Avoid Financial Potholes: Car Fleeces
(I mean car leases)

Do these advertising slogans sound familiar?

“Rich people lease their cars instead of buy them.
They must know something the rest us don’t; after all, they’re rich.”
“Get more car for the money by leasing instead of buying that new car.”
“Save up to 40% on your payments by leasing instead of buying.”
“You can get that new car today for less than you think if you lease instead of buy.”

Kind of makes you feel dumb for buying a car, doesn’t it?

Well there’s no need to feel dumb. In Dave Ramsey’s book, The Total Money Makeover, he says Consumer Reports, Smart Money magazine, and a good calculator will confirm that leasing a car is the worse possible way to acquire a vehicle. He goes on to say that, based on his own financial counseling experience, the average lease interest rate is 14%. Of course leasing companies are not required by law to disclose interest rates.

Here is something else to consider: car leasing = perpetual debt!

I don’t know about you, but “perpetual debt” does not strike me as something compatible with good stewardship, at least as it relates to personal finances.

Best Way to Acquire a Vehicle

Generally, the best way to acquire a car is to buy a slightly used vehicle – two or three years old. Shop around a lot: go to dealers, look online and in newspaper classifieds, and call wholesalers. Have the vehicle thoroughly checked out by someone you trust before you buy it. Drive it until it’s eight to ten years old (maybe longer if you can stand it), all the while keeping it well maintained. Then trade it in, sell it, or give it away, and purchase another slightly used vehicle. During this time, continue to make “car payments” to a separate savings account so you can pay cash for your next slightly used vehicle.

Something to think about: The most inexpensive car you’ll ever own is the one you’re driving today!

The rich rule over the poor, and the borrower is servant to the lender. (Proverbs 22:7)

 

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