Buy or Lease a Car? Do the Math

Q. There seem to be growing numbers of attractive deals on new-car leases these days. As someone who's always opposed leasing a car, should I bite?

See also: Use AARP's lease versus buy calculator.

A. Maybe, but make sure you understand the numbers. That car advertised for $200 a month may not include things you expect such as a sunroof or keyless entry, let alone floor mats.

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And some manufacturers have downgraded traditional lease terms that allowed 12,000 miles per year to 10,500. So what used to be a three-year lease for 36,000 miles may get you just 31,500 before you're charged an overage fee of roughly 15 cents per mile come turn-in time.

You should also carefully read the contract — as well as this article by MSNBC.com consumer watchdog Bob Sullivan.

Car website Edmunds.com offers useful advice on car leases, and its Incentives and Rebates page provides info on cash-back, financing and other deals to help you make the buy-versus-lease decision. The site also has an Auto Lease Calculator to crunch your numbers.

Also, consider lease-swapping services such as LeaseTrader and SwapALease. These connect drivers who want to end their leases early with drivers willing to assume those leases. The lease buyers take over the monthly payments for the remaining lease period, avoiding the down payment of a new lease. Lease sellers end their leases without paying off the balance or paying early-termination penalties.

LeaseTrader, by the way, finds that more and more boomers are opting for leases. In 2000, only 15 percent of its customers were in the boomer age group; today the figure's close to 48 percent. The website attributes the shift in part to boomers wanting to drive "the latest and greatest" and being comfortable with the idea of always paying for a car, rather than taking out a loan and paying it off.

Sid Kirchheimer writes about health and consumer issues. Have a question for Sid Kirchheimer about a new product, a new kind of bank account? Check out the Ask Sid archive. If you don’t find your answer there, send a query.