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Makin' Money

Buying v. leasing: The right choice for your budget

Devin Maverick Robins Apr 27, 2011

All week on Makin’ Money we’re talking about cars as we inch our way closer to a one hour special broadcast focused on the topic. One question that appeared over and over was whether it’s smarter to buy or lease a car?

Phil Reed, Senior Consumer Advice Editor for Edmunds.com and author of “Confessions of a Car Salesman” knows quite a bit about this topic. He met up with Marketplace Money host Tess Vigeland at a used car lot in Santa Monica answer the sticky lease versus buy question. Listen to the interview:

The takeaway is this: Leasing is just another way to finance a car. It’s also a good way to be in a new car every two years, even though you’ll wind up paying more over time versus buying out right. Buying a used car requires a great level of expertise from the buyer. The process can be daunting and requires more risk but the benefit can far outweigh the risks.

With leasing, you never own the car, you’re just paying for the depreciation of the vehicle on a monthly basis. The whole concept of leasing is to maximize your cash flow: Small down payment, small monthly payment and you’re driving a great car. Essentially, you can drive more car for less money. Finally, there’s a tax benefit to leasing.

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