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Question: The Mercedes C-Class is a hot-looking car, and I can get a lease for 36 months at $399 with $4,193 down. My girlfriend (who might be my fiance one day) says that’s a big waste of money.
But here’s the thing: A 2017 C-Class goes for almost $40K. I’m getting one for three years at around $18,500. So I’m looking at what I save, while she’s only looking at what I’m spending. Who’s right?
— Aiden in Florida
When personal finance experts like myself gather, we agree this is one of the most common questions we’re asked. Buying a car versus leasing one has been a hot topic these past few years, because leasing skyrocketed.
In 2016, 31.9 percent of all new vehicle sales were leases — almost a third, which still amazes me. However, the pace is off this year, according to the car experts over at Edmunds. They say leasing has dipped to 31.1 percent.
“Leasing remains a popular choice among car shoppers, but the era of steady growth is over,” says Edmunds executive Jessica Caldwell. “This year we’re seeing a drop-off in trade-ins going toward leases, signaling that the pool of people opting to lease is shrinking.”
I think this is a good trend, because leasing only makes financial sense in a very few situations. It doesn’t in yours, Aiden.
I followed up with you after receiving your email and learned you need the car to drive to work, which is a 40-mile round trip. That means you’ll drive 10,000 miles a year just for your job (figuring 50 weeks a year).
The lease you’re considering penalizes you for more than 12,000 miles a year. Are you really certain you’ll only drive 2,000 miles a year that aren’t for your commute? That’s a mere 5.5 miles a day.
Also, you tell me you like to take your two wild-and-crazy Great Danes on road trips. Why does that matter? Because in your lease is a clause that says you’ll return the car in “original condition, less normal wear and tear.” You admit your dogs like to chew on upholstery. You’ll pay a pretty penny for that.
Finally, you admit you really want this car not for financial reasons, but because you’ve simply “fallen in love with it.” I’m no expert in love, but I as a CPA for more than two decades I know this: Love can be expensive, especially when it’s unrequited. No car will return your love.
Bottom line, Aiden: You’re not an idiot. You’re a human being. It’s natural to be lured by a hot set of wheels. However, if you love your girlfriend more than you love a car, listen to her in this case.
Email your question to email@example.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.
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