Plain Old Common Cents

Consumer Reports Article Comparing Leasing To Financing A Car:
The Money Lab determined that buying a car—in this case, the best-selling 2008 Honda Accord EX, at $24,495—would cost $4,597 less over five years than closed-end leasing for exactly the same model.

Consumer Reports calculated that it would cost the average consumer nearly $4,597 more to lease a Honda Accord than to finance the same car over a 5 year period. Assuming that you get an average loan rate of 7%, the final cost of the Honda Accord is $29,100. That is $4,500 more than buying the vehicle outright. What about buying a used car instead of a new one. Can you guess how much you would save by buying a 3 year old Honda Accord with cash, instead of financing a new one? According to Kelly Blue Book, a 2005 Honda Accord EX in excellent condition with 45,000 miles should retail for $18,095. It would cost $15,890 if you bought it from an individual.

Lets recap, shall we:

• Brand new Accord: $24,495
• Brand new Accord with loan: $29,100
• Brand new Accord with lease: $33,697
• Used Accord with 45,000 miles: $18,095

By choosing to buy a used model with cash, instead of leasing a new model, you can save $15,600. You could buy a second car with that.

photo by flickr user mjmyap