As individuals reach retirement age and beyond, the benefit of leasing a car may be more advantageous than buying a car. It is good to know what your options are when meeting your automotive needs.

Buying a car is by far the most popular option. It gives you the freedom to drive as many miles as you want, pay off the vehicle early if you choose, and you will be left with an asset to sell or trade in when purchasing another car. However, a lease has some age-related benefits that may make this option more attractive than buying a car outright.

Here are some reasons retirees may want to consider a lease:

1) Lower Monthly Payments

Monthly lease payments, on average, are lower than car loan payments since you are paying for the depreciation of the car rather than the entire cost of the car. This could make financial sense for those living on a fixed income.

2) The Latest Model

If you want to buy a new car, but the cost will be more than you want to spend, leasing can help.You can usually drive a current model year car with the latest features. This has many advantages such as better safety features than older models, as well as modern features such as rearview cameras, global positioning systems, and parking assist.

3) Warranty Protection

Being hit with unexpected repair bills for your car can be difficult when managing a fixed monthly budget. A great benefit of leasing a car is that most of the cars will be new and come with warranty protection.

4) Flexibility At The End Of The Lease

At the end of your lease, you will have several options:

Buy out your current leased car. In most cases the buyout price is higher than the vehicle's true value, but this option allows you to keep the car you have been driving for several years, which you may prefer over changing to something different.

Return the car and lease a different car.

Return the car and walk away. If you reach a point in your life when you no longer wish to, or are able to drive a car, this is a hassle-free option.

Extend your lease. This option will allow you to extend the lease under the same terms for the same monthly payment for a limited period of time. This will give you some time to decide what you would like to do, but you will most likely pay a fee to do so.

Here are some downfalls to leasing a car:

1) You Will Not Own The Asset

You are making monthly payments for a specific amount of time. The average car lease is between three and four years and when the lease expires, you do not own the car.

2) Process Can Be Confusing And Intimidating

Buying a car is a more of a straightforward process than leasing. A lease contract can be complicated and if you are not careful, you could end up paying a lot more than you needed to by not understanding the terms of the lease.

3) Major Financial Decision At Lease End

There usually are several options once the lease expires, but it can be very costly if the lease agreement is not followed.

4) High Insurance Cost

Most leasing companies require that you purchase a higher level of insurance than you normally would have with an owned car. This is due to state laws that place liability on the driver as well as the owner of the vehicle, which in this case, is the leasing company.

5) Early Termination Is Expensive And Can Include:

An early termination fee
The remaining payment on your lease
The cost to prepare the car for lease or sale
The cost to store the car

6) Limited Mileage

If you exceed the mileage agreement, there will be fees to pay. If you are planning to make a lot of road trips, you might want to wait on leasing a car until you reach a time when you are driving mostly to local areas.

7) No Car Customization Allowed

8) You must return the car in good condition or will be charged for damages

So, in making the decision between leasing or buying a car, it is good practice to crunch the numbers, consider all of your options, and weigh the pros and cons for your own personal financial situation.

Carol Chaudet

Last updated: 8/16/17