MINNEAPOLIS (WCCO) – Car leasing is at an all-time high. According to a new report by Experian Automotive, 31.4 percent of new vehicles were leased in the first quarter of 2015. Experts say it’s partly due to lower monthly car payments and better car technology.
So, when should you lease? Good Question.READ MORE: Crews Battle Fire In Northeast Minneapolis
“Leasing is popular because you know you’re going to get a new car when the term is up, and there’s no maintenance,” said Scott Lambert, Executive Vice President with the Minnesota Automobile Dealers Association.
Ultimately, a decision on what’s best comes down to lifestyle: How often do you drive? Do you like new cars? How much do you want to pay?
Most car leases are spread out over three years and have a 12,000 to 15,000 annual limit with no maintenance costs.
“The big question you need to ask is, ‘Are you going to hit the mileage limit?” said Scott Lambert, Executive Vice President with the Minnesota Automobile Dealers Association. “If you exceed it, you are going to pay a penalty per mile.”
According to Experian, leases often also come with lower monthly payments. The average lease payment is $405 per month, versus $488 per month for a financed car.READ MORE: Minnesota Weather: High Temps Could Reach 90 Degrees Sunday
“It’s not just the monthly payment,” said Nicole Middendorf, a financial adviser with Prosperwell Financial. “You’ve got to look at what this car costs completely and what it costs over a long period of time.”
According to Honda.com, a Honda Civic, over 36 months, could lease for $346 per month — a total of $12,456 over three years. You could buy the same car over that time period for $553 per month. After the three years, you’d own the car and no longer have monthly payments.
“In the long run, it’s cheaper to buy as long as you own that car and hold onto it,” Middendorf said. “Leasing works great for the executive business owner who isn’t going to drive very many miles, has to have new technology, has to have a new car all the time and doesn’t mind having a payment for the rest of [their] life.”
She recommends buying a one- or two-year-old car and holding onto it for five to seven years.
The average car now lasts around 11 years, but technology is changing much faster and some car owners are willing to lease for those updates.MORE NEWS: Minnesota Weather: 1 Dead, NWS Confirms 3 Tornadoes Touched Down Across MN
“There’re so many updates that a vehicle three years old is so different from a vehicle right now,” said Lambert.