed.  My main concern has been my wife.  I don’t want her to have to worry about dependable transportation.  For her sake I lease a clean, new, dependable car for her. While I do drive a 13-year-old used car that I have owned for seven years, I do this so that I don’t mind if I take it on mountain roads and tree branches scratch the sides of the car or so that I don’t have to worry about it getting dinged by a shopping cart at the super market.
But financially speaking, Dave is wrong.  A lease truly cannot be beat when it comes to saving time and money.  Perhaps the interest rates will rise, making the lease payment more expensive, but for now I can not improve upon the lease arrangement.  It is kind of funny, as I talked with all five of my children — they all grew up with me buying older used cars and forcing them to drive a not-so-cool-car through college, but today all but one have leased their vehicles.  They all have college degrees and are reasonably bright.  So unless you are a trained mechanic, I support leasing over buying used.  I challenge you to prepare the numbers, then track them over time just like Money Mastery teaches and find out for yourself which one is best.

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