Leasing a Vehicle Can Steal Your Financial Freedom

There is a lady at my church who always seems to be driving a new car. One day I asked her if her husband worked at a car dealership. The answer was no. She was actually leasing these vehicles. She said she loved her lease because she was able to drive a new car more frequently than she would by buying them.

This is exactly what car dealerships and vehicle manufacturers want you to think. The truth is that leasing a vehicle can be a dangerous cycle for anyone trying to get out of debt or achieve some level of financial freedom.

Leasing a vehicle is essentially renting it. You make monthly payments, but you never really own the car. At the end of the lease – usually two or three years – you either buy the car for what you still owe on it, or you turn it in. If you’re like the lady at my church, you start the process all over again with a new vehicle.

Think about this. When you purchase a vehicle – new or used – you pay on the car for the length of your loan and then it’s yours. Once the loan is paid off, you readjust your budget, because you now have several hundred dollars you’re not spending on a car loan.

When you lease a vehicle and continue to lease new vehicles, you never lose that car payment. Most people are attracted to leasing because the monthly payments can be so low, but then they get sucked in to the rush of driving a new car every few years. Before they know it, they have spent thousands of dollars over time and don’t even own a vehicle.

If they buy the car for what is still owed on it at the end of the lease, they often end up going upside down on their loan. That means they are paying more on their loan than the vehicle is worth. Should they total the vehicle before that loan is paid off, they won’t get enough money from the insurance company to pay off the loan. That means they’ll be paying on a loan for a car they can’t even drive.

Here’s a more ideal scenario. Buy a used vehicle, maybe a year or two old, with very few miles on it. If you have to finance the loan, get a low interest loan for as few years as possible. Once the loan is paid in full, continue making those payments to a savings account that you never touch, with the exception of an emergency. When you are ready to purchase another new vehicle, you’ll be able to do it with cash. That’s what financial freedom is all about.

Leasing a vehicle seems attractive because of the low monthly payments, but it can be really dangerous to your long-term financial picture.