If you need a car, the most frugal option is to buy one that’s 2 to 3 years old, pay cash and drive it until the wheels fall off.
The least frugal option traditionally has been leasing, where you make monthly payments to drive a car but don’t own it. You’re paying for the vehicle during its most expensive period – cars lose more than half their value on average in the first three years – and you have nothing to show for your payments after the lease ends.
Few people opt for the frugal way, however, and car buying has changed enough that leasing may no longer be the costliest option. In some situations, leasing could be the most sensible.
COSTLIER CARS, LONGER LOANS
To understand why, let’s survey the U.S. automotive landscape. Americans are:
– Buying more expensive cars.
– Financing larger amounts.
– Taking out longer loans.