24 Aug Should I buy out my car lease?

Q. My car lease is expiring soon. We have a choice to buy out the lease. How can I decide if I should?
— Driver

A. Buying a car is expensive these days, thanks to supply chain issues affecting both new and used cars.

And interest rates are ugly.

The average rate for a new car is more than 5% — and that’s for people with the highest credit score. It’s nearly 7% for used cars, again for those with the best credit.

Before you decide to buy out your lease, take a close look at the offer price in your lease contract and compare it to similar cars out there for sale. There’s a very good chance it’s a better price than what you would pay on the open market today.

But also consider whether you want the car or not. If you were not happy with the vehicle when it was a lease, you’re not going to like it any more as an owner.

If you’re looking at the pure financials, though, you probably know that new cars lose a huge amount of value once you drive it off the lot. A used car, assuming it’s not full of unexpected mechanical problems, is almost always a better deal than buying new.

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This story was originally published on Aug. 23, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.